UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of: 

The Bank of Nova Scotia and Scotia 

Capital USA Inc., 

Respondents. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

CFTC Docket No. 23-25

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTION 6(c) AND (d) OF THE COMMODITY EXCHANGE ACT, MAKING 

FINDINGS, AND IMPOSING REMEDIAL SANCTIONS 

I. INTRODUCTION

The Commodity Futures Trading Commission (“Commission”) has reason to believe that 

from at least 2020 to the present (“Relevant Period”), The Bank of Nova Scotia and Scotia 

Capital USA Inc. (“BNS” or “Respondents”) violated, as set forth below, Sections 4g, 

4s(f)(1)(C), 4s(g)(1) and (3), and 4s(h)(1)(B) of the Commodity Exchange Act (“Act”), 7 U.S.C. 

§§ 6g, 6s(f)(1)(C), 6s(g)(1), (3), 6s(h)(1)(B), and Commission Regulations (“Regulations”) 1.31,

1.35, 23.201(a), 23.202(a)(1) and (b)(1), 23.602(a), and 166.3, 17 C.F.R. §§ 1.31, 1.35,

23.201(a), 23.202(a)(1), (b)(1), 23.602(a), 166.3 (2022). Therefore, the Commission deems it

appropriate and in the public interest that public administrative proceedings be, and hereby are,

instituted to determine whether Respondents engaged in the violations set forth herein and to

determine whether any order should be issued imposing remedial sanctions.

In anticipation of the institution of an administrative proceeding, Respondents have 

submitted an Offer of Settlement (“Offer”), which the Commission has determined to accept. 

Respondents admit the facts set forth in Section II below, acknowledge that their conduct 

violated the Act and Regulations and consent to the entry of this Order Instituting Proceedings 

Pursuant to Section 6(c) and (d) of the Commodity Exchange Act, Making Findings, and 

Imposing Remedial Sanctions (“Order”), and acknowledge service of this Order.1

1

 Respondents agree that the findings of fact and conclusions of law in this Order shall be taken as true and 

correct and be given preclusive effect without further proof in this proceeding and any other proceeding brought by 

the Commission or to which the Commission is a party or claimant, including but not limited to, a proceeding in 

bankruptcy or receivership. Respondents do not consent to the use of the Offer or this Order, or the findings or 

conclusions in this Order, by any other party in any other proceeding. 
2 

II. FINDINGS 

The Commission finds the following: 

A. SUMMARY 

The Act and Regulations impose recordkeeping and supervision requirements on 

Commission registrants to ensure that they responsibly discharge their crucial role in our 

markets. Compliance with these requirements is essential to the Commission’s efforts to 

promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound 

regulation. 

During the course of an investigation, Commission staff became aware of information 

regarding multiple BNS employees’ use of unapproved communication methods for business 

conversations. Documents produced and information disclosed by BNS in the course of the 

investigation indicated the use of non-BNS-approved methods of communication, including 

WhatsApp, to communicate internally and externally. Thereafter, BNS undertook a review of 

the use of unapproved communications methods by its employees. That review demonstrated 

that the use of unapproved devices was a widespread and longstanding practice at BNS, 

including by senior-level employees. 

The Commission’s subsequent investigation into BNS employees’ use of unapproved 

methods of communication identified that, during the Relevant Period, BNS employees, 

including those at senior levels, communicated both internally and externally using unapproved 

methods, including via personal text messages and WhatsApp messages. These written 

communications were sent and received by BNS employees and included messages related to 

BNS’s businesses as Commission registrants that were required to be maintained under 

Commission-mandated recordkeeping requirements. These written communications via 

unapproved methods generally were not maintained and preserved by BNS, and BNS generally 

would not have been able to furnish the communications promptly to a Commission 

representative if and when requested. As a result, BNS violated, as set forth below, Sections 4g, 

4s(f)(1)(C), and 4s(g)(1) and (3) of the Act, 7 U.S.C. §§ 6g, 6s(f)(1)(C), 6s(g)(1), (3), and 

Regulations 1.31, 1.35, 23.201(a), and 23.202(a)(1) and (b)(1), 17 C.F.R. §§ 1.31, 1.35, 

23.201(a), 23.202(a)(1), (b)(1) (2022). 

In addition, the widespread use of unauthorized communication methods by BNS’s 

employees to conduct firm business violated BNS’s own policies and procedures, which 

prohibited such communications. BNS did not maintain adequate internal controls with respect 

to the use of unapproved communication methods for business-related communications. Indeed, 

some of the very same supervisory personnel at BNS responsible for ensuring compliance with 

BNS’s policies and procedures themselves utilized unapproved methods of communication to 

engage in business-related communications, in violation of firm policy. Because BNS failed to 

implement a diligent supervisory system to ensure compliance with Commission recordkeeping 

requirements and the firm’s own policies and procedures, and because the widespread use of 

unauthorized communication methods resulted in the firm’s failure to maintain Commissionrequired records, BNS failed to diligently supervise matters related to its business as a 
3 

Commission registrant in violation of Section 4s(h)(1)(B) of the Act, 7 U.S.C. § 6s(h)(1)(B), and 

Regulations 166.3 and 23.602(a), 17 C.F.R. §§ 166.3, 23.602(a) (2022), as set forth below. 

B. RESPONDENTS 

The Bank of Nova Scotia is a chartered schedule I bank on the Bank Act (Canada), 

headquartered in Toronto, Canada. BNS has been provisionally registered with the Commission 

as a Swap Dealer since December 31, 2012. BNS maintains offices in, among other places, New 

York, New York. 

Scotia Capital USA Inc. is a U.S. company with its main office in New York, New 

York. Scotia Capital USA Inc. has been registered with the Commission as a Futures 

Commission Merchant (“FCM”) since April 8, 2015, and previously was registered as an 

Introducing Broker. 

C. FACTS 

During the course of an investigation, Commission staff became aware of information 

regarding BNS employees’ use of unapproved communication methods for business 

conversations. The Commission requested the records of certain BNS traders, as well as 

documents and information related to BNS employees’ use of unapproved communication 

methods for business communications. The documents produced and information disclosed by 

BNS indicated that BNS traders used methods of communication not approved by BNS to 

communicate regarding swap dealer business with individuals internal and external to BNS. 

In response to Commission staff’s questions regarding BNS employees’ use of 

unapproved communication methods on those employees’ personal devices, BNS conducted a 

review of the use of unapproved communications methods by its swap dealer and FCM 

employees. That review demonstrated that there was widespread and longstanding use of 

unapproved communication methods by employees—including senior-level employees—to 

engage in the firm business, including relating to trading in CFTC regulated derivatives markets. 

Importantly, during the Relevant Period, BNS’s swap dealer and FCM policies and 

procedures broadly prohibited employees from using unapproved communication methods, such 

as personal text messages and WhatsApp, to engage in business-related communications. 

Messages sent through BNS-approved communications methods were monitored, subject 

to review, and when appropriate, archived. By contrast, messages sent using unapproved 

communication methods, including over personal WhatsApp, email, and text messages, were 

generally not monitored, subject to review, or archived. 

As a result of BNS’s failure to ensure that employees—including supervisors and seniorlevel employees—complied with the firm’s communications policies and procedures, BNS failed 

to maintain thousands of business-related communications, including communications in 

connection with its commodities and swaps businesses, and thus failed diligently to supervise its 

businesses as Commission registrants. These supervision failures resulted in the widespread use 

of unapproved methods of communication by many BNS employees in violation of the firm’s 
4 

policies and procedures, as well as a widespread failure to maintain certain records required to be 

maintained pursuant to Commission recordkeeping requirements. 

A sampling analysis, for example, of the personal devices of thirty-seven BNS 

employees, including twenty-one associated persons of BNS’s swap dealer business, illustrates 

the breadth of BNS’s supervision and recordkeeping failures. Of those thirty-seven employees, 

who ranged in seniority from Associate to Managing Director, the vast majority had violated 

BNS’s communications policies and procedures by using personal text message and other 

unapproved methods to communicate with brokers, coworkers, or market participants. Further, 

those employees’ communications revealed that dozens of other BNS employees (including 

numerous senior supervisors and associated persons) conducted swap dealer and FCM business 

via unapproved methods (including in text and WhatsApp messages). Certain of these 

communications constituted records that were required to be kept pursuant to Commission 

recordkeeping requirements, and none of the communications were preserved and maintained by 

BNS. 

BNS’s recordkeeping and supervision failures were widespread across BNS’s swap 

dealer and FCM and involved employees at all levels of authority. Moreover, employees’ use of 

unapproved communication methods was not hidden within the firm. To the contrary, certain 

supervisors—the very people responsible for supervising employees to prevent this 

misconduct—routinely communicated using unapproved methods on their personal devices. In 

fact, managing directors and senior supervisors responsible for implementing BNS’s swap dealer 

and FCM policies and procedures and for overseeing employees’ compliance with those policies 

and procedures, themselves failed to comply with firm policies by communicating using 

unapproved methods on their personal devices about the firm’s Commission-regulated 

businesses. 

III. LEGAL DISCUSSION 

A. The Bank of Nova Scotia Failure to Maintain Required Records in Violation 

of Sections 4s(f)(1)(C) and 4s(g)(1) and (3) of the Act and Regulations 

23.201(a) and 23.202(a)(1) and (b)(1) 

Section 4s(f)(1)(C) of the Act obligates swap dealers to keep “books and records of all 

activities related to its business as a swap dealer . . . in such form and manner and for such period 

as may be prescribed by the Commission by rule or regulation” and those books and records 

must be kept “open to inspection and examination by any representative of the Commission.” 

7 U.S.C. § 6s(f)(1)(C); see also Section 4s(g)(1) and (3) of the Act, 7 U.S.C. § 6s(g)(1), (3) 

(requiring swap dealers to keep daily trading and counterparty records). These statutes are 

implemented, among other places, at Regulations 23.201(a) and 23.202(a)(1) and (b)(1), 

17 C.F.R. §§ 23.201(a), 23.202(a)(1), (b)(1) (2022). 

Regulation 23.201(a) obligates a swap dealer to “keep full, complete, and systematic 

records, together with all pertinent data and memoranda, of all its swaps activities,” including 

“[r]ecords of each transaction, including all documents on which transaction information is 

originally recorded.” Regulation 23.202(a)(1) and (b)(1) requires, in relevant part, every swap 

dealer to keep daily trading records of all swaps and related cash and forward transactions it 
5 

executes including, specifically, a record of oral and written communications provided or 

received concerning quotes, solicitations, bids, offers, instructions, trading, and prices that led to 

the execution of a swap transaction or the conclusion of a related cash or forward transaction. 

During the Relevant Period, as a result of the widespread employee use of unapproved 

communication methods, The Bank of Nova Scotia failed to maintain Commission-required 

transaction records and pre-execution communications. By this conduct, The Bank of Nova 

Scotia violated Sections 4s(f)(1)(C) and 4s(g)(1) and (3) of the Act and Regulations 23.201(a) 

and 23.202(a)(1) and (b)(1). 

B. Scotia Capital USA Inc.’s Failure to Keep Required Records in Violation of 

Section 4g of the Act and Regulation 1.35 

Section 4g of the Act requires FCMs and other registrants to create and keep books and 

records pertaining to transactions and positions in such form and manner and for such period as 

may be required by the Commission. 7 U.S.C. § 6g. Regulation 1.35(a)(1), 17 C.F.R. 

§ 1.35(a)(1) (2022), sets forth some of the books and records that are required to be created and 

maintained by FCMs. Specifically, an FCM must: 

(i) Keep full, complete, and systematic records . . . of all transactions relating to its 

business of dealing in commodity interests . . . which shall include all orders (filled, 

unfilled, or canceled), . . . and all other records, which have been prepared in the course 

of its business of dealing in commodity interests . . . . 

*** 

(iii) Keep all oral and written communications provided or received concerning quotes, 

solicitations, bids, offers, instructions, trading, and prices that lead to the execution of a 

transaction in a commodity interest . . . whether transmitted by telephone, voicemail, 

facsimile, instant messaging, chat rooms, electronic mail, mobile device, or other digital 

or electronic media . . . . 

With the exception of pre-trade communications, all such records are required to be “kept in a 

form and manner that allows for the identification of a particular transaction.” Regulation 

1.35(a)(5), 17 C.F.R. § 1.35(a)(5) (2022). 

As a result of the widespread use of unapproved methods of communication by firm 

employees, which communications were not preserved and maintained, Scotia Capital USA 

Inc.’s failed to keep full, complete, and systematic records of all transactions relating to its 

business of dealing in commodity interests, in violation of Section 4g of the Act and Regulation 

1.35. 

C. The Bank of Nova Scotia and Scotia Capital USA Inc.’s Failure to Keep 

Records in Required Manner in Violation of Regulation 1.31 

Regulation 1.31(b)(4), 17 C.F.R. § 1.31(b)(4) (2022), requires that registrants keep all 

books and records that are required to be maintained under the Act and Regulations in such 

manner as to make them “readily accessible” for a period of two years for paper records and for 
6 

the duration of the retention period for electronic records. Upon request of the Commission, all 

of these documents are required to be “promptly” produced. Regulation 1.31(d), 17 C.F.R. 

§ 1.31(d) (2022). Regulation 23.203(b)(1), 17 C.F.R. § 23.203(b)(1) (2022), requires that 

records required to be kept pursuant to Part 23 of the Regulations, be kept in accordance with 

Regulation 1.31, 17 C.F.R. § 1.31 (2022). 

By failing to keep all Commission-required records in such a manner as to make them 

“readily accessible,” BNS violated Regulation 1.31. 

D. The Bank of Nova Scotia’s Failure to Supervise Diligently in Violation of 

Section 4s(h)(1)(B) of the Act and Regulation 23.602(a)

Section 4s(h)(1)(B) of the Act, 7 U.S.C. § 6s(h)(1)(B), requires “diligent supervision of 

the business of the registered swap dealer[.]” Regulation 23.602(a) requires that each swap 

dealer “shall establish and maintain a system to supervise, and shall diligently supervise, all 

activities relating to its business performed by its partners, members, officers, employees, and 

agents (or persons occupying a similar status or performing a similar function).” 17 C.F.R. 

§ 23.602(a) (2022). The operative language of Regulation 23.602 is similar to the language of 

the Commission’s longstanding supervision regulation for futures and options, Regulation 166.3, 

17 C.F.R. § 166.3 (2022). 

Under Regulation 23.602(a), a violation is demonstrated by showing either that: (1) the 

registrant’s supervisory system was generally inadequate; or (2) the registrant failed to perform 

its supervisory duties diligently. See In re JPMorgan Chase Bank, N.A., CFTC No. 22-07, 2021 

WL 6098347, at *6 (Dec. 17, 2021) (consent order); see also In re Commerzbank AG, CFTC 

No. 19-03, 2018 WL 5921385, at *10-11 (Nov. 8, 2018) (consent order) (noting textual 

similarities between Regulation 23.602 and Regulation 166.3, applying case law concerning 

Regulation 166.3, and citing In re Murlas Commodities, Inc., CFTC No. 85-29, 1995 WL 

523563, at *9 (Sept. 1, 1995), and In re Paragon Futures Assoc., CFTC No. 88-18, 1992 WL 

74261, at *14 (Apr. 1, 1992)); In re INTL FCStone Markets, LLC, CFTC No. 15-27, 2015 WL 

4980321, at *3 (Aug. 19, 2015) (consent order) (same). Either showing “alone is sufficient to 

establish a violation of the supervision requirement.” Commerzbank, 2018 WL 5921385, at *10 

(interpreting Regulation 23.602 in light of Regulation 166.3 precedents). No evidence of an 

underlying violation is necessary. In re Collins, CFTC No. 94-13, 1997 WL 761927, at *10 

(Dec. 10, 1997) (interpreting Regulation 166.3). Evidence of violations that “‘should be detected 

by a diligent system of supervision, either because of the nature of the violations or because the 

violations have occurred repeatedly,’ is probative of a failure to supervise.” See In re Bank of 

Nova Scotia, CFTC No. 20-26, 2020 WL 4926053, at *10 (Aug. 19, 2020) (consent order) 

(quoting In re Société Générale Int’l Ltd., CFTC No. 19-38, 2009 WL 4915485, at *7 (Sept. 30, 

2019) (consent order)). 

The Bank of Nova Scotia failed to supervise its swap dealer business activities diligently 

during the Relevant Period. The Bank of Nova Scotia failed to maintain an adequate supervisory 

system to ensure that employees did not utilize unapproved methods to engage in 

communications relating to firm business, including the swap dealer business. The Bank of 

Nova Scotia’s failure to supervise is demonstrated by its failure to detect, prevent, and remediate 

repeated violations of the Commission’s recordkeeping requirements and firm policies and 
7 

procedures. Supervisory personnel failed to ensure that employees complied with The Bank of 

Nova Scotia’s Commission recordkeeping obligations and firm communications policies and in 

some instances themselves violated the policies. These supervision failures also resulted in the 

failure to keep and maintain Commission-required records and the failure to maintain the records 

in such a manner as to make them readily available. By this conduct, The Bank of Nova Scotia 

failed to supervise diligently their officers, employees, and agents, in violation of 

Section 4s(h)(1)(B) of the Act and Regulation 23.602(a). 

E. Scotia Capital USA Inc.’s Failure to Diligently Supervise in Violation of 

Regulation 166.3

Regulation 166.3 states: 

Each Commission registrant, except an associated person who has no supervisory duties, 

must diligently supervise the handling by its partners, officers, employees and agents (or 

persons occupying a similar status or performing a similar function) of all commodity 

interest accounts carried, operated, advised or introduced by the registrant and all other 

activities of its partners, officers, employees and agents (or persons occupying a similar 

status or performing a similar function) relating to its business as a Commission 

registrant. 

17 C.F.R. § 166.3 (2022). 

A violation under Regulation 166.3 is an independent violation for which no underlying 

violation is necessary. See Collins, 1997 WL 761927, at *10. A violation of Regulation 166.3 is 

demonstrated by showing either that: (1) the registrant’s supervisory system was generally 

inadequate; or (2) the registrant failed to perform its supervisory duties diligently. Murlas 

Commodities, Inc., 1995 WL 523563, at *9; Sansom Refining Co. v. Drexel Burnham Lambert, 

Inc., CFTC No. 82-R448, 1990 WL 282783, at *11 (Feb. 16, 1990) (noting that, under 

Regulation 166.3, registrants have “duty to develop procedures for the detection and deterrence 

of possible wrongdoing by [their] agents” (internal quotation omitted)); In re GNP Commodities, 

Inc., CFTC No. 89-1, 1992 WL 201158, at *17–19 (Aug. 11, 1992) (providing that, even if an 

adequate supervisory system is in place, Regulation 166.3 can still be violated if the supervisory 

system is not diligently administered); see also In re Rosenthall Collins Grp., LLC, CFTC 

No. 12-18, 2012 WL 1242406, at *6 (Apr. 12, 2012) (consent order) (respondent failed to 

perform supervisory duties diligently by not following its compliance procedures that were in 

place). Evidence of violations that “should be detected by a diligent system of supervision, 

either because of the nature of the violations or because the violations have occurred repeatedly” 

is probative of a failure to diligently supervise. In re Paragon Futures Assoc., CFTC No. 88-18, 

1992 WL 74261, at *14 (Apr. 1, 1992) (“The focus of any proceeding to determine whether Rule 

166.3 has been violated will be on whether [a] review [has] occurred and, if it did, whether it was 

‘diligent.’”). 

Scotia Capital USA Inc. failed to supervise its business as a Commission registrant by 

failing to maintain adequate supervisory systems to ensure that employees complied with Scotia 

Capital USA Inc.’s Commission recordkeeping requirements and firm policies and procedures 

that prohibited business-related communications on unapproved methods of communication. 
8 

The inadequacy of Scotia Capital USA Inc.’s supervisory systems is demonstrated by the 

longstanding and repeated violations of Scotia Capital USA Inc.’s Commission recordkeeping 

obligations and firm policies and procedures and the fact that the supervisory failures resulted in 

the repeated failure to maintain Commission-required records, to ensure that the required records 

were readily accessible, and that the records could be promptly produced upon request. By this 

conduct, Scotia Capital USA Inc. failed to supervise diligently its officers, employees, and 

agents in violation of Regulation 166.3. 

IV. FINDINGS OF VIOLATIONS 

Based on the foregoing, the Commission finds that, during the Relevant Period, The Bank 

of Nova Scotia violated Sections 4s(f)(1)(C), 4s(g)(1) and (3), and 4s(h)(1)(B) of the Act, 

7 U.S.C. §§ 6s(f)(1)(C), 6s(g)(1), (3), 6s(h)(1)(B), and Regulations 1.31, 23.201(a), 23.202(a)(1) 

and (b)(1), and 23.602(a), 17 C.F.R. §§ 1.31, 23.201(a), 23.202(a)(1), (b)(1), 23.602(a) (2022); 

and Scotia Capital USA Inc. violated Section 4g of the Act, 7 U.S.C. § 6g, and Regulations 1.31, 

1.35, and 166.3, 17 C.F.R. §§ 1.31, 1.35, 166.3 (2022). 

V. OFFER OF SETTLEMENT 

Respondents have submitted the Offer in which they: 

A. Acknowledge service of this Order; 

B. Admit the facts described in Section II above and acknowledge that their conduct 

violated the Act and Regulations; 

C. Admit the jurisdiction of the Commission with respect to all matters set forth in this 

Order and for any action or proceeding brought or authorized by the Commission based 

on violation of or enforcement of this Order; 

D. Waive: 

1. The filing and service of a complaint and notice of hearing; 

2. A hearing; 

3. All post-hearing procedures; 

4. Judicial review by any court; 

5. Any and all objections to the participation by any member of the Commission’s 

staff in the Commission’s consideration of the Offer; 

6. Any and all claims that they may possess under the Equal Access to Justice Act, 5 

U.S.C. § 504, and 28 U.S.C. § 2412, and/or the rules promulgated by the 

Commission in conformity therewith, Part 148 of the Regulations, 17 C.F.R. pt. 

148 (2022), relating to, or arising from, this proceeding; 
9 

7. Any and all claims that they may possess under the Small Business Regulatory 

Enforcement Fairness Act of 1996, Pub. L. No. 104-121, tit. II, §§ 201–253, 110 

Stat. 847, 857–74 (codified as amended at 28 U.S.C. § 2412 and in scattered 

sections of 5 U.S.C. and 15 U.S.C.), relating to, or arising from, this proceeding; 

and 

8. Any claims of Double Jeopardy based on the institution of this proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief, including this Order; 

E. Stipulate that the record basis on which this Order is entered shall consist solely of the 

findings contained in this Order to which Respondents have consented in the Offer; 

F. Consent, solely on the basis of the Offer, to the Commission’s entry of this Order that: 

1. Makes findings by the Commission that The Bank of Nova Scotia violated 

Sections 4s(f)(1)(C), 4s(g)(1) and (3), and 4s(h)(1)(B) of the Act, 7 U.S.C. 

§§ 6s(f)(1)(C), 6s(g)(1), (3), 6s(h)(1)(B), and Regulations 1.31, 23.201(a), 

23.202(a)(1) and (b)(1), and 23.602(a), 17 C.F.R. §§ 1.31, 23.201(a), 

23.202(a)(1), (b)(1), 23.602(a) (2022); and Scotia Capital USA Inc. violated 

Section 4g of the Act, 7 U.S.C. § 6g, and Regulations 1.31, 1.35, and 166.3, 

17 C.F.R. §§ 1.31, 1.35, 166.3 (2022); 

2. Orders The Bank of Nova Scotia to cease and desist from violating Sections 

4s(f)(1)(C), 4s(g)(1) and (3), and 4s(h)(1)(B) of the Act, and Regulations 1.31, 

23.201(a), 23.202(a)(1) and (b)(1), and 23.602(a); and Scotia Capital USA Inc. to 

cease and desist from violating Section 4g of the Act and Regulations 1.31, 1.35, 

and 166.3; 

3. Orders Respondents to pay, jointly and severally, a civil monetary penalty in the 

amount of fifteen million US dollars ($15,000,000), plus post-judgment interest 

within fourteen days of the date of entry of this Order; and 

4. Orders Respondents and their successors and assigns to comply with the 

conditions and undertakings consented to in the Offer and as set forth in Part VI 

of this Order; and 

G. Represents that Respondents have engaged in a review of certain recordkeeping failures 

and begun a program of remediation. 

Upon consideration, the Commission has determined to accept the Offer. 

VI. ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

A. The Bank of Nova Scotia and its successors and assigns shall cease and desist from 

violating Sections 4s(f)(1)(C), 4s(g)(1) and (3), and 4s(h)(1)(B) of the Act, 7 U.S.C. 
10 

§§ 6s(f)(1)(C), 6s(g)(1) and (3), 6s(h)(1)(B), and Regulations 1.31, 23.201(a), 

23.202(a)(1) and (b)(1), and 23.602, 17 C.F.R. §§ 1.31, 23.201(a), 23.202(a)(1), (b)(1), 

23.602(a) (2022); and Scotia Capital USA Inc. and its successors and assigns shall cease 

and desist from violating Section 4g of the Act, 7 U.S.C. § 6g, and Regulations 1.31, 

1.35, and 166.3, 17 C.F.R. §§ 1.31, 1.35, 166.3 (2022). 

B. Respondents shall pay, jointly and severally, a civil monetary penalty in the amount of 

fifteen million US dollars ($15,000,000) (“CMP Obligation”), within fourteen days of the 

date of the entry of this Order. If the CMP Obligation is not paid in full within fourteen 

days of the date of entry of this Order, then post-judgment interest shall accrue on the 

CMP Obligation beginning on the date of entry of this Order and shall be determined by 

using the Treasury Bill rate prevailing on the date of entry of this Order pursuant to 28 

U.S.C. § 1961. 

Respondents shall pay the CMP Obligation and any post-judgment interest by electronic 

funds transfer, U.S. postal money order, certified check, bank cashier’s check, or bank 

money order. If payment is to be made other than by electronic funds transfer, then the 

payment shall be made payable to the Commodity Futures Trading Commission and sent 

to the address below: 

MMAC/ESC/AMK326 

Commodity Futures Trading Commission 

6500 S. MacArthur Blvd. 

HQ Room 266 

Oklahoma City, OK 73169 

9-AMC-AR-CFTC@faa.gov 

If payment is to be made by electronic funds transfer, BNS shall contact Tonia King or 

her successor at the above email address to receive payment instructions and shall fully 

comply with those instructions. Respondents shall accompany payment of the CMP 

Obligation with a cover letter that identifies the paying Respondent(s) and the name and 

docket number of this proceeding. The paying Respondent(s) shall simultaneously 

transmit copies of the cover letter and the form of payment to the Chief Financial Officer, 

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, 

Washington, D.C. 20581; 

C. Respondents and their successors and assigns shall comply with the following conditions 

and undertakings set forth in the Offer: 

1. BNS shall conduct, within 150 days of the entry of this Order: 

a. A comprehensive review of BNS’s supervisory, compliance, and other 

policies and procedures designed to ensure that BNS’s electronic 

communications, including those found on personal electronic devices, 

including without limitation, cellular phones (“Personal Devices”), are 

preserved in accordance with the requirements of the Act, the Regulations, 

and BNS’s policies and procedures. 
11 

b. A comprehensive review of training conducted by BNS to ensure swap 

dealer and FCM personnel are complying with the requirements regarding 

the preservation of electronic communications, including those found on 

Personal Devices, in accordance with the requirements of the Act and the 

Regulations, and BNS’s policies and procedures, including by ensuring 

that BNS swap dealer and FCM personnel certify in writing on a quarterly 

basis that they are complying with preservation requirements. 

c. An assessment of the surveillance program measures implemented by 

BNS to ensure compliance, on an ongoing basis, with the requirements 

found in the Act, the Regulations, and BNS’s swap dealer and FCM 

policies and procedures to preserve electronic communications, including 

those found on Personal Devices. 

d. An assessment of the technological solutions that BNS has begun 

implementing to meet the record retention requirements of the Act, the 

Regulations, and BNS’s policies and procedures, including an assessment 

of the likelihood that BNS swap dealer and FCM personnel will use the 

technological solutions going forward and a review of the measures 

employed by BNS to track employee usage of new technological 

solutions. 

e. An assessment of the measures used by BNS to prevent the use of 

unauthorized communications methods for business communications by 

swap dealer and FCM personnel. This assessment should include, but not 

be limited to, a review of the firm’s policies and procedures to ascertain if 

they provide for any significant technology and/or behavioral restrictions 

that help prevent the risk of the use of unapproved communications 

methods on Personal Devices (e.g., trading floor restrictions). 

f. A review of BNS’s electronic communications surveillance routines to 

ensure that electronic communications through approved communications 

methods found on Personal Devices are incorporated into BNS’s overall 

swap dealer and FCM communications surveillance program. 

g. A comprehensive review of the framework adopted by BNS to address 

instances of non-compliance by BNS swap dealer and FCM employees 

with BNS’s policies and procedures concerning the use of Personal 

Devices to communicate about BNS business in the past. This review 

shall include a survey of how BNS determined which employees failed to 

comply with BNS policies and procedures, the corrective action carried 

out, an evaluation of who violated policies and why, what penalties were 

imposed, and whether penalties were handed out consistently across 

business lines and seniority levels. 
12 

2. Written Report of Findings: 

a. Within forty-five (45) days after completion of the review set forth in subparagraphs 1.a. through 1.g. above, BNS shall submit a detailed written 

report of its findings to the Commission staff (the “Report”). The Report 

shall include a description of the review performed, the names of the 

individuals who performed the review, the conclusions reached, and a 

summary of the plan for implementing the recommended changes in or 

improvements to BNS’s policies and procedures. 

b. BNS shall adopt all recommendations contained in the Report within one 

hundred and thirty-five (135) days of the date of the Report. 

c. The Report will likely include confidential financial, proprietary, 

competitive business or commercial information. Public disclosure of the 

reports could discourage cooperation, impede pending or potential 

government investigations or undermine the objectives of the reporting 

requirement. For these reasons, among others, the reports and the contents 

thereof are intended to remain and shall remain non-public, except: 

(1) pursuant to court order; (2) as agreed to by the parties in writing; (3) to 

the extent that the Commission determines in its sole discretion that 

disclosure would be in furtherance of the Commission’s discharge of its 

duties and responsibilities; or (4) is otherwise required by law. 

3. One-Year Evaluation: BNS shall assess its program for the preservation, as 

required under the Act, Regulations, and BNS’s policies and procedures, of 

electronic communications, including those found on Personal Devices, 

commencing one year after submitting the Report required by Paragraph 2.a 

above. BNS shall require this review to evaluate BNS’s progress in the areas 

described in Paragraph 1.a. through 1.g. above. After this review, BNS shall 

submit a report (the “One Year Report”) to the Commission staff and shall ensure 

that the One Year Report includes an updated assessment of BNS’s policies and 

procedures with regard to the preservation of electronic communications 

(including those found on Personal Devices), training, surveillance programs, and 

technological solutions implemented in the prior year period. 

4. Reporting Discipline Imposed: For two years following the entry of this Order, 

BNS shall notify the Commission staff as follows upon the imposition of any 

discipline imposed by BNS, including, but not limited to, written warnings, loss 

of any pay, bonus, or incentive compensation, or the termination of employment, 

with respect to any swap dealer and FCM personnel found to have violated BNS’s 

policies and procedures concerning the preservation of electronic 

communications, including those found on Personal Devices: (1) at least 48 hours 

before the filing of a Form 8-T; or (2) within ten (10) days of the imposition of 

other discipline.