Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

U.S. regulator fines RBC Capital Markets $5 million for unlawful trades

Published 10/03/2019, 11:23 AM
Updated 10/03/2019, 11:23 AM
© Reuters. FILE PHOTO: The Royal Bank of Canada logo is seen outside of a branch in Ottawa

By Nichola Saminather

TORONTO (Reuters) - RBC Capital Markets has been fined $5 million (C$6.7 million) by the U.S. Commodities and Futures Trading Commission for failures that resulted in unlawful trades and other violations between at least late 2011 and May 2017.

Between December 2011 and October 2015, RBC Capital Markets (RBCCM), a unit of Canada's biggest lender, Royal Bank of Canada (TO:RY), engaged in at least 385 non-competitive, fictitious or unlawful trades, the CFTC said in a statement on its website https://www.cftc.gov/PressRoom/PressReleases/8034-19 on Tuesday.

The CFTC said 217 of the trades took place after the entry of a consent order in December 2014 of a CFTC enforcement action against RBC for fictitious transactions.

"The order finds that RBCCM had actual notice of the December 2014 injunction against RBC prohibiting wash trading, yet the Wash EFPs (exchange for physical) continued at RBCCM," according to the statement.

In a wash trade, an investor simultaneously buys and sells the same financial instruments, creating misleading activity. An exchange for physical is an agreement to trade a futures contract for the underlying asset.

"This matter has been resolved and we continue to remain committed to complying with regulatory requirements," a spokeswoman for RBC said by email on Thursday. "We have enacted a number of measures to prevent this issue from recurring, including improved surveillance and additional training."

Those involved believed such moves were allowed, and a compliance officer did not respond to inquiries on whether the trades were appropriate until at least May 2015, according to CFTC.

And while RBCCM reported the trades to the CFTC shortly before disclosing them in its 2015 compliance report, it failed to respond fully and on time to document requests and subpoenas from CFTC staff, the regulator said. RBCCM also tried to dissuade the regulator's staff from examining RBC's role in the trades.

© Reuters. FILE PHOTO: The Royal Bank of Canada logo is seen outside of a branch in Ottawa

The CFTC also found RBCCM, which was responsible for handling RBC's futures transactions in the United States, failed to "adequately implement a reasonable supervisory system overseeing its futures transactions."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.