Royal bank of Canada sued by the top US regulators

The top US regulator Commodity Futures Trading Commission (CFTC) sues Royal Bank of Canada on Monday alleging that the bank made the sham trades with itself. The complaint was filed before the US District Court in New York.

In the statement made by CFTC director of enforcement David Meister s. RBC willfully concealed and made false statements in what it called a wash sales scheme from June 2007 to May 2010 but also misled the exchange into believing the conduct to be a lawful one.

The wash trading is illegal according to US laws it is an illegal practice in which an investor buys and sells shares in a company through two different brokers.

Further CFTC alleged that the transactions made were not at arm’s length as prescribed by law. An arm’s length transaction is made at a price that would persist if the buyer and seller are not related to each other.

In its civil suit filed CFTC is claiming for unspecified fines and damages The claims of CFTC were denied by RBC stating the charges against it to be absurd In the recent years Royal Bank has been involved in many serious cases with the US regulators including the one around so called auction rate securities during the financial crisis which ultimately ended with a settlement agreement.