Four senior employees of RBC Dominion Securities have been fined a total of $312,000 in a settlement of a wash trading case.

A hearing panel of Market Regulation Services Inc. approved the settlement today.

Ian Macdonald, managing director of Canadian equity derivatives, was fined $90,000 and assessed $35,000 in costs.

David Singh, director of Canadian equity derivatives, and Edward Boyd, vp of Canadian equity derivatives, were each fined $60,000 and must pay $20,000 each in costs.

Peter Dennis, senior equity and derivatives trader, was fined $20,000 plus $7,000 in costs.

In addition, RBC DS agreed to make restitution of $231,500 to cover the estimated losses market participants affected.

Wash trading normally involves one person or firm both selling and buying securities without a real change in ownership, to create a misleading impression of market activity and manipulate the price.

In this case, the RBC DS traders entered orders with seconds left in the trading day last Aug. 11 to offset orders they had placed earlier in the day for shares of Bank of Montreal and Royal Bank of Canada, after the failure of another securities dealer to complete trades on the other side of a hedge transaction.

The other dealer’s errors on a market on close (MOC) order for BMO shares left RBC DS with a potential liability on orders to buy shares of BMO and sell shares of Royal Bank.

In a statement, RS said the four traders “were acting in a very compressed timeframe to address a serious problem created by another dealer’s error.”

The identity of the other firm was not disclosed.

RS said the men were not trying to manipulate the market and that they did not benefit personally from the trades.

As well, RS noted the traders admitted their error to RS upon being contacted about the trades.

“It is unacceptable for a market participant to undertake a wash trade, directly or indirectly, even in circumstances where the participant is trying to correct an existing market MOC Order or to limit its liability due to an existing MOC Order,” said Maureen Jensen, vp, market regulation, eastern region.