Former TD Bank Trader Prohibited from Financial Industry While Awaiting Spoofing Trial
A former senior trader who worked at Toronto-Dominion Bank and Jefferies Financial Group Inc. has been officially banned from the U.S. financial industry while he awaits trial on charges of allegedly manipulating the market for U.S. government bonds. The Financial Industry Regulatory Authority (Finra) has barred Jeyakumar Nadarajah from associating with any regulated firm after he failed to provide certain information requested by the watchdog.
Regulatory Action and Investigation Details
According to filings dated February 5, Finra had requested Nadarajah to answer questions as part of its investigation into "certain trading practices by certain traders" at an unidentified company. While Nadarajah did appear for on-the-record testimony and answered some questions, he declined to answer all of them "due to a pending matter." The regulatory body subsequently took action against him for this non-compliance.
Nadarajah consented to the disciplinary action without admitting or denying Finra's findings. His lawyer did not respond to multiple requests for comment regarding the ban. Spokespeople for both Toronto-based TD Bank and New York-based Jefferies declined to comment on the situation.
Criminal Charges and Legal Proceedings
U.S. prosecutors in New Jersey charged Nadarajah in 2023 for allegedly engaging in so-called spoofing transactions while he served as head of trading in U.S. Treasuries at TD Bank. Nadarajah has consistently denied any wrongdoing, and his trial has been scheduled for November according to court notices.
The practice of spoofing involves traders placing orders to buy or sell securities that they have no intention of fulfilling, thereby manipulating markets by creating false impressions of supply or demand. U.S. regulators have aggressively pursued spoofing cases since the practice was specifically defined and made illegal through the 2010 Dodd-Frank Act.
Employment History and Related Settlements
Nadarajah first joined TD Bank in 2009, but the lender terminated his employment in 2019 for allegedly violating compliance procedures that prohibit "the placement and subsequent cancellation" of trades, according to Finra filings. He subsequently joined Jefferies in 2020, but the New York-based firm discharged him in 2024, citing "loss of confidence due to pending criminal charges."
In a related development, TD Bank paid more than $20 million to resolve probes into spoofing allegations in 2024. The bank also entered into a three-year deferred prosecution agreement with the U.S. Department of Justice the same year to end criminal and civil investigations into what the DOJ described as "hundreds of fraudulent spoof orders amounting to tens of billions of dollars of false supply and demand" for Treasury securities.
Legal Challenges and Industry Context
Nadarajah's legal team has criticized the DOJ's agreement with TD Bank, alleging in a court filing that it "announced to the world that Mr. Nadarajah is guilty" and denied him the right to a fair trial. This case occurs within a broader context of regulatory action against spoofing practices across the financial industry.
Other major financial institutions including JPMorgan Chase & Co., Bank of America Corp., and NatWest Group Plc have paid millions of dollars in recent years to resolve allegations that their traders engaged in spoofing. In 2024, Nomura Holdings Inc. found itself embroiled in a spoofing scandal and fired a top trader in Japanese government bonds after regulators discovered he had arranged illicit transactions.
The ongoing case against Nadarajah represents another chapter in regulators' continuing efforts to combat market manipulation in government bond trading, with the November trial date looming as a significant milestone in this high-profile financial enforcement action.
