Two major Canadian Banks — Royal Bank of Canada RY and The Toronto-Dominion Bank TD — have been asked to pay about C$24.5 million ($18.5 million) to settle accusations laid by the Ontario Securities Commission (“OSC”).
OSC is a regulatory agency, which administers and enforces securities legislation in the Canadian province of Ontario.
The statement of allegations, filed separately against each bank, alleged that traders of the banks shared confidential customer information with other participants in chatrooms to gain potential advantage in foreign exchange (FX) transactions that took place between 2011 and 2013.
Also, per the regulator, compliance monitoring issues were present at both banks.
Of the total penalty amount, TD Bank is supposed to pay nearly C$10.1 million, consisting of fines to the commission and investigation cost. Royal Bank of Canada will be paying about C$14.4 million.
The FX trading business of banks has been under scrutiny of regulators on a global level for quite some time.
Last year in June, the New York regulator fined Deutsche Bank DB with $205 million for improper FX trading activities it conducted between 2008 and 2013. In May 2018, Goldman Sachs GS agreed to pay nearly $110 million to settle allegations that its traders used an electronic chat room to improperly share clients’ personal information.
OurTake
Banks across the globe are under increased scrutiny for their business practices. Many of the firms have paid billions of dollars as fines and compensation to settle lawsuits and probes.
Many investors have lost their hard-earned money as a result of such business malpractices. Such probes help reinstate investors’ confidence in law enforcement agencies.
Shares of Toronto-Dominion have gained 9% so far this year and shares of Royal Bank of Canada have jumped 9.1% against the industry’s decline of 4.6%.
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Currently, Toronto-Dominion carries a Zacks Rank #2 (Buy) while Royal Bank of Canada has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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