Intergenerational ILLEGAL PRICACY
FEDERAL COURT ESTATE CORRUPTION
Rob Wright has 35 years of economic, policy and management experience in the Public Service of Canada, over twenty years of which was at the Deputy Minister level, most recently as Deputy Minister of Finance.
Mr. Wright began his federal government career as an economist with the Department of External Affairs. Over the next 12 years he held various positions at the National Energy Board, the Department of Energy, Mines and Resources, and the Department of Finance. In 1987, he was appointed Assistant Secretary to the Cabinet (Priorities and Planning) at the Privy Council Office.
Between 1989 and 2009, Mr. Wright held a number of positions at the Deputy Minister level, including: Deputy Secretary to the Cabinet (Plans); Deputy Minister of Agriculture and Agri-Food Canada; High Commissioner for Canada to New Zealand; Deputy Minister of Revenue Canada and the first Commissioner of the Canada Customs and Revenue Agency; Associate Secretary to the Cabinet, Deputy Minister to the Deputy Prime Minister and National Security Advisor to the Prime Minister of Canada; President and Chief Executive Officer of Export Development Canada; and Deputy Minister of Finance. Mr. Wright retired from his position as Deputy Minister of Finance on July 8, 2009 - the 35th anniversary of his employment in the Public Service of Canada.
Mr. Wright was presented with the Outstanding Achievement Award of the Public Service of Canada on June 30, 2005 by the Prime Minister of Canada.
In addition to leadership roles on public service committees and Boards, Mr. Wright has served actively with two Crown Boards managed by members from outside government. as Director, Export Development Canada Board of Directors, in his capacity as President and CEO (2005-2006); and as Director, Board of Management Canada Customs and Revenue Agency, as Commissioner of the Agency (1999-2003).
Mr. Wright was born in 1951 in Northwestern Ontario. He has a BA in economics from the University of Western Ontario (1973) and an MA in economics from the University of Manitoba (1975).
Between 1989 and 2009, Mr. Wright held a number of positions at the Deputy Minister level, including: Deputy Secretary to the Cabinet (Plans); Deputy Minister of Agriculture and Agri-Food Canada; High Commissioner for Canada to New Zealand; Deputy Minister of Revenue Canada and the first Commissioner of the Canada Customs and Revenue Agency; Associate Secretary to the Cabinet, Deputy Minister to the Deputy Prime Minister and National Security Advisor to the Prime Minister of Canada; President and Chief Executive Officer of Export Development Canada; and Deputy Minister of Finance. Mr. Wright retired from his position as Deputy Minister of Finance on July 8, 2009 - the 35th anniversary of his employment in the Public Service of Canada.
Mr. Wright was presented with the Outstanding Achievement Award of the Public Service of Canada on June 30, 2005 by the Prime Minister of Canada.
In addition to leadership roles on public service committees and Boards, Mr. Wright has served actively with two Crown Boards managed by members from outside government. as Director, Export Development Canada Board of Directors, in his capacity as President and CEO (2005-2006); and as Director, Board of Management Canada Customs and Revenue Agency, as Commissioner of the Agency (1999-2003).
Mr. Wright was born in 1951 in Northwestern Ontario. He has a BA in economics from the University of Western Ontario (1973) and an MA in economics from the University of Manitoba (1975).
CONSERATIVES Cunning Plans
In a related request, Postmedia News sought 2007 briefing notes to Flaherty about the preparation of the report, and the department found 154 pages. It decided to censor virtually all of the material. Only two partly-blacked-out pages out of the 154 pages were released.
One document, however, is significant.
The Sept. 6, 2007 memorandum - marked ``SECRET'' - was written by then-deputy finance minister Rob Wright to Flaherty.
``Please find attached an early draft of the Fiscal Sustainability and Intergenerational Report,'' wrote Wright.
Profile
Harper gov't pilloried in Commons over pension report `coverup.' By Mark Kennedy, Postmedia NewsMay 18, 2012 OTTAWA - The Harper government was accused in the House of Commons Friday of a political ``coverup'' over its decision to clamp a lid of secrecy on a draft report it prepared in 2007 on the costs and ``policy implications'' of Canada's aging population.
The development came in the wake of an exclusive Postmedia News report which revealed that Finance Minister Jim Flaherty received a copy of the report five years ago from his senior bureaucrat, and that his department has now formally rejected a request to have it publicly released.
Opposition parties accused the Conservative government Friday of hiding its plans to slash future seniors' pensions, and called on the Tories to release the report.
The very existence of the report - confirmed by Postmedia News through an access to information request - raised questions about the Harper's government's transparency on the politically explosive issue of seniors' pensions.
After federal bureaucrats drafted the taxpayer-funded report in 2007, the Conservatives decided to keep it under wraps.
``For months now Conservatives have refused to come clean about their plans to cut Old Age Security,'' said NDP House Leader Nathan Cullen, as he led off question period Friday.
``Now we learn that the finance minister has been sitting on a report about the future costs of OAS for nearly five years, but refuses to share it with Canadians. Two elections, four budgets, one big coverup.''
It wasn't until after winning a majority government that Prime Minister Stephen Harper revealed earlier this year his plans to slash pensions for future senior citizens - a plan that was outlined in Flaherty's March 29 budget.
Flaherty's budget proposes that starting in 2023, the age of eligibility for the Old Age Security (OAS) benefit will gradually increase to 67 from 65. The government says the cutbacks will chop an estimated $10.8 billion off the annual OAS bill by 2030 - making the cost $97.9 billion that year instead of $108.7 billion without the changes.
Now, the government has formally denied a request from Postmedia News for a copy of the Finance Department report prepared five years ago.
``Conservatives were always planning to cut OAS as far back as 2007, yet never once did they come clean with Canadians,'' said Cullen.
Government House Leader Peter Van Loan said the 2007 report was ``never completed'' because at the time the country was entering an economic downturn.
``The focus of our government was to focus on the economic stimulus, our economic action plan. We are now turning our focus on ensuring income security for long term.''
Cullen later told reporters he doesn't believe that explanation.
``They always intended to do this whether the economy was robust or on hard times. So it seems like an excuse and a convenient excuse for the government.''
In his March 20, 2007 budget, Flaherty promised to release a report later that year that would ``provide a broad analysis of current and future demographic changes and the implication of these changes for Canada's long-run economic and fiscal outlook.''
Moreover, Flaherty's budget said that ``publication of a report on fiscal sustainability is motivated by the government's view that maintaining sustainable public finances at all orders of government is a critical condition to achieving intergenerational equity and strong and sustained economic growth.''
However, Flaherty did not release the report when he issued his fiscal and economic update on Oct. 30, 2007. Since then, it has never been clear what happened to the report.
Earlier this year, Postmedia News requested a copy of a draft or final version of the report. The department said it has three documents, totalling 211 pages, in its files.
But the department refused to release them, citing sections in the Access to Information Act which allow the government to deny public release of information involving ``advice or recommendations'' to a minister, and materials involving cabinet confidences which are excluded from disclosure under the Act.
In a related request, Postmedia News sought 2007 briefing notes to Flaherty about the preparation of the report, and the department found 154 pages. It decided to censor virtually all of the material. Only two partly-blacked-out pages out of the 154 pages were released.
One document, however, is significant.
The Sept. 6, 2007 memorandum - marked ``SECRET'' - was written by then-deputy finance minister Rob Wright to Flaherty.
``Please find attached an early draft of the Fiscal Sustainability and Intergenerational Report,'' wrote Wright.
``We have tried to position the Report as a readable background document that presents the facts and policy implications related to population aging.''
mkennedy(at)postmedia.com
Twitter.com/Mark_Kennedy_
The development came in the wake of an exclusive Postmedia News report which revealed that Finance Minister Jim Flaherty received a copy of the report five years ago from his senior bureaucrat, and that his department has now formally rejected a request to have it publicly released.
Opposition parties accused the Conservative government Friday of hiding its plans to slash future seniors' pensions, and called on the Tories to release the report.
The very existence of the report - confirmed by Postmedia News through an access to information request - raised questions about the Harper's government's transparency on the politically explosive issue of seniors' pensions.
After federal bureaucrats drafted the taxpayer-funded report in 2007, the Conservatives decided to keep it under wraps.
``For months now Conservatives have refused to come clean about their plans to cut Old Age Security,'' said NDP House Leader Nathan Cullen, as he led off question period Friday.
``Now we learn that the finance minister has been sitting on a report about the future costs of OAS for nearly five years, but refuses to share it with Canadians. Two elections, four budgets, one big coverup.''
It wasn't until after winning a majority government that Prime Minister Stephen Harper revealed earlier this year his plans to slash pensions for future senior citizens - a plan that was outlined in Flaherty's March 29 budget.
Flaherty's budget proposes that starting in 2023, the age of eligibility for the Old Age Security (OAS) benefit will gradually increase to 67 from 65. The government says the cutbacks will chop an estimated $10.8 billion off the annual OAS bill by 2030 - making the cost $97.9 billion that year instead of $108.7 billion without the changes.
Now, the government has formally denied a request from Postmedia News for a copy of the Finance Department report prepared five years ago.
``Conservatives were always planning to cut OAS as far back as 2007, yet never once did they come clean with Canadians,'' said Cullen.
Government House Leader Peter Van Loan said the 2007 report was ``never completed'' because at the time the country was entering an economic downturn.
``The focus of our government was to focus on the economic stimulus, our economic action plan. We are now turning our focus on ensuring income security for long term.''
Cullen later told reporters he doesn't believe that explanation.
``They always intended to do this whether the economy was robust or on hard times. So it seems like an excuse and a convenient excuse for the government.''
In his March 20, 2007 budget, Flaherty promised to release a report later that year that would ``provide a broad analysis of current and future demographic changes and the implication of these changes for Canada's long-run economic and fiscal outlook.''
Moreover, Flaherty's budget said that ``publication of a report on fiscal sustainability is motivated by the government's view that maintaining sustainable public finances at all orders of government is a critical condition to achieving intergenerational equity and strong and sustained economic growth.''
However, Flaherty did not release the report when he issued his fiscal and economic update on Oct. 30, 2007. Since then, it has never been clear what happened to the report.
Earlier this year, Postmedia News requested a copy of a draft or final version of the report. The department said it has three documents, totalling 211 pages, in its files.
But the department refused to release them, citing sections in the Access to Information Act which allow the government to deny public release of information involving ``advice or recommendations'' to a minister, and materials involving cabinet confidences which are excluded from disclosure under the Act.
In a related request, Postmedia News sought 2007 briefing notes to Flaherty about the preparation of the report, and the department found 154 pages. It decided to censor virtually all of the material. Only two partly-blacked-out pages out of the 154 pages were released.
One document, however, is significant.
The Sept. 6, 2007 memorandum - marked ``SECRET'' - was written by then-deputy finance minister Rob Wright to Flaherty.
``Please find attached an early draft of the Fiscal Sustainability and Intergenerational Report,'' wrote Wright.
``We have tried to position the Report as a readable background document that presents the facts and policy implications related to population aging.''
mkennedy(at)postmedia.com
Twitter.com/Mark_Kennedy_
CONSERATIVES Cunning Plans
GENERATION #3
Bill Gates has to be the biggest fraud of all… Written by admin on March 5, 2012 · Leave a Comment Even though this website is usually highly critical of David Icke; A tall man who tells tall stories, occasionally David Icke is absolutely correct in what he says. A good example, would be David Icke’s take on Bill Gates. Bill Gates tries to portray himself as the ultimate philanthropist. To fully appreciate the true improbability of Bill Gates as the very personification of the philanthropic spirit, we must first take a brief look at Bill Gates’ business modus operandi of the last fifteen years:
Bill Gates fought a lengthy and expensive battle with the US government over the anti trust case, which was basically Microsoft using anti competitive tactics to favour its browser and software over that of its rivals. How believable is it really, that a nasty, greedy little nurd like Bill Gates, who so aggressively fought the US congress at great cost over this issue of browser/software monopoly, would suddenly morph into this almost dove-like, Florence Nightingale figure, championing the the lives and general welfare of poor, economically disadvantaged Africans??? I mean come on—Bill Gates is about as much a philanthropist, as the Moon is a spaceship full of aliens controlling human consciousness on Planet Earth…
Bill Gates is one of the wealthiest human beings on Planet Earth. He acquired this enormous wealth, by selling huge quantities of sub-standard, defective software at extortionate prices to gullible fools who are essentially computer illiterate. Now, because Bill Gates is an extremely greedy, rapacious individual, he would baulk at the thought of paying appropriate tax on his vast personal fortune, despite his claims on TV, that rich people should pay more tax. So to avoid paying tax, he needs a cunning plan—Enter the Bill and Melinda Gates Foundation:
This ‘charitable’ foundation, pays no tax whatsoever to the IRS, because being a ‘charitable’ organisation, it’s tax exempt. This means that despite the fact that the foundation has assets in excess of $37,000,000,000, it only has to spend $1,500,000,000 annually on charitable causes to retain its charitable status. Now, how much tax do you think Bill Gates, Warren Buffet (another predatory capitalist turned ‘philanthropist’), would pay on $37,000,000,000 if it was not tax exempt? Obviously, it would be considerably more than the relatively paltry $1,500,000,000 The Bill and Melinda Gates Foundation ‘gives’ to charity.http://www.icke-exposed.co.uk/icke-is-right/bill-gates-has-to-be-the-biggest-fraud-of-all/
Bill Gates fought a lengthy and expensive battle with the US government over the anti trust case, which was basically Microsoft using anti competitive tactics to favour its browser and software over that of its rivals. How believable is it really, that a nasty, greedy little nurd like Bill Gates, who so aggressively fought the US congress at great cost over this issue of browser/software monopoly, would suddenly morph into this almost dove-like, Florence Nightingale figure, championing the the lives and general welfare of poor, economically disadvantaged Africans??? I mean come on—Bill Gates is about as much a philanthropist, as the Moon is a spaceship full of aliens controlling human consciousness on Planet Earth…
Bill Gates is one of the wealthiest human beings on Planet Earth. He acquired this enormous wealth, by selling huge quantities of sub-standard, defective software at extortionate prices to gullible fools who are essentially computer illiterate. Now, because Bill Gates is an extremely greedy, rapacious individual, he would baulk at the thought of paying appropriate tax on his vast personal fortune, despite his claims on TV, that rich people should pay more tax. So to avoid paying tax, he needs a cunning plan—Enter the Bill and Melinda Gates Foundation:
This ‘charitable’ foundation, pays no tax whatsoever to the IRS, because being a ‘charitable’ organisation, it’s tax exempt. This means that despite the fact that the foundation has assets in excess of $37,000,000,000, it only has to spend $1,500,000,000 annually on charitable causes to retain its charitable status. Now, how much tax do you think Bill Gates, Warren Buffet (another predatory capitalist turned ‘philanthropist’), would pay on $37,000,000,000 if it was not tax exempt? Obviously, it would be considerably more than the relatively paltry $1,500,000,000 The Bill and Melinda Gates Foundation ‘gives’ to charity.http://www.icke-exposed.co.uk/icke-is-right/bill-gates-has-to-be-the-biggest-fraud-of-all/
The Fund's newly reinforced inspector general's office, which uncovered the corruption, can't give an overall figure on the size of the fraud because it has examined only a tiny fraction of the $10 billion that the fund has spent since its creation in 2002.
To date, the United States, the European Union and other major donors have pledged $21.7 billion to the fund, the dominant financier of efforts to fight the three diseases.
The Global Fund receives money from 54 countries and charitable foundations such as (Product) Red, which is supported by rock star Bono.
Other prominent backers of the Fund include former U.N. secretary-general Kofi Annan, French first lady Carla Bruni-Sarkozy and Microsoft founder Bill Gates, whose Bill and Melinda Gates Foundation gives $150 million a year.
Read more: http://www.dailymail.co.uk/news/article-1353287/28-billion-health-fund-backed-Bill-Gates-Bono-investigation-fraud.html#ixzz1vFkDyVrQ
To date, the United States, the European Union and other major donors have pledged $21.7 billion to the fund, the dominant financier of efforts to fight the three diseases.
The Global Fund receives money from 54 countries and charitable foundations such as (Product) Red, which is supported by rock star Bono.
Other prominent backers of the Fund include former U.N. secretary-general Kofi Annan, French first lady Carla Bruni-Sarkozy and Microsoft founder Bill Gates, whose Bill and Melinda Gates Foundation gives $150 million a year.
Read more: http://www.dailymail.co.uk/news/article-1353287/28-billion-health-fund-backed-Bill-Gates-Bono-investigation-fraud.html#ixzz1vFkDyVrQ
Doug McGregor
Chairman and Co-CEO
Doug McGregor is Chairman and Co-CEO of RBC Capital Markets; Co-Group Head, Capital Markets and is a member of the Group Executive of RBC. As Chairman and Co-CEO of RBC Capital Markets, Mr. McGregor is responsible for managing the firm's investment banking, research and equity trading and credit businesses. He also heads the North American real estate, capital markets and advisory business. Mr. McGregor holds an Honours BA (Business) and an MBA from the University of Western Ontario. He is a member of the University Health Network Board of Trustees and the former Chairman of the Board of Directors of the Investment Industry Regulatory Organization of Canada.
Mark Standish
President and Co-CEO
Mark Standish is President and Co-CEO of RBC Capital Markets; Co-Group Head, Capital Markets Division and is a member of the Group Executive of RBC. As President and Co-CEO of RBC Capital Markets, Mr. Standish is responsible for sales and trading, financing and balance sheet management. Mr. Standish's tenure with RBC began in 1995 as head of proprietary and structured trading within the Global Equity Derivatives group of RBC Dominion Securities. From 1993 until 1995, Mr. Standish was a managing director at Kidder Peabody & Company. Preceding Kidder Peabody, Mr. Standish was with Lehman Brothers in New York responsible for equity derivatives, commodity derivatives and commodity financing.
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Mark Hughes
Chief Operating Officer
Mark Hughes is Chief Operating Officer with RBC Capital Markets. As Chief Operating Officer, Mr. Hughes is globally responsible for the operational and administrative matters of the firm. He is a member of the Operating Committee and is also an executive Vice President of RBC. He has held a number of positions in RBC's international offices before being appointed as an Executive Officer in 1995, responsible for managing RBC's involvement with the public sector across Canada. During 1998 to 1999, Mr. Hughes led RBC's operations in the United States. Over the past decade, Mr. Hughes was responsible for RBC’s global wholesale loan portfolio. Mr. Hughes received his MBA from Manchester Business School and his LLB from Leeds University in England. He serves as a Director of a number of RBC subsidiaries and is the Chairman Emeritus of the board of the International Association of Credit Portfolio Managers and is also on the board of the Loan Sales and Trading Association.
Harry Samuel CEO, Europe
Harry Samuel is a Managing Director and CEO for RBC Capital Markets in Europe. Harry is based in London and, in addition to this role as CEO, is responsible for global wholesale funding, liquidity and securities finance. Harry joined RBC in 1989 in FX and Money Markets, working in London, Toronto and Sydney and has previously managed global fixed income, FX, commodities and futures. Harry is a member of RBC Capital Markets' Operating Committee, Director of RBC Europe Ltd., and Director and Chairman of the Audit Committee of RBC Channel Islands Holdings Ltd. Harry holds an Honours BA from McGill University and a MSc from University of London (London School of Economics), and is actively involved in charitable and educational organizations in the UK, Canada and South Africa, promoting children's welfare and education. Among his many other responsibilities, Harry is Chair of the UK Diversity Council and a member of RBC's Diversity Leadership Council.
Michael Bowick
Co-Head, Global Equities
Michael Bowick is Co-Head of the Global Equities Division of RBC Capital Markets. This division is responsible for all aspects of client coverage for both traditional cash equities and equity derivatives including sales and trading, origination, new issue distribution, and risk management. In addition to his responsibilities in Global Equities, Mr. Bowick also has responsibility for the Counterparty Risk Trading (CRT) group, which manages the counterparty risks arising from OTC derivative contracts, well as oversight of some of RBC CM's legacy risk positions. Since joining RBC in 1986, Mr. Bowick has assumed increasingly senior roles managing derivative businesses that reference most asset classes such as FX, Interest Rates, Credit, and Equity. Mr. Bowick holds an undergraduate degree in Business from the University of Prince Edward Island and an MBA from Dalhousie University in Halifax, Nova Scotia.
Morten Friis
Chief Risk Officer, RBC
As Chief Risk Officer, Mr. Friis oversees the strategic management of risk on an enterprise-wide basis. He is a member of RBC’s Group Executive, which sets the overall strategic direction of RBC. Mr. Friis joined RBC in 1979 and was appointed Chief Risk Officer in 2004. Prior to this position, Mr. Friis was Executive Vice-President and Chief Credit Officer for RBC. Mr. Friis joined RBC's Group Risk Management in 1997 as a Senior Vice-President with primary responsibility for credit and counterparty risk issues. Mr. Friis is on the board of the Harvard Business School Club of Toronto. He is also on the advisory board for the Centre for Research and Education on Women and Work at Carleton University. Mr. Friis has an BA (Economics) from Queen's University and an MBA from Harvard Business School
Managing Director at Goldman Sachs in New York and Toronto, where he had co-head responsibility for each of the Global Metals and Mining and the Canadian Investment Banking businessesDoug Guzman
Head, Global Investment Banking
Doug Guzman is Head of Global Investment Banking of RBC Capital Markets. He is responsible for the firm's Investment Banking and Equity Capital Markets teams globally, as well as U.S. Municipal Finance. In addition, Doug has senior client coverage responsibility for a number of RBC Capital Markets' most important clients. Doug is a member of the firm's Operating Committee and Loan Commitments Committee. Doug has led client transactions involving mergers and acquisitions, debt and equity financings and restructurings in the U.S., Canada and Europe. Before joining RBC, Doug was a Managing Director at Goldman Sachs in New York and Toronto, where he had co-head responsibility for each of the Global Metals and Mining and the Canadian Investment Banking businesses. Doug has an Honours BA (Business Administration) from the University of Western Ontario and an MBA with high distinction (Baker Scholar) from Harvard Business School.
Jonathan Hunter
Head, Fixed Income & Currencies
Jonathan Hunter is Global Head, Fixed Income and Currencies, RBC Capital Markets. He joined RBC Dominion Securities in 1991 as a Generalist in the Dealer Trainee Programme. Between 1991and 2000, Jonathan held various institutional trading roles in RBC Capital Markets' domestic fixed income business, culminating in his appointment as Head of Domestic Fixed Income Trading in 2000. Jonathan was transferred to the United Kingdom in November 2002, to serve as Global Head of Fixed Income Sales & Trading. As such, he was also a member of the Board of Directors of the Royal Bank of Canada, Europe Limited and on the London Operating Committee. Jonathan moved to the United States in August 2006. In 2007, RBC Capital Markets' fixed income and currencies businesses integrated and he assumed his current role. In this capacity, he has spent considerable time developing our US $ fixed income business, both domestically and globally. He is a member of the Capital Markets Operating Committee and is on the Board of the International Swaps and Derivatives Association, Inc. He earned an Honours Bachelor of Commerce Degree (Finance) from Queen's University, Canada in 1991 and is a Chartered Financial Analyst.
Clinton Lively
Global Head, Market Risk
Clinton Lively is the Senior Vice President and Global Head of Market Risk for RBC group-wide. Clinton is responsible for providing oversight and governance on market and trading credit exposures across the firm. He is a member of the Capital Markets Operating Committee and Group Risk Management Operating Committee. Prior to joining RBC in June of 2011 he was Senior Vice President and Head of Market Risk Supervision at the Federal Reserve Bank of New York where he managed the function that conducts examinations and stress testing on large and complex banking organizations operating in the United States. Prior to joining the Federal Reserve Bank of New York, Clinton held senior risk management positions at JP Morgan, Merrill Lynch, Millennium Partners, LLC and Bankers Trust Company where he spent 15 years and was Senior Managing Director and Head of Global Risk Management. Clinton has an MBA in Finance from the University of Chicago, an MS in Mathematics from the University of Virginia and a BA in Philosophy and the History of Science from St. John’s College in Annapolis, Maryland. Bruce Macdonald
Head, Commodities & Electronic Trading
Bruce Macdonald is Head of Commodities and Electronic Trading. In this role, Bruce is responsible for all of Capital Markets’ Commodities, Metals and Futures businesses with a mandate to grow a broader global commodities platform. Previously, Bruce was Head of Wholesale Technology and Operations for the Capital Markets and Wealth Management businesses, responsible for overseeing the technology and operations globally. Bruce is also Executive Vice President, Royal Bank of Canada and President, RBC Dominion Securities Inc. With more than thirty years’ experience in the investment banking industry, Bruce began his career in investment banking in 1979 in the equity trading department of Vancouver-based Pemberton Securities Inc. During his tenure, he assumed roles of increasing responsibility and was managing the firm’s Canadian equity derivatives business in 1989 when RBC Dominion Securities acquired Pemberton. From 1994 to 1999, as Head NY Risk Management, he established RBC's first risk management middle office function to enable the growth of the newly acquired global equity derivatives business. In 1999, Bruce was appointed to the position of President and Chief Executive Officer of RBC Dominion Securities Corporation where he was responsible for all aspects of RBC's banking and brokerage operations. In 2001, Bruce was appointed Chief Operating Officer, RBC Capital Markets with global responsibilities for all functions supporting the firm’s businesses.
Troy Maxwell
Chief Financial Officer
Troy Maxwell is a Senior Vice President of RBC where he is Head of Finance Governance and Chief Financial Officer of RBC Capital Markets. He leads RBC's Head Office Finance teams including External Reporting and Finance systems, and as Chied Financial Officer of RBC Capital Markets, oversees all finance services to the business platform, including valuations, financial and product control, and performance management. Prior to joining RBC Capital Markets, Mr. Maxwell was Chief Financial Officer of a major Canadian investment bank, and a partner of PricewaterhouseCoopers LLP, where he led a financial institutions risk management consulting and advisory business. Mr. Maxwell is a Chartered Accountant, and holds an Honours BA and a Master's Degree in Accounting from the University of Waterloo.
Greg Mills
Co-Head, Global Equities
Greg Mills has Co-Head responsibility for RBC Capital Markets' global activities in Equity Sales and Trading, and Equity-Linked Products. He is a member of the firm's operating committee, both the U.S. and Canadian Commitment Committees and is also a member of RBC’s Pension Investment Sub-Committee. Mr. Mills began his career as an equity trader with Burns Fry, and also spent time with First Boston and Scotia Capital. He joined RBC Capital Markets in 1998. He holds an Honours BSC (Geology) from the University of Windsor. Mr. Mills is Chair of the Investment Dealers Association Equity Markets Committee and is also a member of the Investment Committee of Bridgepoint Health Foundation.
Doug Moore
Head, Asia
Doug Moore is Head of RBC Capital Markets Asia based in Hong Kong. He is responsible for the firm's businesses in Asia which include Fixed Income and Currencies, Global Arbitrage and Trading, Treasury Services, Equity Markets, Corporate and Investment Banking, Global Credit and Central Funding. The firm has it's larger Asian offices in Hong Kong, Sydney and Tokyo with additional offices in Singapore, Beijing and Mumbai. In addition, Doug is responsible for driving and executing the firm's Asian strategy and has senior client coverage responsibility for a number of RBC Capital Markets' most important clients in the region. Doug has lived in Hong Kong continuously for more than 20 years . Doug has extensive business and financial experience in Asia on both the buy and sell side, including strong investment management expertise with prominent Asian corporations, and in building a substantial financial services business for Credit Suisse in Hong Kong. Doug has a Juris Doctor from Osgoode Hall Law School, York University.
Richard Tavoso
Head, Global Arbitrage and Trading
Richard Tavoso is a Managing Director at RBC Capital Markets, Head of the Global Arbitrage & Trading (GAT) Division, and a member of the Capital Markets Operating Committee. As the Head of GAT, Mr. Tavoso is responsible for RBC Capital Markets' proprietary trading division. In addition, he co-manages the firm's Central Funding Group, which offers secured balance sheet funding solutions to its clients. Mr. Tavoso joined RBC Capital Markets in 1995 as part of the senior management of an equity derivatives team. Prior to his career at RBC Capital Markets, he spent 7 years at Kidder Peabody in the equity derivatives group. As a Senior Vice-President at Kidder, he built and managed the Tokyo equity derivatives business from 1990 to 1993. Mr. Tavoso graduated
with a degree in history from Princeton University in 1987.
RBC gave these unlawful trades the appearance of being the result of independent decisions by its branches and subsidiaries to buy and sell futures contracts when, in fact, they were controlled by a small group of senior RBC personnel.
DORIS J EKKER
A small group of senior RBC personnel acting on RBC' s behalf designed the NBI and SSF trading strategies and controlled the trading activity. The scheme was designed and orchestrated as part ofRBC's strategy to realize certain lucrative Canadian tax benefits, which prior to and during the relevant period RBC sought to and did realize by holding certain public companies' stock, or "securities," in its Canadian and offshore trading accounts. 1 Page 2 3. In each instance, RBC identified, and purchased or already held, securities that RBC believed would generate a tax benefit. Purportedly to offset risk from holding the tax- beneficial securities, RBC and a subsidiary would buy and sell opposite each other NBI or SSF futures contracts referencing the same securities. As a result ofthe futures trades, RBC and its respective subsidiary held futures positions that were equal and offsetting in size and price in the same contracts of the same delivery month. In almost every instance, RBC and its respective subsidiary expected that NBI futures contracts would periodically be "rolled", or effectively extended, for at least one year, and that SSF futures contracts would be settled by physical delivery of the underlying stock. Thus, RBC's futures trading was conducted in a riskless manner which ensured that the positions of each counterparty washed to zero, in disregard of the price discovery principles of the futures market, leaving RBC to reap large tax benefits.
4. RBC knew that the NBI and SSF transactions were riskless and intended them to be so, and knew and intended that its NBI and SSF transactions would and did achieve a wash result for RBC. 5. RBC gave these unlawful trades the appearance of being the result of independent decisions by its branches and subsidiaries to buy and sell futures contracts when, in fact, they were controlled by a small group of senior RBC personnel. RBC intentionally sought to negate, and did negate, price competition in its NBI and SSF transactions. RBC planned for its NBI and SSF trading strategies to exclude non RBC-affiliated entities and eliminate arm's-length bargaining between RBC and its subsidiaries. As a result, RBC traded almost exclusively with its subsidiaries at prices that were not determined by competitive market forces. 6. RBC's NBI and SSP transactions were, or were of the character of, wash sales and were fictitious sales, and therefore violated Section 4c(a) of the Commodity Exchange Act
2 Page 3 (the "Act"), 7 U.S.C. § 6c(a) (2006). RBC's NBI and SSF transactions were also non- competitive and therefore violated Commission Regulation ("Regulation") 1.3 8( a), 17 C.F.R. § 1.38(a) (2011). 7. Further, from at least January 2005 to April 2010, RBC willfully falsified, concealed and covered up material facts, and made false statements and omitted to disclose material information to CME Group, Inc. ("CME Group"), which exercised the regulatory compliance function for OneChicago, concerning the trading scheme alleged herein.
This conduct violated Section 9(a)(4) of the Act, as amended, 7 U.S.C. § 13 (a)(4). 8. Plaintiff Commodity Futures Trading Commission (the "CFTC" or the "Commission") brings this action pursuant to Section 6c of the Act, to be codified at 7 U.S.C. § 13a-l, to enjoin RBC's violative acts and practices and to compel RBC's compliance with the Act. In addition, the CFTC seeks civil monetary penalties and such other equitable relief as this Court deems necessary or appropriate. 9. Unless restrained and enjoined by this Court, RBC is likely to engage in the acts and practices alleged in this Complaint, or in similar acts and practices, as described more fully below. II. JURISDICTION AND VENUE 10. This Court has jurisdiction over this action pursuant to Section 6c of the Act, 7 U.S.C. § 13a-l, which provides that whenever it shall appear to the CFTC that any person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision ofthe Act or any rule, regulation, or order promulgated thereunder, the CFTC may bring an action in the proper District Court ofthe United States against such person to enjoin such practice, or to enforce compliance with the Act, or any rule, regulation or order thereunder. 3
Page 4 11. Venue properly lies with this COUli pursuant to Section 6c( e) of the Act, 7 U.S .C. § 13a-l(e), because Defendant RBC transacts business in this District, and because the acts and practices in violation of the Act occurred within this District. III. THE PARTIES 12. Plaintiff Commodity Futures Trading Commission is an independent federal regulatory agency that is charged by Congress with administering and enforcing the Act, 7 U.S.C. §§ 1 et seq., and the regulations promulgated thereunder, 17 C.F.R. §§ 1.1 et seq. 13. Defendant Royal Bank of Canada is a Canadian banle and financial services finn headquatiered in Toronto, Canada, with offices in New Yark, New York, and other cities in the United States and around the world. RBC engages in proprietary trading of on- and off- exchange derivative products, including on-exchange NBI and SSF contracts, through its branches, accounts and subsidiaries located in New York, London, Toronto, and the Caribbean. RBC has never been registered with the Commission in any capacity. IV. FACTUAL BACKGROUND A. The Market and Products 14. One Chicago LLC is the only domestic designated contract market ("DCM") that provides a marketplace for trading security futures products, including NBls and SSFs. It is designated with the Commission as a board of trade pursuant to Sections 5 and 6(a) of the Act, 7 U.S.C. §§ 7 and 8(a) (2006), and is notice-registered with the Securities and Exchange Commission ("SEC") a~ a national securities exchange under Section 6(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78f(a), for the purpose oflisting and trading security futures products. One Chicago is jointly owned by the CME Group, Inc., IB Exchange Corp., and the Chicago Board Options Exchange. Trades executed at One Chicago are cleared and settled by the Options Clearing Corporation or by Chicago Mercantile Exchange Inc. ("CME"). The CME 4 Page 5 Group performed regulatory compliance for One Chicago from at least January 2005 to April 2010. 15. NBls are cash-settled futures on custom stock indexes, as defined in Section 1a(25) of the Act, redesignated as Section 1a(35) pursuant to the Dodd-Frank Act, to be codified at 7 U.S.C. § 1a(35). At the expiration of an NBI contract, one party to the contract must pay the other party a sum of money equal to its gains resulting from any change in the contract price over the term of the contract. Alternatively, the contract counterparties can "roll" the contract, which means that, at the expiration of the futures contract, each party offsets its futures position by buying or selling NBI contracts and immediately establishes a new position in the next contract month and takes its respective cash gains or losses from the expired contract. NBI products offered by One Chicago are created at OneChicago's customers' requests. 16. An SSF is a futures contract on a single stock (as opposed to a stock index) that may be settled through delivery of the underlying security. At the expiration of the contract, the person who is "short" the SSF delivers the underlying stock to his counterparty, who is "long" the SSF, if he holds the contract at expiration. Section 1a(31) of the Act, redesignated as Section 1a(44) pursuant to the Dodd-Frank Act, to be codified at 7 U.S.C. § 1a( 44), defines the term "security future" as a contract for the sale or future delivery of a single security or of a nal1'OW- based security index. Security futures are subject to joint regulation by the CFTC and the SEC under Section 2(a)(1)(D) of the CEA, 7 U.S.C. § 2(a)(1)(D) (2006). 17. The futures markets are price discovery markets that provide a centralized marketplace where traders can shift risk. Price discovery occurs through the open and competitive execution of trades on the centralized market. To protect the integrity of the market process, the Act and Regulations generally require trades to be executed openly and 5 Page 6 competitively and prohibit trading practices that undermine the price discovery process such as wash sales and fictitious sales. 18. During the relevant time, OneChicago's rules permitted parties to enter into pre- arranged "block trade" transactions "outside the OneChicago System, at reasonable prices mutually agreed," subject to celiain conditions. OneChicago's block trading rule contained a requirement that "[e]ach party to a Block Trade shall comply with all applicable Rules of the Exchange," including One Chicago Rule 604, which, in turn~ prohibited "conduct in violation of the Applicable Laws," and thereby incorporated the Act's prohibition against wash sales, fictitious sales and non-competitive trading. One Chicago did not have a rule that expressly permitted block trading between affiliated pmiies such as those conducted between RBC and its subsidiaries. B. Relevant RBC "Affiliates" and Business Group 19. RBC executed its NBI and SSF trades through two of its branches and one set of internal RBC accounts, opposite two RBC subsidiaries. The two branches were RBC Bahamas Branch ("Bahamas") and RBC Cayman Branch ("Cayman") (together, "Caribbean"), branches of RBC located in the Bahamas and Cayman Islands that were not stand-alone legal entities. The internal set of accounts, which also was not a stand-alone legal entity, was known as Canadian Transit ("RBC (Canadian Transit)") and housed in Toronto. The two subsidiaries were RBC Capital Markets Arbitrage S.A. ("CMA"), a Luxembourg-based subsidiary ofRBC with offices in New York; and RBC Europe Limited ("RBC EL"), a United Kingdom-based bank subsidiary of RBC with offices in London. 20. During the relevant period, RBC compiled and reported its financial results on a consolidated basis. ImpOliantly, profits and losses generated by the NBI and SSF trading 6 Page 7 activities of CMA, RBC EL, RBC (Canadian Transit), Bahamas and Caymans were consolidated in the overall profits and losses of RBC for both internal and public financial reporting purposes. 21. RBC's Central Funding Group was an internal RBC group comprised of employees from multiple RBC businesses that was formed in or about 2007 to provide futures pricing for various RBC trading desks, among other tasks. During the relevant period, the Central Funding Group's employees worked in RBC offices around the world, including New York, London, Toronto, and the Caribbean. 22. During the relevant period, profits and losses from the trading activities ofthe internal Central Funding Group were ultimately consolidated for both internal and public financial reporting purposes in the overall profits and losses generated by RBC's other businesses. C. Tax Benefits of RBC's Securities Positions 23. The NBI and SSF trades were conducted by RBC with its subsidiaries as pati of a strategy to generate tax credits that RBC would apply against its Canadian taxes. These credits derived from taxes RBC paid on dividends on securities it owned that were issued by U.S. and Canadian companies. Two types of credits are relevant here. 24. First, RBC believed that under Canadian tax rules Canadian taxpayers were entitled to an offset against their Canadian taxes in an amount equal to the U. S. taxes they paid on dividend income received from owning securities issued by U.S. companies. Thus, as further described below, RBC's tax strategy contemplated that RBC, through its Caribbean branches, which were Canadian taxpayers, would hold certain U.S. securities on dividend dates to realize these tax credits. RBC conducted SSF trades between its Caribbean branches and RBC's subsidiary CMA to facilitate this tax strategy. 7 Page 8 25. Second, RBC believed that under Canadian tax rules Canadian companies were entitled to an offset against Canadian taxes in an amount equal to Canadian taxes paid on dividend income from securities issued by other Canadian companies, as long as the Canadian taxpayer owned the securities for one year or longer. Thus, as further described below, RBC's tax strategy contemplated that RBC would buy and hold blocks of Canadian company securities in its RBC (Canadian Transit) accounts for at least one year. RBC conducted NBI trades between its Canadian Transit accounts and its subsidiary RBC EL to facilitate this tax strategy. D. RBC's NBI Transactions Were Non-Competitively Executed Fictitious Sales 26. During the relevant period, RBC conducted its NBI trading activity primarily through RBC (Canadian Transit) trading NBIs with RBC EL, a subsidiary ofRBC. The transactions were arranged off-exchange and then executed as block trades on the OneChicago exchange. When the positions were initiated, RBC (Canadian Transit) was nearly a~ways a seller ofthe futures and RBC EL was nearly always the buyer. The transactions were conducted directly between RBC (Canadian Transit) and RBC EL. RBC almost never attempted to solicit competing NBI bids or offers from non RBC-affiliated market participants, and designed its trading strategy to exclude non RBC-affiliated counterparties. 27. RBC's Central Funding Group members designed all of the specific NBI products offered by OneChicago that RBC (Canadian Transit) traded with RBC EL. As relevant here, the NBIs that RBC designed were custom products comprised of baskets of Canadian securities. 28. Between 2006 and 2010, transactions between RBC (Canadian Transit) and RBC EL accounted for 100% of the total NBI volume on OneChicago. 29. In nearly every NBI transaction between RBC (Canadian Transit) and RBC EL during the relevant period, the transactions were executed through pre-arranged block trades. These offsetting futures transactions were designed to achieve, and did achieve, a wash result for 8 Page 9 RBC. Thus, at the expiration of each NBI contract, gains made or losses incurred by RBC (Canadian Transit) on the futures transactions were offset by RBC EL's gains and losses on the futures transactions; the gains and losses netted to zero when consolidated in the overall profits and losses of RBC. 30. RBC (Canadian Transit) and RBC EL also made equal and offsetting securities purchases and sales that mirrored their NBI positions. RBC EL sold the underlying stocks that made up the NBI index, while RBC (Canadian Transit) purchased the same stocks and held them for the duration of the NBI contracts. 31. The prices of the NBI contracts RBC traded were not negotiated at arm's length. Instead, senior members ofRBC's Central Funding Group determined the prices of the NBI contracts RBC (Canadian Transit) and RBC EL traded during the relevant period using a formula that incorporated (1) the average trading price of the individual securities underlying the NBI, (2) the estimated dividends on the securities, and (3) the estimated interest rate (cost of funds) for the term of the futures contract. The Central Funding Group created the dividend estimates used to price NBI contracts based on information provided by employees in other departments of RBC, or based on information collected directly by members of the Central Funding Group. Similarly, the Central Funding Group determined the interest rate component ofthe NBI price by collecting information fl.-om other departments ofRBC that indicated where RBC could raise cash, and using that information to create an estimate ofRBC's cost of funds. 32. In most cases, RBC (Canadian Transit) and RBC EL NBI traders did not communicate directly with one another to negotiate prices for NBI contracts. Instead, the traders dealt directly with the Central Funding Group. After the Central Funding Group created the price for an NBI, a member of that group would transmit the price directly to the NBI traders at 9 Page 10 RBC (Canadian Transit) and RBC EL by phone or email. The price transmitted by the Central Funding Group then became the price at which the NBI contracts traded. 33. A co-head ofRBC's Central Funding Group ("CFG Member I") created RBC's NBI trading strategy and coordinated RBC's NBI trading during the relevant period. NBI traders at RBC EL were required to obtain the approval of CFG Member 1 to acquire new NBI positions, and to "roll" (as described below) or unwind existing positions. Among other tasks, CFG Member 1 also coordinated the risk limits and supervised the trading strategies and budgets for RBC's NBI trading activity, and supervised the RBC personnel at RBC (Canadian Transit) and RBC EL who conducted the trades. In addition, all of the senior RBC EL and RBC (Canadian Transit) employees responsible for executing RBC's NBI trading activity reported directly to CFG Member 1 during the relevant period. 34. Another senior Central Funding Group member ("CFG Member 2"), who also reported to CFG Member 1, coordinated RBC's NBI trading activity for both RBC (Canadian Transit) and RBC EL during the relevant period. CFG Member 2 was consulted when RBC (Canadian Transit) or RBC EL acquired a new NBI position, determined the overall size of RBC's NBI positions, selected which securities RBC (Canadian Transit) and RBC EL would purchase or sell as part ofRBC's NBI strategy, and determined the quantities of such purchases and sales. CFG Member 2 was also responsible for advising RBC (Canadian Transit) and RBC EL about interest rate and dividend estimates used to price NBI contracts, creating the price of the NBI contracts, and deciding the overall volume ofRBC's NBI business, among other tasks. 35. As alleged above, to qualify for the desired tax benefits, RBC held the Canadian securities underlying the NBI contracts for at least one year. NBI contracts expire quarterly. As a result, from the outset, RBC (Canadian Transit) and RBC EL agreed to "roll", or continue, their 10 Page 11 respective NBI positions quarterly throughout the year, with each side taking offsetting cash gains and losses in the expiring contract month and immediately establishing new positions in the next contract month. 36. CFG Member 1 identified potential tax 0ppOliunities arising from dividends paid on Canadian securities and created RBC's stock and NBI trading strategy to take advantage of these opportunities. CFG Member 1 also worked with RBC employees in RBC's Tax Group to obtain the securities that the strategy required. CFG Member 2 and members ofthe RBC Tax Group assisted in the creation of the NBI trading strategy by, among other things, calculating a minimum profitability threshold for the NBI transactions, which they believed was required by Canadian tax law to ensure that the trades qualified for the tax benefits the transactions generated. 37. RBC's NBI sales and securities purchases, and RBC EL's offsetting NBI purchases and securities sales, constituted four legs of a single trading strategy created by CFG Member 1 and coordinated by CFG Members 1 and 2, two of the Central Funding Group's most senior members. The common purpose of the strategy was to generate tax benefits for RBC. 38. RBC's NBI transactions were not executed openly and competitively. 39. RBC, through its agents and employees, including CFG Members 1 and 2, intended for its NBI transactions to negate risk and price competition, and the transactions did in fact negate risk and competition. 40. RBC, through its agents and employees, including CFG Members 1 and 2, knew at the time RBC entered into the NBI transactions that they negated market risk and were designed to achieve, and did achieve, a wash result, and that the transactions resulted in a position and financial nullity. 11 Page 12 E. RBC's SSF Transactions Were Non-Competitively Executed Fictitious Sales 41. During the relevant period, RBC conducted its SSF trading activity almost exclusively by RBC's Caribbean branches selling SSF futures contracts to RBC's subsidiary CMA. The transactions were ananged off-exchange and then executed as block trades on OneChicago. These trades were almost always originated by Caribbean. The transactions were ananged directly between CMA and Caribbean by email or phone communications. RBC almost never solicited competing SSF bids or offers from non RBC-affiliated market participants, and designed its trading strategy to exclude non RBC-affiliated counterparties. 42. Between 2005 and May 2010, transactions between Caribbean and CMA accounted, on average, for 51 % of the total annual volume of SSF contracts traded on OneChicago. In some years, however, RBC's percentage of One Chicago's SSF volume was even higher. In 2006, for example, RBC's SSF trades accounted for 87% of the total SSF volume on OneChicago, and in 2007 its SSF trades accounted for over 72% of the total volume. 43. Caribbean's and CMA's offsetting futures transactions were designed to achieve, and did achieve, a wash result for RBC. Thus, at the expiration of each SSF contract, gains made or losses incuned from the futures transactions by RBC's Caribbean branches resulted in equal and offsetting losses or gains to RBC's subsidiary CMA, which netted to zero when consolidated with RBC's overall financial results. 44. Caribbean and CMA also made equal and offsetting purchases and sales of the stocks of U.S. companies underlying their SSF positions. Thus, Caribbean bought the same stocks that CMA sold during the term of the SSF contract. Caribbean and CMA always held SSF positions until maturity, and always physically settled the contracts, meaning that Caribbean delivered the underlying securities to CMA at the end of the contract period. The strategy called for the use of SSF contracts that RBC anticipated would expire only after the date on which the 12 Page 13 underlying securities paid dividends, thus insuring that Caribbean would still own the securities on the dividend date, to secure the Canadian tax benefit. RBC also believed that the tax benefits depended upon RBC settling the SSF transactions through delivery ofthe underlying stock. 45. Upon the expiration of an SSF futures contract, after RBC (through Caribbean) delivered the underlying securities to CMA, the counterparties' respective positions were exactly the same as they were before the transaction began, while RBC stood to realize the tax benefit. 46. Similar to RBC's determination ofNBI prices, CMA and Caribbean determined the price of the SSF contracts they traded using a formula based on the cash price of the security underlying the contract, the forecasted dividend for the security, and the relevant interest rate for the duration of the contract. Also similar to the NBI contracts, RBC personnel created and approved the dividend and interest rate components of the price. 47. RBC's SSF transactions were not negotiated at arm's length. At the beginning of an SSF transaction, RBC (through Caribbean) determined which SSF contacts to trade by selecting securities from a list that reflected securities cunently held by CMA, its anticipated SSF counterparty. Thus, the universe of SSF contracts RBC would trade pursuant to its strategy was limited to SSFs on the equities CMA already owned. 48. This list of CMA-owned securities, which RBC called the "Dividend on the Table" report, was disseminated to the RBC managers responsible for overseeing the SSF strategy-including CFG Members 1 and 2-and the CMA and Caribbean SSF traders every morning by email from the RBC Capital Markets email server. The list contained specific information about CMA's securities holdings, including the securities' projected dividends and the expiration date for the c011'esponding SSF contracts. 13 Page 14 49. The Dividend on the Table report also contained a column entitled "on the table," which reflected the monetary amount of foreign tax credit that could be generated by the dividends paid on each of the securities listed in the report, as well as a column reflecting the portion of the securities referenced in the report that had already been committed to another RBC strategy, and were therefore unavailable for the SSF strategy. 50. CFG Member 1 created RBC's SSF trading strategy as part of the overall tax strategy he developed. CFG Member 1 created the strategy such that RBC (through Caribbean) sold SSF contracts and CMA purchased SSF contracts. CFG Members 1 and 2, the same senior RBC employees responsible for coordinating RBC's NBI strategy, also coordinated RBC's SSF trading strategy on a day-to-day basis. During the relevant period, CFG Members 1 and 2 worked in RBC's Caribbean offices, which initiated nearly every SSF transaction, and either CFG Member 1 or CFG Member 2 approved Caribbean's SSF transactions on a trade-by-trade basis, including the size, composition, price, contract month, and timing of the trades. 51. During the relevant period, CFG Member 1 was the head ofRBC Global Arbitrage and Trading in the Caribbean and the most senior RBC employee in either the Bahamas or Cayman office. Also during the relevant period, CFG Member 1 was a member of, and later the Chairman of the Board of Directors of CMA, the counterparty to Caribbean's SSF transactions. 52. Just as he did with respect to the NBI trading, CFG Member 1 identified potential tax opportunities and created RBC's SSF trading strategy to take advantage of them. CFG Member 2 and members of the RBC Tax Group assisted in the creation of the SSF strategy by calculating a minimum profitability threshold for the SSF transactions, which RBC believed was 14 Page 15 required by Canadian tax law to ensure that the transactions qualified for the tax benefits they generated. 53. Caribbean's SSF sales and securities purchases, and CMA's offsetting SSF purchases and equities sales, constituted four legs of a single trading strategy created by CFG Member 1 and coordinated by CFG Members 1 and 2, two of the Central Funding Group's most senior members. The common purpose ofthe strategy was to generate tax benefits for RBC. 54. RBC's SSF transactions were not executed openly and competitively. 55. RBC, through its agents and employees, including CFG Members 1 and 2, intended for its SSF transactions to negate risk and price competition, and the transactions did in fact negate risk and price competition. 56. RBC, through its agents and employees, including CFG Members 1 and 2, knew at the time RBC entered into the SSF transactions that they negated risk and were designed to achieve, and did achieve, a wash result, and that the transactions resulted in a position and financial nullity. F. RBC's False Statements to CME Group 57. Beginning in at least September 2005, CME Group began to inquire into RBC's SSF transactions on OneChicago. CME Group's inquiry was prompted in part by questions it had received from the Commission's Division of Market Oversight ("DMO") concerning the purpose and mechanics ofRBC's block trades on OneChicago. 58. On September 20, 2005, CME Group sent RBC a list of written questions seeking information about SSF trades conducted between RBC and one of its affiliates. In part, CME Group's questions sought information that would allow it to determine whether the SSF trades were "competitive, open, and efficient" as required by Core Principle 9 ofthe Act, 7 U.S.C. § 7(d)(9). 15 Page 16 59. Among other questions, CME Group asked whether "RBC and its affiliates believe they meet the 'arms-length' criteria discussed" in the Commission's "proposed guidance on Core Principle 9," including whether each RBC entity engaged in SSF transactions had a "separate" account controller "with responsibility to evaluate the terms and conditions and the potential risks and benefits of prospective transactions .... " 60. RBC responded to CME Group's questions in a letter dated October 18,2005 from RBC Capital Markets Corp.'s General Counsel, which purported to explain why RBC believed its SSF transactions complied with the Commission's proposed guidance on Core Principle 9. Specifically, RBC stated: The SSF block trades in which RBC entities are on both sides of the transaction qualifY as arms length transactions pursuant to the proposed Guidance on Core Principle 9 issued by the CFTC. . .. The RBC entities participating in the SSF block trades are part of an arms length organizational structure, in that each of the RBC entities engaging in the respective SSF transactions have separate account controllers. RBC's letter also stated: Because the various RBC entities utilize separate account controllers, and effect the cash and SSF components of the trades during market hours, we believe the transactions qualify as arms length transactions for purpose of the CFTC's proposed guidance on Core Principle 9. 61. On October 26, 2005, CME Group sent RBC a written follow-up to its September 20,2005 request seeking additional information about RBC's SSF trades. Among other questions, the October 26, 2005 request asked "how the CMA and RBC (Bahamas Branch) ... initially found each other to conduct the block trades-did the affiliates independently come up with the idea and strategies to trade, or did the idea/strategy originate at the corporate level?" In addition, CME Group asked whether "the [RBC] affiliates ever attempted to solicit other 16 Page 17 parties besides RBC entities to conduct OneChicago block trades" and if "it is possible that non- RBC entities might be involved in such block trades in the future." 62. In a November 17,2005 written response to CME Group's questions from RBC Capital Markets Corp.' s General Counsel, RBC stated: The idea of engaging in OneChicago single stock future block transactions originated with the staff in our Bahamas office. The decision to engage in the block transactions was then made between the RBC affiliates involved in the transactions (primarily RBC (Bahamas Branch) and CMA) after discussions between them. RBC's response also stated: The RBC entities have tried, with only very limited success, to conduct OneChicago block trades with non-RBC entities. We have spoken with several other firms about trading on OneChicago, but concerns about liquidity and pricing have inhibited interest. . .. [T]o date, we have only effected single stock futures transactions with two non-RBC counterparties. We are very enthusiastic about the One Chicago Exchange single stock futures market, and the possibility that additional participants will be attracted to the market. With such broadened participation, we have every reason to believe that we would effect business with a wide range of transaction counterparties. 63. RBC's October 18,2005 and November 17,2005 written responses to CME Group's questions were false because they concealed material infOlmation concerning RBC's SSF trading strategy. Among other material information, RBC's responses concealed information concerning the central role played by CFG Member 1 in the creation and management ofRBC's SSF trading strategy, including, among other things, that: • RBC's SSF strategy had, in fact, "originated at the corporate level" with CFG Member 1, who was (1) a Managing Director of RBC Capital Markets, (2) the head of Global Arbitrage and Trading for RBC's Caribbean branches, (3) a member of the Board of Directors of CMA, Caribbean's counterparty to nearly every SSF transaction, and (4) the co-head ofRBC's Central Funding Group; o "The idea of engaging in OneChicago single stock future block transactions" did not "originate[] with the staff in [RBC' s] Bahamas office," but was instead conceived by CFG Member 1 and proposed to RBC management when CFG Member 1 was a Managing Director ofRBC Capital Markets working in RBC's London office; 17 Page 18 • The RBC branches and subsidiary that engaged in SSF trading did not "independently cpme up with the idea and strategies to trade" SSFs; instead, CFG Member 1 devised the idea to trade SSFs between RBC-affiliated counterparties and created the futures trading strategies for both counterparties to the trades; In addition to creating RBC's SSF trading strategy, CFG Member 1 was required to approve Caribbean's SSF transactions on a trade-by-trade basis; and The RBC branches and subsidiary that engaged in SSF trading did not have "separate" account controllers "with responsibility to evaluate" the "potential risks" of the SSF transactions. Instead, RBC consolidated the risk evaluation function for both counterparties to the SSF transactions in a single RBC manager, who was the direct supervisor of CFG Member 1. 64. In addition, the statements in RBC's October 18, 2005 and November 17,2005 responses concerning the "arm's length" nature of the SSF transactions, RBC's "efforts to conduct block trades with non-RBC entities" and RBC's intention to "effect business with a wide range of transactions counterparties" were false because RBC intentionally designed its SSF transactions to exclude non RBC-affiliated counterparties. For example, in internal documents circulated to RBC management at the outset of the SSF trading strategy, CFG Member 1 stated that he intended to "structure the [SSF] trade internally" between RBC and its subsidiaries and "avoid the outsourcing" of SSF trades to non RBC-affiliated counterparties in order to "capture both sides of the profitability [of the trades] internally, within the RBC network of entities." 65. The foregoing information concerning the central role played by CFG Member 1 in the creation and management ofRBC's SSF trading strategy and RBC's intent to exclude non RBC-affiliated counterparties from its SSF transactions, among other material information relevant to RBC's SSF trading strategy, was concealed from CME Group and the Commission until 2010, when the Commission's Division of Enforcement discovered it during the course of its investigation into RBC's trading on OneChicago. 18 Page 19 66. The foregoing information concerning the central role played by CFG Member 1 in the creation and management ofRBC's SSF trading strategy and RBC's intent to exclude non RBC-affiliated counterparties from its SSP transactions, which was omitted from RBC's October 18,2005 and November 17,2005 written responses to CME Group, was directly relevant to CME Group's inquiry into whether the RBC affiliates' SSF trades were "arm's length," "competitive" and "open" as required by Core Principle 9 and the Commission's proposed guidance. V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT AND THE COMMISSION'S REGULATIONS COUNT ONE VIOLATIONS OF SEC),ION 4c(a) OF THE ACT: WASH SALES AND FICTITIOUS SALES 67. The allegations set forth in paragraphs 1 through 66 are realleged and incorporated herein by reference. 68. Section 4c(a)(1) of the Act, as amended, to be codified at 7 U.S.C. § 6c(a)(1), provides, in relevant part, "It shall be unlawful for any person to offer to enter into, enter into, or confirm the execution of a transaction described in paragraph (2) involving the purchase or sale of any commodity for future delivery ... if the transaction is or may be used to (A) hedge any transaction in interstate commerce in the commodity or the product or byproduct of the commodity," or "(C) deliver any such commodity sold, shipped or received in interstate commerce for the execution of the transaction." 7 U.S.C. § 6c(a)(I). Paragraph (2) of Section 4c(a), in tum, provides, "[aJ transaction referred to in paragraph (1) is a transaction that ... is, is of the character of, or is commonly known to the trade as, a 'wash sale' or 'accommodation trade' ... or is a fictitious sale or is used to cause any price to be reported, registered or recorded that is not a true and bona fide price." 7 U.S.C. § 6c(a)(2). 19 Page 20 69. As set forth above, during the relevant period RBC, through senior RBC personnel acting on RBC's behalf, knowingly offered to enter into and entered into transactions that were, or were of the character of, wash sales and fictitious sales in violation of Section 4c( a) of the Act, 7 U.S.C. § 6c(a), by simultaneously buying and selling the same size blocks of the same NBI and SSP contracts for the same delivery month at the same price, with the expectation that both parties to the trades would offset the futures positions against each other-i.e., that the parties to the NBI transactions would periodically "roll" the futures positions at the same time for at least one year, and that the parties to the SSP transactions would settle by delivery ofthe underlying securities, such that the parties negated or virtually eliminated the risk of undeltaking the respective futures positions. The transactions resulted in no change in the economic position of RBC, which, through its branches, accounts and subsidiaries, was in reality a single entity trading with itself. 70. RBC, through senior RBC personnel acting on RBC's behalf, intended to negate the risk and price competition normally attendant to futures transactions at the time RBC entered into the NBI and SSP transactions. RBC, through senior RBC personnel acting on RBC's behalf, knew at the time it entered into the transactions that they negated risk and price competition, and that they were designed to achieve, and did achieve, a wash result. 71. Each wash sale or fictitious sale of any NBI or SSP contract bought or sold by RBC, including its branches, accounts and subsidiaries, from June 1,2007 through and including May 31, 2010 is alleged herein as a separate and distinct violation of Section 4c(a) of the Act, 7 U.S.C. § 6c(a). 72. The acts, omissions, and failures ofRBC's employees, officers and agents set forth in paragraphs 1 through 66, above, oecuned within the scope ofthe employees', officers' 20 Page 21 and agents' employment, office, or agency with RBC. Therefore, RBC is liable for its' employees', officers' and agents' acts, omissions, and failures constituting violations of Section 4c(a) ofthe Act, as amended, to be codified at 7 U.S.C. § 6c(a), pursuant to Section 2(a)(1)(B) of the Act, as amended, 7 U.S.C. § 2(a)(1)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2011). COUNT TWO VIOLATIONS OF COMMISSION REGULATION 1.38(a): NON-COMPETITIVE TRANSACTIONS 73. The allegations set forth in paragraphs 1 through 66 are realleged and incorporated herein by reference. part: 74. Commission Regulation 1.38(a), 17 C.F.R. § 1.38(a) (2011), provides, in relevant Competitive execution required; exceptions. All purchases and sales of any commodity for future delivery ... on or subject to the rules of a contract market shall be executed openly and competitively by open outcry or posting of bids and offers or by other equally open and competitive methods, in the trading pit or ring or similar place provided by the contract market, during the regular hours prescribed by the contract market for trading in such commodity . . . Provided, however, That this requirement shall not apply to transactions which are executed noncompetitively in accordance with the written rules of the contract market which have been submitted to and approved by the Commission, specifically providing for the noncompetitive execution of such transactions. 75. As set forth above, RBC, through senior RBC personnel acting on RBC's behalf, knowingly entered into NBI and SSF transactions during the relevant period that were not executed openly and competitively, in violation of Regulation 1.38(a), 17 C.F.R. § 1.38(a). 76. RBC's non-competitive NBI and SSF transactions were not executed in accordance with written rules of OneChicago which had been submitted to and approved by the Commission specifically providing for the non-competitive execution of such transactions. 21 Page 22 77. Each non-competitive NBI and SSF trade by RBC, including its branches, accounts and subsidiaries, from June 1, 2007 through and including May 31, 2010 is alleged herein as a separate and distinct violation of Regulation 1.38(a), 17 C.F.R. § 1.38(a). 78. The acts, omissions, and failures ofRBC's employees, officers and agents set forth in paragraphs 1 through 66, above, occurred within the scope of the employees', officers' and agents' employment, office, or agency with RBC. Therefore, RBC is liable for its employees', officers' and agents' acts, omissions, and failures constituting violations of Regulation 1.38(a), 17 C.F.R. § 1.38(a), pursuant to Section 2(a)(1)(B) of the Act, as amended, 7 U.S.C. § 2(a)(1)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2011). COUNT THREE VIOLATIONS OF SECTION 9(a)(4) OF THE ACT: FALSE STATEMENTS TO A REGISTERED ENTITY 79. The allegations set forth in paragraphs 1 through 66 are realleged and incorporated herein by reference. 80. Section 9(a)(4) of the Act, to be codified at 7 U.S.C. § 13 (a) (4), provides, in relevant part: It shall be a felony punishable by a fine of not more than $1,000,000 or imprisonment for not more than 10 years, or both, together with the costs of prosecution, for ... [a]ny person willfully to falsify, conceal, or cover up by any trick, scheme, or artifice a material fact, make any false, fictitious, or fraudulent statements or representations, or make or use any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry to a registered entity, board of trade, or futures association designated or registered under this Act acting in furtherance of its official duties under this Act. 81. As set forth above, during the relevant period RBC, through senior RBC personnel acting on RBC's behalf, (1) willfully falsified, concealed or covered up by a scheme or artifice a material fact in correspondence to CME Group, which exercised the regulatory compliance function for OneChicago, concerning RBC's SSF transactions; (2) willfully made 22 Page 23 false, fictitious or fraudulent statements or representations to OneChicago by making such statements or representations to CME Group concerning REC's SSF transactions; and (3) made use of false writings or documents submitted to OneChicago by submitting such writings or documents to CME Group knowing them to contain false, fictitious or fraudulent statements concerning RBC's SSF transactions, in violation of Section 9(a)(4) of the Act, 7 U.S.C. § 13 (a)(4). 82. Each act of falsification, concealment or cover up, each false or fictitious statement or representation, and each use of a false writing or document by REC, including its branches, accounts and subsidiaries, from January 1,2005 through and including April 30, 2010 is alleged herein as a separate and distinct violation of Section 9(a)(4) of the Act, 7 U.S.C. § 13 (a)(4). 83. The acts, omissions, and failures of REC's employees, officers and agents set forth in paragraphs 1 through 66, above, occurred within the scope ofthe employees', officers' and agents' employment, office, or agency with REC. Therefore, REC is liable for its employees', officers' and agents' acts, omissions, and failures constituting violations of Section 9(a)(4) of the Act, 7 U.S.C. § 13(a)(4), pursuant to Section 2(a)(1)(B) of the Act, as amended, 7 U.S.C. § 2(a)(I)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2011). VI. RELIEF REQUESTED WHEREFORE, the CFTC respectfully requests that this Court, as authorized by Section 6c of the Act, 7 U.S.C. § 13a-l, and pursuant to its own equitable powers, enter: A. An order finding that Defendant violated Sections 4c(a) and 9(a)(4) ofthe Act, as amended, 7 U.S.C. §§ 6c(a) and 13(a)(4), and Commission Regulation 1.38(a), 17 C.F.R. § 1.38(a); 23 Page 24 B. Enter an order of permanent injunction enjoining Defendant and all persons insofar as they are acting in the capacity of Defendant's agents, servants, employees, successors, assigns, or attorneys, and all persons insofar as they are acting in active concert or participation with the Defendant who receive actual notice of such order by personal service or otherwise, from directly or indirectly engaging in conduct in violation of Sections 4c(a) and 9(a)(4) of the Act, as amended, 7 U.S.C. §§ 6c(a) and 13(a)(4), and Commission Regulation 1.38(a), 17 C.F.R. § 1.38(a); C. Enter an order directing Defendant to make an accounting to the Court of all profits made and capital costs savings realized as a result of its NBI and SSF transactions, and all tax benefits obtained as a result of the securities transactions in connection with which its NBI and SSF transactions were made, between June 1,2007 and May 31, 2010; D. Enter an order requiring Defendant to pay civil monetary penalties under the Act, to be assessed by the Court in amounts of not more than the greater of: (1) triple the monetary gain to Defendant for each violation of the Act, or (2) a penalty of$130,000 for each violation from October 23, 2004 through October 22,2008, or (3) a penalty of $140,000 for each violation on or after October 23, 2008 to the present; E. Enter an order requiring Defendant to pay costs and fees as permitted by 28 U.S.C. §§ 1920 and 2412(a)(2) (1994); and F. Enter an Order providing such other and further relief as this Court may deem necessary and appropriate under the circumstances. VII. DEMAND FOR JURY TRIAL Pursuant to Federal Rule of Civil Procedure 38(b), the CFTC hereby demands a jury trial. 24 Page 25 Dated: April 2, 2012 Susan J. Gradman (pro hac vice admission pending) Chief Trial Attorney sgradman@cftc.gov Scott R. Williamson (pro hac vice admission pending) Deputy Regional Counsel swill iamson@cftc.gov Rosemary Hollinger (pro hac vice admission pending) Regional Counsel and Associate Director rhollinger@cftc.gov Commodity Futures Trading Commission 525 W. Momoe St., Suite 1100 Chicago, IL 60661 (312) 596-0523 (Gradman direct dial) (312) 596-0520 (Hollinger direct dial) (312) 596-0560 (Williamson direct dial) (312) 596-0714 (facsimile) 25 Respectfully Submitted, J os ph Rosenberg Se ior Trial Attorney Commodity Futures Tradin, Commission jrosenberg@cftc.gov 140 Broadway, 19th Floor New Yark, NY 10005 (646) 746-9765 (direct dial) (646) 746-9939 (facsimile) David S. Slovick (pro hac vice admission pending) Senior Trial Attorney Commodity Futures Trading Commission dslovick@cftc.gov 115521 st Street, N.W. Washington, D.C. 20581 (202) 418-5451 (direct dial) (202) 418-5987 (facsimile)
4. RBC knew that the NBI and SSF transactions were riskless and intended them to be so, and knew and intended that its NBI and SSF transactions would and did achieve a wash result for RBC. 5. RBC gave these unlawful trades the appearance of being the result of independent decisions by its branches and subsidiaries to buy and sell futures contracts when, in fact, they were controlled by a small group of senior RBC personnel. RBC intentionally sought to negate, and did negate, price competition in its NBI and SSF transactions. RBC planned for its NBI and SSF trading strategies to exclude non RBC-affiliated entities and eliminate arm's-length bargaining between RBC and its subsidiaries. As a result, RBC traded almost exclusively with its subsidiaries at prices that were not determined by competitive market forces. 6. RBC's NBI and SSP transactions were, or were of the character of, wash sales and were fictitious sales, and therefore violated Section 4c(a) of the Commodity Exchange Act
2 Page 3 (the "Act"), 7 U.S.C. § 6c(a) (2006). RBC's NBI and SSF transactions were also non- competitive and therefore violated Commission Regulation ("Regulation") 1.3 8( a), 17 C.F.R. § 1.38(a) (2011). 7. Further, from at least January 2005 to April 2010, RBC willfully falsified, concealed and covered up material facts, and made false statements and omitted to disclose material information to CME Group, Inc. ("CME Group"), which exercised the regulatory compliance function for OneChicago, concerning the trading scheme alleged herein.
This conduct violated Section 9(a)(4) of the Act, as amended, 7 U.S.C. § 13 (a)(4). 8. Plaintiff Commodity Futures Trading Commission (the "CFTC" or the "Commission") brings this action pursuant to Section 6c of the Act, to be codified at 7 U.S.C. § 13a-l, to enjoin RBC's violative acts and practices and to compel RBC's compliance with the Act. In addition, the CFTC seeks civil monetary penalties and such other equitable relief as this Court deems necessary or appropriate. 9. Unless restrained and enjoined by this Court, RBC is likely to engage in the acts and practices alleged in this Complaint, or in similar acts and practices, as described more fully below. II. JURISDICTION AND VENUE 10. This Court has jurisdiction over this action pursuant to Section 6c of the Act, 7 U.S.C. § 13a-l, which provides that whenever it shall appear to the CFTC that any person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision ofthe Act or any rule, regulation, or order promulgated thereunder, the CFTC may bring an action in the proper District Court ofthe United States against such person to enjoin such practice, or to enforce compliance with the Act, or any rule, regulation or order thereunder. 3
Page 4 11. Venue properly lies with this COUli pursuant to Section 6c( e) of the Act, 7 U.S .C. § 13a-l(e), because Defendant RBC transacts business in this District, and because the acts and practices in violation of the Act occurred within this District. III. THE PARTIES 12. Plaintiff Commodity Futures Trading Commission is an independent federal regulatory agency that is charged by Congress with administering and enforcing the Act, 7 U.S.C. §§ 1 et seq., and the regulations promulgated thereunder, 17 C.F.R. §§ 1.1 et seq. 13. Defendant Royal Bank of Canada is a Canadian banle and financial services finn headquatiered in Toronto, Canada, with offices in New Yark, New York, and other cities in the United States and around the world. RBC engages in proprietary trading of on- and off- exchange derivative products, including on-exchange NBI and SSF contracts, through its branches, accounts and subsidiaries located in New York, London, Toronto, and the Caribbean. RBC has never been registered with the Commission in any capacity. IV. FACTUAL BACKGROUND A. The Market and Products 14. One Chicago LLC is the only domestic designated contract market ("DCM") that provides a marketplace for trading security futures products, including NBls and SSFs. It is designated with the Commission as a board of trade pursuant to Sections 5 and 6(a) of the Act, 7 U.S.C. §§ 7 and 8(a) (2006), and is notice-registered with the Securities and Exchange Commission ("SEC") a~ a national securities exchange under Section 6(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78f(a), for the purpose oflisting and trading security futures products. One Chicago is jointly owned by the CME Group, Inc., IB Exchange Corp., and the Chicago Board Options Exchange. Trades executed at One Chicago are cleared and settled by the Options Clearing Corporation or by Chicago Mercantile Exchange Inc. ("CME"). The CME 4 Page 5 Group performed regulatory compliance for One Chicago from at least January 2005 to April 2010. 15. NBls are cash-settled futures on custom stock indexes, as defined in Section 1a(25) of the Act, redesignated as Section 1a(35) pursuant to the Dodd-Frank Act, to be codified at 7 U.S.C. § 1a(35). At the expiration of an NBI contract, one party to the contract must pay the other party a sum of money equal to its gains resulting from any change in the contract price over the term of the contract. Alternatively, the contract counterparties can "roll" the contract, which means that, at the expiration of the futures contract, each party offsets its futures position by buying or selling NBI contracts and immediately establishes a new position in the next contract month and takes its respective cash gains or losses from the expired contract. NBI products offered by One Chicago are created at OneChicago's customers' requests. 16. An SSF is a futures contract on a single stock (as opposed to a stock index) that may be settled through delivery of the underlying security. At the expiration of the contract, the person who is "short" the SSF delivers the underlying stock to his counterparty, who is "long" the SSF, if he holds the contract at expiration. Section 1a(31) of the Act, redesignated as Section 1a(44) pursuant to the Dodd-Frank Act, to be codified at 7 U.S.C. § 1a( 44), defines the term "security future" as a contract for the sale or future delivery of a single security or of a nal1'OW- based security index. Security futures are subject to joint regulation by the CFTC and the SEC under Section 2(a)(1)(D) of the CEA, 7 U.S.C. § 2(a)(1)(D) (2006). 17. The futures markets are price discovery markets that provide a centralized marketplace where traders can shift risk. Price discovery occurs through the open and competitive execution of trades on the centralized market. To protect the integrity of the market process, the Act and Regulations generally require trades to be executed openly and 5 Page 6 competitively and prohibit trading practices that undermine the price discovery process such as wash sales and fictitious sales. 18. During the relevant time, OneChicago's rules permitted parties to enter into pre- arranged "block trade" transactions "outside the OneChicago System, at reasonable prices mutually agreed," subject to celiain conditions. OneChicago's block trading rule contained a requirement that "[e]ach party to a Block Trade shall comply with all applicable Rules of the Exchange," including One Chicago Rule 604, which, in turn~ prohibited "conduct in violation of the Applicable Laws," and thereby incorporated the Act's prohibition against wash sales, fictitious sales and non-competitive trading. One Chicago did not have a rule that expressly permitted block trading between affiliated pmiies such as those conducted between RBC and its subsidiaries. B. Relevant RBC "Affiliates" and Business Group 19. RBC executed its NBI and SSF trades through two of its branches and one set of internal RBC accounts, opposite two RBC subsidiaries. The two branches were RBC Bahamas Branch ("Bahamas") and RBC Cayman Branch ("Cayman") (together, "Caribbean"), branches of RBC located in the Bahamas and Cayman Islands that were not stand-alone legal entities. The internal set of accounts, which also was not a stand-alone legal entity, was known as Canadian Transit ("RBC (Canadian Transit)") and housed in Toronto. The two subsidiaries were RBC Capital Markets Arbitrage S.A. ("CMA"), a Luxembourg-based subsidiary ofRBC with offices in New York; and RBC Europe Limited ("RBC EL"), a United Kingdom-based bank subsidiary of RBC with offices in London. 20. During the relevant period, RBC compiled and reported its financial results on a consolidated basis. ImpOliantly, profits and losses generated by the NBI and SSF trading 6 Page 7 activities of CMA, RBC EL, RBC (Canadian Transit), Bahamas and Caymans were consolidated in the overall profits and losses of RBC for both internal and public financial reporting purposes. 21. RBC's Central Funding Group was an internal RBC group comprised of employees from multiple RBC businesses that was formed in or about 2007 to provide futures pricing for various RBC trading desks, among other tasks. During the relevant period, the Central Funding Group's employees worked in RBC offices around the world, including New York, London, Toronto, and the Caribbean. 22. During the relevant period, profits and losses from the trading activities ofthe internal Central Funding Group were ultimately consolidated for both internal and public financial reporting purposes in the overall profits and losses generated by RBC's other businesses. C. Tax Benefits of RBC's Securities Positions 23. The NBI and SSF trades were conducted by RBC with its subsidiaries as pati of a strategy to generate tax credits that RBC would apply against its Canadian taxes. These credits derived from taxes RBC paid on dividends on securities it owned that were issued by U.S. and Canadian companies. Two types of credits are relevant here. 24. First, RBC believed that under Canadian tax rules Canadian taxpayers were entitled to an offset against their Canadian taxes in an amount equal to the U. S. taxes they paid on dividend income received from owning securities issued by U.S. companies. Thus, as further described below, RBC's tax strategy contemplated that RBC, through its Caribbean branches, which were Canadian taxpayers, would hold certain U.S. securities on dividend dates to realize these tax credits. RBC conducted SSF trades between its Caribbean branches and RBC's subsidiary CMA to facilitate this tax strategy. 7 Page 8 25. Second, RBC believed that under Canadian tax rules Canadian companies were entitled to an offset against Canadian taxes in an amount equal to Canadian taxes paid on dividend income from securities issued by other Canadian companies, as long as the Canadian taxpayer owned the securities for one year or longer. Thus, as further described below, RBC's tax strategy contemplated that RBC would buy and hold blocks of Canadian company securities in its RBC (Canadian Transit) accounts for at least one year. RBC conducted NBI trades between its Canadian Transit accounts and its subsidiary RBC EL to facilitate this tax strategy. D. RBC's NBI Transactions Were Non-Competitively Executed Fictitious Sales 26. During the relevant period, RBC conducted its NBI trading activity primarily through RBC (Canadian Transit) trading NBIs with RBC EL, a subsidiary ofRBC. The transactions were arranged off-exchange and then executed as block trades on the OneChicago exchange. When the positions were initiated, RBC (Canadian Transit) was nearly a~ways a seller ofthe futures and RBC EL was nearly always the buyer. The transactions were conducted directly between RBC (Canadian Transit) and RBC EL. RBC almost never attempted to solicit competing NBI bids or offers from non RBC-affiliated market participants, and designed its trading strategy to exclude non RBC-affiliated counterparties. 27. RBC's Central Funding Group members designed all of the specific NBI products offered by OneChicago that RBC (Canadian Transit) traded with RBC EL. As relevant here, the NBIs that RBC designed were custom products comprised of baskets of Canadian securities. 28. Between 2006 and 2010, transactions between RBC (Canadian Transit) and RBC EL accounted for 100% of the total NBI volume on OneChicago. 29. In nearly every NBI transaction between RBC (Canadian Transit) and RBC EL during the relevant period, the transactions were executed through pre-arranged block trades. These offsetting futures transactions were designed to achieve, and did achieve, a wash result for 8 Page 9 RBC. Thus, at the expiration of each NBI contract, gains made or losses incurred by RBC (Canadian Transit) on the futures transactions were offset by RBC EL's gains and losses on the futures transactions; the gains and losses netted to zero when consolidated in the overall profits and losses of RBC. 30. RBC (Canadian Transit) and RBC EL also made equal and offsetting securities purchases and sales that mirrored their NBI positions. RBC EL sold the underlying stocks that made up the NBI index, while RBC (Canadian Transit) purchased the same stocks and held them for the duration of the NBI contracts. 31. The prices of the NBI contracts RBC traded were not negotiated at arm's length. Instead, senior members ofRBC's Central Funding Group determined the prices of the NBI contracts RBC (Canadian Transit) and RBC EL traded during the relevant period using a formula that incorporated (1) the average trading price of the individual securities underlying the NBI, (2) the estimated dividends on the securities, and (3) the estimated interest rate (cost of funds) for the term of the futures contract. The Central Funding Group created the dividend estimates used to price NBI contracts based on information provided by employees in other departments of RBC, or based on information collected directly by members of the Central Funding Group. Similarly, the Central Funding Group determined the interest rate component ofthe NBI price by collecting information fl.-om other departments ofRBC that indicated where RBC could raise cash, and using that information to create an estimate ofRBC's cost of funds. 32. In most cases, RBC (Canadian Transit) and RBC EL NBI traders did not communicate directly with one another to negotiate prices for NBI contracts. Instead, the traders dealt directly with the Central Funding Group. After the Central Funding Group created the price for an NBI, a member of that group would transmit the price directly to the NBI traders at 9 Page 10 RBC (Canadian Transit) and RBC EL by phone or email. The price transmitted by the Central Funding Group then became the price at which the NBI contracts traded. 33. A co-head ofRBC's Central Funding Group ("CFG Member I") created RBC's NBI trading strategy and coordinated RBC's NBI trading during the relevant period. NBI traders at RBC EL were required to obtain the approval of CFG Member 1 to acquire new NBI positions, and to "roll" (as described below) or unwind existing positions. Among other tasks, CFG Member 1 also coordinated the risk limits and supervised the trading strategies and budgets for RBC's NBI trading activity, and supervised the RBC personnel at RBC (Canadian Transit) and RBC EL who conducted the trades. In addition, all of the senior RBC EL and RBC (Canadian Transit) employees responsible for executing RBC's NBI trading activity reported directly to CFG Member 1 during the relevant period. 34. Another senior Central Funding Group member ("CFG Member 2"), who also reported to CFG Member 1, coordinated RBC's NBI trading activity for both RBC (Canadian Transit) and RBC EL during the relevant period. CFG Member 2 was consulted when RBC (Canadian Transit) or RBC EL acquired a new NBI position, determined the overall size of RBC's NBI positions, selected which securities RBC (Canadian Transit) and RBC EL would purchase or sell as part ofRBC's NBI strategy, and determined the quantities of such purchases and sales. CFG Member 2 was also responsible for advising RBC (Canadian Transit) and RBC EL about interest rate and dividend estimates used to price NBI contracts, creating the price of the NBI contracts, and deciding the overall volume ofRBC's NBI business, among other tasks. 35. As alleged above, to qualify for the desired tax benefits, RBC held the Canadian securities underlying the NBI contracts for at least one year. NBI contracts expire quarterly. As a result, from the outset, RBC (Canadian Transit) and RBC EL agreed to "roll", or continue, their 10 Page 11 respective NBI positions quarterly throughout the year, with each side taking offsetting cash gains and losses in the expiring contract month and immediately establishing new positions in the next contract month. 36. CFG Member 1 identified potential tax 0ppOliunities arising from dividends paid on Canadian securities and created RBC's stock and NBI trading strategy to take advantage of these opportunities. CFG Member 1 also worked with RBC employees in RBC's Tax Group to obtain the securities that the strategy required. CFG Member 2 and members ofthe RBC Tax Group assisted in the creation of the NBI trading strategy by, among other things, calculating a minimum profitability threshold for the NBI transactions, which they believed was required by Canadian tax law to ensure that the trades qualified for the tax benefits the transactions generated. 37. RBC's NBI sales and securities purchases, and RBC EL's offsetting NBI purchases and securities sales, constituted four legs of a single trading strategy created by CFG Member 1 and coordinated by CFG Members 1 and 2, two of the Central Funding Group's most senior members. The common purpose of the strategy was to generate tax benefits for RBC. 38. RBC's NBI transactions were not executed openly and competitively. 39. RBC, through its agents and employees, including CFG Members 1 and 2, intended for its NBI transactions to negate risk and price competition, and the transactions did in fact negate risk and competition. 40. RBC, through its agents and employees, including CFG Members 1 and 2, knew at the time RBC entered into the NBI transactions that they negated market risk and were designed to achieve, and did achieve, a wash result, and that the transactions resulted in a position and financial nullity. 11 Page 12 E. RBC's SSF Transactions Were Non-Competitively Executed Fictitious Sales 41. During the relevant period, RBC conducted its SSF trading activity almost exclusively by RBC's Caribbean branches selling SSF futures contracts to RBC's subsidiary CMA. The transactions were ananged off-exchange and then executed as block trades on OneChicago. These trades were almost always originated by Caribbean. The transactions were ananged directly between CMA and Caribbean by email or phone communications. RBC almost never solicited competing SSF bids or offers from non RBC-affiliated market participants, and designed its trading strategy to exclude non RBC-affiliated counterparties. 42. Between 2005 and May 2010, transactions between Caribbean and CMA accounted, on average, for 51 % of the total annual volume of SSF contracts traded on OneChicago. In some years, however, RBC's percentage of One Chicago's SSF volume was even higher. In 2006, for example, RBC's SSF trades accounted for 87% of the total SSF volume on OneChicago, and in 2007 its SSF trades accounted for over 72% of the total volume. 43. Caribbean's and CMA's offsetting futures transactions were designed to achieve, and did achieve, a wash result for RBC. Thus, at the expiration of each SSF contract, gains made or losses incuned from the futures transactions by RBC's Caribbean branches resulted in equal and offsetting losses or gains to RBC's subsidiary CMA, which netted to zero when consolidated with RBC's overall financial results. 44. Caribbean and CMA also made equal and offsetting purchases and sales of the stocks of U.S. companies underlying their SSF positions. Thus, Caribbean bought the same stocks that CMA sold during the term of the SSF contract. Caribbean and CMA always held SSF positions until maturity, and always physically settled the contracts, meaning that Caribbean delivered the underlying securities to CMA at the end of the contract period. The strategy called for the use of SSF contracts that RBC anticipated would expire only after the date on which the 12 Page 13 underlying securities paid dividends, thus insuring that Caribbean would still own the securities on the dividend date, to secure the Canadian tax benefit. RBC also believed that the tax benefits depended upon RBC settling the SSF transactions through delivery ofthe underlying stock. 45. Upon the expiration of an SSF futures contract, after RBC (through Caribbean) delivered the underlying securities to CMA, the counterparties' respective positions were exactly the same as they were before the transaction began, while RBC stood to realize the tax benefit. 46. Similar to RBC's determination ofNBI prices, CMA and Caribbean determined the price of the SSF contracts they traded using a formula based on the cash price of the security underlying the contract, the forecasted dividend for the security, and the relevant interest rate for the duration of the contract. Also similar to the NBI contracts, RBC personnel created and approved the dividend and interest rate components of the price. 47. RBC's SSF transactions were not negotiated at arm's length. At the beginning of an SSF transaction, RBC (through Caribbean) determined which SSF contacts to trade by selecting securities from a list that reflected securities cunently held by CMA, its anticipated SSF counterparty. Thus, the universe of SSF contracts RBC would trade pursuant to its strategy was limited to SSFs on the equities CMA already owned. 48. This list of CMA-owned securities, which RBC called the "Dividend on the Table" report, was disseminated to the RBC managers responsible for overseeing the SSF strategy-including CFG Members 1 and 2-and the CMA and Caribbean SSF traders every morning by email from the RBC Capital Markets email server. The list contained specific information about CMA's securities holdings, including the securities' projected dividends and the expiration date for the c011'esponding SSF contracts. 13 Page 14 49. The Dividend on the Table report also contained a column entitled "on the table," which reflected the monetary amount of foreign tax credit that could be generated by the dividends paid on each of the securities listed in the report, as well as a column reflecting the portion of the securities referenced in the report that had already been committed to another RBC strategy, and were therefore unavailable for the SSF strategy. 50. CFG Member 1 created RBC's SSF trading strategy as part of the overall tax strategy he developed. CFG Member 1 created the strategy such that RBC (through Caribbean) sold SSF contracts and CMA purchased SSF contracts. CFG Members 1 and 2, the same senior RBC employees responsible for coordinating RBC's NBI strategy, also coordinated RBC's SSF trading strategy on a day-to-day basis. During the relevant period, CFG Members 1 and 2 worked in RBC's Caribbean offices, which initiated nearly every SSF transaction, and either CFG Member 1 or CFG Member 2 approved Caribbean's SSF transactions on a trade-by-trade basis, including the size, composition, price, contract month, and timing of the trades. 51. During the relevant period, CFG Member 1 was the head ofRBC Global Arbitrage and Trading in the Caribbean and the most senior RBC employee in either the Bahamas or Cayman office. Also during the relevant period, CFG Member 1 was a member of, and later the Chairman of the Board of Directors of CMA, the counterparty to Caribbean's SSF transactions. 52. Just as he did with respect to the NBI trading, CFG Member 1 identified potential tax opportunities and created RBC's SSF trading strategy to take advantage of them. CFG Member 2 and members of the RBC Tax Group assisted in the creation of the SSF strategy by calculating a minimum profitability threshold for the SSF transactions, which RBC believed was 14 Page 15 required by Canadian tax law to ensure that the transactions qualified for the tax benefits they generated. 53. Caribbean's SSF sales and securities purchases, and CMA's offsetting SSF purchases and equities sales, constituted four legs of a single trading strategy created by CFG Member 1 and coordinated by CFG Members 1 and 2, two of the Central Funding Group's most senior members. The common purpose ofthe strategy was to generate tax benefits for RBC. 54. RBC's SSF transactions were not executed openly and competitively. 55. RBC, through its agents and employees, including CFG Members 1 and 2, intended for its SSF transactions to negate risk and price competition, and the transactions did in fact negate risk and price competition. 56. RBC, through its agents and employees, including CFG Members 1 and 2, knew at the time RBC entered into the SSF transactions that they negated risk and were designed to achieve, and did achieve, a wash result, and that the transactions resulted in a position and financial nullity. F. RBC's False Statements to CME Group 57. Beginning in at least September 2005, CME Group began to inquire into RBC's SSF transactions on OneChicago. CME Group's inquiry was prompted in part by questions it had received from the Commission's Division of Market Oversight ("DMO") concerning the purpose and mechanics ofRBC's block trades on OneChicago. 58. On September 20, 2005, CME Group sent RBC a list of written questions seeking information about SSF trades conducted between RBC and one of its affiliates. In part, CME Group's questions sought information that would allow it to determine whether the SSF trades were "competitive, open, and efficient" as required by Core Principle 9 ofthe Act, 7 U.S.C. § 7(d)(9). 15 Page 16 59. Among other questions, CME Group asked whether "RBC and its affiliates believe they meet the 'arms-length' criteria discussed" in the Commission's "proposed guidance on Core Principle 9," including whether each RBC entity engaged in SSF transactions had a "separate" account controller "with responsibility to evaluate the terms and conditions and the potential risks and benefits of prospective transactions .... " 60. RBC responded to CME Group's questions in a letter dated October 18,2005 from RBC Capital Markets Corp.'s General Counsel, which purported to explain why RBC believed its SSF transactions complied with the Commission's proposed guidance on Core Principle 9. Specifically, RBC stated: The SSF block trades in which RBC entities are on both sides of the transaction qualifY as arms length transactions pursuant to the proposed Guidance on Core Principle 9 issued by the CFTC. . .. The RBC entities participating in the SSF block trades are part of an arms length organizational structure, in that each of the RBC entities engaging in the respective SSF transactions have separate account controllers. RBC's letter also stated: Because the various RBC entities utilize separate account controllers, and effect the cash and SSF components of the trades during market hours, we believe the transactions qualify as arms length transactions for purpose of the CFTC's proposed guidance on Core Principle 9. 61. On October 26, 2005, CME Group sent RBC a written follow-up to its September 20,2005 request seeking additional information about RBC's SSF trades. Among other questions, the October 26, 2005 request asked "how the CMA and RBC (Bahamas Branch) ... initially found each other to conduct the block trades-did the affiliates independently come up with the idea and strategies to trade, or did the idea/strategy originate at the corporate level?" In addition, CME Group asked whether "the [RBC] affiliates ever attempted to solicit other 16 Page 17 parties besides RBC entities to conduct OneChicago block trades" and if "it is possible that non- RBC entities might be involved in such block trades in the future." 62. In a November 17,2005 written response to CME Group's questions from RBC Capital Markets Corp.' s General Counsel, RBC stated: The idea of engaging in OneChicago single stock future block transactions originated with the staff in our Bahamas office. The decision to engage in the block transactions was then made between the RBC affiliates involved in the transactions (primarily RBC (Bahamas Branch) and CMA) after discussions between them. RBC's response also stated: The RBC entities have tried, with only very limited success, to conduct OneChicago block trades with non-RBC entities. We have spoken with several other firms about trading on OneChicago, but concerns about liquidity and pricing have inhibited interest. . .. [T]o date, we have only effected single stock futures transactions with two non-RBC counterparties. We are very enthusiastic about the One Chicago Exchange single stock futures market, and the possibility that additional participants will be attracted to the market. With such broadened participation, we have every reason to believe that we would effect business with a wide range of transaction counterparties. 63. RBC's October 18,2005 and November 17,2005 written responses to CME Group's questions were false because they concealed material infOlmation concerning RBC's SSF trading strategy. Among other material information, RBC's responses concealed information concerning the central role played by CFG Member 1 in the creation and management ofRBC's SSF trading strategy, including, among other things, that: • RBC's SSF strategy had, in fact, "originated at the corporate level" with CFG Member 1, who was (1) a Managing Director of RBC Capital Markets, (2) the head of Global Arbitrage and Trading for RBC's Caribbean branches, (3) a member of the Board of Directors of CMA, Caribbean's counterparty to nearly every SSF transaction, and (4) the co-head ofRBC's Central Funding Group; o "The idea of engaging in OneChicago single stock future block transactions" did not "originate[] with the staff in [RBC' s] Bahamas office," but was instead conceived by CFG Member 1 and proposed to RBC management when CFG Member 1 was a Managing Director ofRBC Capital Markets working in RBC's London office; 17 Page 18 • The RBC branches and subsidiary that engaged in SSF trading did not "independently cpme up with the idea and strategies to trade" SSFs; instead, CFG Member 1 devised the idea to trade SSFs between RBC-affiliated counterparties and created the futures trading strategies for both counterparties to the trades; In addition to creating RBC's SSF trading strategy, CFG Member 1 was required to approve Caribbean's SSF transactions on a trade-by-trade basis; and The RBC branches and subsidiary that engaged in SSF trading did not have "separate" account controllers "with responsibility to evaluate" the "potential risks" of the SSF transactions. Instead, RBC consolidated the risk evaluation function for both counterparties to the SSF transactions in a single RBC manager, who was the direct supervisor of CFG Member 1. 64. In addition, the statements in RBC's October 18, 2005 and November 17,2005 responses concerning the "arm's length" nature of the SSF transactions, RBC's "efforts to conduct block trades with non-RBC entities" and RBC's intention to "effect business with a wide range of transactions counterparties" were false because RBC intentionally designed its SSF transactions to exclude non RBC-affiliated counterparties. For example, in internal documents circulated to RBC management at the outset of the SSF trading strategy, CFG Member 1 stated that he intended to "structure the [SSF] trade internally" between RBC and its subsidiaries and "avoid the outsourcing" of SSF trades to non RBC-affiliated counterparties in order to "capture both sides of the profitability [of the trades] internally, within the RBC network of entities." 65. The foregoing information concerning the central role played by CFG Member 1 in the creation and management ofRBC's SSF trading strategy and RBC's intent to exclude non RBC-affiliated counterparties from its SSF transactions, among other material information relevant to RBC's SSF trading strategy, was concealed from CME Group and the Commission until 2010, when the Commission's Division of Enforcement discovered it during the course of its investigation into RBC's trading on OneChicago. 18 Page 19 66. The foregoing information concerning the central role played by CFG Member 1 in the creation and management ofRBC's SSF trading strategy and RBC's intent to exclude non RBC-affiliated counterparties from its SSP transactions, which was omitted from RBC's October 18,2005 and November 17,2005 written responses to CME Group, was directly relevant to CME Group's inquiry into whether the RBC affiliates' SSF trades were "arm's length," "competitive" and "open" as required by Core Principle 9 and the Commission's proposed guidance. V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT AND THE COMMISSION'S REGULATIONS COUNT ONE VIOLATIONS OF SEC),ION 4c(a) OF THE ACT: WASH SALES AND FICTITIOUS SALES 67. The allegations set forth in paragraphs 1 through 66 are realleged and incorporated herein by reference. 68. Section 4c(a)(1) of the Act, as amended, to be codified at 7 U.S.C. § 6c(a)(1), provides, in relevant part, "It shall be unlawful for any person to offer to enter into, enter into, or confirm the execution of a transaction described in paragraph (2) involving the purchase or sale of any commodity for future delivery ... if the transaction is or may be used to (A) hedge any transaction in interstate commerce in the commodity or the product or byproduct of the commodity," or "(C) deliver any such commodity sold, shipped or received in interstate commerce for the execution of the transaction." 7 U.S.C. § 6c(a)(I). Paragraph (2) of Section 4c(a), in tum, provides, "[aJ transaction referred to in paragraph (1) is a transaction that ... is, is of the character of, or is commonly known to the trade as, a 'wash sale' or 'accommodation trade' ... or is a fictitious sale or is used to cause any price to be reported, registered or recorded that is not a true and bona fide price." 7 U.S.C. § 6c(a)(2). 19 Page 20 69. As set forth above, during the relevant period RBC, through senior RBC personnel acting on RBC's behalf, knowingly offered to enter into and entered into transactions that were, or were of the character of, wash sales and fictitious sales in violation of Section 4c( a) of the Act, 7 U.S.C. § 6c(a), by simultaneously buying and selling the same size blocks of the same NBI and SSP contracts for the same delivery month at the same price, with the expectation that both parties to the trades would offset the futures positions against each other-i.e., that the parties to the NBI transactions would periodically "roll" the futures positions at the same time for at least one year, and that the parties to the SSP transactions would settle by delivery ofthe underlying securities, such that the parties negated or virtually eliminated the risk of undeltaking the respective futures positions. The transactions resulted in no change in the economic position of RBC, which, through its branches, accounts and subsidiaries, was in reality a single entity trading with itself. 70. RBC, through senior RBC personnel acting on RBC's behalf, intended to negate the risk and price competition normally attendant to futures transactions at the time RBC entered into the NBI and SSP transactions. RBC, through senior RBC personnel acting on RBC's behalf, knew at the time it entered into the transactions that they negated risk and price competition, and that they were designed to achieve, and did achieve, a wash result. 71. Each wash sale or fictitious sale of any NBI or SSP contract bought or sold by RBC, including its branches, accounts and subsidiaries, from June 1,2007 through and including May 31, 2010 is alleged herein as a separate and distinct violation of Section 4c(a) of the Act, 7 U.S.C. § 6c(a). 72. The acts, omissions, and failures ofRBC's employees, officers and agents set forth in paragraphs 1 through 66, above, oecuned within the scope ofthe employees', officers' 20 Page 21 and agents' employment, office, or agency with RBC. Therefore, RBC is liable for its' employees', officers' and agents' acts, omissions, and failures constituting violations of Section 4c(a) ofthe Act, as amended, to be codified at 7 U.S.C. § 6c(a), pursuant to Section 2(a)(1)(B) of the Act, as amended, 7 U.S.C. § 2(a)(1)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2011). COUNT TWO VIOLATIONS OF COMMISSION REGULATION 1.38(a): NON-COMPETITIVE TRANSACTIONS 73. The allegations set forth in paragraphs 1 through 66 are realleged and incorporated herein by reference. part: 74. Commission Regulation 1.38(a), 17 C.F.R. § 1.38(a) (2011), provides, in relevant Competitive execution required; exceptions. All purchases and sales of any commodity for future delivery ... on or subject to the rules of a contract market shall be executed openly and competitively by open outcry or posting of bids and offers or by other equally open and competitive methods, in the trading pit or ring or similar place provided by the contract market, during the regular hours prescribed by the contract market for trading in such commodity . . . Provided, however, That this requirement shall not apply to transactions which are executed noncompetitively in accordance with the written rules of the contract market which have been submitted to and approved by the Commission, specifically providing for the noncompetitive execution of such transactions. 75. As set forth above, RBC, through senior RBC personnel acting on RBC's behalf, knowingly entered into NBI and SSF transactions during the relevant period that were not executed openly and competitively, in violation of Regulation 1.38(a), 17 C.F.R. § 1.38(a). 76. RBC's non-competitive NBI and SSF transactions were not executed in accordance with written rules of OneChicago which had been submitted to and approved by the Commission specifically providing for the non-competitive execution of such transactions. 21 Page 22 77. Each non-competitive NBI and SSF trade by RBC, including its branches, accounts and subsidiaries, from June 1, 2007 through and including May 31, 2010 is alleged herein as a separate and distinct violation of Regulation 1.38(a), 17 C.F.R. § 1.38(a). 78. The acts, omissions, and failures ofRBC's employees, officers and agents set forth in paragraphs 1 through 66, above, occurred within the scope of the employees', officers' and agents' employment, office, or agency with RBC. Therefore, RBC is liable for its employees', officers' and agents' acts, omissions, and failures constituting violations of Regulation 1.38(a), 17 C.F.R. § 1.38(a), pursuant to Section 2(a)(1)(B) of the Act, as amended, 7 U.S.C. § 2(a)(1)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2011). COUNT THREE VIOLATIONS OF SECTION 9(a)(4) OF THE ACT: FALSE STATEMENTS TO A REGISTERED ENTITY 79. The allegations set forth in paragraphs 1 through 66 are realleged and incorporated herein by reference. 80. Section 9(a)(4) of the Act, to be codified at 7 U.S.C. § 13 (a) (4), provides, in relevant part: It shall be a felony punishable by a fine of not more than $1,000,000 or imprisonment for not more than 10 years, or both, together with the costs of prosecution, for ... [a]ny person willfully to falsify, conceal, or cover up by any trick, scheme, or artifice a material fact, make any false, fictitious, or fraudulent statements or representations, or make or use any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry to a registered entity, board of trade, or futures association designated or registered under this Act acting in furtherance of its official duties under this Act. 81. As set forth above, during the relevant period RBC, through senior RBC personnel acting on RBC's behalf, (1) willfully falsified, concealed or covered up by a scheme or artifice a material fact in correspondence to CME Group, which exercised the regulatory compliance function for OneChicago, concerning RBC's SSF transactions; (2) willfully made 22 Page 23 false, fictitious or fraudulent statements or representations to OneChicago by making such statements or representations to CME Group concerning REC's SSF transactions; and (3) made use of false writings or documents submitted to OneChicago by submitting such writings or documents to CME Group knowing them to contain false, fictitious or fraudulent statements concerning RBC's SSF transactions, in violation of Section 9(a)(4) of the Act, 7 U.S.C. § 13 (a)(4). 82. Each act of falsification, concealment or cover up, each false or fictitious statement or representation, and each use of a false writing or document by REC, including its branches, accounts and subsidiaries, from January 1,2005 through and including April 30, 2010 is alleged herein as a separate and distinct violation of Section 9(a)(4) of the Act, 7 U.S.C. § 13 (a)(4). 83. The acts, omissions, and failures of REC's employees, officers and agents set forth in paragraphs 1 through 66, above, occurred within the scope ofthe employees', officers' and agents' employment, office, or agency with REC. Therefore, REC is liable for its employees', officers' and agents' acts, omissions, and failures constituting violations of Section 9(a)(4) of the Act, 7 U.S.C. § 13(a)(4), pursuant to Section 2(a)(1)(B) of the Act, as amended, 7 U.S.C. § 2(a)(I)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2011). VI. RELIEF REQUESTED WHEREFORE, the CFTC respectfully requests that this Court, as authorized by Section 6c of the Act, 7 U.S.C. § 13a-l, and pursuant to its own equitable powers, enter: A. An order finding that Defendant violated Sections 4c(a) and 9(a)(4) ofthe Act, as amended, 7 U.S.C. §§ 6c(a) and 13(a)(4), and Commission Regulation 1.38(a), 17 C.F.R. § 1.38(a); 23 Page 24 B. Enter an order of permanent injunction enjoining Defendant and all persons insofar as they are acting in the capacity of Defendant's agents, servants, employees, successors, assigns, or attorneys, and all persons insofar as they are acting in active concert or participation with the Defendant who receive actual notice of such order by personal service or otherwise, from directly or indirectly engaging in conduct in violation of Sections 4c(a) and 9(a)(4) of the Act, as amended, 7 U.S.C. §§ 6c(a) and 13(a)(4), and Commission Regulation 1.38(a), 17 C.F.R. § 1.38(a); C. Enter an order directing Defendant to make an accounting to the Court of all profits made and capital costs savings realized as a result of its NBI and SSF transactions, and all tax benefits obtained as a result of the securities transactions in connection with which its NBI and SSF transactions were made, between June 1,2007 and May 31, 2010; D. Enter an order requiring Defendant to pay civil monetary penalties under the Act, to be assessed by the Court in amounts of not more than the greater of: (1) triple the monetary gain to Defendant for each violation of the Act, or (2) a penalty of$130,000 for each violation from October 23, 2004 through October 22,2008, or (3) a penalty of $140,000 for each violation on or after October 23, 2008 to the present; E. Enter an order requiring Defendant to pay costs and fees as permitted by 28 U.S.C. §§ 1920 and 2412(a)(2) (1994); and F. Enter an Order providing such other and further relief as this Court may deem necessary and appropriate under the circumstances. VII. DEMAND FOR JURY TRIAL Pursuant to Federal Rule of Civil Procedure 38(b), the CFTC hereby demands a jury trial. 24 Page 25 Dated: April 2, 2012 Susan J. Gradman (pro hac vice admission pending) Chief Trial Attorney sgradman@cftc.gov Scott R. Williamson (pro hac vice admission pending) Deputy Regional Counsel swill iamson@cftc.gov Rosemary Hollinger (pro hac vice admission pending) Regional Counsel and Associate Director rhollinger@cftc.gov Commodity Futures Trading Commission 525 W. Momoe St., Suite 1100 Chicago, IL 60661 (312) 596-0523 (Gradman direct dial) (312) 596-0520 (Hollinger direct dial) (312) 596-0560 (Williamson direct dial) (312) 596-0714 (facsimile) 25 Respectfully Submitted, J os ph Rosenberg Se ior Trial Attorney Commodity Futures Tradin, Commission jrosenberg@cftc.gov 140 Broadway, 19th Floor New Yark, NY 10005 (646) 746-9765 (direct dial) (646) 746-9939 (facsimile) David S. Slovick (pro hac vice admission pending) Senior Trial Attorney Commodity Futures Trading Commission dslovick@cftc.gov 115521 st Street, N.W. Washington, D.C. 20581 (202) 418-5451 (direct dial) (202) 418-5987 (facsimile)
Jean McFarlane, Baroness McFarlane of Llandaff From Wikipedia, the free encyclopedia Jump to: navigation, search The Right Honourable
The Baroness McFarlane of Llandaff
MCSP Life Peer In office
30 July 1979 – 13 May 2012 Personal details Born 1 April 1926(1926-04-01)
Cardiff, Wales, UK Died 13 May 2012(2012-05-13) (aged 86) Political party Crossbench Jean Kennedy McFarlane, Baroness McFarlane of Llandaff, FRCN, MCSP (1 April 1926 – 13 May 2012)[1] was a British nurse and member of the House of Lords.
McFarlane was born in Cardiff, Wales, and later trained as a nurse, a midwife, and as a health visitor before going on to pursue a successful career in nursing teaching and administration. In the 1960s she participated in the Royal College of Nursing research programme "Study of Nursing Care". In 1974 she became the holder of the first Chair of Nursing at an English university (the University of Manchester) and held it until 1989.
McFarlane served on the Royal Commission on the National Health Service, 1976–79 (Chairman: Sir Alec Merrison).[2]
McFarlane was created a life peer in the House of Lords as Baroness McFarlane of Llandaff, of Llandaff in the County of South Glamorgan on 30 July 1979, in the Queen's Birthday Honours list.
McFarlane was a member of four select committees of the House of Lords. As well as being a Vice President of the League of Nurses of St Bartholomew's Hospital, she is a Fellow of the Royal College of Nursing and a trustee of numerous charities. In 2005, she was awarded the British Journal of Nursing's Lifetime Achievement Award.
Deceased Lords
- McFarlane of Llandaff, B., died on 13 May 2012
- Glenamara, L., died on 4 May 2012
- Ritchie of Brompton, B., died on 24 April 2012
- Ashley of Stoke, L., died on 20 April 2012
- Brett, L., died on 29 March 2012
- Newton of Braintree, L., died on 25 March 2012
- Wedderburn of Charlton, L., died on 9 March 2012
- St John of Fawsley, L., died on 2 March 2012
- Hooson, L., died on 21 February 2012
- Corbett of Castle Vale, L., died on 19 February 2012
- Carr of Hadley, L., died on 17 February 2012
- Gould of Brookwood, L., died on 6 November 2011
- Croham, L., died on 11 September 2011
- Marsh, L., died on 29 July 2011
- Boston of Faversham, L., died on 23 July 2011
- Rodger of Earlsferry, L., died on 26 June 2011
