CFTC Fines Scotiabank $127 Million for Regulatory Violations

The US Commodity Futures Trading Commission (CFTC) has announced on Wednesday the settlement of two separate enforcement actions against the Bank of Nova Scotia (BNS), operating as Scotiabank, for a total fine of $127.4 million.

The regulator charged the provisionally registered swap dealer for spoofing and violations of swap dealer compliances. It also found the company making false statements to cover up both allegations.

The press release detailed that the BNS attempted manipulation and spoofing in gold and silver futures contracts in thousands of occasions in more than eight years, and for these manipulative and deceptive conduct, it was fined with $77.4 million.

In 2018, BNS was first penalized with $800,000 for the allegations, but the settlement amount was upped later as the regulator found that the company made multiple false statements to the CFTC staff in the course of the investigation.

The total settlement fine for those charges include a $17 million penalty for making false and misleading statements to the regulatory staff and another $42 million for spoofing and attempted manipulation. Apart from that, the company is also asked to pay $6.62 million and $11.82 million for restitution and disgorgement respectively.

For the compliance rules violations, the CFTC settled with the swap dealer for $50 million. 

“BNS’s compliance and supervision violations highlight the need for all swap dealers to have the right tone at the top—plus appropriate programs and incentives in place—to instill a meaningful culture of compliance among their personnel,” Joshua B. Sterling, Division of Swap Dealer and Intermediary Oversight Director, said.

Focusing on data analytics

The US regulatory is also boasting its improvements with the capabilities of data analytics as CFTC Chairman Heath P. Tarbert pointed out that the agency’s “ability to go through the electronic order book and look across markets has enabled the CFTC to not only spot misconduct, but also to uncover false and misleading statements.”

Apart from these civil penalties, the BNS is also facing criminal charges Department of Justice and has agreed to pay $60.4 million in criminal fines, forfeiture, and restitution.