Item: Shepherd Smith Edwards & Kantas, LLP
Rating: 5
Author: M.B.

RBC Capital Markets

RBC Capital Markets is the United States-based subsidiary brokerage firm of Royal Bank of Canada (RBC). With nearly 4,000 investment professionals in 70 offices across 15 countries, this global investment bank offers finance, capital markets, and banking services to institutional investors, corporations, asset managers, and governments.

The other RBC broker-dealer subsidiaries are:

RBC Dominion Securities, Inc., in Canada
RBC Europe Limited (RBCEL) in Europe
Royal Bank of Canada in Australia and Asia
RBC Capital Markets (Japan) Ltd. in Japan

At Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com), our institutional investor lawyers represent customers of RBC Capital Markets who have suffered significant losses due to brokerage firm fraud or negligence. Call us at (800) 259-9010 today.

Alleged Supervisory Failures and Misrepresentations and Omissions Lead to Regulatory Sanctions

According to BrokerCheck, RBC Capital Markets has 449 disclosures. This includes 326 regulatory events, 2 civil events, 7 bond events, and 114 arbitration claims.

Recent and significant regulatory events involving this brokerage firm include:

4/2020: The US Securities and Exchange Commission (SEC) ordered the broker-dealer to pay $3.9M in disgorgement with penalties for not disclosing that it had sold more costly mutual fund share classes. This occurred even though there were less expensive share classes from the same fund available to retirement account clients and charitable organizations. The regulator said that about 4,571 customers overpaid around $2.6M in these sales fees, ongoing charges, and other costs. RBC settled without denying or admitting to the findings.
10/2019: The brokerage firm settled charges with the Commodity Futures Trading Commission (CFTC) for its failure to fulfill its supervisory duties. This allegedly resulted in hundreds of illegal trades and other violations from at least late 2011 through May 2019. The firm was accused of engaging in “at least 385 non-competitive, fictitious, exchange for physical wash transactions” (Wash EFPs). RBC Capital Markets was ordered to pay a $5M civil monetary penalty.
10/2019: The Financial Industry Regulatory Authority (FINRA) ordered RBC Capital Markets to pay a $2.9M fine for its handling of mutual fund, exchange-traded note (ETN) and exchange-traded fund (ETF) sales. According to the self-regulatory organization (SRO), from July 2003 to October 2004, the brokerage firm did not make sure that prospectuses related to the sale of specific registered securities were delivered, nor did it give clients who purchased ETFs their product descriptions. RBC is accused of inadequate supervisory systems related to the delivery of these prospectuses and product descriptions.
10/2018: The firm was fined $215K by FINRA after it was found that they did not implement an adequate supervisory system related to the close-out of fail-to-deliver positions that were in compliance with securities laws.
12/2016: FINRA fined RBC Capital Markets, jointly with RBC Capital Markets Arbitrage SA, $3.5M for not adequately maintaining about 172 million electronic brokerage records in non-rewritable and non-erasable formats.
4/2015: RBC was ordered by FINRA to pay a $1M fine and about $434K in customer restitution over alleged supervisory failures that led to unsuitable reverse convertible sales. Some 218 customer accounts collectively lost at least $1.1M. RBC settled without denying or admitting to the charges.

RBC Capital Markets and Puerto Rico Bonds

The broker-dealer became the subject of numerous Puerto Rico bond fraud and closed-end bond fraud claims after the US territory’s municipal bonds plunged in value in 2013. Not only did RBC Capital Markets sell these bonds to customers, many of whom suffered significant losses, but the firm was also one of the underwriters for Puerto Rico bonds and earned millions in fees.

As an underwriter for the Puerto Rico Sales Tax Financing Corporation (COFINA), the broker-dealer would have known the risks involved in these bonds. Yet, they allegedly overconcentrated investors’ accounts in Puerto Rico bonds.

Institutional Investor Fraud Attorneys

SSEK Law Firm represents pension funds, charitable organizations, mutual funds, commercial trusts, endowment funds, hedge funds, private equity investors, and other institutional investors in recovering their investment losses.

These losses are often sustained because of the misconduct, lack of action, negligence, or fraudulent actions of brokers-dealers, stockbrokers, money managers, and investment advisors.

If you are an institutional investor or high net worth individual investor who suffered significant losses with RBC Capital Markets as your brokerage firm, our investment fraud lawyers can help you explore your legal options. Call (800)-259-9010 or contact us online.

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