High (finance) drama between Royal Bank and a U.S. regulator

A lawsuit filed yesterday against Royal Bank of Canada could make for major scandal: a U.S. regulator is accusing Canada’s largest bank of conducting hundreds of millions of dollars in sham futures trades. The Commodity Futures Trading Commission says RBC engaged in something called “wash trading,” coordinating with subsidiaries to buy and sell shares in simultaneous transactions that cancel each other out. (It’s a good way to dodge taxes, which is probably why it’s illegal in the United States.) The bank fired back in a statement, saying it “proactively contacted the exchange to seek its guidance” before the trades were made and was given the go ahead. Not quite, claims the CFTC, who says the bank lied about the true nature of the trades. One fact not up for debate: RBC shares were down nearly three per cent in New York today. Read the entire story [Canadian Business] »