December 10, 2019 (Toronto, Ontario) – The Mutual Fund Dealers Association of Canada (“MFDA”) commenced a disciplinary proceeding in respect of Lachman Hassaram Balani (“Respondent”) by Notice of Hearing dated June 19, 2019.
The hearing of this matter on its merits was held today in Toronto, Ontario before a three-member Hearing Panel of the MFDA’s Central Regional Council. After hearing submissions from Staff of the MFDA with respect to misconduct, the Hearing Panel found that the four allegations set out in the Notice of Hearing had been established. In particular, the Hearing Panel made the following findings of misconduct against the Respondent:
Allegation #1: Commencing February 13, 2017, the Respondent failed to cooperate with an investigation by MFDA Staff into his conduct, contrary to section 22.1 of MFDA By-Law No. 1.
Allegation #2: Between October 2010 and November 20, 2016, the Respondent prepared and submitted new account application forms and investment loan applications for at least two clients which the Respondent knew or ought to have known contained false, misleading or incorrect information, thereby failing to observe the high standards of ethics and conduct in the transaction of business and engaging in conduct unbecoming an Approved person, contrary to MFDA Rule 2.1.1.
Allegation #3: Between October 2010 and November 20, 2016, the Respondent misrepresented, failed to fully and adequately explain, or omitted to explain, the risks, benefits, material assumptions, features and costs of a leveraged investment strategy that he recommended to at least two clients, thereby failing to ensure that the leveraged investment recommendations were suitable for the clients and in keeping with the clients’ investment objectives, contrary to MFDA Rules 2.2.1 and 2.1.1 and MFDA Policy No. 2.
Allegation #4: Between October 2010 and November 20, 2016, the Respondent failed to ensure that the leveraged investment recommendations he made to at least two clients were suitable for the clients and in keeping with the clients’ investment objectives, having regard to the clients’ relevant “Know Your Client” information and personal and financial circumstances, including but not limited to the clients’ ability to afford the costs associated with the investment loans and withstand investment losses, contrary to MFDA Rules 2.2.1 and 2.1.1 and MFDA Policy No. 2.
The Hearing Panel advised that it will issue written reasons for its decision as to misconduct in due course. Submissions with respect to sanctions will take place on a date to be determined and announced accordingly.
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 81,000 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.