Wasseem Dirani of Ontario must pay a $40,000 fine to the Toronto-based Investment Industry Regulatory Organization of Canada (IIROC) for recommending unsuitable investments and engaging in undisclosed personal business with clients.
In early 2006, according to IIROC documents, a 63-year old, retired member of Dirani’s church group approached him about getting a reverse mortgage to help pay for her living expenses. Instead of the mortgage, Dirani, who was an employee of brokerage firm Edward Jones in Hamilton, Ont. at the time, recommended taking out a line of credit. In March 2006, the client did so and deposited the $75,000 line of credit into a margin account Dirani had opened as well as an additional $15,000 inheritance.
At the time, the client’s sole income consisted of a small disability and government pension and her largest asset was her house, which was fully paid off. Despite, these facts, IIROC found that Dirani stated the client as having $125,000 in liquid assets at the time of the account opening.
The client’s personal circumstances changed in 2008 and she needed to withdrawal more money from her account to cover expenses. As such, Dirani recommended the client visit a different bank from the one that gave her the line of credit to take out a mortgage on her house. The client received a $165,000 loan from the bank with which she paid off the balance of the line of credit and then invested the balance – roughly 80,000 – into the margin account.
Between 2008 and 2012, the value of the client’s account decreased in value, according to IIROC, in large part due to deferred sales charge (DSC) redemption fees, the declining value of some securities and margin interest.
In 2012, the client began writing complaints to Dirani about the state of her account via his personal email. Dirani responded to the complaints in kind but did not inform his firm of the written correspondence. Instead, he told his company verbally of the problems with the account. Dirani’s assistant filled out a “verbal complaint form message” at the request of Edward Jones. The client later wrote a formal letter of complaint.
In a separate matter, IIROC investigators found that Dirani had borrowed $30,000 from another client in 2012. The loan was secured by a mortgage on Dirani’s home. At no time was Edward Jones made aware of Dirani’s personal dealings with the client. The loan was paid back in full, according to IIROC, and the client gave Dirani a full discharge.
In addition to the fine, Dirani agreed to rewrite the Conduct and Practices Handbook exam, to be strictly supervised for a 12-month period, to disgorge $3,100 and to pay an additional $2,500 in costs. Dirani currently works with the Mississauga-branch of IPC Securities Corp.