Toronto Dominion Bank to Pay Over $20 Million for Fraud Trading Offense

(Reuters) – Toronto Dominion Bank (NYSE:TD) is set to pay over $20 million as part of a deal with U.S. authorities to resolve an investigation into a former employee’s fraud trading tactics to manipulate the U.S. Treasuries market.

Canada’s second-largest bank entered into a three-year deferred prosecution agreement, as stated by the U.S. Department of Justice in a filing with the New Jersey federal court on Monday.

The agreement will conclude the criminal and civil probe, which involved “placing hundreds of fraudulent spoof orders amounting to tens of billions of dollars of false supply and demand in the secondary market for U.S. Treasuries” by former trader Jeyakumar Nadarajah.

This development comes as the Canadian lender is nearing a possible guilty plea to criminal charges regarding its U.S. retail bank’s failure to combat money laundering linked to Chinese crime groups and illicit fentanyl sales, according to a Wall Street Journal report last week.

The bank will pay a $12.5 million criminal penalty to resolve civil investigations by the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority.

This is in addition to an approximately $9.5 million criminal penalty related to the agreement. Additionally, the bank has agreed to pay $4.7 million in victim compensation and $1.4 million in forfeiture.