Scotiabank Reaches Agreements With The U.s. Department

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. 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. The fines and enforcement actions are the result of an investigation by The Scotia Metal Trade Sector. The U.S. authorities stated that between January 2008 and July 2016, four Traders from Scotiabank Bank issued thousands of mandates to buy and sell precious metal contracts to cancel these orders in order to manipulate prices.

The traders were based in New York, London and Hong Kong, according to the U.S. Department of Justice. “The unique situation facing businesses is an industry-wide challenge that requires an interprofessional solution,” added Gagnon. “We want to ensure that more small businesses are prepared to face the challenges of this global pandemic. Intact is committed to working with the Insurance Bureau of Canada in an interprofessional effort, “Today, Scotiabank recognized its role in a massive price manipulation system that seeks to wrongly price precious metals futures to serve the best interests of the bank,” said FBI Bank Deputy Director William F. Swee Jr. “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. A number of relevant considerations contributed to the Department`s criminal decision with Scotiabank, including the nature and seriousness of the offence, Scotiabank`s compliance program and Scotiabank`s failure to fully and voluntarily disclose the offence to the Division.