On November 16, the UK Financial Services Authority (FSA) fined Toronto Dominion Bank (London Branch) £490,000 (approximately $1,000,000) and banned one of its former employees from carrying out regulated activities. The Bank’s employee had been mis-pricing trading positions and entering fictitious trades between early 2005 and his resignation in March 2007. The Bank was held to have had systems and controls failings while the employee was found not to be a fit and proper person.
In March 2007, the employee disclosed to the Bank that he had been mis-pricing trading positions for almost two years in order to hide losses on his trading book and that he had entered fictitious trades just prior to his resignation. The mis-pricings and fictitious trades resulted in losses to the bank of £4.25 million ($8.77 million).
The FSA identified three main system and control failings at the Bank: (i) an absence of an independent price verification system; (ii) a lack of effective trading supervision; and (iii) a failure to implement effective trade break escalation procedures.
By agreeing to settle at an early stage of the FSA's investigation, the Bank qualified for a 30% reduction of the penalty under the FSA's executive settlement procedures.