Mutual Fund Dealer member involved in outside sale of $700,000 in investments

The Mutual Fund Dealers Association of Canada (MFDA) has started disciplinary proceedings in the case of an owner of a Mississauga, ON-based insurance and financial planning firm after he became involved in the sale of more than $700,000 worth of syndicated mortgage investments through a former business associate.

According to MFDA filings, in 2015 Leszek Dziadecki was advised by a former business associate who had joined a company called BioNorth Technology Group, that the company was raising capital by offering syndicated mortgage investments (SMI) on property owned by BioNorth. The Biotech representative knew Dziadecki was in the securities industry and provided investment advice to clients and he wanted Dziadecki to inform clients or other investors about the opportunity to invest. 

Between 2015 and 2016, Dziadecki recommended, sold, or facilitated the sale of BioNorth SMIs totalling at least $713,300 to at least six clients and one individual investor. One of Dziadecki’s clients invested with another person to the tune of $500,000. 

Firm does not repay principal amounts to investors 

However, in June 2018, when the BioNorth SMIs were to mature, BioNorth did not repay the principal amounts invested in the SMIs to the investors, said the MFDA. On November 17, 2020, the local municipality where the BioNorth mortgaged property was situated sold the property pursuant to a tax sale.  There wasn’t enough money from the sale to make any payment to the investors, and the syndicated mortgage against the property was discharged. 

The investors lost all of their principal investments totalling $713,300. 

The MFDA said that at all material times, Dziadecki did not obtain approval before engaging in an outside business activity, although he did benefit – or expected to benefit – with respect to the SMIs at BioNorth. 

The MFDA has the power to impose a fine of $5 million, suspension and prohibiting Dziadecki from conducting securities-related business. 

Dziadecki will make a first appearance before an MFDA Hearing Panel on October 19, 2022.