Banking Giant Paying $4,700,000 To Victims of Billion-Dollar Market Manipulation Scheme: US Department of Justice

A group of US regulators including the Department of Justice (DOJ) is hitting a banking giant with a multi-million dollar fine to settle criminal charges that the firm defrauded the Treasury market.

The DOJ says TD Bank’s registered broker-dealer, TD Securities, has accepted the terms of a deferred prosecution agreement (DPA) that charges the firm with one count of wire fraud for rigging the market.

Prosecutors allege Jeyakumar Nadarajah, who worked at the firm’s US Treasuries trading desk, placed tens of billions of dollars in fraudulent orders in a spoofing manipulation scheme between April 2018 and May 2019.

Spoofing is an illegal trading practice that involves the placement of orders that are intended to be canceled to create a false perception of demand or supply.

The DOJ says Nadarajah, who is facing individual criminal charges, used the technique to drive the prices of bonds in the secondary market to desired levels before executing actual trades.

Under the DPA, TD Securities has agreed to pay $15.5 million in criminal monetary penalty and forfeiture, with $4.7 million going to market participants who were harmed by the bank’s practices.

“TD Securities placed hundreds of orders to buy and sell US Treasuries that it never intended to execute, in order to deceive market participants and manipulate prices by creating the false appearance of supply and demand. Such efforts to profit through unlawful trading undermine public confidence in US Treasuries markets and defraud other market participants.” 

The Securities and Exchange Commission (SEC) is also tapping TD Securities for rigging the Treasury market for violating securities laws while failing to reasonably supervise Nadarajah.

The SEC says TD Securities will pay $400,000 in disgorgement and $6.5 million in civil penalty.

Meanwhile, TD Securities also agrees to pay a $6 million fine to the Financial Industry Regulatory Authority (FINRA) to settle similar charges.

As of June 30th, 2024, TD Bank is the 10th-largest commercial bank in the US with over $370.332 billion in consolidated assets, according to the Federal Reserve.

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