Toronto-Dominion (TD) Bank has reached a settlement of over $20 million with U.S. authorities to resolve a spoofing case involving the manipulation of U.S. Treasuries. The bank agreed to this settlement as part of a three-year deferred prosecution agreement with the U.S. Department of Justice (DOJ) and other regulatory bodies, including the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
The case stems from allegations against a former TD trader, Jeyakumar Nadarajah, who is accused of placing spoof orders between 2018 and 2019. Spoofing involves placing large, fake orders on one side of the market to create a false sense of supply or demand, then quickly canceling them to benefit from price movements. This strategy has been viewed as a form of market manipulation, distorting market transparency.
As part of the settlement, TD will pay $9 million in criminal penalties, $12.5 million to settle civil charges from the SEC and FINRA, and an additional $4.7 million in compensation to victims. The bank is also required to enhance its compliance systems to prevent similar misconduct in the future.
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