Fed OKs Bank of Nova Scotia to Buy Bank in US Ignoring FOIA so Reconsideration Bid

Fed OKs Bank of Nova Scotia to Buy Bank in US Ignoring FOIA so Reconsideration Bid by Matthew Russell Lee, Patreon Book Substack SOUTH BRONX/SDNY, Oct 29 – Bank of Nova Scotia proposes to buy a bank in the United States to obtain an FDIC-insured charter to support its U.S. Mortgage Capital Markets business and warehouse lending strategy. But it has a dodgy compliance record (not unlike TD Bank) and the Fed should have denied the application. Instead, after granting Inner City Press "expedited processing" of a Freedom of Information Act request about the deal on September 25 but still not providing a single document, the Fed on October 29 approved the application. This while in SDNY the Fed lost a FOIA ruling then claimed no jurisdiction and still seeks to delay. Today's Fed has gone rogue. So FFW has formally requested reconsideration, including the below. The vote was unanimous: Chairman Warsh, Vice Chair Jefferson, Vice Chair for Supervision Bowman, and Governors Powell, Waller, Cook and Barr. The order says the Board received “two adverse comments... both submitted by the same commenter,” Fair Finance Watch and Inner City Press. It denied the requests for a public hearing and for an extension of the comment period.  Four matters in the order, five in the record Footnote 16 lists the matters the comment cited: $127.5 million in 2020 for a precious-metals futures manipulation scheme, $22.5 million in 2023 for recordkeeping failures, $1 million in fines and $10.8 million in client compensation in 2022, and the March 2026 settlement over $9.8 million fraudulently withdrawn from a nonprofit’s accounts. It does not mention the fifth, disclosed in the Sept 25 story: on August 6, 2026, with this application pending, a Canadian Investment Regulatory Organization panel approved a settlement under which Scotia Securities self-reported that customer complaints from June 2022 to May 2024 were “wrongly resolved” under the wrong framework, and agreed to a $275,000 fine plus costs. Yet the order says: “The enforcement actions and litigation raised by the commenter have all been resolved.” It also repeats BNS’s claim that everything was “fully remediated” and that the commenter “merely restates publicly available information.” A matter that BNS self-reported to a regulator while the Fed was reviewing its application is not old news. The Board’s rationale again rests on “confidential supervisory information” and “the views of OSFI.” The order describes the 2020 matter only as a “scheme to manipulate the price of futures on certain precious metals.” It does not mention the $17 million penalty for false statements to CFTC investigators, or the three-year monitor.  Questions asked, answers withheld, order silent. The Dallas Fed sent BNS three rounds of written questions: August 3, August 25 and, with the processing period extended on August 28, a third round answered September 25. The public versions withheld a “Confidential Annex” and “Item 4.” The Fed asked BNS for its latest Canadian supervisory letter and any anti-money-laundering assessment by Canada’s financial intelligence unit. BNS’s September 25 answers deferred the MapleMark integration plan to a “Confidential Exhibit A,” redacted the list of dual-hat employees and their pay, left out the assumptions behind projected loan and deposit mix, and did not address the OSFI Annual Supervisory Letter or FINTRAC findings. The order mentions none of this. It says only that the Board “has considered” information provided by BNS and consulted with OSFI. It never says whether the Fed ever received the FINTRAC findings or the OSFI letter it asked for.  Peru, answered by silence. FFW asked what due diligence BNS did when it acquired the Peruvian subsidiary in 2006, and what controls have applied since. Footnote 19 recites BNS’s reply, that the events were “over two decades ago” and that the commenter “did not allege that BNS participated in the alleged activity.” It then says only that the Board “considered” the comments. The order does not say what due diligence was done, or whether the Board asked.  The business plan nobody can see. The commenter said BNS wants MapleMark as a funding vehicle for its mortgage capital markets and warehouse lending, not for its small retail footprint. The order does not say that is wrong. It says BNS “asserts that the commenter did not provide an accurate description of BNS’s reasons” and then gives none. Footnote 35 says “the Board believes that the proposed business plan is consistent with MapleMark’s ability to continue to meet the convenience and needs of the communities to be served.” That plan is the confidential material FFW’s FOIA seeks. BNS also told the Board it does not anticipate “any material changes to MapleMark’s operations,” which is hard to square with the stated purpose. The competition section finds no overlap in retail banking markets and does not analyze the wholesale mortgage business that is the point of the deal.  HMDA and CRA, and a stale exam. The order says the commenter “alleged” MapleMark “made fewer loans to African American individuals as compared to white individuals in 2025.” It does not give the numbers from the full-year 2025 HMDA register, which show one loan to an African American applicant and five to white applicants. BNS said MapleMark only began reporting in 2023, that small business loans are a large share of its book, and that HMDA excludes purchased loans. The Board added that it “considers additional information not available to the public.” The CRA exam it relies on is from July 8, 2024 and reviewed 2023 small business loans. It expressly “did not evaluate the bank’s HMDA-reportable lending.” On Tulsa, the order says moderate-income tract lending “fell below the relevant demographic benchmark” without the 8.5-point shortfall. It accepts BNS’s statement that, through June 30, 2026, MapleMark made 15 small business loans in the Tulsa assessment area, “approximately 13 percent” in low-income tracts and “53 percent” in moderate-income tracts. That is about two and eight loans. The order says that “exceed[s] peer performance” without giving the peer figures. The order does not address the comment’s argument that complaint volume matters even if it isn’t treated as “substantive.” It also notes MapleMark is moving its main office from Tulsa to Dallas, without saying what that means for Tulsa.  Regulatory carousel. Footnote 27 shows MapleMark went from a Texas nonmember bank to an Oklahoma nonmember bank on September 26, 2025, became an Oklahoma state member bank in May 2026, and is now converting to a Texas state member bank. Its primary supervisor goes from the FDIC to the Kansas City Fed to the Dallas Fed within about a year.  Hearing denied while FOIAs pend. The Board says the request for a public hearing “does not identify disputed issues of fact that are material to the Board’s decision.” The disputed facts are the ones the Board is withholding. As of Sept 25, Inner City Press’s FOIAs for the Confidential Annex, the OSFI response, the confidential Day 1 balance sheet and capital ratios, and the withheld question set were pending, as was FFW’s FOIA for the Business Plan. Inner City Press’ lawsuit over the Fed’s redaction of Additional Information Requests in the Enova/Grasshopper application, Lee v. Board of Governors, also remained open. The Board decided before it answered any of them.  Footnote 7 also notes that the Board approved BNS to acquire up to 19.99 percent of KeyCorp on June 22, 2026 (Order 2026-18). The same bank with the same record now gets a US charter four months later. For the record:   Fair Finance Watch, after the Federal Reserve refused to act to ensure public access to Home Mortgage Disclosure Act data,  has commented to the Fed on the 2025 HMDA data of MapleMark Bank, the target, and on Scotiabank: Dear Chairman Warsh, Secretary McDonough        This comment is submitted on behalf of Inner City Press / Fair Finance Watch regarding the application by The Bank of Nova Scotia ("Scotiabank" or "BNS") to acquire Maple Financial Holdings, Inc., parent company of MapleMark Bank ("MapleMark"), of Dallas, Texas.  Scotiabank is not acquiring MapleMark for its existing retail or mortgage lending footprint, which is minimal, but to convert a small commercial charter into a much larger funding vehicle for mortgage-related activity. On July 21 BnS' outside law firm filed an ostensible response which essentially counts on the Fed overlooking or excusing the compliance problems in FFW's initial comment, even while withholding information.  Bank of Nova Scotia's response arrived, nine pages from Sullivan & Cromwell, addressing all eight points in the original comment. It did not dispute a single underlying fact — not the $127.5 million spoofing settlement, not the $22.5 million CFTC/SEC recordkeeping penalty, not the $1 million mutual fund fine, not the $9.8 million FACTOR fraud, not the one-loan-to-an-African-American HMDA figure. What it disputed was relevance, applying the identical formula to each: old, resolved, a different regulator, a different country, therefore beside the point. Assembled rather than atomized, the record BNS itself confirms is not old — four regulatory or litigation resolutions across four different business lines, the most recent from March 2026, four months before this application was even filed.  The response also asked the Board to look to BNS's confidential Business Plan for the "complete" picture of what MapleMark Bank is meant to become — a document Fair Finance Watch has separately been seeking to pry loose through a still-pending FOIA request to the Federal Reserve. Pointing regulators and the public to a document the public cannot see is not an answer to a comment; it is a reason to keep asking for the document. Fair Finance Watch has replied to the Fed, renewing the request for a public hearing and asking the Board to weigh the compliance record in its entirety rather than matter by matter.   On August 3, still without any ruling on the withheld Plan, the Fed sent some of its questions to Bank of Nova Scotia. But an annex was withheld, and a FOIA request was sent. The Federal Reserve Bank of Dallas has sent its first round of written questions to Bank of Nova Scotia in the pending MapleMark Bank application — but only the public portion. The letter itself confirms a "separately attached Confidential Annex" containing additional questions was withheld entirely, the same practice now the subject of Inner City Press's federal lawsuit against the Board over a different application, Enova International's bid for Grasshopper Bank. Inner City Press has filed a FOIA request for the Annex, noting this is now the third pending bank merger application in which the Board has hidden its own questions from public view, not merely an applicant's answers.  Inner City Press has direct, adverse experience with this precise practice. In the pending application by Enova International, Inc. to acquire Grasshopper Bank, the Board redacted its own Additional Information Request letters in their entirety, prompting Inner City Press to file suit, Lee v. Board of Governors of the Federal Reserve System, No. 1:26-cv-04556-AT-RWL (S.D.N.Y.), in which the Fed itself has yet to make an appearance. What the public questions do reveal validates Fair Finance Watch's own comments on this application. The Fed is asking BNS to detail "any continuing conditions imposed by the Commodity Futures Trading Commission, the Securities and Exchange Commission, the Department of Justice or any foreign regulator related to prior settlements or litigation" — the same compliance history, including a $127.5 million spoofing settlement and a $9.8 million fraud matter from earlier this year, that FFW's comment argued the Board must weigh under the managerial resources factor. The Fed is also pressing BNS to substantiate, with specifics, its promise to "explore new methods and opportunities to expand lending, investment and services" to low- and moderate-income communities — precisely the vague, unsupported convenience-and-needs language FFW's comment flagged as insufficient on its own. On August 25, another Fed question letter, again some withheld - and so, another FOIA request:  The Federal Reserve has sent Bank of Nova Scotia a second round of additional information requests, and once again, one full item — Item 4 — is withheld from the public entirely: "See Confidential Annex." What is public, though, is substantive. The Fed is pressing BNS directly to "discuss in greater detail the remedial efforts" it made following four separate enforcement actions: the August 2020 Deferred Prosecution Agreement with DOJ over the bank's spoofing scheme; the May 2023 SEC order against its Scotia Capital (USA) subsidiary; the CFTC's parallel May 2023 order; and a December 2022 settlement between Scotia Securities and Canada's Mutual Fund Dealers Association. The Fed also wants BNS's most recent Canadian regulatory supervisory letter and any available anti-money-laundering assessment from Canada's financial intelligence unit — precisely the compliance-history documentation Fair Finance Watch's comments have argued the Board must weigh under the managerial-resources factor. Inner City Press has filed another FOIA request for a merger applicant's withheld question set. What do the ex parte rules mean? We aim to ask, including in the FOIA case in SDNY. On August 28 the Fed wrote to BNS: "August 28, 2026  Stephen M. Salley Sullivan and Cromwell 125 Broad Street New York, NY 10004 Dear Mr. Salley: This letter refers to the application filed by The Bank of Nova Scotia, Toronto, Canada, to acquire Maple Financial Holdings, Inc., Dallas, Texas, and thereby indirectly acquire MapleMark Bank, Tulsa, Oklahoma, pursuant to Section 3 of the Bank Holding Company Act of 1956, as amended. Section 225.15(d)(2) of Regulation Y provides that an applicant must be notified when a proposal will not be acted upon within 60 days after the acceptance date. The 60th day for this filing is August 29, 2026. The processing period for the applications has been extended to facilitate further review of the statutory factors. The time extension will not exceed the period provided for in section 225.16(f). Update, September 4: Bank of Nova Scotia's latest response to the Federal Reserve reveals a compliance matter not previously disclosed anywhere in this application: on August 6, 2026 — one month ago — a panel of Canada's Investment Regulatory Organization approved a settlement in which BNS's securities subsidiary, Scotia Securities Inc., self-reported that between June 2022 and May 2024, customer complaints meant for securities-industry handling were instead entered into BNS's ordinary banking complaint system and "wrongly resolved" under the wrong regulatory framework entirely — for two full years. SSI agreed to a $275,000 fine plus costs. That brings the total number of BNS enforcement matters disclosed in this application to five, the most recent occurring while this very acquisition was pending before the Federal Reserve. Separately, BNS's response defers the Federal Reserve's request for its home regulator's own supervisory assessment — the Office of the Superintendent of Financial Institutions' Annual Supervisory Letter and any FINTRAC findings — without providing it in the public version. Inner City Press has filed a FOIA request for that response, and for the confidential Day 1 balance sheet and capital ratios also withheld. Watch this site.    Bank of Nova Scotia's third round of responses to the Federal Reserve, filed September 25, shows the same pattern persisting across three separate rounds of questioning. The integration plan for MapleMark Bank — timeline, leadership structure, operational changes — is again deferred entirely to a "Confidential Exhibit A," with nothing in the public version. The list of BNS employees who would serve in dual-hat roles at both BNS and the Bank, including their compensation arrangements, is again redacted in full. And the specific assumptions behind BNS's own projected loan and deposit composition — the "detailed assumptions supporting the projected composition of net loans and total deposits by period, including loan type mix, deposit category breakdown, and expected growth rates" — are entirely absent from the public record, not a single figure disclosed.  Most notably, BNS's home regulator's own assessment — the Office of the Superintendent of Financial Institutions' Annual Supervisory Letter, and any available FINTRAC anti-money-laundering findings — requested by the Fed weeks ago and still outstanding as of Inner City Press's September 4 report, remains unaddressed in this latest filing as well. Three rounds of Federal Reserve questions, three rounds of the same category of information withheld, for an applicant whose own disclosed compliance record now spans five separate enforcement matters across four countries, the most recent occurring while this application has been pending. Inner City Press's FOIA requests for this material remain pending with the Board. Now a new FOIA request. Watch this site.  From our first comment: The scale of what MapleMark is today, versus what it is intended to become, should be squarely before the Board. We have reviewed MapleMark's full-year 2025 HMDA Loan/Application Register (LEI 2549006V23YD1XWUR350). It contains only one loan to an African American, and five to whites.  Separately, MapleMark's most recent CRA Public Evaluation found that the bank originated zero small business loans in low-income census tracts in its Oklahoma (Tulsa) assessment area, with moderate-income tract lending also falling 8.5 percentage points below the demographic benchmark. Scotiabank's own compliance record warrants close scrutiny in connection with this application. In August 2020, Scotiabank entered into a Deferred Prosecution Agreement with the U.S. Department of Justice and agreed to three separate orders with the Commodity Futures Trading Commission, paying a combined $127.5 million to resolve an eight-year scheme (2008–2016) in which its traders engaged in "spoofing" — placing and cancelling orders to manipulate the price of gold, silver, platinum, and palladium futures. Of that total, $17 million was a record penalty specifically for making false and misleading statements to CFTC investigators during an earlier, related 2018 investigation. Scotiabank was required to retain an independent compliance monitor for three years.  In 2023, Scotiabank and its affiliate Scotia Capital (USA), Inc. paid a combined $22.5 million to the CFTC and SEC for recordkeeping failures related to employees conducting bank business over unmonitored personal messaging channels. In 2022, Scotiabank's mutual fund dealer subsidiary paid $1 million in fines and returned $10.8 million to clients after regulators found 46 employees had misrecorded roughly 750 client transactions to inflate sales credits, resulting in the termination of 34 employees. As recently as March 2026, Scotiabank settled litigation with a Canadian nonprofit, FACTOR, after $9.8 million was fraudulently withdrawn from a FACTOR account at Scotiabank; public reporting indicated Scotiabank was less than fully cooperative with the resulting investigation.   Separately, we note and the FRB should inquire into, including at the requested evidentiary hearing, leaked documents from Peru's Financial Intelligence Unit (Unidad de Inteligencia Financiera), which found that Scotiabank's Peru subsidiary, Banco Wiese (rebranded Scotiabank following its 2006 acquisition), was among the banks that had accepted deposits or maintained accounts later connected to individuals and front companies tied to narcotics trafficking, including a company linked to a major Peruvian drug trafficker that moved suspicious transactions through Banco Wiese, BBVA, and BCP between 2000 and 2004.  The Board's review of this application should include whatever independent supervisory information exists regarding Scotiabank's international AML controls, given the reporting's implications for the adequacy of due diligence at Scotiabank's foreign subsidiaries.  This application asks the Board to entrust a materially larger share of the U.S. mortgage funding system to an institution with a recent and repeated pattern of compliance and internal-control failures across trading, recordkeeping, and retail sales practices.  On the current record, the application should be denied.   Evidentiary hearings are needed on this application. There are consumer complaints, but the FRB has declared that even CFPB database complaints, no matter the volume, are not "substantive." We disagree - and ask for a hearing on these issues as well. Your support means a lot. As little as $5 a month helps keep us going and grants you access to exclusive bonus material on our Patreon page. Click here to become a patron. Feedback: Editorial [at] innercitypress.com SDNY Press Room 500 Pearl Street, NY NY 10007 USA Mail: Box 130222, Chinatown Station, NY NY 10013 Reporter's mobile (and weekends): 718-716-3540 Other, earlier Inner City Press are listed here, and some are available in the ProQuest service, and now on Lexis-Nexis.  Copyright 2006-2025 Inner City Press, Inc. To request reprint or other permission, e-contact Editorial [at] innercitypress.com