A former London investment adviser could face professional discipline over his alleged involvement in a pyramid scheme.

Sean Nother, who had worked for CIBC World Markets Inc. since 2001, was dismissed in January for his alleged involvement in the so-called gifting club between May and August 2018, according to documents filed with the Investment Industry Regulatory Organization of Canada.

An unnamed organizer introduced Nother to the gifting club in May 2018. The club had multiple groups, known as clouds, each consisting of various levels. The top level, the birthday position, was occupied by one person, while the levels beneath had two, three and four members, says a notice of hearing posted on the regulator’s website.

The four bottom members were required to give $5,000 each to the birthday position holder, and had to bring in two new members to move up the ladder, the documents allege.

The organizer offered to sponsor Nother to join the club, the documents allege, noting the Ontario Securities Commission previously had banned the organizer from selling investments for past misconduct involving clients.

Nother brought his lawyer to a meeting with the organizer in May 2018, and the lawyer said the club was legal from a tax perspective, the documents allege.

According to documents filed by the regulator, Nother was barred by his employer from outside business activity and asked his wife to join the club. She was elevated to the next level in summer 2018, despite not bringing in any new members, the documents allege.

Nother discussed the gifting club with seven clients, five of whom joined, and other non-clients, four of whom signed up, the documents allege.

According to documents filed by the regulator, Nother didn’t disclose his involvement in the gifting club to his employer and said new members were required to meet with the organizer and pay $5,000. But one of Nother’s clients and another non-client reported paying him the fee directly, with the understanding that he’d then pay the organizer, the documents allege.

According to the regulator, Nother says his wife quit the club in summer 2018 after the couple became uncomfortable with it. He also reported trying unsuccessfully to contact the organizer and get the money back for his clients and two non-clients, the documents allege.

According to documents filed by the regulator, Nother says he tried to reach the organizer again in November 2018, after reading a news report of London police charging two people for their alleged involvement in a gifting club. Nother had met one of the accused, Bernard Baratta, at a social event with the organizer in May 2018, the documents allege.

Baratta, 73, and Shakila Bayat, 52, were charged jointly with conducting or managing a pyramid scheme. They were sentenced Nov. 5 to 12 months’ probation under a conditional discharge, an outcome in which an admission of guilt is made but no conviction is registered.

Nother, who was not charged, maintained his club was separate from the one involving Baratta, the documents allege.

The organizer put an end to the club in December 2018, leaving the members brought in by Nother out $45,000, the documents allege, noting Nother reimbursed one person.

Nother is to appear before a hearing panel Jan 14 in Toronto. If the panel concludes the regulator’s allegations are true, it may impose penalties ranging from being reprimanded or fined to losing his licence or being barred from working in the finance industry.

dcarruthers@postmedia.com