NJ Settles for $450,000 with Canadian Bank Over Ponzi Scheme
A Canadian investment bank has agreed to a $450,000 settlement with the State Division of Consumer Affairs Bureau of Securities for failing to perform required review of accounts held by convicted securities fraudster James Hankins, Jr.
RBC Capital Markets, LLC didn't follow its own procedures and never performed monthly reviews on accounts opened by Hankins. By March 2006, the required monthly reviews of Hankins' accounts were reported as overdue between 162 and 253 days. He used those accounts to perpetuate a multi-million dollar Ponzi scheme.
Hankins was sued by the Bureau in 2008 and he was permanently barred from the State's securities industry. He was also ordered to pay $7 million in restitution and $220,000 in civil penalties. Hankins pleaded guilty to criminal charges from his Ponzi scheme and is currently serving a 20-year prison sentence.
"RBC failed to follow its own procedures that are designed to monitor account activity. In this case, the bank's failure may have cost investors severely. We will not allow such laxity to go unpunished," said Attorney General Jeff Chiesa.
RBC will pay $300,000 in disgorgement to the Bureau, which will be distributed to Hankins' investors. The remaining $150,000 is is a civil penalty, $50,000 of which is payable to the Bureau and $100,000 is suspended due to RBC's cooperation with the State.