A "wash trading scheme of massive proportions" is alleged by the CFTC against Royal Bank of...

A "wash trading scheme of massive proportions" is alleged by the CFTC against Royal Bank of Canada (RY). The CFTC says the bank engaged in stock futures trades with 2 foreign subsidiaries from 2007-10 that weren't "at arm's length," carried no market risk, and were designed to get Canadian tax credits on its stock holdings. Shares -2% AH.

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Comments (8)
  • phdinsuntanning
    , contributor
    Comments (1325) | Send Message
    what about rigged appl trade driven by central banks money?
    is not even worst form of market manipulation?
    most of profits taken overseas and taxes never paid
    2 Apr 2012, 06:28 PM Reply Like
  • Demonical
    , contributor
    Comments (117) | Send Message
    ^ How is that relevant to the allegations against RY?


    And can somebody explain what this charge really means, will it cost RY, etc... ??
    2 Apr 2012, 06:48 PM Reply Like
  • rick flair
    , contributor
    Comments (369) | Send Message
    the entire canadian bank industry does it, WITH YOUR SHARES...ever wonder why ?
    2 Apr 2012, 07:11 PM Reply Like
  • Demonical
    , contributor
    Comments (117) | Send Message
    ^ I don't even understand the trade or transaction, whatever this 'wash' thing is. I'm just trying to understand what the hell it is, so I can formulate an opinion on this.
    2 Apr 2012, 07:34 PM Reply Like
  • losbronces
    , contributor
    Comments (865) | Send Message
    Here is a good definition of what they are doing: http://bit.ly/H9RHtp


    They are selling a position at a loss for tax purposes without really selling the position. They need to use two brokerages to do this.
    2 Apr 2012, 08:13 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4183) | Send Message
    That is why I dislike banks.....
    2 Apr 2012, 09:22 PM Reply Like
  • happyshorter
    , contributor
    Comments (1214) | Send Message
    That is a great way to make money:
    Buy a bunch of Canadian stocks (and sell them through the back door)
    Cash the dividends.
    (and maybe cash them twice ?, because when you are short on a stock, you have to pay the dividends to the person whose shares you've shorted)
    Don't pay taxes on those dividends,
    Get tax credit for the capital loss when you after a year officially sell the stock.


    Although I am Canadian my-self, I did not know that big companies could have such tax breaks on dividends, when we, small investors, have to pay taxes on the dividends of stocks that we hold for years.


    I wish they can prove that what they made was not illegal, so then it might become legal for us too.


    Why do they sue a Canadian bank, when American banks do very similar things?
    Because the American banks make the law in the US, not "small" banks like the biggest Canadian bank.
    3 Apr 2012, 05:07 AM Reply Like
  • Demonical
    , contributor
    Comments (117) | Send Message
    From everything I've heard this morning, these transactions were all approved by the CFTC, and then reviewing these after-the-fact somebody decided they weren't legit'.
    Consensus is analysts are saying these are not all that unusual trades, and the $$$ involved is not material to RY. Like $20M-$30 a year; chump change for Royal Bank.


    Sounds a bit to me like some college graduate at the CFTC that is looking for attention.
    3 Apr 2012, 09:53 AM Reply Like
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