TD Bank sues former wealth adviser amid money-laundering assessment

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It appeared like a typical dispute between an organization and a former worker: Toronto-Dominion Bank sued wealth adviser Gregg Desmarais final month, claiming he and a colleague “abruptly” resigned and violated their contracts by luring away shoppers with hundreds of thousands of {dollars} of property to competitor Raymond James Financial Inc.

But Toronto-Dominion advised a wholly totally different story when it reported his departure to regulators in April: Desmarais voluntarily stop after the financial institution opened an inner assessment over suspected violations of anti-money-laundering insurance policies, in keeping with a disclosure the Canadian banking big filed with the Financial Industry Regulatory Authority.

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The discover got here as Toronto-Dominion is below investigation by the U.S. Department of Justice, financial institution regulators and the Treasury Department over allegations that it did not catch cash laundering and different monetary crimes at a number of of its U.S. branches. The lender has mentioned it’s within the midst of a “complete overhaul” of its anti-money-laundering program.

Toronto-Dominion declined to touch upon the lawsuit in opposition to Desmarais, citing the continuing authorized proceedings. The inner assessment cited on his Finra profile “will not be associated to the financial institution’s broader AML investigation,” spokesperson Lisa Hodgins mentioned.

She mentioned the investigation disclosed to Finra was not concluded earlier than Desmarais left the financial institution and that it’s unrelated to the non-solicitation lawsuit, which doesn’t point out anti-money-laundering points.

“Mr. Desmarais denies TD’s baseless allegations,” Michael Roche, a lawyer representing Desmarais within the lawsuit, mentioned by e mail. “I’d additionally like to notice that TD’s lawsuit in opposition to my shopper has nothing to do with TD’s AML points.”

Representatives for Raymond James had no instant remark.

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Desmarais “abruptly resigned” and terminated his registration with the financial institution on April 25, in keeping with Toronto-Dominion’s grievance, filed with the U.S. District Court in Connecticut. The case has but to be heard on its deserves, however there’s a short-term restraining order in place barring Desmarais from soliciting further shoppers of his former agency.

His Finra profile, below the class of “employment separation after allegations,” says: “An inner assessment was initiated of the Representative’s actions based mostly on the suspected violation of agency Anti-Money Laundering (AML) coverage by the Representative.”

That sort of disclosure occasion pertains to conditions the place a dealer voluntarily resigns, is fired or was permitted to resign after being accused of violating investment-related legal guidelines, guidelines or requirements; fraud or the wrongful taking of property; or failure to oversee in reference to investment-related necessities, in keeping with Finra.

Desmarais’s termination sort is listed as “voluntary resignation” on April 24 and the product sort concerned is described as “banking merchandise” apart from certificates of deposit.

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Finra’s publicly accessible database, often known as BrokerCheck, is meant to assist buyers make selections in regards to the advisers and corporations they work with.

But the regulator additionally notes that disclosures posted on the web site “could also be pending or contain allegations which are contested and haven’t been resolved or confirmed.” It cautions that points might finally be withdrawn, dismissed, resolved in favor of the dealer or finish in a negotiated settlement, “with no admission or discovering of wrongdoing.”

With help from Sridhar Natarajan, Noah Buhayar and Dean Halford.

Bloomberg.com

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