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Investment-banking fees generated from advisory services and debt and equity issuance rose 4.9 percent to an estimated $53.4 billion in 2013, according to data compiled by Bloomberg News yesterday. That’s the highest amount since the peak of $86.9 billion in the pre–financial crisis, irrationally exuberant year of 2007. U.S. equity markets went on a tear in 2013, with the Standard & Poor’s 500 Index surging 30 percent. Initial public offerings, from companies such as Twitter Inc. and Hilton Worldwide Holdings Inc., returned in a big way. The total value of global IPO issues rose 45 percent to $164.7 billion, according to Bloomberg data. The rebounding U.S. stock market last year also gave voice to a noisier brand of investor: the activist. Hedge-fund executives, asset managers and other institutional shareholders are increasingly using their large stakes to wrest changes from corporate boards, which dealmakers say may translate to fee revenue down the road. Activists targeted 369 companies last year, 12 percent more than in 2012 and 14 percent more than in 2011, according to Philadelphia-based Hedge Fund Solutions LLC, which tracks investor agitation.

The Federal Trade Commission has sued a group of affiliated collection agencies and their owners for using the words "Federal," "American," "U.S.," or "State" in their names and for collection tactics such as threatening to arrest customers, CollectionsCreditRisk.com reported yesterday. Federal Check Processing Inc., of Amherst, N.Y., is the lead defendant. "Since at least May 2010, and continuing thereafter, defendants have used abusive, unfair, and deceptive tactics to pressure consumers into making payments on purported debts, often with respect to loans that the consumers have challenged in part or in whole,” according to the FTC’s lawsuit. “Defendants regularly have contacted consumers via repeated telephone calls and have threatened consumers with dire consequences — including arrest — if consumers fail to make immediate payments to the defendants.” The defendants have collected millions of dollars through misrepresentations, the FTC claims. In many cases, the defendants contacted consumers by telephone repeatedly and asserted that the consumer has committed check fraud or another criminal act.

Consumer spending in the U.S. climbed more than forecast in January, reflecting the biggest increase in services in over 12 years, Bloomberg News reported yesterday. Household purchases, which account for about 70 percent of the economy, rose 0.4 percent, after a 0.1 percent gain the prior month that was smaller than previously estimated, Commerce Department figures showed yesterday. Today’s figures showed that, after adjusting consumer spending for inflation, which generates the figures used to calculate gross domestic product, purchases rose 0.3 percent after a 0.1 percent decrease the previous month.

The Federal Reserve this month will take a step toward revealing more about its oversight of the financial system, an area where the central bank has yet to match the strides it has taken toward transparency in monetary policy, Bloomberg News reported yesterday. With the scheduled publication of annual stress-test findings in March, the Fed will for the first time describe how rising interest rates could affect the health of the nation’s biggest banks. Last year, the Fed didn’t disclose results of a similar test, even though the U.S. Treasury’s Office of Financial Research had flagged interest-rate risk as the one code-red concern in the financial system. Almost four years after the Dodd-Frank Act gave the Fed unprecedented authority over the banking industry, Democrats and Republicans alike in Congress are demanding more communication on financial risk. Fed officials download billions of pieces of data on loan and securities portfolios as part of their annual stress test, which measures an institution’s readiness to withstand adversity. This year the test expands to the 30 biggest banks, from 18 last year.

A headache is growing for Citigroup as a banking affiliate involved in money transfers across the Mexican border has become ensnared in a criminal investigation, the New York Times DealBook blog reported today. The disclosure of the inquiry yesterday follows the bank’s admission on Friday that it had been defrauded of $400 million in a scheme involving a financially shaky oil services company in Mexico. A Citigroup affiliate based in Los Angeles received a grand jury subpoena from federal prosecutors in Massachusetts related to anti-money-laundering compliance, the bank said in a securities filing yesterday, though the focus of the subpoenas is unclear. The affiliate has also received a subpoena from the Federal Deposit Insurance Corp. related to its anti-money-laundering program and the Bank Secrecy Act.

Madoff trustee Irving Picard, who will try to reinstate hundreds of lawsuits through an appeal to be argued on March 5, had his chances of success dealt a blow last week when the U.S. Supreme Court decided a case involving R. Allen Stanford’s Ponzi scheme, according to a Bloomberg News analysis today. Picard is appealing a federal district court decision barring him from suing to recover transfers made more than two years before bankruptcy. Were Picard to succeed on appeal, he might eventually be able to pay defrauded customers in full. Customers’ recoveries currently are in the 56 percent range. In last week’s decision in Chadbourne & Parke LLP v. Troice, the Supreme Court ruled in favor of defrauded customers, allowing them to sue firms and individuals who helped sell Stanford’s fraudulent securities. At first blush, Troice seems to help the Madoff trustee because the high court allowed defrauded investors to sue. Looking at the Troice opinion in detail, though, it’s at best unhelpful for Picard and customers who are suing third parties to recover their losses.

Lehman Brothers Holdings Inc. has reached a deal with the lone holdout to a multibillion-dollar settlement with its former Swiss derivatives unit, freeing up another $1.8 billion for the failed investment bank's creditors, the Wall Street Journal reported today. Entities with ties to Klaus Tschira, the founder of German software company SAP AG, have agreed to drop their appeal of Lehman's settlement with its Swiss derivatives subsidiary, Lehman Brothers Finance AG, according to court papers filed on Wednesday. Tschira has been fighting for years with the Swiss subsidiary over derivatives contracts terminated after Lehman's 2008 collapse. His decision to drop his appeal brings to a close more than five years of highly contentious litigation between Lehman's New York-based holding company and the Swiss hub of its global equity derivatives business.

A federal judge yesterday granted Bruce Berkowitz’s Fairholme Funds Inc. a motion to conduct discovery in its lawsuit against the U.S. government that challenges changes that the Treasury Department made to its bailout of Fannie Mae and Freddie Mac, the Wall Street Journal reported today. The ruling marked an initial victory for shareholders in what figures to be a long-running battle with the U.S. government over its 2012 decision to require Fannie and Freddie to send all of their profits to the government as part of the mortgage companies’ 2008 bailouts. Judge Margaret M. Sweeney of the U.S. Court of Federal Claims said she would hear the government’s motion to dismiss the lawsuit only after lawyers representing Fairholme had the opportunity to seek evidence that could undermine arguments the government has made in seeking to dismiss the case. A growing class of shareholders has sued the Treasury to challenge the changes to Fannie and Freddie’s bailout terms. They say that the new terms amount to an unconstitutional expropriation of assets and illegal self-dealing between Treasury and the firms’ regulator, the Federal Housing Finance Agency, which is charged with running the companies during their federal conservatorship.

The trustee in charge of Lehman Brothers Holdings Inc.'s failed brokerage defended his bid to consolidate the deferred-compensation claims of former Lehman employees into one proceeding, saying that doing so would save the estate money, Dow Jones Daily Bankruptcy Review reported today. Lawyers for trustee James W. Giddens said in a court filing on Tuesday that consolidating the claims into one is the best option, contrary to the arguments of 340 former employees who want their complaints heard separately. Among other benefits, consolidation would keep Lehman from having to spend more in litigation, the lawyers said.

The Supreme Court ruled yesterday that victims of former Texas tycoon R. Allen Stanford's massive Ponzi scheme can go forward with class-action lawsuits against the law firms, accountants and investment companies that allegedly aided the $7.2 billion fraud, the Associated Press reported yesterday. The decision is a loss for firms that claimed federal securities law insulated them from state class-action lawsuits and sought to have the cases thrown out. But it offers another avenue for more than 21,000 of Stanford's bilked investors to try to recover their lost savings. Federal law says class-action lawsuits related to securities fraud cannot be filed under state law, as these cases were. But a federal appeals court said the cases could move forward because the main part of the fraud involved certificates of deposit, not stocks and other securities. The high court agreed in a 7-2 decision, with the two dissenting justices warning that the ruling would lead to an explosion of state class-action lawsuits.