SEC Investigating Allegations that Large Banks Cheated Customer Out of Billions in Lost Interest

SEC investigating Wall Street banks over ‘billions’ in lost interest payments

The US Securities and Exchange Commission is investigating allegations that Wells Fargo, Morgan Stanley and other Wall Street groups have been systematically cheating customers out of billions of dollars of interest payments.

The probe into “cash sweep” accounts comes as a number of firms have upped the interest they are paying clients. But the rates being offered to savers, particularly by the nation’s largest banks, remains far lower than the returns paid to banks based on short-term interest rates set by the Federal Reserve.

The issue has arisen from idle cash sitting in customer accounts at brokerage firms and large banks, which “sweep” otherwise uninvested funds into interest-bearing alternatives in order to generate income. The SEC is looking into whether the firms steered those clients into sweep accounts that paid little or no interest, and whether the financial advisers at those groups had a fiduciary duty to advise clients they could make higher returns if they moved their cash into other accounts.

SEC Climate Regulations Spared in Chevron Ruling, Agency Says

SEC corporate emissions reporting requirements should still be allowed after this summer’s Chevron rollback, the agency has told a federal court for the first time since the Supreme Court decision that makes it easier for challengers to fight some agency regulations.

The Supreme Court’s June decision upending the decades-old Chevron legal doctrine gives the Securities and Exchange Commission and other agencies flexibility with rulemaking when laws clearly delegate discretionary authority to them, the SEC told the US Court of Appeals for the Eighth Circuit on Monday.

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“It is not an argument that the Commission lacks statutory authority to promulgate the Rules,” the SEC said in its brief, adding “the Commission reasonably explained the Rules and the basis for them.”

WisdomTree Asset Management Gets Wells Notice From SEC Staff

WisdomTree said its unit WisdomTree Asset Management received a Wells notice from the staff of the US SEC.

Staff has made a “preliminary determination” to recommend that the SEC file an enforcement action alleging violations of certain provisions of federal securities laws

The alleged violations relate to three exchange-traded series of WisdomTree Trust managed by WTAM that pursued ESG-focused investment strategies.

Ex-Pfizer Manager Gets Nine Months for Covid Insider Trading

A former Pfizer Inc. statistician was sentenced to nine months behind bars for making more than $200,000 by trading on confidential information before a key announcement about the drugmaker’s Covid-19 treatment Paxlovid.

Amit Dagar, convicted of securities fraud and conspiracy after a one-week trial in January, was sentenced Tuesday in federal court in Manhattan by US District Judge Andrew L. Carter Jr. Dagar was charged in June 2023 with trading ahead of a November 2021 announcement that Paxlovid had reduced hospitalizations and deaths in high-risk patients by 89%, which sent the shares surging. He had asked for a sentence of probation or home confinement.

Bitcoin as ‘Digital Gold’ Thesis Undermined by Crypto Selloff

The cryptoasset selloff is testing the industry axiom that Bitcoin is the equivalent of “digital gold,” and therefore belongs in an asset portfolio to hedge against stock market gyrations, like seldom before.

As equities sank on Monday and carry trades unraveled, Bitcoin behaved more like stocks than gold, at one point tumbling 17% to below $50,000 before recouping some losses. Its correlation with the precious metal turned negative in July, data compiled by Bloomberg show.

“It is unrealistic to think that institutional investors are allocating capital to Bitcoin for the same reason as gold,” said eToro analyst Josh Gilbert. “These two assets don’t play the same role in investment portfolios.”

Morgan Stanley Advisors Given Go-Ahead to Pitch Bitcoin ETFs to Investors

Investment behemoth Morgan Stanley on Friday said it will soon permit its financial advisors to actively promote Bitcoin ETFs to eligible clients, marking the first time a major Wall Street bank has taken such a step.

Starting next Wednesday, the firm’s vast network of approximately 15,000 financial advisors will be authorized to pitch shares in BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund to suitable investors.