Monday, April 2, 2012

RBC in Trouble Again with U.S. Regulators

This looks like it violates the letter of the law being applied, less so the spirit. Also, it seems like RBC doesn't seem to realize that the climate has, you know, perhaps shifted a bit on financial shenanigans between 2005 and present day. U.S. regulator accuses Royal Bank of ‘wash trade’ scheme
The Commodity Futures Trading Commission, which regulates derivatives trading in the U.S., said in court documents Monday that senior officials at RBC created “a wash trading scheme of massive proportion” that enabled it to earn Canadian tax credits.

The scheme is the largest that the CFTC has ever brought forward based on the value of the securities traded, which it said were in the “hundreds of millions of dollars.” But the bank issued a statement strongly denying the charges, saying it sought clearance from the CFTC as far back as 2005 to make the trades in question. A bank spokeswoman said the impact of the case was “not a financially material event.”
Just the latest trouble . . . Royal Bank of Canada's Reputation Takes Hit
In September, RBC Capital agreed to pay US$30.4 million to settle U.S. Securities and Exchange Commission civil charges of misleading five Wisconsin school districts that lost US$200 million invested in risky securities. The SEC said RBC didn't fully disclose the risks in 2006 when the school districts bought the investments. RBC neither admitted nor denied wrongdoing.

Last July, Massachusetts's top securities regulator sued RBC Capital Markets LLC and Michael Zukowski, a former RBC employee, for allegedly selling complex exchange-traded funds to clients that didn't understand them, causing 35 investors to lose almost US$800,000.

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