Two former mutual fund salespeople have been fined a total of $650,000 by the Mutual Fund Dealers Association of Canada (MFDA), and permanently banned from conducting securities-related business with any MFDA member.

Following a settlement hearing in June, the MFDA has announced penalties facing Faisal Amin Satti and Kamran Ghani.

Satti was registered in Ontario as a mutual fund salesperson and branch manager with Carte Wealth Management Inc. from November 2007 to October 2008. In June 2008, he submitted an employment application seeking to become registered with FundEX Investments Inc.; however, he was not hired by FundEX.

Ghani was registered in Ontario as a mutual fund salesperson and branch manager with Monarch Wealth Corp. from January 2009 to April 2009, and was previously registered as a mutual fund salesperson with FundEX Investments Inc. from October 2008 to December 2008.

The MFDA panel found that Satti intentionally submitted client account opening documents and loan applications for 22 clients that contained false and misleading information. This included exaggerated income levels, net worth and investment knowledge, as well as claims that clients were employed when in fact they were unemployed.

Satti had the clients sign the documents before they were completed, and thereafter filled them in with false information, according to the MFDA.

Satti also fabricated documents in respect of 15 clients that he submitted in support of new client account applications and loan applications, the regulator found.

Furthermore, the MFDA said he opened accounts in the names of two individuals, each of whom he had never met, and thereafter obtained investment loans in the names of those individuals and used the loan proceeds to purchase mutual funds for their accounts.

Satti also breached MFDA rules by having Ghani process clients’ account openings and investment loans through FundEX, rather than through Satti’s own firm, Carte Wealth Management, after Carte had declined to approve similar investment loan applications for previous clients.

By processing the loans for Satti, the MFDA said, Ghani failed to learn the essential facts relative to each client and each order accepted and failed to treat the client fairly, honestly and in good faith.

The regulator also found that in 2008, Satti facilitated stealth advising by Ghani, who was not registered as a mutual fund salesperson at the material time, by opening accounts for 12 clients under Satti’s representative code, processing investment loan applications for the clients and purchasing mutual funds for the accounts of the clients.

Lastly, the MFDA found that Satti submitted an application for employment to FundEX, a member firm, containing false or misleading information.

Satti has been ordered to pay a fine of $500,000 and costs of $7,500; and Ghani has been ordered to pay a fine of $150,000 and costs of $7,500. Both Satti and Ghani are permanently prohibited from conducting securities related business in any capacity while in the employ of or associated with any MFDA member.