Receiving Wide Coverage ...

Not the Best: Bank of New York Mellon agreed to pay $714 million to settle litigation that accused the custody bank of defrauding clients on currency transactions. Stemming from a lawsuit filed in February 2011, the Manhattan U.S. Attorney and the New York State Attorney General said BNY Mellon gave some clients worse prices on foreign currency trades than promised. Put another way, BNY Mellon promised "best execution" of the foreign-currency trades, but instead gave customers the worst prices. BNY Mellon last quarter restated earnings to take into account the expected cost of the settlement. The settlement will also result in the end of private lawsuits filed against BNY Mellon, and the end of investigations by other government agencies. However, the settlement price is far less than the $2 billion originally sought by prosecutors. Also as part of the agreement, BNY Mellon agreed to fire David Nichols, a managing director, and another unnamed executive. Among the BNY Mellon customers cheated were pension funds for New York City teachers and police officers, the Duke University endowment, and a private investment fund controlled by Walt Disney Co. Another interesting fact from the case: Prosecutors were tipped off to the fraud by several whistleblowers, including Harry Markopolos, who repeatedly warned regulators about Bernard Madoff's Ponzi scheme.

Breaking Up is Hard to Do: Bank of America must allow a shareholder proposal to break up the bank to be included on its proxy statement, and to be voted on at the Charlotte company's annual meeting, the Securities and Exchange Commission ruled this week. Although the measure is unlikely to pass, it's the first time the SEC has approved the inclusion of a shareholder proposal to break up a big bank. "We've reduced the size of the company by hundreds of billions of dollars as we've streamlined and simplified our business model," a B of A spokesman said. The nonbinding proposal, submitted by Bartlett Naylor of consumer advocacy group Public Citizen, calls for the creation of a committee to devise a plan for how B of A is to sell off its noncore assets. Naylor says he plans to introduce the proposal again next year at Citigroup and JPMorgan Chase. The Wall Street Journal, Financial Times and Charlotte Observer all have stories on the ruling. In a separate proxy proposal submitted by Naylor, Citigroup shareholders will vote on whether to defer some top executives' pay for a decade, and to set aside those funds to cover the cost of penalties if the bank is found to have broken laws. Naylor said Citi's clawback policy doesn't go far enough, which is why he submitted this proposal.

SIFIs: The Journal has a brief story on Thursday's Senate Banking Committee hearing, in which the possibility of lifting the $50 billion threshold for systemically important institutions was discussed. The FT's article on the hearing includes the perspective of consultant Mayra Rodriguez Valladares, who said regulators should watch banks that aren't global, but whose concentration in certain geographic sections of the U.S. could pose their own systemic risks. A comprehensive story on the hearing can be found in American Banker.

Wall Street Journal

It appears highly likely that the decisions of the Financial Stability Board are binding on its member nations, Peter J. Wallison and Daniel M. Gallagher write in an op-ed column. The key evidence supporting their theory is the U.S. Financial Stability Oversight Council "has consistently moved to implement" the FSB's decisions. Furthermore, the FSOC has done so without ever saying publicly that it considers the FSB's decisions binding. Perhaps the FSOC has refrained from saying this because Congress has not endorsed that concept. "The FSB’s authority, if any, flows from the G-20. Allowing its decisions to dictate U.S. policy means that an American president can create authority to issue domestic regulations simply by making an agreement with the G-20 or other foreign leaders." If allowed to continue, and to be applied to the environment, telecommunications or other areas, this could set a precedent that "would unravel the separation of powers and the role of Congress in the U.S. constitutional system."

Washington Post

Target shoppers could be in the money, if they can prove they were victimized in the 2013 Target data breach. Target has offered to shell out $10 million to settle a class-action lawsuit stemming from the beach. The settlement would include terms to allow Target customers to receive up to $10,000 in damages, if they can prove they were harmed.

Elsewhere ...

Chicago Tribune: Here's good news on the outlook for noninterest income. About a quarter of bank customers surveyed in a recent poll said they'd be willing to pay $3 a month to keep using their banks' mobile apps, even if the app is currently free. The poll was conducted by SNL Financial.

Houston Chronicle: Bank robbers in Houston are extremely aggressive. About 40% of armed robberies of Houston banks involve thieves storming into a branch brandishing firearms and taking over the bank. That compares to the national average of 6%. The FBI is looking into the matter. Houston is also considered the armored-car robbery capital of the U.S.

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