The SEC is reportedly preparing an enforcement action against Royal Bank of Canada, Canada’s largest bank, as part of its investigation into the collapse of the $330-billion auction-rate securities market. The Financial Post reports that the bank is “at the top of the list for enforcement agents” at the SEC, stating that two officials at at the agency have acknowledged they are preparing a federal enforcement action against RBC that would make RBC one of the first Canadian banks to be called to account for its role in the credit crisis.
The SEC is actively pursuing a case against RBC “after previous investigations found firms dealing in auction-rate securities misled customers into believing the financial products were safe and highly liquid investments comparable to cash deposits,” the article states.
An RBC executive said Wednesday the bank was working with regulators and expected to reach a comprehensive settlement with U.S. authorities.
RBC is also the target of a class action law suit from customers of the bank on similar issues filed by law firm Girard Gibbs.