(a)
LEGAL AND REGULATORY MATTERS
In the ordinary course of business, the Bank
and its subsidiaries are involved in various
legal and regulatory actions, including but
not limited to civil claims and
lawsuits, regulatory examinations, investigations,
audits, and requests for information by
governmental, regulatory and self-regulatory
agencies and law
enforcement authorities in various jurisdictions,
in respect of our businesses and compliance
programs. The Bank establishes provisions
when it becomes
probable that the Bank will incur a loss and
the amount can be reliably estimated.
The Bank also estimates the aggregate range
of reasonably possible losses
(RPL) in its legal and regulatory actions (that
is, those which are neither probable nor
remote), in excess of provisions. However, the Bank does
not disclose the
specific possible loss associated with each underlying
matter given the substantial uncertainty associated
with each possible loss as described below and
the
negative consequences to the Bank’s resolution
of the matters that comprise the
RPL should individual possible losses be disclosed.
As at April 30, 2026, the
Bank’s RPL is from
zero
456.8
million (October 31, 2025 – from
zero
440.7
million). The Bank’s provisions and RPL represent
the Bank’s best estimates based upon currently available
information for actions for which estimates
can be made, but there are a number of factors
that could
cause the Bank’s actual losses to be significantly
different from its provisions or RPL. For example,
the Bank’s estimates involve significant judgment
due to the
varying stages of the proceedings, the existence
of multiple defendants in many proceedings
whose share of liability has yet to be determined,
the numerous yet-
unresolved issues in many of the proceedings,
some of which are beyond the Bank’s control and/or
involve novel legal theories and interpretations,
the attendant
uncertainty of the various potential outcomes
of such proceedings, and the fact that the underlying
matters will change from time to time. In addition,
some actions
seek very large or indeterminate damages.
Refer to Note 25 of the Bank’s 2025 Annual Consolidated
Financial Statements for details on the Bank’s significant
legal and regulatory matters. Based on
the Bank’s current knowledge, and subject to
the factors listed above as well as other uncertainties
inherent in litigation and
regulatory matters, other than as described
below: (i) there have been no notable developments
to the matters previously identified in Note 25
of the Bank’s 2025
Annual Consolidated Financial Statements; and
(ii) since October 31, 2025, no other legal
or regulatory matter has arisen or progressed
to the point that it would
reasonably be expected to result in a material
financial impact to the Bank.
As previously disclosed, on October 10, 2024,
the Bank announced that, following active
cooperation and engagement with authorities and
regulators, it
reached a resolution (the “Global Resolution”)
of previously disclosed investigations related
to its U.S. Bank Secrecy Act (BSA) and Anti-Money
Laundering (AML)
compliance programs (collectively, the “U.S. BSA/AML program”).
The Bank and certain of its U.S. subsidiaries
consented to orders with the Office of the
Comptroller of the Currency (OCC), the Federal
Reserve Board, and the Financial Crimes
Enforcement Network and entered into plea agreements
with the
Department of Justice (DOJ), Criminal
Division, Money Laundering and Asset
Recovery Section and the United States
Attorney’s Office for the District of New
Jersey. Details of the Global Resolution include: (i) a total payment
of US$
3.088
4.233
billion), all of which was provisioned during
the 2024 fiscal year;
(ii) TD Bank, N.A. (TDBNA) pleading guilty
to one count of conspiring to fail to maintain
an adequate AML program, failing
to file accurate currency transaction
reports (CTRs) and launder money and
TD Bank US Holding Company (TDBUSH)
pleading guilty to two counts of causing
TDBNA to fail to maintain an adequate
AML program and to fail to file accurate
CTRs; (iii) requirements to remediate the
Bank’s U.S. BSA/AML program; (iv) a requirement
to prioritize the funding and
staffing of the remediation, which includes Board
certifications for dividend distributions
from certain of the Bank’s U.S. subsidiaries to the
Bank; (v) formal
oversight of the U.S. BSA/AML remediation
through an independent compliance monitorship;
(vi) a prohibition against the average combined
total assets of TD’s
two U.S. banking subsidiaries (TDBNA and
TD Bank USA, N.A.) (collectively, the “U.S. Bank”) exceeding
US$
434
billion (representing the combined total assets
of the U.S. Bank as at September 30, 2024)
(the “Asset Limitation”), and if the
U.S. Bank does not achieve compliance with
all actionable articles in the OCC
consent orders (and for each successive
year that the U.S. Bank remains non-compliant),
the OCC may require the U.S. Bank to
further reduce total consolidated
assets by up to
7
%; (vii) the U.S. Bank being subject to OCC
supervisory approval processes for any
additions of new bank products, services,
markets, and
stores prior to the OCC’s acceptance of the
U.S. Bank’s improved AML policies and procedures,
to ensure the AML risk of new initiatives is appropriately
considered and mitigated; (viii) requirements
for the Bank and TD Group U.S. Holdings,
LLC (TDGUS) to retain a third party
to assess the effectiveness of the
corporate governance and U.S. management
structure and composition to adequately
oversee U.S. operations; (ix) requirements
to comply with the terms of the
plea agreements with the DOJ during a five-year
term of probation (which could be extended
as a result of the Bank failing to complete
the compliance
undertakings, failing to cooperate or to report
alleged misconduct as required, or
committing additional crimes); (x) an ongoing
obligation to cooperate with DOJ
investigations; and (xi) an ongoing obligation
to report evidence or allegations of violations
by the Bank, its affiliates, or their employees
that may be a violation of
U.S. federal law. The Bank is focused on meeting the
terms of the consent orders and plea agreements,
including meeting its requirements to remediate
the
Bank’s U.S. BSA/AML compliance programs.
During the first fiscal quarter of 2025, the
Bank fully paid the remainder of the monetary penalty
owed pursuant to the
consent orders and plea agreements that
were entered into as part of the Global Resolution.
The payment was covered by provisions previously
taken by the Bank
for this matter.
As previously disclosed, the Bank and
some former and current directors, officers and employees
have been named as defendants in proposed
class action
lawsuits in the United States and Canada
purporting to be brought on behalf of
the Bank’s shareholders alleging, among other things,
that a decline in the price of
the Bank’s shares was the result of misleading disclosures
with respect to the Bank’s AML compliance programs
and/or the potential outcomes of the government
agencies’ or regulators’ investigations.
The two proposed class actions filed in
the United States have been consolidated
under the caption
Tiessen v. The
Toronto-Dominion Bank, et al.,
in the United States District Court for
the Southern District of New York, and a consolidated amended complaint
has been filed
which names TD Bank, N.A., TDBUSH,
and certain former and current officers as
defendants. On May 30, 2025, the defendants
filed a motion to dismiss in the
Tiessen
case, which is pending before the court. Out
of the three proposed class actions in Ontario,
Parkin v. The Toronto-Dominion Bank, et al.,
has been
identified as the lead action with the other
two Ontario actions being stayed. There remains
one further proposed class action in Quebec
which has been stayed.
The
Parkin
certification hearing and the motion to seek
leave under the
Securities Act
(Ontario) were argued in part on
February 17 to 20, 2026 and May 20 and
21, 2026,
with an additional date for argument scheduled
on May 28, 2026. A putative shareholder
derivative action, captioned
Rubin v. Masrani, et al.,
has also
been filed purportedly on behalf of TD in the
United States in the Supreme Court of the State
of New York, New York County,
against certain former and current
TD directors, officers and employees, and certain
of TD’s U.S. affiliates and subsidiaries. The complaint
asserts alleged breaches of duties and
other claims
against the individual defendants in connection
with the Bank’s U.S. BSA/AML compliance programs.
On October 31, 2025, TD filed a motion to dismiss
the
Rubin
action. Certain purported TD shareholders
have also filed an application in the Ontario
Superior Court of Justice (
The Trustees of International Brotherhood of
Electrical Workers, et al., v. The Toronto-Dominion Bank, et al.
) seeking leave to bring a shareholder
derivative action in the Delaware Court
of Chancery on behalf
of TD and TDBUSH against certain current
and former directors and officers. The motion
to seek leave was heard on April 21, 2026.
On May 4, 2026, the Court
issued its decision declining the applicant's
leave. The applicants have
30
days from the date of the decision to
file an appeal. All of the proceedings are
still in
early stages. Losses or damages cannot be estimated
at this time.
As previously disclosed, the Bank has been
named as defendant in a purported class
action lawsuit in the United States to be brought
on behalf of First Horizon
shareholders alleging that a decline in the price
of First Horizon shares was the result
of alleged misleading disclosures the
Bank made with respect to its U.S.
BSA/AML compliance programs and its
effect on the Bank’s contemplated merger with
First Horizon. The lawsuit also names some of
the Bank’s former and
current officers and a former employee as defendants.
On November 26, 2025, the court dismissed
plaintiffs’ complaint, but gave plaintiffs a final opportunity
to
amend their complaint again to attempt
to address its deficiencies. On January
22, 2026, the plaintiffs did not amend their
complaint and instead filed a notice of
appeal. On February 26, 2026, three lawsuits
brought by entities organized under
the laws of the Cayman Islands were filed on
an individual basis in New Jersey
state court against the Bank, TDBNA,
TDGUS and current and former officers and
employees claiming they were induced
to purchase and hold First Horizon stock
based on TD's representations concerning
TD's U.S. BSA/AML compliance programs
and its effect on the Bank's contemplated
merger with First Horizon.
Nineteen77 Global Multi-Strategy Alpha Master
Ltd. et al v. The Toronto-Dominion Bank et al; AQR Arbitrage MA Offshore Fund L.P. et al v. The Toronto-
Dominion Bank et al; HBK Master Fund LP
et al v. The Toronto-Dominion Bank et al
. On March 27, 2026, TD filed a notice
to remove the cases to federal court,
which plaintiffs are contesting. Losses or damages
cannot be estimated at this time.
As previously disclosed, the Bank is a defendant
in Canada and/or the United States in a
number of matters, including class actions, alleging
claims in
connection with various fees, practices and
credit decisions. The cases are in various
stages of maturity and include, among others:
a Quebec action against
members of the financial services industry
(including the Bank) regarding the existence
and amount of the insufficient or non-sufficient
funds fee, a Quebec action
against certain brokers (including TD Direct
Investing) regarding disclosure of foreign
conversion fees, a Quebec action against members
of the automobile
insurance industry (including Primmum Insurance
Company) regarding underwriting practices
in Quebec, and a class action that was recently
certified against the
Bank related to a specific class of employees
and TD’s practice of treating amounts paid
under the applicable compensation plans
as inclusive of vacation pay and
public holiday pay for those employees.
Refer to Note 15 for disclosures related
to tax matters.