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[Federal Register Volume 89, Number 250 (Tuesday, December 31, 2024)]
[Notices]
[Pages 107181-107185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-31134]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-35427; File No. 812-15678]

The Toronto-Dominion Bank, et al.; Notice of Application and 
Temporary Order

December 20, 2024.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Temporary order and notice of application for a permanent order 
under section 9(c) of the Investment Company Act of 1940 (``Act'').

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Summary of Application: Applicants have received a temporary order 
(``Temporary Order'') exempting them from section 9(a) of the Act, with 
respect to guilty pleas entered on October 10, 2024 (``Guilty Pleas''), 
by TD Bank US Holding Company (``TDBUSH'') and TD Bank, N.A. (``TDBNA'' 
and together with TDBUSH, the ``Pleading Entities'') in the United 
States District Court for New Jersey (the ``District Court'') in 
connection with plea agreements (``Plea Agreements'') between the 
Pleading Entities and the United States Department of Justice 
(``DOJ''), until the Commission takes final action on an application 
for a permanent order (the ``Permanent Order,'' and with the Temporary 
Order, the ``Orders''). Applicants also have applied for a permanent 
order.

Applicants: The Toronto-Dominion Bank (``TD Bank''), TDBUSH, TDBNA, and 
Epoch Investment Partners, Inc. (``Epoch'' and collectively, the 
``Applicants'').

Filing Date: The application was filed on December 20, 2024.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may

[[Page 107182]]

request a hearing by emailing the Commission's Secretary at [email protected] and serving applicants with a copy of the request, by 
email. Hearing requests should be received by the Commission by 5:30 
p.m. on January 16, 2025 and should be accompanied by proof of service 
on the applicants, in the form of an affidavit, or for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by emailing the 
Commission's Secretary.

ADDRESSES: The Commission: [email protected]. Applicants: Jane 
Langford at [email protected].

FOR FURTHER INFORMATION CONTACT: Adam M. Large, Senior Special Counsel, 
or Nadya Roytblat, Assistant Chief Counsel, at (202) 551-6825 (Division 
of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a temporary order and a 
summary of the application. The complete application may be obtained 
via the Commission's website by searching for the file number at the 
top of this document, or for an Applicant using the Company name search 
field, on the SEC's EDGAR system. The SEC's EDGAR system may be 
searched at https://www.sec.gov/edgar/searchedgar/legacy/companysearch.html. You may also call the SEC's Office of Investor 
Education and Advocacy at (202) 551-8090.

Applicants' Representations

    1. TDBNA, a Pleading Entity, is a national bank headquartered in 
Cherry Hill, New Jersey. TDBNA is a wholly-owned subsidiary of TDBUSH. 
TDBNA's deposits are insured under the Federal Deposit Insurance Act, 
and the bank is regulated and supervised by the Office of the 
Comptroller of the Currency (``OCC'').
    2. TDBUSH, a Pleading Entity, is a Delaware corporation and a non-
operating holding company with oversight over the anti-money laundering 
(``AML'') compliance program of TDBNA, its direct subsidiary, and is 
accountable for monitoring the effectiveness of TDBNA's AML program 
pursuant to the Bank Secrecy Act (``BSA'').
    3. Epoch, a Delaware corporation, is registered as an investment 
adviser under the Investment Advisers Act of 1940 (the ``Advisers 
Act'') and is a direct, wholly-owned subsidiary of TDBUSH. Epoch serves 
as a sub-adviser to the investment companies registered under the Act 
that are listed in Appendix A to the application.
    4. TD Bank is an international banking and financial services 
corporation headquartered in Toronto, Canada. TD Bank is a chartered 
bank subject to the provisions of the Bank Act (Canada). TD Bank is the 
indirect parent of TDBUSH through an intermediate U.S. holding company.
    5. While no existing company of which a Pleading Entity is an 
``affiliated person'' within the meaning of section 2(a)(3) of the Act 
(``Affiliated Person''), other than Epoch, currently serves as an 
investment adviser (as defined in section 2(a)(20) of the Act) or 
depositor of any registered investment company, employees' securities 
company (``ESC''), or investment company that has elected to be treated 
as a business development company (``BDC'') under the Act, or as 
principal underwriter (as defined in section 2(a)(29) of the Act) for 
any registered open-end investment company (``Open-End Fund''), 
registered unit investment trust (``UIT''), or registered face-amount 
certificate company (``FACC'') (such persons, ``Funds,'' and such 
activities performed on behalf of such persons, collectively ``Fund 
Servicing Activities''), Applicants request that any relief granted by 
the Commission pursuant to the application also apply to any other 
current or future Affiliated Person of the Pleading Entities other than 
TDBUSH and TDBNA (together with Epoch, the ``Covered Persons'') with 
respect to any activity contemplated by section 9(a) of the Act.\1\
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    \1\ Covered Persons may, if the Order is granted, in the future 
act in any of the capacities contemplated by section 9(a) of the Act 
subject to the applicable terms and conditions of the Order. TD Bank 
does not and will not serve as an investment adviser, depositor or 
principal underwriter to any registered investment company as it is 
not a Covered Person.
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    6. On October 10, 2024, the DOJ filed a one count criminal 
information in the District Court charging TDBNA with conspiring to: 
(1) fail to maintain an adequate AML program, contrary to Title 31, 
United States Code, Sections 5318(h) and 5322; (2) fail to file 
accurate Currency Transaction Reports (``CTRs''), contrary to Title 31, 
United States Code, Sections 5313 and 5324; and (3) launder monetary 
instruments, contrary to Title 18, United States Code, Section 
1956(a)(2)(B)(i), in violation of Title 18, United States Code, Section 
371. On the same date, the DOJ filed a two-count criminal information 
in the District Court charging TDBUSH with: (1) failing to maintain an 
adequate AML program, in violation of Title 31, United States Code, 
Section 5318(h) and 5322; and (2) failing to file accurate CTRs in 
violation of Title 31, United States Code, Sections 5313 and 5324. 
According to the Statement of Facts that served as the basis for the 
Plea Agreements (``Statement of Facts''), between January 2014 and 
October 2023 TDBNA and TDBUSH failed to implement an AML program that 
complied with the BSA. As a result, according to the Statement of 
Facts, the Pleading Entities failed to remediate deficiencies in the 
AML program, including (a) failing to substantively update TDBNA's 
transaction monitoring system between 2014 and 2022, and (b) failing to 
adequately train its AML and retail employees. These failures enabled, 
among other things, three money laundering networks to launder over 
$600 million in criminal proceeds through TDBNA between 2019 and 2023. 
These failures also created vulnerabilities that allowed five branch-
level TDBNA employees to open and maintain accounts for one of these 
money laundering networks. According to the Statement of Facts, TDBNA's 
senior AML executives knew there were deficiencies in the Pleading 
Entities' U.S. AML policies, procedures, and controls. According to the 
Statement of Facts, the Pleading Entities willfully failed to file 
accurate CTRs related to one of the three money laundering schemes.
    7. Pursuant to the Plea Agreements, each Pleading Entity agreed to 
enter a plea of guilty to the charge(s) set out in its respective 
information. According to the Plea Agreements, each of the Pleading 
Entities agreed: (1) to abide by all terms and obligations of the Plea 
Agreement; (2) that in the event that, during the term of the Plea 
Agreement, the Pleading Entity undertakes any change in corporate form, 
including if it sells, merges, or transfers business operations that 
are material to its consolidated operations, or to the operations of 
any subsidiaries, branches, or affiliates involved in the conduct 
described in the Statement of Facts, as they exist as of the date of 
the Plea Agreements, whether such transaction is structured as a sale, 
asset sale, merger, transfer or other change in corporate form, it 
shall include in any contract for sale, merger, transfer, or other 
change in corporate form a provision binding the purchaser, or any 
successor in interest thereto, to the obligations described in the Plea 
Agreements; (3) to continue to cooperate fully with the DOJ (in any and 
all matters relating to the conduct, individuals, and entities 
described in the Plea Agreements and the Statement

[[Page 107183]]

of Facts as well as any other conduct, individuals, and entities under 
investigation by the DOJ at any time during the term of the Plea 
Agreements, until the later of the date upon which all investigations 
and prosecutions arising out of such conduct are concluded or the end 
of the term of the Plea Agreements; (4) that, should the Pleading 
Entity learn of any evidence of allegation of conduct by the Pleading 
Entity, its affiliates, or their employees that may constitute a 
violation of federal criminal law, the Pleading Entity shall promptly 
report such evidence or allegation to the DOJ in a manner and form 
consistent with local law; and (5) that any fine, forfeiture, or 
restitution imposed by the District Court will be due and payable as 
specified in the Plea Agreements, and that any forfeiture or 
restitution imposed by the District Court will be due and payable in 
accordance with the District Court's order. The monetary penalties and 
forfeiture under the Plea Agreements totaled approximately $1.9 
billion.
    8. The Pleading Entities are subject to orders by other U.S. 
regulatory or enforcement agencies related to the Conduct. The Federal 
Reserve Board (``FRB'') entered a cease-and-desist order and order of 
assessment of a civil monetary penalty (the ``FRB Order'') on October 
9, 2024 against the TD Bank, TDBUSH, and TD Group US Holdings 
(``TDGUS''), the ultimate U.S. holding company for TD Bank's U.S. 
operations. The Financial Crimes Enforcement Network (``FinCEN'') 
entered into a consent order (the ``FinCEN Order'') on October 10, 2024 
with TDBNA and TD Bank USA, National Association (``TDBUSA''), a 
national bank and wholly owned direct subsidiary of TDBUSH, concerning 
violations of the BSA, including the failure to maintain an adequate 
AML program, and the failure to file CTRs and Suspicious Activity 
Reports (``SARs''). The OCC entered into a consent order (the ``OCC 
Order'') with TDBNA and TDBUSA concerning violations of the BSA, 
including the failure to maintain a compliant AML program, the failure 
to file SARs and CTRs in accordance with law and regulations, and the 
failure to conduct customer due diligence as required by law and 
regulation.

Applicants' Legal Analysis

    1. Section 9(a)(1) of the Act provides, in pertinent part, that a 
person may not serve or act as an investment adviser or depositor of 
any registered investment company or as principal underwriter for any 
Open-End Fund, UIT, or FACC, if such person within ten years has been 
convicted of any felony or misdemeanor, including those arising out of 
such person's conduct as a broker, dealer or bank. Section 2(a)(10) of 
the Act defines the term ``convicted'' to include a plea of guilty. 
Section 9(a)(3) of the Act extends the prohibitions of section 9(a)(1) 
to a company, any affiliated person of which has been disqualified 
under the provisions of section 9(a)(1). Section 2(a)(3) of the Act 
defines ``affiliated person'' to include, among others, any person 
directly or indirectly controlling, controlled by, or under common 
control with, the other person. The Pleading Entities are affiliated 
persons of each of the other Applicants within the meaning of section 
2(a)(3) of the Act. Therefore, the Plea Agreement resulted in a 
disqualification of Epoch for ten years under section 9(a)(3) from 
acting in any of the capacities listed in section 9(a), by effect of a 
conviction described in section 9(a)(1).
    2. Section 9(c) of the Act provides that: ``[t]he Commission shall 
by order grant [an] application [for relief from the prohibitions of 
subsection 9(a)], either unconditionally or on an appropriate temporary 
or other conditional basis, if it is established [i] that the 
prohibitions of subsection 9(a), as applied to such person, are unduly 
or disproportionately severe or [ii] that the conduct of such person 
has been such as not to make it against the public interest or the 
protection of investors to grant such application.'' Applicants have 
filed an application pursuant to section 9(c) seeking a Temporary Order 
and a Permanent Order exempting Epoch and other Covered Persons from 
the disqualification provisions of section 9(a) of the Act. The Covered 
Persons may, if the Orders are granted, in the future act in any of the 
capacities contemplated by section 9(a) of the Act subject to the 
applicable terms and conditions of the Orders.
    3. Applicants believe they meet the standards for exemption 
specified in section 9(c). Applicants assert that: (i) the scope of the 
misconduct was limited and did not involve any of the Applicants acting 
as an investment adviser, depositor or principal underwriter for any 
Fund, or any Fund with respect to which Epoch engage in Fund Servicing 
Activities; (ii) application of the statutory bar would impose 
significant hardships on the Funds and their shareholders; (iii) the 
prohibitions of section 9(a), if applied to Epoch, would be unduly or 
disproportionately severe; and (iv) the Conduct did not constitute 
conduct that would make it against the public interest or protection of 
investors to grant the exemption from section 9(a).
    4. Applicants represent that the Conduct did not involve Epoch or 
any Epoch personnel. Applicants further represent that the Conduct did 
not involve any Fund with respect to which Epoch engaged in Fund 
Servicing Activities. Applicants represent that the Conduct did not 
involve any of the Applicants acting in the capacity as an investment 
adviser, depositor or principal underwriter for any Fund.\2\ Applicants 
state that the Conduct was confined to TDBNA and TDBUSH. Applicants 
state that the five former TDBNA employees identified in the Statement 
of Facts as having willfully opened or maintained accounts for a money 
laundering network have been terminated and are not employed by any 
affiliate of the Pleading Entities. Applicants state that TD Bank 
recognizes that effective AML compliance begins by setting the ``tone 
from the top'' and continues to implement significant changes in 
connection with relevant practices and controls, as summarized below 
and described in more detail in the application. Applicants assert 
that, in light of the limited scope of the Conduct, it would be unduly 
and disproportionately severe to impose a section 9(a) disqualification 
on the Fund Servicing Applicants. Applicants assert that the conduct of 
the Applicants has not been such to make it against the public interest 
or the protection of investors to grant the exemption from section 
9(a).
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    \2\ Applicants represent that the Pleading Entities do not 
engage, have not engaged, and will not engage in in any of the 
capacities contemplated by section 9(a) of the Act.
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    5. Applicants assert that neither the protection of investors nor 
the public interest would be served by permitting the section 9(a) 
disqualifications to apply to Epoch because those disqualifications 
would deprive the Funds of the sub-advisory services that shareholders 
expected the Funds would receive when they decided to invest in the 
Funds. Applicants also assert that application of the prohibitions of 
section 9(a) to Epoch could operate to the financial detriment of the 
Funds and their shareholders, including by causing the Funds to spend 
time and resources to engage substitute sub-advisers.
    6. Applicants assert that if Epoch were barred under Section 9(a) 
from providing investment advisory services to the Funds and were 
unable to obtain the requested exemption, the effect on its businesses 
and employees would be severe. Applicants state that Epoch has 
committed substantial capital and other resources to establishing 
expertise in

[[Page 107184]]

sub-advising Funds with a view to continuing and expanding this 
business, which Applicants consider strategically important. Applicants 
further state that prohibiting Epoch from engaging in Fund Servicing 
Activities would not only adversely affect its business but would also 
adversely affect its employees who are involved in these activities.
    7. Applicants represent that: (1) none of Epoch's current or former 
directors, officers or employees had any involvement in the Conduct; 
(2) no current or former employee of the Pleading Entities or any 
Covered Person who previously has been or who subsequently may be 
identified by the Pleading Entities or any U.S. or non-U.S. regulatory 
or enforcement agencies as having been responsible for the Conduct will 
be an officer, director, or employee of any Covered Person; (3) the 
identified employees have had no, and will not have any future, 
involvement in the Covered Persons' activities in any capacity 
described in section 9(a) of the Act; and (4) because the personnel of 
Epoch did not engage in the Conduct, shareholders of the Funds were not 
affected any differently than if those Funds had received services from 
any other non-affiliated investment adviser.
    8. Applicants have agreed that none of the Applicants or any of the 
other Covered Persons will employ the former employees of an affiliate 
of the Pleading Entities or any other person who subsequently may be 
identified by the Pleading Entity or any U.S. or non-U.S. regulatory or 
enforcement agencies as having been responsible for the Conduct in any 
capacity without first making a further application to the Commission 
pursuant to section 9(c).
    9. Applicants have also agreed each Applicant and Covered Person 
will adopt and implement policies and procedures reasonably designed to 
ensure compliance with the terms and conditions of any Orders granted 
under section 9(c).
    10. In addition, each Applicant and Covered Person will comply in 
all material respects with the material terms and conditions of the 
Plea Agreements and with the material terms of the FRB Order, the 
FinCEN Order, the OCC Order and any other orders issued by regulatory 
or enforcement agencies addressing the Conduct.
    11. Applicants further state that the Pleading Entities have 
undertaken and are continuing to undertake certain other remedial 
measures, as described in greater detail in the application. These 
remedial measures include: (i) implementing new transaction monitoring 
scenarios; (ii) enhancing policies and procedures related to the 
identification of parties involved in conducting transactions, the 
collection of such conductors' identifying information, and reporting 
of the conductors in CTRs; (iii) terminating, separating, and/or 
sanctioning certain employees involved in the Conduct; and (iv) 
improving the overall compliance function and increasing their 
investments in the program, including by hiring competent and 
experienced AML compliance employees and executives and making 
significant investments in technology and AML systems.
    12. As a result of the foregoing, the Applicants submit that absent 
relief, the prohibitions of section 9(a) would be unduly or 
disproportionately severe, and that the Conduct did not constitute 
conduct that would make it against the public interest or protection of 
investors to grant the exemption.
    13. To provide further assurance that the exemptive relief being 
requested in the application would be consistent with the public 
interest and the protection of the investors, the Applicants state that 
with respect to each of the Funds for which Epoch is a sub-adviser, 
they have disclosed and discussed the circumstances that led to the 
Plea Agreements, as well as any effects on the Funds, with the Fund's 
primary investment adviser. Applicants note that they understand that 
each primary investment adviser has provided to each Fund's board of 
directors all information concerning the Plea Agreements and the 
Application necessary for those Funds to fulfill their disclosure and 
other obligations under the U.S. federal securities laws. Applicants 
also state that they have offered to reimburse the Funds for all 
reasonable out-of-pocket expenses that the Funds have incurred as a 
result of the impact of the Plea Agreements on Epoch.
    14. Applicants represent that the sub-advisory fees that would 
otherwise be payable to Epoch by the primary investment advisers to the 
respective Funds for the period from October 10, 2024 through the date 
upon which the Commission grants the Temporary Order have been and will 
continue to be retained by the primary investment advisers in escrow 
arrangements. Amounts placed in the escrow arrangements will be 
released after the Commission has acted on the application for the 
Permanent Order.
    15. TD Bank previously applied for, and was granted by the 
Commission, an exemptive order under Section 9(c) of the Act, as 
described in greater detail in the application.\3\ Applicants note that 
none of the conduct underlying the previous Section 9(c) order involved 
the provision of Fund Servicing Activities.
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    \3\ See In the Matter of the Toronto Dominion bank., et al., 
Investment Company Act Release Nos. IC-24486 (June 7, 2000) (notice 
and temporary order) and IC-26787 (July 11, 2000) (permanent order).
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Applicants' Conditions

    Applicants agree that any order granted by the Commission pursuant 
to the application will be subject to the following conditions:
    1. Any temporary exemption granted pursuant to the application will 
be without prejudice to, and will not limit the Commission's rights in 
any manner with respect to, any Commission investigation of, or 
administrative proceedings involving or against, Covered Persons, 
including, without limitation, the consideration by the Commission of a 
permanent exemption from section 9(a) of the Act requested pursuant to 
the Application or the revocation or removal of any temporary 
exemptions granted under the Act in connection with the Application.
    2. None of the Applicants or any of the other Covered Persons will 
employ the former employees of an affiliate of the Pleading Entities or 
any other person who subsequently may be identified by the Pleading 
Entities or any U.S. or non-U.S. regulatory or enforcement agencies as 
having been responsible for the Conduct in any capacity without first 
making a further application to the Commission pursuant to Section 
9(c).
    3. Each Applicant and Covered Person will adopt and implement 
policies and procedures reasonably designed to ensure that it will 
comply with the terms and conditions of the Orders within 60 days of 
the date of the Permanent Order or, with respect to condition four, 
such later date or dates as may be contemplated by the Plea Agreements, 
the FRB Order, the FinCEN Order, the OCC Order or any other orders 
issued by regulatory or enforcement agencies addressing the Conduct.
    4. Each Applicant and Covered Person will comply in all material 
respects with the material terms and conditions of the Plea Agreements 
and with the material terms of the FRB Order, the FinCEN Order, the OCC 
Order, and any other orders issued by regulatory or enforcement 
agencies addressing the Conduct.
    5. Applicants will provide written notification to the Chief 
Counsel of the Commission's Division of Investment Management with a 
copy to the Chief

[[Page 107185]]

Counsel of the Commission's Division of Enforcement of a material 
violation of the terms and conditions of the Orders within 30 days of 
discovery of the material violation.
    6. As a condition of the Temporary Order, the primary investment 
advisers will hold in an escrow arrangement amounts equal to all sub-
advisory fees payable by the Funds to Epoch for the period from October 
10, 2024 through the date upon which the Commission grants the 
Temporary Order. Amounts placed in the escrow arrangement will be 
released from the escrow arrangement after the Commission has acted on 
the application for the Permanent Order.

Temporary Order

    The Commission has considered the matter and finds that Applicants 
have made the necessary showing to justify granting a temporary 
exemption.
    Accordingly,
    It is hereby ordered, pursuant to section 9(c) of the Act, that the 
Applicants and any other Covered Persons are granted a temporary 
exemption from the provisions of section 9(a), effective as the date of 
this order, solely with respect to the Guilty Pleas entered into 
pursuant to the Plea Agreements, subject to the representations and 
conditions in the application, until the Commission takes final action 
on their application for a permanent order.

    By the Commission.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-31134 Filed 12-30-24; 8:45 am]
BILLING CODE 8011-01-P
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