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TD Bank pays $52.5M in charges tied to scam

September 23, 2013

WASHINGTON (AP) — TD Bank is paying $52.5 million to settle U.S. civil charges after regulators accused the bank of failing to report suspicious activity in accounts linked to a $1.2 billion Ponzi, or pyramid, scheme.

The Securities and Exchange Commission and the Office of the Comptroller of the Currency announced settlements Monday with the Canadian bank.

The OCC said TD Bank failed to file suspicious activity reports to the government on the accounts of Scott Rothstein, a former Florida lawyer now serving a 50-year prison sentence for the pyramid scheme. The SEC said the bank deceived investors by saying that it had restricted Rothstein’s transfers of money in the accounts.

TD Bank is paying a $37.5 million penalty to the OCC and a $15 million penalty to the SEC.

The bank neither admitted nor denied wrongdoing in its settlement with the SEC. But it did agree to refrain from future violations of securities laws.

TD Bank said in a statement that it “is pleased to resolve these regulatory concerns and to put the Rothstein matter behind us.”

TD Bank, based in Toronto, is Canada’s second-largest bank and ranks among the top 10 banks in terms of assets in the U.S.

The SEC also charged Frank Spinosa, a former TD Bank regional vice president in Florida, with misleading the bank’s investors with documents and statements about Rothstein’s accounts.

TD Bank, through a regional vice president, produced false documents on bank letterhead and told outright lies to investors, failing in its gatekeeper role,” Andrew Ceresney, co-director of the SEC’s enforcement division, said in a statement.

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