“Royal Bank of Canada has chosen to challenge the Commodity Futures Trading Commission in court instead of settling over allegations it engaged in illegal futures trades because it said it didn’t break any rules.
“It was a conscious decision to defend ourselves vigorously and we made that decision because we believe we didn’t do anything wrong,” said Arthur Hahn, a Chicago-based lawyer defending Canada’s biggest bank.
Royal Bank is being sued by the regulator over claims it engaged in illegal futures trades worth hundreds of millions of dollars to garner tax benefits tied to equities. The Toronto- based lender made false and misleading statements about “wash trades” from 2007 to 2010 in which affiliates traded among themselves in a way that undermined competition and price discovery on the OneChicago LLC exchange, the CFTC said in a complaint filed April 2 in Manhattan federal court.
“All of the transactions in question here were within standard rules and the guidances put out by the commission,” Hahn said in an interview. “We don’t think we did anything wrong, it’s that simple.”
Royal Bank enlisted affiliates to help carry out hundreds of futures transactions done off-exchange and then reported to OneChicago as block trades between independent affiliates, according to the CFTC.
“These were legitimate block trades, these were legitimate trades between affiliates,” said Hahn, a partner with Katten Muchin Rosenman LLP (1161L)…”
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