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The House is scheduled to vote on two bills this week that would undercut new Dodd-Frank Act financial regulations, the New York Times DealBook blog reported today. The legislation has garnered broad bipartisan support in the House, even after lawmakers learned that Citigroup lobbyists helped write one of the bills, which would exempt a wide array of derivatives trading from new regulation. The bills are part of a broader campaign in the House among Republicans and business-friendly Democrats to roll back elements of the 2010 Dodd-Frank Act, the most comprehensive regulatory overhaul since the Depression. Of 10 recent bills that alter Dodd-Frank or other financial regulation, six have passed the House this year. This week, if the House approves Citigroup’s legislation and another bill that would delay heightened standards for firms that offer investment advice to retirees, the tally would rise to eight. Both the Treasury Department and consumer groups have urged lawmakers to reject the bills, warning that they could leave the nation vulnerable again to excessive financial risk taking. The House proposals stand little chance of becoming law, having received a much chillier reception in the Senate and at the White House, which on Monday threatened to veto the bill on investment advice for retirees.
http://dealbook.nytimes.com/2013/10/28/house-set-to-vote-on-2-bills-is-…

In related news, the House Financial Services Financial Institutions and Consumer Credit Subcommittee will hold a hearing today at 3 p.m. entitled “Examining Legislative Proposals to Reform the Consumer Financial Protection Bureau.” For more information, including the witness list, please click here.

Lawyers for former MF Global Inc. Chief Executive Jon Corzine and his top lieutenants are opposing a bankruptcy trustee's bid to characterize his final 100 percent payment to the failed firm's commodity customers as an "advance," Dow Jones Daily Bankruptcy Review reported today. Corzine's lawyers, along with attorneys representing former No. 2 Bradley I. Abelow, ex-finance chief Henri J. Steenkamp and other top brass aren't objecting to trustee James W. Giddens' request to return property to the customers. But they are upset about his attempt to characterize his final $305 million payout to customers as an "advance" to be recouped over time from future distributions due from MF Global 's U.K unit.

The hedge fund SAC Capital Advisors is moving closer to a plea deal with prosecutors that would force it to wind down its business of managing money for outside investors, punctuating its decline from the envy of Wall Street to a firm caught in the government’s cross hairs, the New York Times DealBook blog reported yesterday. An agreement to stop operating as an investment adviser is one feature of a larger agreement SAC is negotiating as it seeks to resolve insider trading charges. The plea deal would also require SAC to plead guilty to criminal misconduct and pay more than $1 billion in penalties, a record for an insider trading prosecution.

A former employee of Bernard L. Madoff who started working for the convicted con man in the 1960s was part of the firm’s legitimate broker-dealer unit and didn’t know about the fraud at the investment advisory business, a lawyer told a jury, Bloomberg News reported yesterday. Daniel Bonventre, the operations chief who signed checks for Madoff’s securities firm and worked with its general ledger, was fooled by Madoff’s “depraved and pathological lies,” Andrew Frisch said today in federal court in New York. “Dan did what Madoff told him to do. That’s what the evidence will show. Dan believed Madoff like so many others.” Frisch was the first defense lawyer to present opening statements in the trial of five ex-employees who are accused of aiding Madoff’s $17 billion Ponzi scheme.

A former official at Bank of America Corp.’s Countrywide unit said that he went to federal authorities and filed a whistle-blower lawsuit after learning the government might settle with the lender, Bloomberg News reported on Friday. Edward O’Donnell, who now works for Fannie Mae, said that he contacted the office of Manhattan U.S. Attorney Preet Bharara in February 2012 after reading in news accounts that the Justice Department was considering settling with large U.S. banks accused of selling bad mortgages to government-sponsored enterprises (GSEs). In a complaint filed that month under the False Claims Act and unsealed eight months later, O’Donnell alleged that Countrywide Financial Corp. issued defective mortgages under its “High Speed Swim Lane” program, or HSSL, and then sold them to Fannie Mae and Freddie Mac. The U.S. later joined the suit and the trial, which began Sept. 24 in federal court in New York.

JPMorgan Chase & Co.'s penalties for the "London whale" trading fiasco are expected to total $500 million to $600 million as part of a far-reaching settlement that could wrap up as soon as next month, the Wall Street Journal reported today. The Justice Department, Securities and Exchange Commission, Commodity Futures Trading Commission, Office of the Comptroller of the Currency and the U.K's Financial Conduct Authority are conducting investigations into J.P. Morgan's handling of the episode. Not all agencies have agreed to their final numbers and the total could still be above or below the range. U.S. and U.K. officials for months have been considering the possibility of such a "global" settlement, which would resolve all the probes at once. (Subscription required.)
http://online.wsj.com/article/SB100014241278873234071045790385028943022…

In related news, Javier Martin-Artajo, a former JPMorgan Chase employee accused of hiding trading losses that ultimately reached more than $6 billion, had his first day in court yesterday as he surrendered to Spanish authorities and kicked off what could be a lengthy extradition process, the New York Times DealBook blog reported yesterday. Martin-Artajo, a Spaniard who worked in the bank’s London office, was released soon after his surrender and arrest. He agreed to remain at the disposal of the Spanish judiciary, but it was unclear whether his passport was confiscated to prevent him from leaving the country. The criminal charges stem from a risky bet at JPMorgan’s chief investment office in London, where Martin-Artajo worked.
http://dealbook.nytimes.com/2013/08/27/spanish-authorities-arrest-forme…

As the clock runs out on a three-year statute of limitations, the Federal Deposit Insurance Corp. has filed a flurry of lawsuits to recoup losses tied to the largest wave of bank failures during the financial crisis, the Washington Post reported on Saturday. The agency is waging legal battles against hundreds of directors and officers that it claims had a hand in their bank’s demise, failures that cost the deposit insurance fund billions of dollars. These cases, however, may take years to play out in the courts, as the judicial process has been slow-going. The FDIC has filed 76 lawsuits against 574 former bank executives since 2008. Thirty-two of those cases were filed in the first eight months of 2013, nearly triple the number filed during the first eight months of last year, according to the agency. The surge in filings correlates with the peak of bank failures rooted in the crisis, which reached 157 in 2010.

American Airlines and US Airways are seeking a 10-day trial that would begin Nov. 12 in U.S. federal court to fight the challenge by the U.S. Justice Department to their proposed merger, which would form the world's biggest carrier, Reuters reported yesterday. In a court filing on Thursday, the carriers said the proposed date would give the Justice Department 90 days of trial preparation. By contrast, the 180 days requested by the government would be "far longer than any of its other merger trials in the century," the filing added. The bankruptcy status of American adds to the airlines' urgency to have the lawsuit heard. The merger would be the mechanism by which American parent AMR Corp. exits bankruptcy. The Justice Department sued last week to block the merger, saying it would reduce competition and lead to higher airfares.

The Securities and Exchange Commission will soon thrust CEO compensation back into the spotlight when it proposes a long-delayed rule requiring companies to disclose the pay gap between chief executives and rank-and-file employees, The Wall Street Journal reported today. The requirement, a mandate of the Dodd-Frank Act, could put added pressure on corporate boards to slow pay increases for CEOs at companies with significant or growing gaps. The rule, expected to be approved by the SEC as early as next month, has come under fire from corporations. But it is expected to be less onerous than what lawmakers originally ordered the SEC to adopt. Rather than surveying the entire workforce, the SEC is expected to allow companies to consider a fraction of their employees when calculating median pay. It is not clear what percentage of the workforce would be included in the sample. Companies would have to disclose the ratio between CEO compensation and the median pay of the sampled employee group. The proposal is meant to resolve concerns of large multinational companies that have complained that tallying pay for a far-flung, global workforce is prohibitively expensive.

The federal regulator that polices accounting firms is proposing a major overhaul of how company audits are reported to the public, a move that could provide investors with deeper insight into the health of corporations, the New York Times DealBook blog reported yesterday. The Public Company Accounting Oversight Board wants accounting firms to include a potentially large amount of new information in the audit report that is attached to a company’s annual report. For instance, an auditor would have to explain where it found it difficult to form judgments about a company’s books. That difficulty might stem from the complexity of the company’s financial statements, or from a lack of evidence to support management’s estimates of an accounting item. The proposal is one of the most ambitious initiatives to come from the oversight board, which was set up 10 years ago after devastating accounting scandals at large companies revealed serious shortcomings at auditing firms.