U.S. Department
of Justice
The Bank of Nova Scotia, Deferred Prosecution Agreement (DPA)
PENDING CRIMINAL DIVISION CASES
The Bank of Nova Scotia, Deferred Prosecution Agreement (DPA)
Court Docket No.: 3:20-CR-00707-MAS
Court Assigned: This case is assigned to U.S. District Court for the District of New Jersey, Clarkson S. Fisher Building & U.S. Courthouse, 402 East State Street Room 2020, Trenton, NJ 08608.
On August 19, 2020, The Bank of Nova Scotia (Scotiabank) entered into a deferred prosecution agreement (DPA) with the Department of Justice and agreed to pay $60,451,102 in criminal monetary penalties, criminal disgorgement and victim compensation. The DPA arises from criminal charges related to a price manipulation and fraud scheme involving thousands of episodes of unlawful trading activity in U.S. commodities markets by four former traders.
According to court documents filed as part of the DPA, from approximately January 2008 until July 2016, four metals traders employed by Scotiabank, including Corey Flaum, engaged in fraudulent and manipulative trading practices in the markets for gold, silver, platinum, and palladium futures contracts (collectively, precious metals futures contracts) that traded on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by the CME Group, Inc. On thousands of occasions throughout this period, the traders placed orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution. By placing these orders, the traders intended to artificially move the prices of precious metals futures contracts in a direction that was favorable to them and Scotiabank, and to inject false and misleading information into the precious metals futures markets in order to deceive other market participants into believing something untrue, namely that the market reflected legitimate supply and demand. This false and misleading information was intended to, and at times did, trick other market participants into reacting to the apparent change and imbalance in supply and demand by buying and selling futures contracts at quantities, prices, and times that they otherwise likely would not have traded.
Under the terms of the DPA, the Bank of Nova Scotia has agreed to pay a combined $60,451,102 in a criminal monetary penalty ($42,000,000), criminal disgorgement ($11,828,912), and victim compensation ($6,622,190) with the criminal monetary penalty credited for any payments made to the Commodity Futures Trading Commission (CFTC). Scotiabank has also agreed to, among other things, continue to cooperate with the Department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, to modify its compliance program where necessary and appropriate, and to retain an independent compliance monitor for three years.
On July 25, 2019, Flaum pleaded guilty to one count of attempted price manipulation in connection with his precious metals futures contracts trading at Scotiabank and another financial services firm. His sentencing is scheduled for January 27, 2021 before U.S. District Judge Brian M. Cogan of the Eastern District of New York.
To facilitate the efficient payment of compensation to victims in this matter the Department will serve as the claims administrator and will have sole discretion to determine how the victim compensation amount will be disbursed. Please complete the below Victim Impact Statement with the requisite information to submit your claim.
For more information about the Deferred Prosecution Agreement (DPA), please see below:
Press Release
The Bank of Nova Scotia, DPA
Criminal Information
For more information on related cases, please see below:
Former Precious Metals Trader Pleads Guilty to Attempted Commodities Price Manipulation
Victim Impact Statement: If you would like to submit a Victim Impact Statement you may do so by mailing the Victim Impact Statement below to: Victim Witness Unit, U.S. Department of Justice, Criminal Division, Fraud Section, 10th & Constitution Avenue, NW, Bond Building, Room 4416, Washington, DC 20530. You also may submit the Victim Impact Statement via email at Victimassistance.fraud@usdoj.gov or by fax at: (202) 514-3708.
The information on this website will be updated as new developments arise in the case. If you have any questions, please call the Victim Assistance Line toll-free at (888) 549-3945 or email us at victimassistance.fraud@usdoj.gov.
Presumption of Innocence: It is important to keep in mind that defendants are presumed innocent until proven guilty and that presumption requires both the court and our office to take certain steps to ensure that justice is served.
Crime Victims’ Rights Act and Right to Retain Counsel: The Crime Victims’ Rights Act (18 U.S.C. § 3771) applies only to victims of the counts charged in federal court, and thus individuals may not be able to exercise all of these rights if the crime of which the individual is a victim was not charged. Section 377I(c)(2) of this Act requires that we advise you that you have the right to retain counsel. Although the statute specifically sets forth your right to seek advice of an attorney with regard to your rights under the statute, there is no requirement that you retain counsel. The Government may not recommend any specific counsel, nor can the Government (or the Court) pay for counsel to represent you. Government attorneys represent the United States.
If you elect to obtain counsel to represent your interests, please have your attorney notify this office in writing at: U.S. Department of Justice, Criminal Division, Fraud Section, 10th & Constitution Avenue, NW, Bond Building, 4th Floor, Washington, DC 20530, Attention: Victim Witness Unit; fax: (202) 514-3708; or email: victimassistance.fraud@usdoj.gov. If you elect not to retain counsel to represent your interests, you do not need to do anything.