Toronto Dominion Bank Faces $20M Penalty Over U.S. Market Manipulation

The Toronto-Dominion Bank’s TD U.S. broker-dealer unit, TD Securities USA, has agreed to pay more than $20 million in a settlement with U.S. authorities over allegations of manipulations of the U.S. Treasuries market.Allegations Against TD BankTD Securities USA admitted to engaging in the spoofing in the U.S. Treasury cash securities market as a part of the deal with the U.S. Justice Department. This puts to an end a long-running probe into manipulation, per the court filing. TD Securities further settled related civil charges from the Securities and Exchange Commission (SEC).The bank was charged with a failure to supervise the head of its U.S. Treasuries desk. Between April 2018 and May 2019, the employee entered orders that he didn’t intend to execute, creating an appearance of a false demand, known as spoofing, to trade at better prices.Per the agreement signed by TD, the prosecution will be suspended as long as the bank remains compliant in accordance with the three-year deal and enhances its compliance measures. Also, the Department of Justice considered TD’s remedial steps to be adequate, thus, denying the need to appoint an external monitor to oversight compliance.Fines to be Paid by TDTD will pay a $12.5 million criminal penalty to settle civil investigations by the SEC and the Financial Industry Regulatory Authority.Additionally, roughly $9.5 million criminal fine has been levied on the bank as per the agreement. Further, the bank has committed to pay $4.7 million to compensate victims and $1.4 million in forfeiture.Toronto Dominion Bank’s Other Litigation/ProbesThis settlement comes as the bank is reportedly close to reaching a plea deal on separate government charges, alleging that TD’s U.S. retail bank possibly failed to curb money laundering, per a Wall Street Journal report last week.Also, last month, TD agreed to pay a $28 million penalty in response to the Consumer Financial Protection Bureau (CFPB) order concerning credit reporting issues. The bank was accused of mishandling customers’ credit information and failing to make necessary amendments to its practices.In August, the bank announced an additional provision of $2.6 billion in its fiscal third-quarter results to meet the estimated cost of $3 billion for compliance failures regarding anti-money laundering (AML) practices.Last year, after Toronto-Dominion Bank’s landmark $13.4 billion deal to acquire First Horizon collapsed, the Canadian lender started receiving inquiries from the U.S. Department of Justice, financial regulators and the Treasury Department regarding its AML practices.In 2020, the bank faced a $122 million fine by the CFPB post an investigation revealing that it deceptively marketed a debit card advance service as free while levying fees on overdraft transactions.TD’s Zacks Rank & Price PerformanceYear to date, shares of Toronto Dominion Bank have lost 2.1% against the industry’s growth of 11.7%.Image Source: Zacks Investment ResearchCurrently, TD carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Legal Issues Faced by Other Finance FirmsLast month, Wells Fargo & Company WFC faced a new class-action lawsuit, where it has been accused of underpaying interest to clients participating in its cash sweep program.Sweep programs were created to allow banks and brokers to put their customers' uninvested cash to work. They move excess client cash balances overnight into a money market fund or another higher-yielding product offered by a bank or affiliate bank.According to the lawsuit, Wells Fargo paid customers in cash sweep accounts just 0.15% interest for most of 2023, while short-term U.S. Treasury Bills yielded around 5.25%, a 36-fold difference. The plaintiffs further alleged that some account holders were paid as little as 0.02% interest on their cash sweep account balances.Similarly, a proposed order was filed by the U.S. CFPB against Navient Corporation NAVI, according to which the student loan servicer will be permanently banned from servicing federal direct loans and directly servicing or acquiring most loans under the Federal Family Education Loan Program.NAVI will have to pay $120 million for years of student lending failures, which includes $100 million in restitution and a $20 million civil penalty.Infrastructure Stock Boom to Sweep AmericaA massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.The only question is “Will you get into the right stocks early when their growth potential is greatest?”Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How To Profit From Trillions On Spending For Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wells Fargo & Company (WFC): Free Stock Analysis Report Toronto Dominion Bank (The) (TD): Free Stock Analysis Report Navient Corporation (NAVI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks