TD Securities’ involvement in a spoofing scheme is a wake-up call for firms to take compliance seriously. The lack of effective supervision allowed illegal trading activities to continue for over a year. With penalties from the SEC, DOJ, and FINRA totaling over $15 million, this case reinforces the financial and reputational risks of non-compliance. Firms must prioritize detecting and preventing manipulative trading practices before they escalate into major regulatory breaches.
Key Points:
- TD Securities was charged by the SEC for manipulating the U.S. Treasury cash securities market via a spoofing scheme.
- The firm also failed to supervise its U.S. Treasuries desk head, who executed hundreds of illegal trades.
- TD Securities will pay $6.5 million in penalties to the SEC and over $15 million in total sanctions, including settlements with the DOJ and FINRA.
Short Narrative:
TD Securities (USA) LLC, a registered broker-dealer, has been charged by the SEC for engaging in an illegal trading strategy known as spoofing. Over a 13-month period from April 2018 to May 2019, the head of the firm’s U.S. Treasuries desk manipulated the market by placing non-bona fide orders to distort prices and achieve favorable trades for the firm. Once the legitimate trades were filled, the false orders were canceled, generating profits for TD Securities. The SEC also found that the firm failed to adequately supervise the trader, even after warnings were issued regarding his suspicious trading activity.
Actionable Insight:
This case demonstrated that the SEC is not only going against crypto startups but also against big names. The agency made clear that robust internal controls and active supervision are essential in preventing market manipulation. Firms must ensure that employees are monitored closely, particularly after receiving red flags, to avoid costly regulatory actions.
Call for Information:
Do you have knowledge of illicit trading practices or spoofing schemes within the securities market? FinTelegram encourages whistleblowers to step forward. Reporting these activities is key to maintaining market integrity.
