Canada’s TD Bank to Pay Over $20 Million in US Spoofing Charges, Says Reuters

The U.S. broker-dealer branch of Toronto Dominion Bank has agreed to pay over $20 million to settle charges related to manipulation of the U.S. Treasuries market. TD Securities USA acknowledged engaging in spoofing, a deceptive practice involving the placing of orders that the trader did not intend to execute, which creates a misleading impression of demand.

This settlement is part of an agreement with the U.S. Justice Department, concluding a prolonged investigation into market manipulation. Alongside the Justice Department’s charges, the bank also addressed related civil allegations from the Securities and Exchange Commission.

Authorities indicated that the bank failed to supervise the then-head of its U.S. Treasuries trading desk adequately. The employee in question exploited the Treasury cash securities market between April 2018 and May 2019 by using spoofing tactics to secure more favorable trades.

U.S. regulators have been vigilant in targeting spoofing practices, which distort the market’s appearance. Under the terms of the settlement, the bank will not face prosecution as long as it complies with the terms of the three-year agreement and enhances its compliance measures. The Justice Department opted against appointing an external monitor to oversee compliance due to the bank’s intended remedial actions.

The total financial consequences include a $12.5 million criminal penalty to cover civil investigations from regulatory authorities, in addition to a criminal penalty of approximately $9.5 million associated with the settlement. Furthermore, TD has committed to providing $4.7 million in victim compensation and will forfeit $1.4 million.

This agreement comes as TD nears a plea deal regarding unrelated allegations that its U.S. retail banking operations may not have effectively managed money laundering concerns linked to Chinese crime groups and the illicit fentanyl trade.