Panel issues $50,000 in penalties for undisclosed crypto activity outside dealer member channels
The Canadian Investment Regulatory Organization (CIRO) approved a settlement agreement with sanctions against Christopher Leslie Meehan on April 28, following a hearing under the Mutual Fund Dealer Rules.
According to the settlement, Meehan admitted to engaging in securities-related business outside his Dealer Member firm, Assante Financial Management Ltd.
Between October 2019 and July 2022, he entered into agreements with 30 individuals—including 8 clients of Assante—to trade crypto assets on their behalf.
The transactions were neither processed through nor approved by the Dealer Member.
CIRO documents state that Meehan received approximately $1.23m in cryptocurrency from the investors, which he deposited into his personal digital wallets.
He performed over 6,000 trades involving at least 75 different cryptocurrencies and earned about US$91,241 in crypto as compensation, including US$12,261 from four Assante clients.
The contracts with investors included a 20 percent commission on profits beyond a doubling of the initial investment.
CIRO indicated that Meehan initially requested approval in 2017 for an outside activity involving cryptocurrency mining.
Assante denied the request and advised that crypto activity could fall under securities laws.
Nonetheless, Meehan proceeded to trade cryptocurrencies and later incorporated a numbered company, operated by his spouse, to formalize the contracts with investors.
The company was not disclosed to Assante.
In March 2022, the British Columbia Securities Commission (BCSC) issued a cease trade order, asserting that the contracts constituted securities and required a prospectus or exemption.
Subsequently, Meehan returned all crypto funds and commissions to the investors voluntarily and without complaints from any of them.
As a result of the settlement, Meehan agreed to a four-month suspension from securities-related business with any CIRO Dealer Member registered as a mutual fund dealer.
He also agreed to pay a $45,000 fine and $5,000 in costs.
CIRO noted that Meehan continues to be registered with Assante in Abbotsford, British Columbia, where he had conducted all business activities during the period in question.
