Scotiabank in US$127.4m US settlement on rigged trades

[NEW YORK] The Bank of Nova Scotia will pay US$127.4 million to settle charges of attempted market manipulation and making false statements to regulators, US authorities announced on Wednesday.

Between 2008 and 2016, four precious metals traders with the Canadian bank engaged in fraudulent trades in gold, silver, platinum and palladium, according to the US Justice Department.

The transactions were cancelled out before they were executed, but moved the market in a way that benefited the traders' positions, DOJ said in a press release.

"For the markets to work fairly, everyone needs to be able to make trading decisions with consistent, accurate information," said US Attorney Craig Carpenito.

"In the conduct described here, four Scotiabank traders attempted to rig precious metals futures prices in their favor by placing thousands of orders they knew they would cancel before the trades were executed. In this way, they sought to illegally manipulate the market to their own advantage and to the disadvantage of other traders."

Scotiabank reached a deferred prosecution agreement with the DOJ to settle the charges, agreeing to appoint an independent monitor for three years and cooperate with other ongoing investigations.

The Commodity Futures Trading Commission (CFTC), which oversaw a parallel civil case, rapped Scotiabank for making "multiple statements" to CFTC staff that "were later proven to be false," said a CFTC press release.

"Entities seeking to cooperate with the CFTC, like all others that interact with the Commission, must tell the truth," said CFTC enforcement director James McDonald. "When entities are not completely truthful, they will be penalised."

Scotiabank said it would comply with the agreements.

"At Scotiabank, we understand that in order to maintain the trust of our stakeholders, we must adhere to trading-related regulatory requirements and compliance policies," a bank statement said. "We are committed to adhering to these standards."

AFP