This was deemed to be ‘stealth advising’ or allowing an unregistered individual to open investment accounts and make investment recommendations and was called “very serious conduct” by the panel. Sadiq was able to submit KYC forms and process trades, all using Lehri’s codes.
Lehri and Sadiq had worked together at two previous firms and Sadiq was permanently banned for stealth advising and misappropriation of funds in 2022.
“This case is about the core values of the securities industry: the privilege and the corresponding responsibility of being an Approved Person,” the panel noted. “It is about the trust clients place in the hands of an Approved Person and the regulatory system.”
Lehri was found to have failed to use due diligence to learn the essential facts relative to the clients and to ensure that the leveraging strategy and investments that were recommended and implemented for clients were suitable.
Further, the investigation found that Lehri “breached a client’s and another individual’s trust by misappropriating US$31,000 from the client and the individual and failed to cooperate with MFDA [predecessor to CIRO] Staff.” Overall, the decision was that Lehri was “ungovernable.”
