U.S. authorities are accusing Canadian Royal Bank of fraudulent activities.
April 3, 2012- Regulators in the U.S. announced they are suing the Royal Bank in Canada. They are accusing the large Canadian bank of laundering millions of dollars through a number of fraudulent trades.
The CFTC, the Commodity Futures Trading Commission in the U.S. said on Monday it filed a complaint in a New York Federal district court. The complaint accuses RBC of a wash sale scheme valued at hundreds of millions of dollars. Both the RBC and its financial services business have operations in New York.
The scheme set up by the bank was allegedly put in place to gain lucrative tax benefits in Canada, by holding certain securities from public companies in its offshore and Canadian trading accounts.
Between June 2007 and May 2010, the bank allegedly traded hundreds of millions of dollars worth of stock index futures non-competitively. The CFTC alleges that the bank’s SSF and NBI trading activity constituted illegal non-competitive trades, fictitious sales and wash sales.
RBC, in a statement, said it would defend is reputation vigorously and said the allegations were absurd. It said guidance was sought from regulators before any transactions were made that are now being questioned.
The bank’s statement concluded by saying, “The commission has known about these transactions for seven years. The trades were done in accordance with regulations.”