Wall Street Journal
Is it a case of He Who Must Not Be Named? No, it's not Voldemort from the Harry Potter series. It's the Structured Equity Finance and Trading group at Bank of America, also known as SEFT. Why has the division been sent to the penalty box? Because regulators have stepped up the pace of investigations into the type of dividend-tax trades made by SEFT. Unnamed sources say regulators are looking into whether the group broke customer-protection rules. Regulators are also, apparently, looking into potential tax-cheating.
The agencies seeking to nose around in SEFT's file cabinets include, but are not limited to, the Securities and Exchange Commission, the Federal Reserve Bank of Richmond and unidentified European agencies. SEFT has also been plagued by a rash of quittings, or perhaps firings, of key personnel. Including Monuhar Ullah, who led SEFT's London office, and Stuart Hendel, who led B of A's business with hedge funds. One ex-SEFT trader, Rurik Jutting, is sitting in a Hong Kong jail awaiting trial on charges of murder after two women were found dead in his apartment; the body of one was founf in a suitcase on his balcony.
B of A isn't the only institution that's appeared to run afoul of regulators in the area of dividend-arbitrage trades, as some European hedge funds have also come under the microscope for the practice.
Morgan Stanley designated its successor-in-waiting to Chief Executive James Gorman. The New York bank tapped Colm Kelleher as its sole president and said he would succeed Gorman if Gorman were to leave unexpectedly. Gregory Fleming, Morgan Stanley's co-president, abruptly quit on Wednesday, after the bank's board approved a plan for Gorman to remain in the post for at least five more years, essentially eliminating Fleming's path to the CEO-ship.
Renters may now be even more inclined to move into the ranks of homeowners. But it's going to be difficult for them to make the switch. Apartment rents rose faster in 2015 than at any time since 2007, according to real-estate researcher Reis. While that's great news for landlords and multifamily lenders like New York Community Bancorp, it's not so hot for renters. The average monthly rental payment is now $1,180, up from $1,125 two years ago.
That means it's more difficult for renters to accumulate adequate savings for a downpayment. Indeed, the percentage of first-time buyers among all homebuyers has dipped to its lowest level in three decades, according to the National Association of Realtors.
The Justice Department is investigating traders at Bank of America, Credit Suisse, Credit Agricole and Nomura for allegations they manipulated the government-sponsored debt market, specifically the supranational, subsovereign and agency (SSA) debt market market. Prosecutors are looking at whether traders at the banks colluded to manipulate prices by using online chat rooms, unnamed sources said. Issuers in the SSA market include Freddie Mac.
Delaware News Journal: A federal grand jury has charged Wilmington Trust with criminal violations tied to the federal bailout money it received. The case stems from criminal cases against former Wilmington Trust bankers, including David Gibson, who have been charged with fraud for intentionally understating past-due loans in 2009 and 2010. M&T Bank in Buffalo, N.Y., which now owns Wilmington Trust, could be financially liable now.
ZDNet: Banks have been unable to stop infection rates from banking Trojans, a type of computer virus, despite their best efforts. Various types of Trojans have become more complex and more difficult to detect, and there is concern the increased spread of the malware threatens their cybersecurity.
Barron's: Beware a flatter yield curve, at least if you own bank stocks. Flat yield curves are bad for bank lending; but recent bank stock performance indicates that's where investors believe conditions are heading.