The Financial Services Authority (FSA) has fined Toronto Dominion Bank (London Branch) (Toronto Dominion) GBP7mn for repeated systems and controls failings around the pricing of sophisticated financial products that forced the bank to make a negative adjustment of CAD$96mn in July 2008.
The breaches relate to pricing issues that were uncovered on a proprietary trader’s books within Toronto Dominion’s credit products group. Amongst other failings the FSA found that Toronto Dominion failed to follow their established procedures in ensuring the trader’s books were independently verified, and did not have adequate controls in place which could have detected the pricing issues.
Margaret Cole, director of enforcement and financial crime at FSA, said: “This is one of our largest fines and it underlines the seriousness with which the FSA views repeat offences. When we uncover failings in a firm we expect them to put it right immediately and to take special care to ensure it does not happen again. Toronto Dominion clearly failed to apply proper controls in this area despite its previous sanction and repeat offenders need to know that they will face severe consequences.
“It is important that firms trading in sophisticated and often illiquid financial products have robust controls in place, particularly in times of increased market volatility. Where a firm doesn’t do this the FSA will take action.”
Toronto Dominion has agreed to settle at an early stage of the FSA’s investigation. Without the discount the fine would have been GBP10mn.
