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U.S. authorities have reached beyond the country's borders to extract huge settlements from foreign firms like BNP Paribas SA, Total SA and Credit Suisse Group AG, but a new court ruling may mean U.S. law doesn't extend far enough to protect certain whistleblowers who flag such violations, the Wall Street Journal reported today. A federal appeals court last week held that U.S. law can only reach so far into Germany-based Siemens AG's operations, upholding a lower-court ruling dismissing a whistleblower-retaliation claim a former Taiwanese employee brought against the German firm. The former employee sought protection under a strict new U.S. whistleblower law. The ruling held that the provisions of the 2010 Dodd-Frank financial-reform law that prohibit retaliation against whistleblower employees don't apply to the former Siemens China staffer. The ruling cited a 2010 U.S. Supreme Court decision that says that legislation doesn't apply outside the U.S. unless there is evidence Congress indicated otherwise.

Bank of America Corp. will hand over $26.4 million in mortgage loans to the bankruptcy liquidation trustee for defunct Taylor, Bean & Whitaker Mortgage Corp., the Daily Business Review reported on Friday. Ocala, Fla.-based Taylor Bean and ex-CEO Lee Farkas perpetrated a $2.9 billion fraud, causing the collapse of Montgomery, Ala.-based Colonial Bank in the process. Taylor Bean was the nation's largest private mortgage origination company when it filed for bankruptcy protection in 2009 after being cited for manufacturing fake loans and failing to service 528,000 others. Farkas is serving a 30-year prison sentence. A settlement plan was approved by U.S. Bankruptcy Judge Jerry A. Funk in Orlando in 2011, and liquidating trustee Neil F. Luria has been pursuing clawback lawsuits to reimburse creditors, including Freddie Mac and Ginnie Mac. The settlement with Bank of America calls for the trust to pay $10.3 million and receive the $26 million mortgage pool. The lawsuit against the bank claimed it failed to pay Taylor Bean $40 million under forward-purchasing agreements pending at the time of the bankruptcy filing.

PricewaterhouseCoopers — hired and paid by the banks it examines — has now landed in the regulatory spotlight for obscuring some of the same misconduct it was supposed to unearth, the New York Times reported today. New York State’s financial regulator is poised to announce a settlement with PricewaterhouseCoopers, taking aim at the consulting firm for watering down a report about one of the world’s biggest banks, Bank of Tokyo-Mitsubishi UFJ. The regulator, Benjamin M. Lawsky, will impose a $25 million penalty against PricewaterhouseCoopers and prevent one of its consulting units from taking on certain assignments from New York-regulated banks for two years, a reputational blow that could cause some banking clients to leave. The firm, which is accused of lacking the objectivity and integrity expected of consultants but not actually breaking the law, agreed to pay the fine and accept the two-year sidelining of its regulatory consulting unit. PricewaterhouseCoopers appeared to have had little choice: Lawsky’s office, which has the authority under a little-known New York law to censure erring consultants even without a legal violation, threatened to otherwise inflict a more sweeping and lengthy prohibition.

General unsecured creditors of Lehman Brothers Inc. will receive $4.6 billion in their first distribution, perhaps as soon as next month, the Wall Street Journal reported today. In a notice to creditors filed in bankruptcy court today, trustee James W. Giddens for the first time put a number on the payback amount. These creditors had to wait for years as Giddens repaid those with "customer" status. Customers received 100 percent of their money back, while the general unsecured creditors will receive smaller percentages of recovery. Giddens said that he hopes to make the first distribution on Sept. 10.

Bill Ackman’s Pershing Square Capital Management LP sued the U.S. government claiming revised terms of the 2008 bailout of Fannie Mae and Freddie Mac cheat investors of the profit from the mortgage-financing entities, Bloomberg News reported today. The Federal Housing Finance Agency “purportedly acting as conservator” of Fannie Mae and Freddie Mac, and the Treasury Department “agreed between themselves to strip all profits from the companies,” depriving shareholders “of any economic value in their shares,” according to the complaint filed yesterday in the U.S. Court of Federal Claims in Washington. Taxpayers rescued Fannie Mae and Freddie Mac with a bailout that swelled to $187.5 billion. While the firms have sent more than that amount back to the Treasury, funds were counted as a return on the U.S. investment rather than full repayment of the aid. The issue for investors is that the Treasury Department decided in 2012 to keep all the companies’ profits. Pershing Square’s complaint is at least the 20th lawsuit challenging the government’s decision to divert Fannie Mae and Freddie Mac profits to the Treasury.

Puerto Rico's cash-strapped electric power authority faces a key deadline today to extend lines of credit with banks or face a possible restructuring of about $9 billion in total debt, the Wall Street Journal reported today. Extensions of the loans would help the Puerto Rico Electric Power Authority (Prepa) to overcome a short term cash crunch and avoid more uncertainty about its future, which is roiling the market for Puerto Rico bonds. The authority last month reached deals with Citigroup Inc. unit Citibank and banks led by Scotiabank de Puerto Rico, a unit of Bank of Nova Scotia, to delay some payments on $671 million it owed the banks between July and mid-August. It was the second agreement to postpone payments. The power authority said in a statement that it is prohibited by nondisclosure agreements from providing details on talks with its lenders, bondholders and bond insurers. Prepa owes $146 million to Citigroup and $525 million to the syndicate led by Scotiabank on a credit line that matures today, Standard & Poor's Ratings Services said in a report last month cutting the utility's bonds further into junk territory. The agency has already dipped into rainy-day cash to cover its debts, tapping a reserve fund for $41.6 million to make a July payment to bondholders. (Subscription required.) http://online.wsj.com/articles/puerto-rico-power-authority-faces-thursd… In related news, the judge asked to consider the constitutionality of a new Puerto Rico law that allows government-owned entities to restructure debt outside of federal bankruptcy court wants each side to make its case by October, Bloomberg News reported today. Saying that the new law depressed the value of $1.6 billion in power utility debt they hold, bond funds affiliated with Franklin Resources Inc. and Oppenheimer Rochester Funds sued Puerto Rico in June, contending the Public Corporation Debt Enforcement and Recovery Act violates the U.S. Constitution. The law would let a commonwealth court restructure debt in a process akin to chapter 11 of the U.S. Bankruptcy Code. Puerto Rico has asked U.S. District Judge Francisco A. Besosa in San Juan Besosa to dismiss the suit and declare the law constitutional. The bond funds filed a summary judgment motion this week, taking the position that undisputed facts require Besosa to declare the law void, regardless of the specific circumstances under which it’s applied. The judge told Puerto Rico to file papers by Sept. 12 supporting its claim that the law is constitutional. The bond funds are to file opposing papers by Oct. 6. http://www.bloomberg.com/news/print/2014-08-14/puerto-rico-debt-law-bri… The situation surrounding Prepa’s debt and the introduction of H.R. 5305, the "Puerto Rico Chapter 9 Uniformity Act of 2014," will be discussed on the latest ABI podcast. A link to the new podcast will be included in today’s Bankruptcy Brief newsletter.

Since the financial crisis, some steps have been taken to shore up the potentially unstable debt market, known as the repo market, but Eric S. Rosengren, president of the Federal Reserve Bank of Boston, yesterday became the latest prominent regulator to call for a more ambitious overhaul of the repo market, the New York Times DealBook blog reported. In particular, he suggested that financial institutions making large use of repo borrowing should maintain higher levels of capital. “Broker-dealers can experience significant funding problems during times of financial stress,” he said yesterday. “Unfortunately that potential for problems has not been fully addressed.” The Dodd-Frank Act of 2010 and international regulatory agreements have introduced many new rules since the crisis that are aimed at making the financial system stronger. Still, some regulators, including Janet L. Yellen, the Fed chairwoman, and Daniel K. Tarullo, the Fed governor who oversees regulation, are still concerned about Wall Street’s heavy use of short-term debt markets to finance their operations.

The U.S. is withholding documents that might show the government sued Standard & Poor’s for $5 billion in retaliation for downgrading the country’s debt, the ratings company said, asking a court to compel the records’ production, Bloomberg News reported yesterday. A federal judge in April ruled that S&P could seek potential evidence from the Justice Department to mount a retaliation defense to U.S. claims that it gave fraudulent ratings to mortgage-backed securities. Since then the government has turned over documents with redactions ranging from the omission of a single word on a page to multiple pages, S&P said yesterday in court papers. S&P is the only credit rating company sued by the Justice Department over the claim that it gave fraudulent ratings to mortgage-backed securities. The company has said that it was singled out after it downgraded the U.S. debt in August 2011. The Justice Department and ex-U.S. Treasury Secretary Timothy Geithner denied there’s a connection between the downgrade and the suit. The U.S. may seek as much as $5 billion in civil penalties from S&P.

As hopes for a settlement between Argentina and holdout creditors fade, efforts by U.S. hedge fund NML Capital Ltd. to seize assets allegedly owned by an associate of Argentine President Cristina Kirchner and her husband and predecessor Néstor Kirchner are gaining traction, the Wall Street Journal reported today. Earlier this week, U.S. District Judge Cam Ferenbach in Nevada issued a ruling to help NML uncover information about a network of 123 companies based in Nevada that Argentine prosecutors allege are affiliated with Argentine construction baron Lazaro Báez, who built a business empire after Kirchner was elected president in 2003. Some analysts say the move is likely to raise tension between holdout creditors and the Argentine government, complicating efforts to reach a deal that would lift Argentina out of its recent default. U.S. Judge Thomas Griesa blocked an attempt by Argentina to pay other creditors, who accepted previous debt-restructuring offers, unless Buenos Aires also paid the holdout creditors. Credit-ratings agencies then ruled that Argentina had defaulted on its debt.

The Consumer Financial Protection Bureau issued its first consumer advisory on virtual currencies, including Bitcoin, and said that it would begin accepting complaints about such issues or companies, the New York Times DealBook Blog reported yesterday. The agency warns consumers to be aware of hackers and schemes, volatile exchange rates and a lack of government protection. “Virtual currencies may have potential benefits but consumers need to be cautious and they need to be asking the right questions,” Richard Cordray, the director of the bureau, said in a statement. “Virtual currencies are not backed by any government or central bank, and at this point, consumers are stepping into the Wild West when they engage in the market.” In the bulletin, the agency urges virtual currency users to pay attention to potential hidden costs associated with digital money. For one, the price of Bitcoin can fluctuate wildly. In about five years, the value of Bitcoin has gone from just a few dollars to over $1,000. It is now trading around $580, according to the virtual currency website CoinDesk.