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Thomas J. Butler, head of the Securities and Exchange Commission's Office of Credit Ratings, said that he has referred multiple cases to the agency's enforcement division and is helping complete several industry regulations to address quality and transparency in how big debt deals are rated, the Wall Street Journal reported today. Those moves signal a potential flurry of regulatory activity involving ratings firms, which have been largely untouched as government oversight has increased in most other financial sectors in recent years. Butler, a former Citigroup Inc. executive, has been relatively quiet since launching the office in 2012 to oversee firms including Standard & Poor's Ratings Services and Moody's Investors Service. The creation of the office was mandated in the Dodd-Frank financial-overhaul law. His office has produced annual reports summarizing industry activity and monitored ratings firms to make sure they comply with existing rules that dictate how criteria are developed for evaluating bonds and whether internal protocols are followed, among other things. Butler's office doesn't have direct enforcement powers over firms, but monitors their activities and can make referrals to the unit headed by Andrew Ceresney, the SEC's top enforcement chief, for potential action. Butler declined to say how many referrals he has made or what firms are involved.

The U.S. Supreme Court tightened the limits on class-action lawsuits by shareholders, giving a partial victory to Halliburton Co. while stopping short of abolishing those suits altogether, Bloomberg News reported yesterday. Halliburton and business groups had sought to overturn a 1988 precedent and effectively end class-action fraud suits over securities bought on public exchanges. A divided court today refused, with Chief Justice John Roberts saying Halliburton hadn’t shown “the kind of fundamental shift in economic theory” that would warrant overruling the precedent. The court instead made it easier for defendants to prevent approval of a class action, a certification that can ratchet up the pressure on a company to settle. Roberts said that a defendant can block a class action by showing that an alleged misstatement didn’t affect a company’s stock price.

MBIA Inc. asked a judge to order Credit Suisse Group AG to turn over internal records that the bond insurer says bolster its contention the bank lied about how it processed loans packaged into mortgage-backed securities, Bloomberg News reported yesterday. MBIA said in a court filing yesterday that Credit Suisse has withheld evidence about how the bank’s actual practices diverged from its representations — including documents identified as exhibits in other lawsuits based on the same allegations. The bond insurer asked Justice Shirley Werner Kornreich in New York State Supreme Court to force the bank to search documents and e-mails on its policies and practices including those related to loan underwriting and origination, due diligence and post-acquisition quality-control review. MBIA, based in Armonk, N.Y., sued Zurich-based Credit Suisse in December 2009, saying that it made “pervasive and material misrepresentations” about the loans underlying $1 billion worth of mortgage securities.

The Department of Justice said that GE Capital Retail Bank, a division of General Electric, excluded tens of thousands of Spanish-speaking credit card customers from a debt-reduction program it ran for two years, a pattern of discrimination that will cost the bank $169 million in fines, the Washington Post reported today. The bank ran two programs from 2009 to 2012 that helped cardholders with low credit scores and high balances catch up on their payments. During that time, prosecutors say, the bank sent out offers to 400,000 people but did not inform 108,000 cardholders with mailing addresses in Puerto Rico or whose accounts indicated a preference for communications in Spanish.

Bank of America Corp. failed to win dismissal of a U.S. Justice Department lawsuit in which it’s accused of misleading investors about the quality of loans tied to $850 million in residential mortgage-backed securities, Bloomberg News reported yesterday. U.S. District Judge Max O. Cogburn Jr. in Charlotte, N.C., gave the Justice Department 30 days to revise the suit after a magistrate judge earlier found the government’s complaint was deficient and recommended it be dismissed. The case is part of a U.S. bid to punish companies for actions it says helped trigger the financial crisis. The Bank of America case and others like it rely on a law dating to the savings-and-loan crisis of the 1980s that allows the government to punish actions taken too long ago to be covered by other laws. It also lets the U.S. seek larger damages awards. Bank of America will still have a chance to challenge the amended complaint and could appeal any ruling against it.

BlackRock Inc., the world’s biggest money manager, and Pacific Investment Management Co. are among investors that sued banks including Citigroup Inc. and Deutsche Bank AG over their roles as mortgage-bond trustees, Bloomberg News reported yesterday. The banks knew the loans underlying trillions of dollars worth of residential mortgage-backed securities were misrepresented and failed to invoke their rights to force the sellers to buy them back or act against servicers, causing billions of dollars in losses, according to copies of the complaints reviewed by Bloomberg News. The filings couldn’t be immediately confirmed yesterday in New York State Supreme Court in Manhattan. Bank of New York Mellon Corp. “negligently failed to protect the trusts and certificate holders,” according to a copy of the complaint against the New York-based company. “BNYM and its responsible officers knew of pervasive, material breaches of originators’ and RMBS sponsors’ representations and warranties, and loan servicers’ material breaches, yet did nothing to protect the trusts,” according to the court filings.

Just as the federal government reached an agreement on Tuesday with SunTrust Banks over questionable mortgage practices, the government’s talks to resolve Citigroup’s mortgage issues grew increasingly tense and veered toward a lawsuit, the New York Times DealBook blog reported yesterday. The size of the $968 million settlement with SunTrust pales next to the multibillion-dollar pacts that the government has signed — or is seeking to sign — with the nation’s largest banks. The Justice Department is seeking a $10 billion penalty from Citigroup over its sale of defective mortgage investments, but Citi contends that the amount far exceeds the losses suffered by investors.

JPMorgan Chase & Co. engaged in a “pattern of discriminatory” lending that led to foreclosures, the city of Miami said in a lawsuit filed last week in federal court, the latest in a series of similar claims against the nation’s largest banks, Bloomberg News reported yesterday. Last month, Banco Santander SA’s U.S. unit was sued by the city of Providence, R.I., over claims that it stopped issuing mortgages in minority neighborhoods after the housing bubble burst. Santander Bank, previously named Sovereign Bank, pulled out of the neighborhoods and focused on white communities after being acquired by the Madrid-based lender in 2009, the city alleged. Miami and Los Angeles are among cities to have filed similar lawsuits against Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. for allegedly “red-lining” black and Hispanic areas as no-loan zones, and then “reverse red-lining,” flooding the areas with predatory mortgages even when minorities qualified for better terms. Miami is seeking damages for reduced property taxes and higher expenses for municipal services associated with foreclosures, according to the lawsuit, filed on June 13.

More than a million Americans have been effectively blacklisted from the mainstream financial system because they overdrew their accounts or bounced a check — mistakes that routinely bedevil young and low-income consumers, financial counselors say, the New York Times DealBook blog reported today. Databases, used by Bank of America, JPMorgan Chase and other big banks, were intended to weed out serial fraudsters. Now, regulators say, banks are screening out potential customers and swelling the ranks of the so-called unbanked — the roughly 10 million households in the United States that lack even a basic bank account. New York’s attorney general today will become the first government authority to take aim at how banks use the databases. The attorney general’s office is expected to announce that Capital One has agreed to fundamentally change the way it uses the largest database, ChexSystems, barring only customers who land in the database for fraud.

The Justice Department and Citigroup Inc. are locked in a high-stakes game of chicken, with the U.S. warning that it plans to file a lawsuit as early as next week related to Citigroup's alleged sale of shoddy mortgages in the run-up to the financial crisis, the Wall Street Journal reported on Saturday. Citigroup is offering less than $4 billion to resolve a long-running civil probe by the Justice Department over how the bank packaged mortgages into bonds and sold them to investors. The government has sought a figure closer to $10 billion. The two sides also remain far apart on the substance of the government's allegations with the bank arguing its pre-crisis conduct shouldn't warrant such a large sum.