Another fine mess for Wells; PayPal to buy iZettle

Receiving Wide Coverage ...

The song that never ends: Employees in Wells Fargo’s wholesale business banking unit improperly altered information on corporate customers’ documents without their knowledge, the Wall Street Journal reports. The actions took place last year and early this year as the bank was working to meet a deadline to comply with a regulatory consent order involving anti-money-laundering controls. Wells reported the problem to the Office of the Comptroller of the Currency.

“The behavior again raises questions about Wells Fargo’s risk-management practices and controls,” the paper says.

“The missteps reported by the Journal … suggest Wells Fargo is still struggling to improve its compliance and its workplace culture,” the New York Times comments. “If more problems crop up at Wells Fargo, the public will be more likely to believe that the bank is too big to manage — and that regulators are not up to the task of reining it in.” It also renews the questions about whether CEO Tim Sloan, who once led the commercial division, will be able to turn things around.

Swooping in: PayPal agreed to buy iZettle for about $2.2 billion, about double what the Swedish fintech startup was hoping to raise at its upcoming initial public offering. The acquisition, the biggest in PayPal’s history, “catapults the U.S. digital-payments giant into hundreds of thousands of brick-and-mortar retailers around the world,” the Journal says. “PayPal’s goal is to give a more comprehensive offering to retailers that want to sell products in stores and across digital platforms,” CEO Dan Schulman said. It also “sets up a showdown” with rival Square. Wall Street Journal, Financial Times, New York Times, American Banker

Wall Street Journal

Fraudsters: Hundreds of technology firms looking to raise money through digital coin offerings “are using deceptive or even fraudulent tactics to lure investors,” according to an investigation by the paper. It reviewed 1,450 documents and found 271 “with red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.” More than 100 “repeated entire sections word-for-word from other” documents, including “descriptions of marketing plans, security issues and even distinct technical features.”

Going it alone: Coinbase, which operates the largest U.S. cryptocurrency exchange, and IvyKoin, a payments platform for fiat currencies and cryptocurrencies, met with the federal regulators earlier this year about the possibility of obtaining banking licenses. A federal banking charter would let the companies offer their own federally insured bank accounts rather than having to partner with banks.

Financial Times

Stuck in the middle: The U.S. and the European Union “are heading for a showdown” following President Trump’s decision to re-impose sanctions on Iran, and the Swift financial messaging network may be caught in the middle. Swift severed links with Iran in 2012 but reopened them in 2015 following the Iran nuclear deal. “The question now is whether the EU will cooperate with any U.S. requests for those connections to be severed again and whether Swift will find itself caught in the crossfire of a transatlantic dispute over sanctions.”

Punished: Hong Kong’s Securities and Futures Commission fined Citigroup $7.3 million for failing to conduct adequate due diligence on an IPO it sponsored in 2009 for China-based Real Gold Mining Limited. The company was suspended from trading two years later for accounting irregularities. Citi “failed to conduct adequate and reasonable due diligence on Real Gold’s customers and properly supervise its staff when carrying out the sponsor work on Real Gold’s listing application,” the commission said.

Quotable

“You never start a company planning to sell it. But this is a very exciting way for the company to continue its vision. It gives us steroids to speed the company’s growth.” — iZettle co-founder and CEO Jacob de Geer on PayPal’s agreement to buy the company.