Finance Brief: SEC Reportedly Issues Dozens of Subpoenas in Cryptocurrency Probe

Top Stories

  • The Securities and Exchange Commission sent numerous subpoenas, as well as requests for information, to firms involved in the cryptocurrency trade, marking a significant step forward in regulators’ actions against initial coin offerings, according to unnamed people familiar with the matter. The subpoenas include requirements that firms send over data about the structure of ICO sales, the sources said. (The Wall Street Journal)
  • Companies whose representatives met with Jared Kushner, President Donald Trump’s son-in-law and a senior White House adviser, lent millions of dollars to Kushner’s family businesses following the meetings, sources said. A $325 million loan came from Citigroup Inc. in the spring of 2017, not long after Kushner met with Chief Executive Officer Michael L. Corbat to discuss trade and financial issues, according to unnamed people briefed on the meeting. (The New York Times)
  • A major announcement is expected today on whether the the Trump administration will impose steep tariffs on imports of steel and aluminum, with the president inviting executives from the industry to the White House for the event. In February, the Commerce Department recommended Trump place tariffs on imports of the goods from countries, including China, by using a law that allows the administration to impose duties for national security reasons. (The Washington Post)

Chart Review

Events Calendar (All Times Local)

Senate Banking Committee hearing with Fed’s Powell 10 a.m.
WITA event on trade enforcement 9 a.m.


Kushner’s Business Got Loans From Companies After White House Meetings
Jesse Drucker et al., The New York Times

Early last year, a private equity billionaire started paying regular visits to the White House. During that period, he met on multiple occasions with Jared Kushner, President Trump’s son-in-law and senior adviser, said three people familiar with the meetings.

White House planning major trade announcement Thursday on steel and aluminum imports
David J. Lynch and Damian Paletta, The Washington Post

The White House is planning to make a major announcement Thursday about whether it will impose new limits on steel and aluminum imports, three people familiar with the event said, following months of speculation about whether President Trump would follow through on trade threats and impose tariffs that could roil global markets. The details of the announcement were closely held and the situation remained very fluid, the people warned.

Top Chinese Economic Adviser Meets With Dimon, Other U.S. Executives
Jacob M. Schlesinger and Sarah Krouse, The Wall Street Journal

Chinese President Xi Jinping’s top economic adviser huddled Wednesday afternoon with a group of prominent American business executives at the start of his visit to Washington, according to people familiar with the matter. The meeting between Liu He and business luminaries, including JPMorgan Chase & Co. CEO James Dimon and Goldman Sachs Group Inc. co-chief operating officer David Solomon, came a day before Mr. Liu is slated to see top Trump administration officials amid rising economic tensions between the two countries.

Nafta Negotiators Agree to Regulatory Best Practices, Source Says
Eric Martin, Bloomberg

Negotiators from the U.S., Canada and Mexico finished work on regulatory best practices for Nafta, the first official “chapter” completed in the latest talks in Mexico City, according to a person with knowledge of the process. The three nations had agreed to some similar measures on regulatory coherence as part of the Trans-Pacific Partnership, but the rules approved for the North American Free Trade Agreement go deeper, according to the person, who asked not to be identified before a public announcement and wouldn’t elaborate on the chapter’s specifics.

AGs, not CFPB, should take greater role on enforcement: Mulvaney
Rachel Witkowski, American Banker

The Consumer Financial Protection Bureau will let states more often take the lead on enforcing consumer protection laws, acting Director Mick Mulvaney said during an attorneys general conference on Wednesday. Mulvaney said the CFPB would no longer be “pushing the envelope” or “look to create law where there isn’t” through enforcement actions.

Senate confirms Trump’s OMB deputy
Niv Elis, The Hill

The Senate on Wednesday confirmed Russell Vought as deputy White House budget chief by a 50-49 vote after months of keeping the nomination in limbo. Vice President Pence cast the tie-breaking vote. Sens. John McCain (R-Ariz.) and Mike Rounds (R-S.D.), were not present for the vote.

Global Stocks Slide, Treasuries Rise Before Powell: Markets Wrap
Eddie Van Der Walt, Bloomberg

European shares dropped the most since a global rout three weeks ago following sharp declines in the U.S. and Asia. Futures on the S&P 500 Index declined 0.1 percent to the lowest in more than a week.


Wells Fargo Is Accused of Harming Fraud Victims by Closing Accounts
Emily Flitter and Stacy Cowley, The New York Times

When signs of fraud appear on a customer’s account, such as a counterfeit check or an unauthorized withdrawal, a bank is required by law to investigate whether criminal activity has occurred. Wells Fargo had a simpler solution, according to a former employee: Close the account and drop the customer.

Does Wells Fargo Have a Plan?
Laura J Keller and Shahien Nasiripour, Bloomberg

Wells Fargo & Co. Chief Executive Officer Tim Sloan has said it to customers, shareholders, and employees. In October he flew to Washington to say it to Congress: He’s sorry for how the bank abused consumers.

Senate Readies Rollback of Bank Rules
Andrew Ackerman and Christina Rexrode, The Wall Street Journal

The Senate is expected this month to approve the most significant rollback of postcrisis financial rules since Republicans took control of Washington last year. The bipartisan legislation, supported by the Trump administration and top Federal Reserve officials, would relax dozens of rules for small to medium-size banks, shaking up the banking sector with policy changes that could encourage deal-making and make it easier for banks to expand.

New Fed Chief Gets Same Old Republican Pushback on Balance Sheet
Matthew Boesler, Bloomberg

Republican lawmakers made the Federal Reserve’s bloated balance sheet a big political issue for the last two heads of the U.S. central bank. During his first congressional testimony as Fed chairman, they hammered home to Jerome Powell that they were still on the case.

Trump praised an Ohio bank for hiking wages. Now the bank is making an even bigger payout — to shareholders
Jeff Stein, The Washington Post

When an Ohio bank announced raises and bonuses for low-wage workers because of the Republican tax cuts, President Trump touted it as evidence the tax law would be a boon to workers — and not, as Democrats charge, a giveaway whose primary beneficiaries are among the wealthy. On Tuesday, that bank, Fifth Third, said it would buy back as many as 100 million corporate shares, a move that is projected to cost nearly $3 billion.

Financial Products and Investments

Ameriprise unit settles charges it overcharged customers: SEC
Tim Ahmann, Reuters

The U.S. Securities and Exchange Commission said on Wednesday that a unit of Ameriprise Financial Inc has agreed to settle charges it sold higher-fee mutual fund shares to retail customers without determining whether they were eligible for less-expensive funds. The SEC said Ameriprise Financial Services Inc, without admitting or denying the findings, agreed to pay a penalty of $230,000.

How to Cover Up Alleged Fraud? Suppress Online Comments from Disgruntled Investors, SEC Says
Dave Michaels, The Wall Street Journal

Executives in Texas involved in an alleged oil and gas fraud raised money the old-fashioned way: by cold-calling investors. To keep the cash coming in, they turned to a novel tool: suppressing negative comments on the internet from angry investors.

Volatile month sees S&P 500 fall nearly 4% in February
Robin Wigglesworth and Peter Wells, Financial Times

Wall Street ended a tumultuous month on a sour note on Wednesday, suffering a second consecutive decline of over 1 per cent and slipping to its worst monthly performance in more than two years. The S&P 500 had stayed in positive territory for most of the day, but the bounce came undone in the final hour of trading, as it closed 1.1 per cent lower, with the Dow Jones Industrial Average sinking 1.5 per cent.

Housing and GSEs

How Ocwen plans to rebuild servicing scale with PHH deal
Bonnie Sinnock and Brad Finkelstein, National Mortgage News

Ocwen Financial Corp.’s $360 million acquisition of PHH Corp. presents an opportunity for the nonbank servicer to rebuild scale that’s been diminished by years of regulatory restrictions and the decline in distressed mortgage volume brought about by improvements in the overall housing market. Maintaining scale is critical for servicers and subservicers like Ocwen in the event of an uptick in mortgage delinquencies.


Treasury Unveils Tax Cut Calculator to Verify Withholding
Sahil Kapur, Bloomberg

The U.S. Treasury Department unveiled an online calculator Wednesday to help Americans determine whether the amount of federal taxes being withheld from their pay is accurate under a new tax law. The tax overhaul, passed by congressional Republicans in December, is estimated to boost after-tax incomes for most Americans in the initial years.

Boom in Share Buybacks Renews Question of Who Wins From Tax Cuts
Akane Otani et al., The Wall Street Journal

U.S. companies are buying back their shares at an aggressive pace, stirring debates in Washington and on Wall Street about how savings from corporate tax cuts are being used and who benefits most. Share buybacks announced by large U.S. companies have exceeded $200 billion in the past three months, more than double the prior year, according to a Wall Street Journal analysis of data for S&P 500 companies.

Financial Technology

SEC Launches Cryptocurrency Probe
Jean Eaglesham and Paul Vigna, The Wall Street Journal

The Securities and Exchange Commission has issued dozens of subpoenas and information requests to technology companies and advisers involved in the red-hot market for cryptocurrencies, according to people familiar with the matter. The sweeping probe significantly ratchets up the regulatory pressure on the multibillion-dollar U.S. market for raising funds in cryptocurrencies.

A Message from the Electronic Payments Coalition: 

A majority of voters are concerned with data breaches, yet there are no national data security standards to protect consumers at checkout. It’s time retailers share responsibility for data security. Learn more from the Electronic Payments Coalition.

Opinions, Editorials and Perspectives

Bitcoin Enters Awkward Adolescence
Aaron Brown, Bloomberg

Last fall, as cryptocurrencies seemed on the brink of a linkage with the traditional financial system, there were predictions of a price explosion along with institutional, regulatory and mainstream acceptance of the currencies. Others predicted disaster or a collapse to zero value.

Is it time to roll back US bank regulation?
Hal Scott and Lisa Donner, Financial Times

The US Senate will take up the first bipartisan effort to rein in the impact of the Dodd-Frank financial reform bill on smaller banks within weeks. But that should be just one step in reform.

Cleaning Up the Cleaned Up Tax Code
The Editorial Board, The Wall Street Journal

One risk for the political success of the GOP tax reform is that some businesses will manipulate a large new deduction that could reduce federal revenue and discredit the project. An early warning is a carve-out that benefits some farmers, a clunker that ought to be corrected.

A Message from the Electronic Payments Coalition: 

A dynamic data security strategy can help businesses protect consumers like you from data breaches. A recent report from EPC underscores why innovation is a key component to fighting fraud. Read why from EPC.

Research Reports

Policies and Analyses under the Regulatory Flexibility Act and Retrospective Reviews Could Be Improved
Government Accountability Office

More than 60 smaller depository institutions told GAO that regulations for reporting mortgage characteristics; reviewing transactions for potentially illicit activity; and disclosing fees, conditions, and mortgage terms to consumers were the most burdensome. Institution representatives said these regulations were time-consuming and costly because the requirements were complex and required reporting that had to be reviewed for accuracy.