As Bank of Nova Scotia Tries to Buy Bank in US Fair Finance Watch Writes to Fed's Warsh

As Bank of Nova Scotia Tries to Buy Bank in US Fair Finance Watch Writes to Fed's Warsh by Matthew Russell Lee, Patreon Book Substack SOUTH BRONX/SDNY, July 3 – 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 deny the application.   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. 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