News Highlights TD's Regulatory Risks, Echoing DeepValue's Cautious View

What happened

A Motley Fool article suggests TD could soar if certain conditions are met, but it notes ongoing U.S. regulatory scrutiny for weak money laundering controls and an asset cap. The DeepValue report confirms that TD's equity narrative is dominated by BSA/AML remediation execution and operating under this cap, with a base case expecting ~US$500m pre-tax spend in FY2026. TD has taken proactive steps, such as shrinking U.S. assets and implementing a restructuring program targeting US$750m in annual savings to offset costs. However, the stock has surged 68% over the past year, eroding valuation buffer and increasing reliance on flawless remediation progress. The report maintains a 'WAIT' rating, highlighting risks like scope expansion or timeline delays that could derail any optimistic scenarios.

Implication

TD's near-term performance depends on containing AML remediation costs near US$500m pre-tax in FY2026 and avoiding scope expansion that could extend work beyond 2027. The asset cap imposes a guided US$280m pre-tax NII drag, constraining earnings growth despite restructuring savings targets. Internal audit validation in 2026-27 is a critical milestone; any rework or adverse findings could prolong the regulatory overhang and increase costs. With the stock up 68% in a year, any deviation from the base case, such as higher spend or timeline slippage, could lead to significant downside. Therefore, investors are better off waiting for either a lower entry price around $88 or positive updates from FY2026 disclosures before considering an investment.

Thesis delta

The news article reinforces existing concerns about TD's regulatory challenges, aligning with the DeepValue report's cautious stance without introducing new material information. No shift in the investment thesis occurs; it remains that investors should wait for evidence of controlled remediation costs and timeline adherence, as the stock's current price lacks a margin of safety against potential downside risks.