TD Bank faces penalty for spoofing, with a 3-year compliance condition to avoid further charges
Toronto-Dominion Bank has agreed to pay over US$20m to settle investigations by US prosecutors and regulators, according to BNN Bloomberg.
The investigations involve allegations of a former trader’s “spoof” orders aimed at manipulating the US Treasuries market.
The US Department of Justice filed a report on Monday in a New Jersey federal court revealing that the Canadian bank entered a three-year deferred prosecution agreement.
This agreement aims to resolve criminal and civil probes into the alleged placement of “hundreds of fraudulent spoof orders” involving tens of billions of dollars in false supply and demand for US Treasury securities.
A spokesperson for TD did not immediately comment on the matter.
The settlement coincides with additional allegations against TD, which is accused of failing to detect money laundering and other financial crimes at several US branches. Prosecutors have filed at least four cases related to these allegations in New York, New Jersey, and Florida.
The Wall Street Journal recently reported that the bank is approaching a guilty plea in the anti-money-laundering investigation, citing sources familiar with the situation.
The spoofing case originates from accusations against Jeyakumar Nadarajah, a former trader, who was charged in November with 16 counts of fraud and securities manipulation related to alleged spoofing activities from 2018 to 2019. Nadarajah has pleaded not guilty and is scheduled for trial in February.
TD has agreed to pay over US$9m in criminal penalties, US$12.5m to end civil investigations led by the Securities and Exchange Commission and the Financial Industry Regulatory Authority, US$4.7m in compensation to victims, and US$1.4m in forfeiture.
As part of the agreement, the bank must improve its compliance protocols and avoid further violations of US law. If TD satisfies these conditions, the case will be dropped after three years.
The case is titled US v TD Securities (USA) LLC, 24-cr-623, in the US District Court for the District of New Jersey.
