A Canadian Investment Regulatory Organization (CIRO) hearing panel has accepted a settlement agreement with Sam Hsiao-Tse Yang after Yang admitted to outside business activity that was not approved of by his firm and outside business activity which didn’t meet the firm’s conditions.

Specifically, Yang engaged in cryptocurrency trading and carried on an ongoing business relationship with a cryptocurrency trading firm he helped a friend launch. He is also being sanctioned for engaging in personal financial dealings with clients by selling his personal cryptocurrency assets to three clients and borrowing money from another to finance his cryptocurrency trading. The client providing the loan was a related person under the Income Tax Act, according to CIRO’s settlement agreement.

The regulator’s settlement agreement notes that the activities involved significant amounts of money.

In the industry since 2014, Yang engaged in crypto trading related activities throughout his tenure with his most recent firm, which ran from April 2018 until he was terminated in November 2021. The firm directed Yang to formally disclose his activity in July 2019. At the time he noted his online cryptocurrency accounts but did not disclose his involvement in the firm founded by his friend. His trading activity was approved under the condition that he forward monthly statements of his trading, which the firm later said Yang did not do, and under the condition that he not solicit clients.

Anti-money-laundering unit became concerned 

It was discovered that he was selling his personal crypto holdings to friends, three of whom were clients, when the firm’s anti-money-laundering unit became concerned about large transactions moving through Yang’s personal banking account. (A total of $1.045-million was deposited into his account by third parties, most of which was paid out to a crypto trading firm.) 

Between November 2020 and June 2021 he also obtained seven loans worth approximately $400,000, which were repaid with interest to the related person.

In addition to a fine of $45,000 and nine-month suspension, Yang must also rewrite the Conduct and Practices Handbook exam and submit to six months of close supervision upon re-registration with any CIRO member firm. Yang also agreed to pay $5,000 in costs.