Sept 30 (Reuters) -

The U.S. broker-dealer unit of Toronto Dominion Bank ( MLWIQXX )

has agreed to pay over $20 million under a deal with U.S.

authorities to settle charges that it manipulated the U.S.

Treasuries market.

TD Securities USA, part of Canada's second-largest bank,

admitted to spoofing the U.S. Treasuries market as part of a

deal with the U.S. Justice Department that will end a

long-running probe into manipulation, according to a court

filing on Monday. TD Securities also settled related civil

charges from the Securities and Exchange Commission, the SEC

said separately.

In addition to the manipulation charges, the bank was

charged with failing to supervise the then-head of its U.S.

Treasuries trading desk, authorities said.

Between April 2018 and May 2019, the then-employee

sought out better trades in the U.S. Treasury cash securities

market by entering orders he did not intend to execute in a

tactic known as "spoofing," authorities said.

U.S. authorities have aggressively gone after the

practice, which is designed to create a false appearance of

demand.

Under the terms of TD's agreement, prosecutors will hold off

prosecuting the firm so long as it complies with the three-year

deal and overhauls compliance. Based on the company's

remediation of the issues, the DOJ decided against installing a

third-party monitor to police compliance.

The bank will pay a $12.5 million criminal penalty to

resolve civil investigations by the U.S. Securities and Exchange

Commission and the Financial Industry Regulatory Authority.

That comes on top of an approximately $9.5 million criminal

penalty related to the agreement. The bank has also agreed to

pay $4.7 million in victim compensation and $1.4 million in

forfeiture.

The settlement comes as the Canadian lender nears a deal

to plead guilty to separate government charges that TD's U.S.

retail bank possibly failed to curb money laundering tied to

Chinese crime groups and illicit fentanyl sales, according to a

Wall Street Journal report last week.