November 3, 2022 (Toronto, Ontario) – The Mutual Fund Dealers Association of Canada (“MFDA”) commenced a disciplinary proceeding in respect of Muhamad Asghar Sadiq (the “Respondent”) by Notice of Hearing dated September 14, 2021.
A disciplinary hearing in this proceeding was held electronically by videoconference on November 2, 2022 before a three-member Hearing Panel of the MFDA’s Central Regional Council. After receiving evidence and hearing submissions from Staff of the MFDA with respect to misconduct, the Hearing Panel made the following findings against the Respondent:
- Between March 2011 and October 2016, he failed to use due diligence to learn and accurately record or intentionally misrepresented the essential facts relative to at least 11 clients, contrary to the Member’s policies and procedures and MFDA Rules 2.2.1, 2.1.1, 2.5.1, and 1.1.2.
- Between August 2014 and June 2015, he submitted supporting documents to the Member in connection with loan applications of at least 4 clients, which he knew or ought to have known contained false, incorrect, or misleading information, contrary to MFDA Rule 2.1.1.
- Between March 2011 and July 2015, he failed to ensure that the leveraged investment strategy and the underlying investments that he recommended and implemented in the accounts of at least 10 clients were suitable for the clients, in keeping with the clients’ risk tolerances, investment knowledge, and ability to withstand the potential costs and investment losses, contrary to MFDA Rules 2.2.1 and 2.1.1.
- Between March 2011 and July 2015, he misrepresented, failed to fully and adequately explain, or omitted to explain the risks, benefits, material assumptions, costs, and features of the leveraged investment strategy and the underlying investments that he recommended and implemented in the accounts of at least 11 clients, thereby failing to ensure that the leverage investment strategy and underlying investments were suitable for the clients, contrary to MFDA Rules 2.2.1 and 2.1.1.
- Between August 2014 and August 2018, while registered as a dealing representative of a Member, he engaged in securities related business on behalf of another Member that he was not registered with, contrary to MFDA Rules 1.1.1 and 2.1.1.
- Between October 2016 and August 2018, he misappropriated or failed to account for monies received from 7 clients and 1 individual, contrary to MFDA Rule 2.1.1.
- Between August 2, 2018 and December 5, 2018, he engaged in personal financial dealings with a client by providing the client with monies to pay her investment loan payments, which gave rise to a conflict or potential conflict of interest that he did not disclose to the Member or otherwise address by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to the Member’s policies and procedures and MFDA Rules 2.1.4, 2.1.1, 2.5.1, and 1.1.2.
Following submissions from Staff of the MFDA with respect to penalty, the Hearing Panel imposed the following sanctions on the Respondent and advised that it will issue written reasons in due course:
- a permanent prohibition from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member;
- a fine in the amount of $750,000; and
- costs in the amount of $49,662.50;
A copy of the Notice of Hearing is available on the MFDA website at www.mfda.ca. During the period described in the Notice of Hearing, the Respondent carried on business in the Mississauga, Ontario area.
The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its Members and their approximately 76,695 Approved Persons with a mandate to protect investors and the public interest. For more information about the MFDA’s complaint and enforcement processes, as well as links to ‘Check an Advisor’ and other Investor Tools, visit the For Investors page on the MFDA website.