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Goldman Sachs Group Inc. has defeated a married couple's appeal in a lawsuit accusing the Wall Street bank of negligence for arranging the $580 million sale of their speech-recognition company to Lernout & Hauspie, which soon collapsed in an accounting fraud, Reuters reported yesterday. The U.S. Court of Appeals for the First Circuit yesterday let stand rulings against James and Janet Baker, who hired Goldman to coordinate the all-stock buyout of Dragon Systems Inc. at the height of the 2000 technology bubble. Goldman had been accused by the Bakers and two former Dragon employees of negligence, misrepresentation, breach of fiduciary duty and unfair business practices for letting the sale go through despite concerns about Lernout's accounting. A federal jury ruled for Goldman on most claims in January 2013, and a judge ruled for Goldman on the remaining unfair business practices claim five months later. Writing for the appeals court, Chief Judge Sandra Lynch rejected arguments that the jury verdict was tainted by faulty instructions, and that the judge erred in finding that Goldman's conduct had to be "egregiously wrong" for it to be liable. "Goldman's conduct, even if sloppy and unforthcoming, was not unfair or deceptive," Lynch wrote for a three-judge panel.

Samuel Wyly and the estate of his brother Charles should pay $329 million for using offshore accounts to hide stock holdings and engage in illegal trading, regulators argued in seeking to increase the penalty ordered by a judge, Bloomberg News reported yesterday. Wyly and the estate should pay that sum plus an undetermined amount of interest, a U.S. Securities and Exchange Commission lawyer told U.S. District Judge Shira Scheindlin in Manhattan today. In September, the judge found that the brothers must pay $187.7 million plus interest, which could push the amount to more than $300 million. The bigger penalty, if accepted, could more than double what the agency is owed, according to court filings.

Caesars Entertainment Corp. have reached an agreement with key senior creditors on the outline of a debt restructuring plan that includes a pre-packaged bankruptcy for its largest unit as soon as January, Bloomberg News reported yesterday. Under the plan being negotiated by first-lien bondholders including Paul Singer’s Elliott Management Corp. and Pacific Investment Management Co., the casino company would put its Caesars Entertainment Operating Co. unit into chapter 11 proceedings as soon as Jan. 14. The proposal, which is the product of eight weeks of talks between the casino operator and its creditors, would help tame a $22.9 billion debt burden taken on six years ago in one of the biggest leveraged buyouts ever. Caesars, taken private by Leon Black’s Apollo Global Management and TPG Capital for $30.7 billion in 2008, has lost money every year since 2009.

An internal disagreement within the Securities and Exchange Commission is threatening potentially lucrative revenue streams at Bank of America Corp., the Wall Street Journal reported today. The SEC is deadlocked on whether to allow Bank of America, which recently settled an SEC probe into flawed mortgage-backed securities, to continue selling shares in hedge funds and startups to wealthy investors. Also at issue is the company’s ability to quickly issue stocks and bonds without the speed bump of an SEC review. The bank was restricted as a result of SEC rules that automatically make firms ineligible from such activities if they violate securities laws. Bank of America has been seeking waivers since the $136 million settlement with the SEC, which was wrapped into a $16.65 billion deal with the U.S. government. The restrictions wouldn’t go into effect until a court finalizes the settlement, a step that has been delayed as the SEC fights over the waivers. Bank of America isn’t alone in seeking such waivers, as dozens of other large banks have sought — and received — the same waivers in recent months after settling SEC charges, including Citigroup Inc., Barclays PLC and Royal Bank of Scotland Group PLC.

Texas tycoon Sam Wyly, who filed for bankruptcy this week, is trying to exhaust his fortune through exorbitant spending to impede the U.S. Securities and Exchange Commission's collection of a $198.1 million fraud claim against him, the regulator told a U.S. judge yesterday, Reuters reported. During a hearing in Dallas bankruptcy court, a lawyer for the SEC criticized Wyly's proposed budget as "staggering." Items include $32,000 a month for assistants to help him write his books and nearly $7,000 a month to support elderly friends and family members. A lawyer for Wyly, Josiah Daniel, said that the budget "reflects some substantial cuts." But U.S. Bankruptcy Judge Barbara Houser said Wyly should consider whether such expenses are "appropriate" given his bankruptcy filing. Wyly filed for chapter 11 protection on Sunday, saying he cannot afford the SEC's claim as well as a potential tax judgment from the Internal Revenue Service.

Bankruptcy Judge Christopher Sontchi has approved Energy Future Holding’s plan to award $20 million in bonuses to top executives despite objections from the U.S. Trustee’s office, the Dallas Morning News reported today. Judge Sontchi said at a hearing yesterday that the bonus programs met legal standards in that it incentivized performance and was not designed solely to keep executives from leaving the company. EFH, formerly TXU Corp., filed for bankruptcy in April, seven years after it was taken private for $45 billion, the largest leveraged buyout in U.S. history.

A plan by cooperative food distributor Associated Wholesalers Inc. to pay executives more than half a million dollars in bonuses has met the resistance of a federal bankruptcy watchdog, who says that the extra pay doesn't require enough work on the part of the employees, Dow Jones Daily Bankruptcy Review reported today. Associated Wholesalers proposes paying 12 members of senior management $246,254 for staying with the company until it is sold. Another $320,186 has been set aside to pay 15 senior managers if the company meets or exceeds certain financial projections. U.S. Trustee Roberta DeAngelis took issue with the bonuses in a filing on Friday, saying that both plans fail to meet the standards outlined in federal bankruptcy laws.

A U.S. appeals court ruling yesterday revived a lawsuit against JPMorgan Chase & Co. filed by a former vice president claiming the bank ignored red flags about a client's potential fraud, even after the massive Ponzi scheme operated by Bernard Madoff, another JPMorgan client, was exposed, Reuters reported yesterday. The U.S. Court of Appeals for the Second Circuit reversed a lower court's decision to throw out Jennifer Sharkey's whistleblower suit and ordered the judge to consider whether the case should be allowed to continue under a more lenient standard of whistleblower protection. The ruling from the three-judge panel was unanimous. JPMorgan has rejected Sharkey's allegations.

The U.S. Securities and Exchange Commission awarded more than $30 million to a whistle-blower in its largest payout from a program started in 2011 to encourage people to come forward with evidence of securities fraud, Bloomberg News reported yesterday. The whistle-blower, who lives outside of the U.S., provided key information in an enforcement action that the SEC didn’t identify, the agency said yesterday. Whistle-blower awards range from 10 percent to 30 percent of the money collected in a case. Congress authorized the SEC’s whistle-blower program in 2010 as the agency was trying to bolster its enforcement program after having failed to act on a detailed tip that Bernard Madoff was operating a multibillion dollar fraud. The agency has made payouts to more than a dozen whistle-blowers, including a $14 million reward in 2013. By law, the SEC doesn’t disclose the identity of the whistle-blower or information that might reveal who it is.

Regulators are poised to require that accounting firms identify exactly who is in charge of each audit they perform at thousands of publicly traded companies, but just where that disclosure will happen is still up for debate, the Wall Street Journal reported today. The Public Company Accounting Oversight Board (PCAOB), the government's audit regulator, expects to give final approval in the next few weeks to a long-awaited rule that will mandate accounting firms disclose the name of their lead "engagement partner," their partner in charge, on each public-company audit they perform each year. The move is aimed at increasing accountability for auditors and giving more information to investors. PCAOB Chairman James Doty wants the name disclosed in the audited company's annual report, also known as the 10-K, in the section in which the auditor's opinion appears. But big accounting firms are pushing for disclosure in a different location: a separate report the auditing firms file with the PCAOB, known as a Form 2.