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CFTC fines RBC Capital Markets $5M for supervisory failures

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CFTC fines RBC Capital Markets $5M for supervisory failures

The Commodity Futures Trading Commission fined RBC Capital Markets LLC $5 million for supervisory failures that resulted in unlawful trades that occurred from at least late 2011 through May 2017.

The regulator said the investment bank engaged in at least 385 fictitious, noncompetitive exchange for physical wash transactions between December 2011 and October 2015. RBC Capital Markets did this, according to the CFTC, to move positions internally between accounts, which was a less-costly option to manage risk. However, the regulator said the company's compliance officers did not confirm whether the trades were appropriate, nor did they provide any formal training until at least May 2015.

The regulatory agency noted that 217 wash transactions occurred after it issued a consent order on RBC Capital Markets' parent, Royal Bank of Canada, over wash sales and other fictitious transactions.

The CFTC also flagged other supervisory failures, such as having no system to check whether employees reviewed the compliance manual and failure to monitor potential future wash trades.

In addition to the fine, the regulator's order requires RBC Capital Markets to cooperate with government agencies for three years in all inquiries related to the matter.