Royal Bank of Canada, sponsor of the PGA Tour's Heritage and Canadian Open events, has been sued by the Commodity Futures Trading Commission (CFTC) in the United States for engaging in a “trading scheme” to garner Canadian tax benefits.The suit alleges a small group of employees at the bank ran a “wash trading” strategy wherein they allowed subsidiaries of the bank to trade stock futures without actually taking a position in the market by simultaneously purchasing and selling futures contracts.The trades, alleged to have been made between June 2007 and May 2010, are valued in the hundreds of millions of dollars. RBC is accused of lying about the nature of the strategy to CME Group, which helps run stock exchanges and sponsors the CME Group Titleholders on the LPGA. 'This lawsuit is meritless, and we will rigorously defend ourselves against such baseless allegations,' Elisa Barsotti, a spokeswoman for RBC, said in a statement to Reuters.
The PGA Tour declined to comment on the suit through a spokesman, as did Bill Paul, tournament director of the Canadian Open. Heritage tournament director Steve Wilmot was unavailable for comment.
Last June, RBC signed a five-year contract to become the title sponsor of the Heritage. In March, the bank extended its contract with Golf Canada and the Canadian Open for another five years.