Receiving Wide Coverage ...
Deutsche Nears Libor Deal: Deutsche Bank is expected to announce a $2.15 billion settlement with U.S. and British regulators over Libor rate-rigging charges, according to the papers. That would be the highest fine faced by any bank in relation to the Libor scandal so far. What makes Deutsche so special? New York's Department of Financial Services is involved in the deal, driving up the penalty, according to the Financial Times. The Wall Street Journal adds a few more details, courtesy of anonymice: Deutsche will reportedly plead guilty and admit to inadequate internal monitoring systems and the penalty will impact quarterly profits. The New York Times hedges a bit in reporting the settlement, writing Deutsche will take a $1.6 billion charge in legal costs from first-quarter earnings but that the bank "declined to confirm" the charge is related to the Libor probe.
Going Rogue: The idea that a London man who made trades from the comfort of his own suburban home could have had the power to set in motion the May 2010 flash crash continues to unsettle industry observers. U.S. authorities' accusations against the trader, Navinder Singh Sarao, are "a timely reminder of the limits of regulating risk," writes Reuters Breakingviews columnist Antony Currie. A Times article says the charges against Sarao have reignited widespread fears about the dangers of spoofing, a practice in which traders make and withdraw large orders in order to manipulate prices. The Journal wonders how regulators could have missed Sarao's alarming trades: "Someone was asleep at the switch," an analyst tells the paper. The Financial Times takes a more measured view, arguing that while spoofing "clearly hurts confidence in the fair functioning of the markets," Sarao's alleged actions couldn't have disrupted the markets without multiple other contributing factors. U.S. lawmakers don't sound quite as relaxed about the situation, according to a separate article in the FT: "The arrest has refocused politicians' gaze on the linkages between futures and equity markets and on regulators' record" in catching potential risks to the financial system. Meanwhile, Sarao plans to fight extradition to the U.S., and successfully posted £5,050,000 bail.
BofA Hustles for Appeal: Bank of America has appealed a ruling that would require it to pay $1.3 billion over allegedly fraudulent practices in a legacy mortgage program with the unfortunate name "the Hustle." Bank of America argues the judge who presided over the civil lawsuit, Judge Jed Rakoff, just doesn't like bankers much and prevented it from putting forward important evidence during the trial. Wall Street Journal, Financial Times
AIG Suit Wraps: The papers paint vastly different portraits of the closing arguments in a lawsuit brought by former American International Group chief Maurice Greenberg against the government. The Journal suggests the presiding judge is sympathetic to Greenberg's argument that the government was excessively harsh in setting the terms of the insurer's 2008 bailout. The article begins by quoting Judge Thomas Wheeler as sardonically telling the government lawyer that "'it doesn't seem far fetched' to question the deal's rigidity." The Times leads with a quote from the judge that suggests this is still anybody's game: "Not surprisingly, just about everything is still in dispute in this case." A separate item says it's remarkable that Greenberg's got a shot at winning, given the ridicule that first greeted the case. A lot of the credit goes to Greenberg's committed lawyer David Boies.
Fresh Funding Round: British marketplace lender Funding Circle has raised $150 million from investors. The company plans to use the funding to fuel growth in the U.S. and the U.K. and to power its entry into "new geographies" in coming months. Funding Circle also announced the appointment of two new executives. Financial Times, New York Times, American Banker
Attack on Hacks: A cybersecurity bill that aims to prompt more companies to share information about potential threats has a good chance of passing, according to the FT. It's one of several cybersecurity bills circulating Congress this week. The Washington Post reports small businesses want the legislation to include "guidelines for how to quickly detect when an attack has happened and what to do to make repairs."
Wall Street Journal
Did a former Goldman Sachs programmer violate New York law by inappropriately pilfering computer code from his employer? It depends on what the meaning of "appropriate" is and on the official definition of a few other words.
Royal Bank of Canada is in hot water with a French tribunal over a charge of "complicity in tax fraud" related to its Bahamas unit.
Troubled HSBC has a difficult public relations battle ahead, an anonymouse tells the paper: "We have to persuade everyone we're not too big to manage. But we've also got to convince everyone we're not a bunch of crooks."
The Atlantic: The Atlantic takes a look at the current state of cultural reform on Wall Street, holding up Morgan Stanley chief James Gorman's cautious approach to risk as one hopeful model.