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Bailey McCann, Opalesque New York:

The U.S. Commodity Futures Trading Commission (CFTC) has filed a complaint in federal district court in New York charging the Royal Bank of Canada (RBC), a Canadian bank and financial services firm doing business in New York, with conducting a multi-hundred million dollar wash sale scheme in connection with exchange-traded stock futures contracts. The complaint alleges that the bank willfully misled OneChicago futures exchange through false statements regarding its activities in order to reap tax benefits on its holdings of company stocks.

This is the largest case it has brought against what are known as wash trades - trades where the firm made fake trades with itself. According to the complaint, from at least June 2007 to May 2010, RBC allegedly non-competitively traded hundreds of millions of dollars’ worth of narrow based stock index futures (NBI) and single stock futures (SSF) contracts with two of its subsidiaries that RBC reported as "block" trades on OneChicago.

The trades were negotiated by a senior team of RBC personnel trading with themselves, in order to reap the maximum tax benefits allowed by Canada’s tax scheme. To do this, RBC allegedly identified stocks in U.S. and Canadian companies that were associated with a tax benefit. RBC and a subsidiary allegedly bought and sold these stocks, and also bought and sold NBI or SSF futures contracts written on the stocks opposite each other, creating a wash for RBC while al......................

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