Bank of Nova Scotia

The Bank of Nova Scotia was fined $127.4 million for two separate orders involving spoofing, making false statements as well as for swap dealer compliance. The spoofing and attempted manipulation order, totaling $60.4 million (the largest civil monetary penalty ever in a spoofing case), arose from manipulative and deceptive conduct that spanned more than eight years, involving thousands of occasions of attempted manipulation and spoofing in gold and silver futures contracts. BNS was originally penalized $800,000 in 2018 for spoofing in the gold and silver futures markets, but multiple statements the company made to CFTC staff during the course of that investigation—on which the CFTC predicated its findings and sanctions—were later proven to be false, concealing the true scope and nature of the original wrongdoing, incurring a record-setting $17 million penalty for making false and misleading statements to CFTC.

The matter concerned the company’s traders placing thousands of orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution. By placing these orders, the traders intended to artificially move the prices of precious metals futures contracts in a direction that was favorable to them, and to inject false and misleading information into the precious metals futures markets in order to deceive other market participants into believing something untrue, namely that the market reflected legitimate supply and demand.

This false and misleading information was intended to, and at times did, trick other market participants into reacting to the apparent change and imbalance in supply and demand by buying and selling futures contracts at quantities, prices, and times that they otherwise likely would not have traded.

Although CFTC once walked away from an investigation of price manipulation into JPMorgan, it imposed its biggest fine ever for the conduct, by reviving the investigation through massive data mining uncover market manipulation.