TD Bank Pays $20 Million to Resolve Spoofing Case
TD Bank is reportedly settling a case involving illegal “spoof” orders by a former trader.
The Canadian bank will pay more than $20 million as part of a deal with American prosecutors, Bloomberg News reported Monday (Sept. 30), citing court filings.
That deal involves TD entering into a three-year deferred prosecution agreement to end criminal and civil investigations into “hundreds of fraudulent spoof orders amounting to tens of billions of dollars of false supply and demand” for U.S. Treasurys.
According to Bloomberg, the spoofing case is connected to alleged actions by former trader Jeyakumar Nadarajah, who was charged with fraud and securities manipulation last year. He has pleaded not guilty and is due to go to trial in February.
Under the agreement, TD will pay a criminal penalty of more than $9 million and $12.5 million to end civil investigations by the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The bank is also paying $4.7 million in compensation to victims and forfeiting another $1.4 million, and must also bolster its compliance program and avoid future violations of U.S. law. Assuming TD meets those requirements, the case will be dropped in three years.
The settlement comes as TD deals with other U.S. regulatory and legal headaches. For example, last week saw a report by The Wall Street Journal that the bank was close to a possible plea in a case related to its anti-money laundering measures.
Sources told the newspaper a plea could come in the next two weeks, with authorities alleging that TD acted recklessly in failing to establish proper anti-money laundering measures.
The Justice Department began looking into TD’s money laundering controls after learning that a criminal Chinese operation had used the bank’s branches in New York and New Jersey to wash hundreds of millions of dollars in narcotics sales, bribing some employees in the process.
The investigation has set aside billions in provisions related to the investigation, which has also cost TD its chief executive.
CEO Bharat Masrani announced his retirement earlier this month, noting at the time that he took full responsibility for the bank’s money laundering challenges.
“In the coming months, I will continue to advance and direct the critical remediation program required to meet our obligations and responsibilities and strengthen our risk and control foundation,” he said.
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