BC Business
RBC wash trades | BCBusinessA U.S. regulator has filed a lawsuit alleging the Royal Bank of Canada engaged in illegal wash trading from 2007 to 2010.
A top U.S. regulator levelled a heavy accusation that the Royal Bank of Canada has engaged in trading illegal futures worth millions. Canada’s largest bank is being sued for making illegal wash trades to take advantage of tax benefits.
Canada’s largest bank is being sued for making illegal wash trades to take advantage of tax benefits. The Commodity Futures Trading Commission alleged Tuesday that a small set of personnel acting of behalf of the Royal Bank of Canada ran an international futures trading operation and then covered up the nature of the trades. The operation is estimated to have generated hundreds of millions of dollars. These fictitious sales, known as wash sales, occur when an investor sells and/or buys back securities to artificially inflate a stock price or to make the stock seem more in demand. In RBC’s case, employees allegedly bought and sold Canadian and U.S. securities amongst themselves at set prices (“riskless” transactions) to reap tax benefits between 2007 and 2010. This is the largest case to date brought against an alleged wash sale. RBC immediately denied the accusations, countering that all the trades were properly documented and the bank was following the CFTC’s guidelines.