Scotiabank Deferred Prosecution Agreement With The U.s. Department Of Justice

Scotiabank Deferred Prosecution Agreement With The U.s. Department Of Justice

Scotiabank relies on DOJ, CFTC on metals market business practices “Today, Scotiabank has recognized its role in a massive price manipulation system that seeks to wrongly price precious metals futures to serve the bank`s best interests,” said Bank Deputy Director William F. Sweeney Jr. of the FBI`s Foreign Office in New York. “The Bank`s actions were designed to encourage others to act in a way they would never have done without the way that was thought to be legitimate in the marketplace. Scotiabank`s agreement to provide more than $60 million in fines, severance pay and compensation for victims highlights the heavy penalties that can be imposed on those who want to use similar and illegal business tactics. Today, the CFTC announced two separate comparisons with Scotiabank in a parallel proceeding. One of Scotiabank`s decisions with the CFTC relates to the illegal trade in Flaum and the three other traders that Scotiabank did not fully disclose to the CFTC in the CFTC`s previous investigation, which resulted in the CFTC 2018 resolution discussed above. Under the new agreement between Scotiabank and the CFTC, Scotiabank agreed to pay approximately US$60.4 million, including a $42 million civil fine, as well as repayment and compensation, credited to the department. The second solution between Scotiabank and the CFTC relates to certain false statements made by Scotiabank to the CFTC (including the investigation that led to CFTC 2018), COMEX and the National Futures Association. Under this agreement, Scotiabank agreed to pay a civil fine of approximately US$17 million. Since the date of the underlying breach, Scotiabank has made significant investments to improve its compliance technology and commercial monitoring tools, nearly doubled its annual compliance budget, added more than 200 full-time equivalents to meet compliance items, and is in the process of terminating its precious metals business. However, the Department ultimately recognized the need for independent compliance control, as Scotiabank`s improvements to its compliance and ethics program have not yet been fully implemented and tested to demonstrate that they would effectively recognize and prevent such misconduct in the future. “The bank`s actions were designed to get others to act in a way they would never have done without the way that was thought to be legitimate in the market,” William Sweeney, head of the FBI`s New York office, said in a statement.

The bank is being sanctioned because its compliance department “did not acknowledge or prevent the illegal business practices of the four merchants,” the Justice Department said. DISCLAIMER: Due to the universality of this update, the information provided in this update may not be applicable in all situations and should not be done without specific legal advice based on specific situations.

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