TD Bank to pay $28M in market manipulation settlement

TD Bank Group has agreed to pay more than US$28 million after an investigation into manipulation of the U.S. Treasuries market by one of its traders.

The deferred prosecution agreement with the U.S. Department of Justice has TD agreeing that a former employee created a false appearance of supply or demand in the market by placing bids or offers, only to cancel them before completion. 

The agreement says hundreds of so-called spoof orders were placed, amounting to tens of billions of dollars of false supply and demand, in an effort to artificially increase the market prices of those products.

The resolution comes as TD is also soon expected to settle a sweeping investigation into shortcomings of its anti-money laundering program that the bank expects will cost it more than US$3 billion.

The agreement on the spoofing case has TD paying about US$12.6 million in civil penalties. It also faces US$9.4 million in criminal penalties, which court documents say is the statutory maximum, plus US$4.7 million in victim compensation and US$1.4 million in forfeiture.

TD says it takes regulatory and employee conduct violations very seriously, and that it reported the employee and fired him and has since enhanced its monitoring and compliance capabilities.

This report by The Canadian Press was first published Sept. 30, 2024