NEWARK, N.J. (Legal Newsline) - New Jersey Attorney General Jeffrey Chiesa announced a $450,000 settlement Wednesday with a Canadian investment bank that allegedly failed to perform required reviews of accounts held by a convicted securities fraudster.
RBC Capital Markets LLC allegedly failed to follow its own procedures when it failed to perform monthly account reviews on accounts opened by James Hankins, Jr. By March 2006, the required monthly reviews of Hankins' accounts were reported as between 162 and 253 days overdue. Hankins allegedly used the accounts to engage in a multi-million dollar Ponzi scheme.
The New Jersey Division of Consumer Affairs' Bureau of Securities Affairs filed a lawsuit against Hankins in 2008 and obtained a default judgment to permanently bar him from the state's securities industry and order the payment of $7 million in restitution and $220,000 in civil penalties. Hankins pled guilty to criminal charges and is now serving a 20-year prison sentence.
"RBC failed to follow its own procedures that are designed to monitor account activity," Chiesa said. "In this case, the bank's failure may have cost investors severely. We will not allow such laxity to go unpunished."
Under the terms of the settlement, RBC will pay $300,000 in disgorgement to the bureau, which will be distributed to Hankins' investors. RBC must also pay $50,000 as a civil penalty to the bureau with an additional $100,000 suspended because of RBC's cooperation with the state.