Washington, D.C. – The Commodity Futures Trading Commission (CFTC) has levied a $4 million penalty against The Toronto Dominion Bank (TD Bank) for failing to adequately supervise its electronic communications surveillance system. The settlement, announced today, August 14, 2024, stems from a five-year period where TD Bank did not monitor communications from hundreds of its swap dealer personnel.
According to the CFTC order, TD Bank’s supervisory failures began in 2016 when a vendor change impacted its automated process for ingesting messages into its surveillance tool. While initially addressed with a temporary manual update process, TD Bank ceased even the manual updates by January 2018. This resulted in messages from newly created accounts—belonging to TD Bank personnel—going unmonitored.
The CFTC found that TD Bank failed to implement any oversight or internal monitoring to ensure the manual process was being followed, or to detect that it had stopped altogether. Even after attempting to reinstate the automated process in October 2019, TD Bank did not adequately test the system, failing to identify a subsequent technical change that continued to prevent proper message ingestion.
As a result, TD Bank continued to fail to surveil messages from new accounts created after January 2018 until March 2023. The CFTC emphasized that robust communications surveillance is a “critical component of an effective system of supervision,” and that swap dealers must vigilantly monitor these systems to prevent market abuse and misconduct.
In addition to the $4 million civil monetary penalty, TD Bank is required to cease and desist from further violations of CFTC supervision requirements and comply with the conditions outlined in the order. TD Bank admits the facts presented in the order and acknowledges the violations of the Commodity Exchange Act and related CFTC regulations.
“This order and the significant monetary penalty reflect that swap dealers must not only have robust systems to detect and prevent market abuse and other misconduct, they must also vigilantly oversee and monitor those systems to ensure they are working,” stated Director of Enforcement Ian McGinley.
Source: CFTC.gov
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