Royal Bank of Canada facing fraud accusations

3 April 2012

The Royal Bank of Canada (RBC) is facing accusations of fraud over derivatives trading after the Commodity Futures Trading Commission (CFTC) filed civil charges against the institute.

It has been claimed that RBC made trades with itself that were deemed uncompetitive and unlawful.

According to the CFTC - which was created by the US Congress in 1974 - the bank exerted control over both sides of the transactions, which have been dubbed 'wash sales'.

The regulator accused the lender of carrying out these actions in a manner that failed to be negotiated at "arm's length between the counter parties to the trades, as required by law".

It added: "The trading scheme was allegedly designed as part of RBC's strategy to realize lucrative Canadian tax benefits."

The accusations stated that the sale initiative included the conduction of a multi-hundred million-dollar scheme - but RBC has claimed it will contest the charges in the courtroom.

By Asim Shah

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