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A unit of Deutsche Bank AG conceded that it misled investors and violated securities laws and will pay more than $40 million to settle charges that it misinformed clients about how it routed orders to anonymous trading platforms known as dark pools, Reuters reported on Friday. The bank agreed to pay $37 million to settle charges from federal and New York state regulators, and an additional $3.25 million to the Financial Industry Regulatory Authority (FINRA), Wall Street's self-funded regulator. In settling with both the New York Attorney General and the U.S. Securities and Exchange Commission, Deutsche Bank also admitted that its marketing materials about how it routed orders to various dark pools were misleading. The problems were due to a computer coding error, according to the documents related to that settlement. FINRA's charges against the bank, meanwhile, revolved around "deficient disclosures" by the bank's own dark pool trading platform itself. The bank settled that matter without admitting or denying any wrongdoing.

The U.S. Supreme Court yesterday ruled unanimously that Bassam Salman, who was convicted of insider trading in 2013, violated the law by trading on confidential information obtained through his brother-in-law even though he gained no tangible financial benefit, MorningConsult.com reported. The case, Salman v. United States, presented the central question of how to define a “personal benefit” garnered from insider information. Justices affirmed a lower court decision that ruled in favor of Salman’s conviction. Salman received insider information from his friend through marriage, who in turn had garnered information his own brother, an employee at Citigroup Inc. Salman then traded on it through another connection. The Court’s ruling strengthens the government’s hand in insider trading cases by affirming that a user of financial tips breaches fiduciary duty when it comes as inside information from a relative, whether or not the person giving the information receives a tangible financial benefit. Yesterday’s opinion undercuts a narrower 2014 ruling saying that the person who provides the tips must receive something of value in exchange for inside information given to family or friends.

Jonathan Gray of Blackstone Group LP went on the biggest homebuying spree in history after the U.S. foreclosure crisis, purchasing repossessed properties from the courthouse steps and through online auctions, the Wall Street Journal reported today. Four years, $10 billion and roughly 50,000 homes later, he will find out if his gambit will pay off. Invitation Homes LP, the Dallas-based company Blackstone formed to maintain and rent those homes, has filed confidentially for an initial public offering that could come as soon as January. Though Blackstone is unlikely to sell much or even any of its stake in an IPO, the stock market debut will test investors’ interest in the idea that the rental-home business can be institutionalized as apartments, shopping centers and office towers were before.

Puerto Rico’s largest mutual-fund bondholders have broken their silence in an ongoing $30 billion creditor standoff, underscoring tensions between the commonwealth’s traditional municipal investor base and the hedge funds now involved in its financial restructuring, the Wall Street Journal reported today. Funds controlled by fixed-income giants Franklin Advisers and OppenheimerFunds asked a federal judge last week to enter them as defendants in a lawsuit brought by hedge funds holding general obligation, or GO, bonds that have been in default since July. The lawsuit pits those creditors against investors holding $17 billion in competing bonds known as Cofinas for their Spanish acronym and backed by sales tax revenues. If successful, the lawsuit could compromise the Cofina bondholders’ liens and free up a fresh source of repayment for the GO bondholders, which are guaranteed under the Puerto Rican constitution. The courts, on the other hand, could affirm the commonwealth’s longstanding position that the sales-tax revenues are off-limits to the GO bondholders. U.S. District Court Judge Francisco Besosa could also freeze the dispute in the hopes that the warring investor groups will negotiate a settlement, as the Cofina investors have urged. Congress installed a federal oversight board over the summer to take over Puerto Rico’s financial decision-making, but it has yet to announce the hiring of legal and financial advisors with whom creditors will negotiate. The legal status of the Cofina revenues has never been tested in the courts, and resolving it now would take a major question on creditors’ rights out of the board’s hands. Read more. (Subscription required.) 

Don’t miss the “Puerto Rico, ‘Super Chapter 9’ and the Future of Sovereign Debt” session at ABI’s Winter Leadership Conference at Terranea Resort from Dec. 1-3. Register here.

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.