Receiving Wide Coverage ...
Halted: Top New York regulator Benjamin Lawsky has stopped a deal that would have seen Wells Fargo sell the mortgage servicing rights on $39 billion in loans to Ocwen Financial Corp. The Times and the Journal both report that Lawsky halted the deal out of concerns about Ocwen's ability to handle more mortgages. Lawsky's Department of Financial Services has been investigating the servicer for alleged misdeeds toward homeowners since December 2012. Per the Journal, the move "highlights how regulators' gaze has shifted to a handful of specialty mortgage servicers that have grown rapidly over the past few years." The Times notes the decision "could complicate Ocwen's strategy of increasing its revenue by acquiring more servicing rights from the big banks." Ocwen said it's working to resolve Lawsky's concerns; Wells Fargo declined to comment on the development.
Guilty: Former SAC portfolio manager Mathew Martoma was found guilty of insider trading on Thursday. The verdict makes Martoma "the eighth person who once worked for the hedge fund titan Steven A. Cohen to be convicted of insider trading," says Dealbook, which goes on to speculate that he is also likely to be the last. But the verdict could have implications for the civil case the Securities and Exchange Commission is building against Cohen, since "the trades at the heart of Mr. Martoma's case, for instance, are some of the same ones the SEC cites in its lawsuit against" Cohen, notes the Journal. Martoma is expected to serve seven to 10 years in prison. He plans to appeal the decision.
Wall Street Journal
High-frequency traders are getting even more high-speed by purchasing direct access to market-moving press releases. "The ability of high-speed firms to trade on market-moving news before other investors highlights how gaining an edge in today's lightning-fast markets can come down to a split-second advantage," the paper notes.
Investors are getting out of U.S. equity fund and into bonds at the "fastest clip on record."
Barclays has tapped junior trader Daniel Ryan as interim head of its London foreign exchange trading desk. The position was vacated after Chris Ashton was suspended in November amid an internal investigation into alleged rigging of the foreign exchange market. "The move to appoint a relatively junior trader to a key role highlights the havoc caused by a global investigation into allegations" of currency manipulation, the paper notes.
Bank "bail-in" bonds, which can be written off or converted into equity if capital falls below a set level, are riskier than initially thought, says Standard & Poor's. "We believe that banking regulators are adopting a tougher 'bail-in' stance toward hybrid capital instruments, increasing the possibility that banks may have to use them to a greater extent to absorb losses," the agency explains.
New York Times
Charles Shrem, the former Bitcoin exchanger arrested in January on charges of conspiring to launder more than $1 million for users of the online drug market Silk Road, is making the media rounds. Right on the heels of an interview in the Journal, Shrem tells the Times: "Given the opportunity, I will get back on the speaking circuit and be an evangelizer for Bitcoin At the same time, the more high-profile you are, the more careful you have to be. It's scary."
Columnist Stephen J. Lubben on Puerto Rico's debt woes: "How it deals with the issue is complicated by the fact that in 1901, not long after the United States acquired Puerto Rico in the Spanish-American War, the United States Supreme Court ruled that the Constitution did not apply in Puerto Rico because the island was a territory and not part of the union. The ruling left the island in a kind of legal limbo."