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The hedge fund Visium Asset Management is being investigated by the Justice Department and the Securities and Exchange Commission, the New York Times DealBook Blog reported yesterday. The agencies have requested information from several years ago relating to Visium’s valuation of certain securities in a credit fund it shut down in 2013. The authorities are also looking at Visium’s trading of certain securities and the firm’s use of a consultant more than five years ago. Visium is an $8 billion, New York-based hedge fund that focuses on investments in pharmaceutical companies. It was one of more than a handful of hedge funds that were invested in Valeant last year, but it sold the last of its shares in the fourth quarter of 2015, according to regulatory filings.

Wells Fargo & Co. and a Rhode Island government agency were sued by a U.S. regulator for allegedly misleading investors about how much money a company led by former Boston Red Sox pitcher Curt Schilling needed to develop a video game, Bloomberg News reported yesterday. After being hired to find financing for Schilling’s 38 Studios LLC, Wells Fargo failed to disclose that the $50 million raised from a bond offering was at least $25 million short of what the company needed to bring the game to market, the Securities and Exchange Commission said yesterday. The Rhode Island Economic Development Corp. also knew that the bond sale wouldn’t raise enough money for Schilling’s company, the SEC said. “Municipal issuers and underwriters must provide investors with a clear-eyed view of the risks involved in an economic development project being financed through bond offerings,” said Andrew J. Ceresney, head of the SEC’s enforcement division.

The Federal Reserve is set to re-propose long-delayed rules for limiting business ties between Wall Street firms such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc., aiming to ensure megabanks won’t take others with them if they fail, Bloomberg News reported today. The measure to be voted on at a meeting in Washington, D.C., today represents a second try after Fed governors abandoned a 2011 proposal to restrict banks’ credit exposure to any other financial firm to 10 percent of capital. That original proposal, much tougher than a 25 percent restriction called for in the 2010 Dodd-Frank Act, was shelved after receiving strong criticism from the banking industry. Congress included the safeguard in the landmark regulatory law after financial firms that fell during the 2008 credit crisis threatened to pull their trading partners toward collapse. In the most infamous instance, Wall Street banks with credit exposure to Lehman Brothers Holdings Inc. got taxpayer-funded aid to help them weather that firm’s bankruptcy. 

Companies that veer too far away from new revenue recognition guidance will have to explain their reasoning to regulators, the Wall Street Journal reported today. “If a company chose to take a different approach, we would expect them to come in and talk to us about why they were not going to follow the … non-authoritative guidance,” said James Schnurr, chief economist for the Securities and Exchange Commission. New rules for recording revenue don’t go into effect until 2018. However, companies must show back years of financials under the new rules so investors and analysts can make appropriate comparisons. That means public company finance teams are already adopting the standard. To help companies adopt the changes, the Financial Accounting Standards Board and the International Accounting Standards Board, which jointly developed the rules, are issuing implementation guidance through a transition resource group.

The Securities and Exchange Commission is considering ways to refine pending rules on how and when companies should recover executive pay tied to company performance, said David Fredrickson, associate director and chief counsel in the Division of Corporation Finance, the Wall Street Journal reported today. Companies are currently required to disclose how executive compensation is tied to company performance, including which financial metrics are used to benchmark company performance. There has been some debate among stakeholders about the regulator’s proposed company performance measure, total shareholder return. It remains the​ metric most consistent with the Commission’s framework, Fredrickson said. Companies and compensation attorneys argue that the proposed rule can be easily circumvented by disclosing less about pay-for-performance in their annual proxy statements. The proposed rules also would require companies to disclose recovery policies, and seek restitution of performance-based compensation, when a restatement would have affected executives’ pay due to previously reported results that were erroneous.

A top U.S. Securities and Exchange Commission official said that regulators remain worried about hard-to-sell assets held by high-yield bond funds as they probe whether the failure of the Third Avenue Focused Credit Fund could be repeated, Bloomberg News reported today. The SEC plans to release findings from a sweep of high-yield credit funds that followed the collapse of the Third Avenue Capital Management LLC fund, said Marc Wyatt, head of the regulator’s office of compliance inspections and examinations. “There is ongoing concern,” Wyatt said on Saturday. The SEC began reviewing about 70 funds in December after the $788.5 million Third Avenue fund blocked clients from getting their money out, said Jane Jarcho, another top SEC examiner. Losses and withdrawals left Third Avenue unable to meet redemptions without selling assets at fire-sale prices. SEC examiners sent letters to funds that invest in similar securities to the Third Avenue fund, ordering them to explain how their bonds could be sold as quickly as they say.

A bankrupt real-estate investment firm that took in millions of investor dollars from people within Indiana’s Amish community would be taken over by a financial professional under a request from the Securities and Exchange Commission, the Wall Street Journal reported today. In court papers, agency lawyers asked Judge Harry C. Dees Jr. to appoint a leader for 5 Star Investment Group LLC and an affiliated company, saying that founder Earl D. Miller went missing after the regulator accused him of lying to investors. Miller advertised big returns to investors whose money would build or rehabilitate real estate, SEC officials said in documents filed in U.S. Bankruptcy Court in South Bend, Ind. Promising returns of 8 to 12 percent a year, Miller raised at least $3.9 million from at least 70 investors since 2014, court papers said.

The latest round of penalties over “dark pools” highlights how reliant banks and exchange operators have become on business from high-frequency traders — even on platforms that promised to blunt their advantage, the Wall Street Journal reported today. Dark pools were advertised to mutual funds and other traditional money managers as a place where they could trade in secret and avoid giving away their moves to computer-driven traders. New settlements with two of the biggest dark-pool operators, Credit Suisse Group AG and Barclays PLC, showed that the banks were quietly catering to high-frequency traders at the same time. The reality beneath those practices is that high-frequency traders account for the bulk of bids and offers that keep the market running — about two-thirds of the total — a source of business that can be hard to pass up. Credit Suisse and Barclays catered to them by concealing the role of speedy traders on their platforms and going back on promises to protect clients from predatory trading, according to the settlements with the Securities and Exchange Commission and New York Attorney General.