Fund salesman banned for sales not approved by dealer

A disciplinary hearing regarding his conduct was held Regina on July 24. At the hearing, an MFDA panel concluded he engaged the following misconduct:

• he conducted securities related business that was not carried on for the account and through the facilities of the fund dealer; and
• he displayed conduct unbecoming of an approved person by failing to fully respond and accurately respond to inquiries from Investia and he omitted relevant information in his responses to the dealer.

In its reasons and decisions published Monday, the panel concluded that while with Investia, Piett recommended the sale of bonds and shares totaling more than $3 million. The securities were not approved for sale by the fund dealer.

The sales were conducted by Piett through an arrangement with a firm called CDS Consulting and involved at least 10 clients of Investia. He did not disclose or get approval from Investia for his arrangement with CDS.

In order to free up funds to purchase the securities, the clients sold substantially all of the mutual funds held in their Investia accounts, which incurred deferred sales charges (DSC) of about $107,000. The client accounts were transferred to Olympia Trust Self-Directed Plans.

As a result of the sales, Piett earned about $157,000 in commissions from CDS. He later reimbursed two clients of the DSC fees incurred.

When questioned by Investia about the activity in the 10 client accounts, Piett said the clients were seeking other financial solutions, but failed to disclose his relationship with Olympia and CDS.

The panel announced that the following penalties and costs:

• a permanent prohibition of Piett to conduct securities related business in any capacity while in the employ of or associated with any MFDA member;
• a global fine of $175,000; and
• costs of $7,500.