TD Bank to pay more than US$20M over ‘spoofing’ charges
The U.S. broker-dealer unit of Toronto Dominion Bank TD.TO has agreed to pay over $20 million under a deal with U.S. authorities to settle charges that it manipulated the U.S. Treasuries market.
The U.S. broker-dealer division of Toronto Dominion Bank (TD.TO) has agreed to pay more than $20 million in a settlement with U.S. authorities over charges of manipulating the U.S. Treasuries market.
TD Securities USA, a subsidiary of Canada's second-largest bank, admitted to engaging in "spoofing" the U.S. Treasuries market as part of an agreement with the U.S. Justice Department, which ends a lengthy investigation into the alleged manipulation, according to a court filing on Monday. TD Securities also settled related civil charges with the Securities and Exchange Commission (SEC), the SEC said in a separate statement.
Alongside the market manipulation charges, the bank faced allegations of failing to properly oversee the former head of its U.S. Treasuries trading desk, according to authorities.
Between April 2018 and May 2019, this employee used "spoofing" to secure better trades in the U.S. Treasury cash securities market. Spoofing involves placing orders with no intention of executing them, a tactic designed to create the illusion of demand, authorities explained.
U.S. regulators have aggressively pursued this practice, which distorts market perception.
As part of the agreement, TD must adhere to a three-year compliance program, and prosecutors will refrain from pursuing criminal charges if the company follows through on its commitments. The Department of Justice (DOJ) opted not to appoint an external monitor to oversee compliance, citing the bank's remediation efforts.
TD will pay a $12.5 million criminal fine to resolve investigations by the SEC and the Financial Industry Regulatory Authority. This is in addition to a $9.5 million criminal penalty linked to the agreement. The bank has also agreed to pay $4.7 million in victim compensation and $1.4 million in forfeiture.
This settlement follows a Wall Street Journal report last week suggesting that TD is close to pleading guilty to separate charges related to its U.S. retail bank's potential failure to prevent money laundering connected to Chinese crime organizations and illegal fentanyl sales.
