Washington, D.C. – The Bank of Nova Scotia (BNS) has agreed to pay $77.4 million in penalties and relief to settle charges of manipulative and deceptive conduct in gold and silver futures trading, the Commodity Futures Trading Commission (CFTC) announced on August 19, 2020. The settlement includes a record $17 million penalty for making false statements to CFTC staff and $60.4 million for spoofing and attempted manipulation.
The CFTC found that BNS engaged in manipulative and deceptive practices spanning over eight years, involving thousands of instances of attempted manipulation and spoofing on the Commodity Exchange, Inc. (COMEX). This action follows a 2018 CFTC sanction against BNS for similar spoofing activities, which resulted in an $800,000 penalty due to the bank’s self-reporting and cooperation.
However, the CFTC determined that BNS provided false and misleading statements during the initial investigation regarding the order entry operator identifiers (Tag50s) used by its traders. The current orders address these false statements and the full extent of the bank’s misconduct.
In a parallel action, the Department of Justice’s Fraud Section entered a Deferred Prosecution Agreement with BNS, deferring criminal prosecution on charges of attempted manipulation and wire fraud. As part of the agreement, BNS will pay $60.4 million – encompassing criminal fines, forfeiture, and restitution – and maintain an independent compliance monitor.
The CFTC’s False Statements Order requires BNS to pay $17 million for providing false or misleading information to investigators concerning its precious metals accounts, traders, and the Tag50s they utilized. The bank allegedly possessed accurate information in its records, which was also reported to COMEX, but failed to disclose it fully.
The Spoofing Order mandates a total of $60.4 million from BNS, comprised of $6,622,190 in restitution, $11,828,912 in disgorgement, and a civil penalty. Furthermore, BNS is required to retain an independent compliance monitor to ensure future adherence to regulations.
Source: CFTC.gov
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