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Toronto-Dominion Bank will pay more than US$20 million as part of a deal with U.S. prosecutors and regulators to resolve investigations over a former trader’s alleged placement of “spoof” orders to manipulate the U.S. Treasuries market.
The United States Department of Justice on Monday said in a New Jersey federal court filing that the Canadian bank entered into a three-year deferred prosecution agreement to end criminal and civil probes into “hundreds of fraudulent spoof orders amounting to tens of billions of dollars of false supply and demand” for U.S. Treasury securities.
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A spokesperson for Toronto-Dominion didn’t immediately respond to a request for comment.
The deal comes as Toronto-Dominion is facing separate allegations that it failed to catch money laundering and other financial crimes at several U.S. branches, with prosecutors having filed at least four cases in New York, New Jersey and Florida. The Wall Street Journal reported last week that the bank is nearing a guilty plea in the anti-money-laundering probe within the next two weeks, citing people familiar with the matter.
The spoofing case stems from conduct allegedly committed by a former trader Jeyakumar Nadarajah, who was charged in November with 16 counts of fraud and securities manipulation based on alleged spoofing between 2018 and 2019.
Nadarajah has pleaded not guilty and is scheduled to go to trial in February.
Toronto-Dominion on Monday agreed to pay a criminal penalty of more than US$9 million and US$12.5 million to end civil investigations by the Securities and Exchange Commission and the Financial Industry Regulatory Authority. The bank will also pay US$4.7 million in compensation to victims and forfeit US$1.4 million.
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Under the deal, the bank must strengthen its compliance regime and avoid further violations of U.S. law. If Toronto-Dominion meets those terms, the case will be dropped after three years.
The case is U.S. v TD Securities (USA) LLC, 24-cr-623, US District Court, District of New Jersey.
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