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State Street Corp. is nearing a deal to pay more than $500 million to end long-running investigations from federal authorities and others into allegations that the custody bank unlawfully overcharged clients on foreign currency transactions, the Wall Street Journal reported today. The settlement, which could be announced this summer, is expected to resolve claims from the U.S. Justice and Labor departments and the Securities and Exchange Commission, as well as lawsuits from clients including pension funds. The lawsuits accuse State Street of promising to execute foreign exchange trades for clients at market prices, but instead using inaccurate or fake rates that included hidden markups. The alleged overcharges occurred between 1998 and 2009, according to the lawsuits. Earlier this month, State Street said in a securities filing that it had set aside $565 million to resolve related claims. But the deal has been held up as the Justice Department and the bank work on a statement of facts that the bank will admit to.

More than $395.4​ billion in U.S. mergers, including, most recently, Staples Inc.’s combination with Office Depot, have fallen apart in 2016, according to data provider Dealogic, felled by exacting regulators, rocky markets or ​reluctant targets​, the Wall Street Journal reported today. That will be a record even if no other deals stumble for the rest of the year.​ That is bad news for the banks that stood to make billions of dollars in fees on the M&A feast of 2015, a record-setting year of more than $4.6 trillion in announced deals. Financial advisers pocket most of their money only when deals close, which means that when deals go bust, the work they have already done goes largely unpaid. Three of the largest collapsed deals this year — Pfizer Inc.’s takeover of Allergan PLC, Halliburton Co.’s purchase of Baker Hughes and Staples’ merger with Office Depot — will cost banks more than $300 million in advisory fees, according to a review of regulatory filings. That doesn’t include potentially large fees banks aren’t legally required to disclose.

A small but growing slice of the mortgage market has shifted from mainstream banks to an informal, loosely regulated corner of property finance, the Wall Street Journal reported today. These lenders can earn 8 percent and more on their money — the catch is they must stomach the risk of lending their savings to borrowers rejected by banks. “It’s the Wild West out here,” said Corey Kohnke, who spends his days driving around Orange County, Calif., matching borrowers with investors looking to make loans, a job that pays commissions of 2 to 8 percent. Private lenders charge annual interest rates as high as triple those of a conventional 30-year fixed-rate mortgage. Some issue loans from personal fortunes and collect monthly interest payments. Others make loans and sell the note to investors. There also are private mortgage funds that pool investor money. “We can’t make loans fast enough to sell them to our investors,” said Michelle Rodriguez, general counsel for R.C. Temme Corp., and its affiliate, private lender Woodland Hills Mortgage Corp. in Los Angeles. When the firm’s salespeople call investors to market the loans, she said, “they’re snapped up within minutes. Literally, 15 minutes and they’re gone.” Read more. (Subscription required.) 

Don’t miss the “Real Estate Values Are Climbing (Again): Debtor, Watch Your Back!” session at the Southeast Bankruptcy Workshop on July 21-24 at the Ritz-Carlton in Amelia Island, Fla. Click here to register. 

JPMorgan Chase & Co. won a judge’s approval to pay $150 million to settle investor claims that it hid as much as $6.2 million in losses caused by a trade dubbed the London Whale, Bloomberg News reported yesterday. U.S. District Judge George Daniels in New York yesterday accepted the accord, which ended a suit brought by a group of pension funds in 2012. They accused JPMorgan of turning its London-based Chief Investment Office in London into a “secret hedge fund” that caused the losses. The accord in the class-action suit “is adequate and reasonable,” the judge said. The bank told investors that the office’s primary role was managing risk, but the lawsuit alleged it was instead engaging in risky trades to generate profits. Ohio pension funds and other plaintiffs claimed they incurred tens of millions of dollars of losses because their fund managers were given false and misleading information. Bruno Iksil, who became known as the London Whale because he amassed large, market-moving positions in credit derivatives, made the trades for the bank.

Investors in Brevan Howard Asset Management have asked to pull about $1.4 billion from the firm’s main hedge fund as investors flee the industry at the fastest pace since the financial crisis, Bloomberg News reported yesterday. The Brevan Howard Master Fund, which bets on macroeconomic trends to invest across asset classes, will have to meet the redemption requests by the end of June. The fund managed $17.6 billion at the end of March, down from about $27 billion two years ago, according to a company website. Investors are losing patience with the high-fee managers after years of sub-par returns. Brevan Howard suffered two years of successive declines, followed by losses during the first quarter. Clients of Tudor Investment Corp., another multibillion-dollar hedge fund, have asked to withdraw more than $1 billion from the firm founded by billionaire Paul Tudor Jones after three years of lackluster returns.