I wrote recently about TD Bank running afoul of the law. Again.
The bank was fined $450 million for facilitating money laundering.
โTD Bankโs persistent prioritization of growth over controls allowed its employees to break the law and facilitate the laundering of hundreds of millions of dollars. The bankโs blatant risk management failures attracted illicit actors and are egregious and unacceptable,โ said Acting Comptroller of the Currency Michael J. Hsu.
But what about the bankโs leadership? Any penalty for them? Any negative impacts to padding profits by skirting the law?
Not really.
A piece in Bloomberg Law notes:
Bharat Masrani, TDโs chief executive officer, had his pay docked for 2023, in relation to โUS regulatory issuesโ and the scrapped takeover. But he lost just C$1 million ($726,000) and still got total compensation of C$13.3 million, which means a 7% cut. Masrani may see his remuneration reduced again for this year, and heโs retiring in April after more than a decade as CEO, but will remain as an adviser until next October.
Leo Salom, TDโs head of banking in the US where the money laundering took place, had been seen as a leading succession candidate, butย missed out to Raymond Chun, currently head of TDโs Canadian retail bank. Salom also forfeited some pay last year for the same reasons as Masrani โ losing $201,000 out of a $4.6 million package.
So, wait? These two guys consistently lead the bank to break the law and the penalty is they still earn millions of dollars and get to keep their jobs and/or stay on as paid advisors?
So, TDโs Board of Directors isnโt all that concerned about breaking the law, just about bringing in the cash.
As the author of the Bloomberg piece notes, unless banking execs start going to jail, they wonโt stop breaking the law.
Sure, you MIGHT see a 7% pay cut (out of a $13 million salary) - but, well, youโre still taking home millions. And you wonโt even get fired.
It would be somewhat more palatable if the Board of Directors looked at such blatant lawbreaking as a fireable offense. Even more so if the firing didnโt come with a golden parachute to ease the fall.
Instead, TDโs Board said, essentially: You facilitated hundreds of millions of dollars worth of money laundering - likely covering up untold heinous crimes - now, keep on making us money and take home ONLY $13.3 million.
Or, as the Bloomberg writer put it:
โThis is on us. We own it. We should have done better,โ Masrani said on a call with investors last week. โWeโve taken full accountability,โ Salom added.
Really? Is that it? The Department of Justice may have secured a guilty plea from the bank itself for the criminal charges of failing to maintain adequate anti-money laundering procedures โ but apparently no action, civil or criminal, is planned against the leaders who set its culture, incentives and practices.