Wednesday, August 09, 2006

NYSE Fines RBC for Proxy Handling

Bloomberg, 9 August 2006

Royal Bank of Canada agreed to pay $80,000 to the New York Stock Exchange to settle allegations that it mishandled proxies, making it the fifth brokerage faulted this year for breaking rules governing votes on corporate actions.

RBC Capital Markets, a unit of Canada's biggest bank, agreed to the fine without admitting or denying wrongdoing, the NYSE said in a statement today. Deutsche Bank AG has drawn the largest fine, paying $1 million in February, followed by UBS AG's $600,000 in June. The fines stem from a 2004 investigation into whether shareholders may be disenfranchised by brokerages that cast too many, or too few, votes on corporate actions.

``We want to give the firm message that this is an area where they need to have tighter controls,'' Linda Riefberg, a vice president at NYSE Regulation's enforcement division, said in an interview. ``NYSE Regulation will continue to review firms for compliance with the proxy rules and see if the firms are getting their reconciliation responsibilities right.''

The fine against Toronto-based Royal Bank was announced by the exchange today among 51 disciplinary actions that netted a total of $1.47 million. In 2004, the firm instituted written polices and procedures to correctly tabulate its proxy votes, according to an NYSE disciplinary panel.

``We respect the decision of the NYSE hearing board and are pleased that this is now resolved,'' said Katherine Gay, a spokeswoman for the bank.

Daiwa Securities America Inc., the U.S. unit of Japan's second-largest brokerage, drew the largest fine announced today, agreeing to pay $250,000 for failing to retain some e-mails and business records.

``We are satisfied that this settlement recognizes our improvements in our record keeping and internal review procedures and resolves our open issues with the exchange,'' a Daiwa spokeswoman said.

In addition to Deutsche Bank, Germany's biggest bank, and UBS, Europe's largest, Goldman Sachs Group Inc. and Credit Suisse Group have also been fined by the exchange for mishandling proxies. All the firms agreed to pay the fines without admitting or denying wrongdoing.

None of the violations cited by the NYSE in its investigation affected the outcome of votes on corporate actions, the exchange said.