The Mutual Fund Dealers Association of Canada (MFDA) has ordered a former mutual fund salesman to pay $250,000 in fines.

An MFDA hearing panel found that, among other infractions, Toula Adeola misrepresented information on know-your-client (KYC) forms and failed to adequately explain a leveraged investment strategy to clients.

Between December 2007 and July 2008, Adeola, who worked in the Mississauga, Ont.-branch of WFG Securities of Canada Inc., reported cash or liquid assets, registered retirement savings plans (RRSP), residences and income on new account application forms (NCAF) and loan application forms, which were inflated in value or did not exist.

As well, Adeola mischaracterized clients’ investment knowledge and risk tolerance, according to the MFDA, and failed to consider whether or not the clients could cover the costs of a leveraged investment strategy. The MFDA found that many of these clients had limited to no investment knowledge and little experience with investments. Furthermore, many were relatively new to Canada and trusted Adeola because of their shared language and cultural background.

During the same time frame, Adeola failed to properly explain a leveraged investment strategy to clients. For example, Adeola told clients that the leveraged strategy would not result in any out-of-pocket expenses, would generate enough money each month to cover the cost of the investment loans as well as additional income. Furthermore, Adeola told clients that the investments held in the strategy would not decline in value.

By 2010, the leveraged investments did decline, according to the MFDA, leaving some of the clients unable to pay the costs of servicing the investment loans.

Following the decline in value of the accounts, one of Adeola’s clients filed a complaint with WFG who launched an investigation in December 2011. Adeola did not participate in the investigation stating he was dealing with family issues out of the country. He also stopped communicating with clients and did not participate in the MFDA’s own investigation. WFG fired Adeola in 2012 and his whereabouts remain unknown.

In addition to the fine, Adeola is also permanently banned from conducting securities related busing under the employ of an MFDA member. Adeola must also pay $10,000 in costs.