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Home / Insurance / RBC unit fines, resolves SEC charges for bond abuse

RBC unit fines, resolves SEC charges for bond abuse



(Reuters) – A Royal Bank of Canada unit was censored and will pay more than $ 863,000 to settle US supervisory fees. announced on Friday, the US Securities and Exchange Commission said that RBC Capital Markets LLC incorrectly allocated bonds to investors called "flippers" who quickly sell their bonds to other brokers at a profit.

Municipal bonds are usually issued by states, cities, and school districts to finance activities and projects, and contain tax benefits over corporate and U.S. government bonds.

The SEC said that the RBC knew or should have known that the prioritization of flippers violated its rules on bond offers as it subscribed.

It also said that RBC also incorrectly bought new bonds that it had not subscribed from flippers, rather than waiting in line to buy those bonds from the guarantors.

The alleged violations occurred from 201

4 to 2017.

RBC's payout includes a $ 150,000 fine plus disgorgement and interest.

Two RBC officials, the head of municipal syndication Jaime Durando and former head of municipal sales Kenneth Friedrich, were also censored by the SEC and fined $ 30,000 and $ 25,000, respectively.

None of the defendants admitted or denied any wrongdoing.

RBC had no immediate comment. Lawyers for the other defendants did not immediately respond to a request for comment.

The SEC has reached several settlements on reverse abuses in municipal bonds, including a $ 10 million agreement with Switzerland's UBS AG in July 2020.

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