UPDATE 1-TD Bank to pay $52.5 mln in US settlements over Ponzi scheme
Sept 23 (Reuters) - Toronto-Dominion Bank will pay $52.5 million in civil penalties to settle charges by U.S. regulators that it violated securities laws in connection with a Ponzi scheme conducted by Florida lawyer Scott Rothstein, who is serving a 50-year prison term.
The Canadian bank was fined $37.5 million by the Financial Crimes Enforcement Network and Office of the Comptroller of the Currency, and $15 million by the U.S. Securities and Exchange Commission.
Regulators said that from April 2008 to September 2009, TD Bank violated the federal Bank Secrecy Act by failing to uncover and report in a timely manner suspicious activities in accounts belonging to the law firm where Rothstein ran a $1.2 billion Ponzi scheme.
The SEC said TD, through regional Vice President Frank Spinosa, "told outright lies to investors," issuing misleading documents and making false statements about Rothstein's accounts that led investors to believe their money was safe.
"Financial institutions are key gatekeepers in the transactions and investments they facilitate and will be held to a high standard of accountability when their officers enable fraud," Andrew Ceresney, co-director of the SEC enforcement division, said in a statement.
FinCEN said it was not until after a 2011 review that TD Bank filed five reports identifying $900 million of "suspicious activity" involving Rothstein.
"In the face of repeated alerts on Mr. Rothstein's accounts by the bank's anti-money laundering surveillance software over an 18-month period, the bank did not do enough to prevent the pain and financial suffering of innocent investors," FinCEN Director Jennifer Shasky Calvery said in a statement.
TD spokeswoman Rebecca Acevedo said: "TD Bank is pleased to resolve these regulatory concerns and to put the Rothstein matter behind us."
The SEC filed separate charges against Spinosa. A lawyer for Spinosa did not immediately respond to a request for comment.
Rothstein pleaded guilty in January 2010 to five criminal counts, including wire fraud and conspiracies to commit fraud and money laundering. He was sentenced in June of that year.
The OCC and FinCEN are part of the U.S. Department of the Treasury. FinCEN said its civil monetary penalty is the first by its new enforcement division, created in a June reorganization.