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    RY   CA7800871021

ROYAL BANK OF CANADA

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RBC resolves U.S. SEC charges over bond abuses, is fined

09/17/2021 | 11:27am EDT
FILE PHOTO: A Royal Bank of Canada logo is seen on Bay Street in the heart of the financial district in Toronto

(Reuters) -A Royal Bank of Canada unit was censured and will pay more than $863,000 to resolve U.S. regulatory charges it broke rules meant to give retail and institutional investors priority in buying new municipal bonds.

In a civil settlement announced on Friday, the U.S. Securities and Exchange Commission said RBC Capital Markets LLC improperly allocated bonds to investors known as "flippers" who quickly resold their bonds to other broker-dealers at a profit.

Municipal bonds are typically issued by states, cities and school districts to fund operations and projects, and contain tax advantages over corporate and U.S. government bonds.

The SEC said RBC knew or should have known that giving priority to flippers violated its rules on bond offerings it underwrote.

It said RBC also improperly bought new bonds it had not underwritten from flippers, rather than wait in line to buy those bonds from the underwriters.

The alleged violations occurred from 2014 to 2017.

RBC's payout includes a $150,000 civil fine, plus disgorgement and interest.

Two RBC officials, head of municipal syndication Jaime Durando and former head of municipal sales Kenneth Friedrich, were also censured by the SEC and fined a combined $55,000. Friedrich left the bank in 2016.

None of the defendants admitted or denied wrongdoing. RBC closed the flippers' accounts and improved surveillance to help avert a recurrence.

RBC declined to comment. Lawyers for the other defendants did not immediately respond to requests for comment.

The SEC has reached several settlements over flipping abuses in municipal bonds, including a $10 million accord with Switzerland's UBS AG in July 2020.

(Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama and Dan Grebler)

By Jonathan Stempel


ę Reuters 2021
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Financials
Sales 2021 47 785 M 38 606 M 38 606 M
Net income 2021 15 993 M 12 920 M 12 920 M
Net Debt 2021 - - -
P/E ratio 2021 11,7x
Yield 2021 3,31%
Capitalization 186 B 150 B 150 B
Capi. / Sales 2021 3,90x
Capi. / Sales 2022 3,73x
Nbr of Employees 85 887
Free-Float 90,0%
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Last Close Price 130,66 CAD
Average target price 142,58 CAD
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David Ian McKay President, Chief Executive Officer & Director
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Kathleen Taylor Chairman
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