In October, 2024, TD Bank NA pled guilty to money laundering charges and agreed to pay U.S. authoritiesThis is a governance failure which shareholders are concerned may be systemic in nature. A column in
Canada’s national newspaper concluded that TD board members earned a “black mark” and questioned
their ongoing tenure.(1) Canada’s bank supervisor Peter Routledge specifically referred viewers to this piece
on a television appearance.(2)
TD’s governance failure may extend beyond money laundering. Several independent assessments show the
bank well off track to meet its net zero commitment,(3) and directors have been unresponsive to significant
shareholder votes asking for clarity on how the bank will address these concerns.(4)
TD’s Corporate Governance Guideline(5) outlines how the board operates. Under “board feedback process,”
the Guideline is unclear on the issue of committee accountability, and silent regarding consequences for
lapses or underperformance.
The Guideline indicates that board members should have a broad spectrum of competencies that reflect the
nature and scope of the bank’s business and refers to the Key Areas of Expertise / Experience matrix disclosed
in TD’s annual proxy circular.(6)
Yet this matrix uses broad categories that leave shareholders guessing about specific competencies. For
example, “Audit/Accounting” does not necessarily include skills related to money laundering. Or,
“Environmental, Social, and Governance” does not necessarily include experience related to net zero.
The Guideline considers the challenge of “Other Directorships and Board Interlocks Policy” as a matter of
time management of directors and not also as a potential systemic conflict of interest if directors must
discharge their fiduciary duty at seemingly incompatible businesses. TD has more cross-posting of directors at
fossil fuel companies than any other Canadian bank despite its net zero commitment. It considers two of
these directors as satisfying its ESG category in its director expertise/experience matrix.
Because it is difficult for a board to assess itself, shareholders request an external review of TD’s board
governance policies and director selection criteria with a view to improving director accountability and
competency for existing risks and emerging priorities like net zero, the results of which are presented in the
bank’s 2025 proxy circular, together with the bank’s response.
more than US$3 billion in fines. The ongoing scandal derailed TD’s 2023 attempted purchase of First Horizon,
and as part of the settlement, TD’s U.S. subsidiaries will have their growth capped.