Washington D.C. – The Commodity Futures Trading Commission (CFTC) has levied a record $127.4 million penalty against The Bank of Nova Scotia (BNS) for spoofing, false statements, and compliance violations. The settlement resolves two separate enforcement actions stemming from manipulative trading practices and misleading information provided to investigators.
According to the CFTC, BNS engaged in manipulative conduct over an eight-year period, involving thousands of instances of attempted manipulation and spoofing in gold and silver futures contracts. The bank had previously been penalized $800,000 in 2018 for similar spoofing activity. However, subsequent statements made by BNS to CFTC staff during that investigation were found to be false, prompting the current action.
The settlement includes a record-setting $17 million penalty for making false and misleading statements to the CFTC during the initial investigation. An additional record penalty of $42 million was assessed for the spoofing and attempted manipulation itself. BNS is also required to pay $6,622,190 in restitution and $11,828,912 in disgorgement. As part of the agreement, the bank must retain an independent monitor to ensure future compliance.
“These record-setting penalties reflect not only our commitment to being tough on those who break the rules, but also the tremendous strides the agency has made in data analytics,” stated CFTC Chairman Heath P. Tarbert. The CFTC’s enhanced data analysis capabilities allowed investigators to identify the misconduct and uncover the false statements, marking a “new era of enforcement” according to the agency.
Division of Enforcement Director James McDonald emphasized the importance of truthful cooperation with the CFTC, noting the agency’s improved ability to verify information received. Division of Swap Dealer and Intermediary Oversight Director Joshua B. Sterling highlighted the need for a strong “tone at the top” and robust compliance programs within swap dealer firms.
The CFTC acknowledged the assistance of the Department of Justice Fraud Section’s Commodities Fraud Group, the U.S. Attorney’s Office for the District of New Jersey, the U.S. Postal Inspection Service, and the Federal Bureau of Investigation in the investigation.
Source: CFTC.gov
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