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The U.S. Securities and Exchange Commission suffered a setback on Friday in its efforts to collect a bigger judgment against Texas tycoon Sam Wyly and his late brother Charles' estate than the nearly $300 million it has already won, Reuters reported. U.S. District Judge Shira Scheindlin ruled that her initial award in September reflected the "best measure" of the Wylys' ill-gotten gains and said she would not impose an alternative amount unless she was reversed on appeal. The SEC had been seeking $192.7 million plus interest from the Wylys, compared with the $187.7 million before interest the judge previously awarded. While Judge Scheindlin called the SEC's calculations under its latest theory "reasonable," she ordered the figure recalculated to exclude a large amount of alleged gains involving securities that were never sold.

The SEC has increased its focus on the municipal market since the credit crisis and 18-month recession that ended in June 2009, Bloomberg News reported yesterday. Those events helped push Jefferson County, Alabama, Detroit and three California cities into bankruptcy and left government pension plans reeling from investment losses. The agency has settled with the governments of New Jersey, Illinois and Harrisburg, Pa., for misleading investors about their financial state. Last year, in a case against an agency in Washington state, the SEC levied its first fine against a municipal issuer that misled investors. The leniency program introduced in March is aimed at municipalities that fail to file timely reports on rating changes and other information of interest to investors, while claiming in bond documents that they do. It’s also open to the bankers who underwrote the debt. The SEC said that borrowers could settle without fines if they turn themselves in. Banks’ penalties are capped at $500,000.

The U.S. Securities and Exchange Commission resolved an impasse over punishing Bank of America Corp. in a mortgage-bond case, clearing the way for the lender to complete a $16.7 billion global settlement, Bloomberg News reported yesterday. In a private meeting earlier this week, SEC commissioners voted to waive most of a set of additional sanctions that could have seriously curtailed the bank’s asset management business and ability to raise money for private companies. Some of the relief is conditioned on the bank’s good behavior and comes with an outside monitor. The bank also got hit with a penalty that takes away its ability to issue more shares or bonds without getting SEC approval for each deal. The SEC’s decision came as Bank of America and the agency neared a deadline for a federal judge in North Carolina to sign off on the settlement. The two sides had twice sought more time from the court as negotiations dragged on.

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.

Global financial regulators on Monday claimed significant progress in ending “too big to fail” and ensuring that the world’s largest banks can collapse without taxpayer bailouts, The Wall Street Journal reported yesterday. The regulators said that banks must change the way that they fund themselves to better weather a crisis, a proposal that could require some firms to issue billions in new debt and possibly dent profits. The proposal from the Financial Stability Board (FSB) aims to ensure that the cost of a giant bank’s failure is borne by its investors — not taxpayers — by forcing the 30 biggest global banks to have big financial cushions that can absorb losses as a bank is failing and recapitalize the firm after it is seized by the government. The preliminary agreement, which comes six years after the 2008 financial crisis, is “a watershed in ending ‘too big to fail’ for banks,” said Mark Carney, the governor of the Bank of England and FSB chairman. The FSB proposal, coupled with another agreement struck last month on swaps contracts, will create “a world where the largest, most complex banks can be resolved without the need for taxpayer support and without disruption to the wider system,” Carney said.

New York’s top banking regulator Benjamin Lawsky, who used his leverage to stiffen penalties against some of the world’s largest financial institutions, will probably step down next year to take a job in the private sector, Bloomberg reported today. Lawsky was appointed by Gov. Andrew Cuomo to head the newly formed Department of Financial Services in 2011, with a mandate to regulate state-licensed banks and insurance companies. He became widely known the following year for threatening to revoke Standard Chartered PLC’s license to operate in New York after growing frustrated with the slow pace of settlement talks over sanctions violations. It isn’t yet clear who Cuomo will name to fill the position after Lawsky resigns. Cuomo combined New York’s bank regulatory department and its insurance division to create DFS in the aftermath of the financial crisis, forming a new state regulator that could monitor hybrid products marketed by all kinds of financial institutions.

When it comes to the Federal Reserve’s emergency lending powers, the crucial word is “solvent,” because both by tradition and, since the passage of the Dodd-Frank Act, by law, the Fed can use its emergency powers to make loans only to a solvent institution, according to an analysis in the The New York Times Friday. In 2008, that’s why Bear Stearns and AIG, both deemed solvent by the Fed, were bailed out — while Lehman Brothers, said to be insolvent, was left to fail. But what did “solvent” mean to those officials? Recent testimony in the continuing litigation over the government’s rescue of AIG — its former chairman and CEO, Maurice Greenberg, claims that the bailout was unconstitutionally punitive — suggests that solvency had little or nothing to do with the Fed’s decision to lend. Numerous firms deemed insolvent nonetheless got emergency loans, while Lehman alone was denied one before it went bankrupt. Judging by their actions, Fed officials seemed to have defined solvency on a case-by-case basis. Consider the testimony of Timothy Geithner, who later served as Treasury secretary. As president of the Federal Reserve Bank of New York when the financial crisis unfolded, Geithner had to make the crucial determination of which firms under his jurisdiction (which included Wall Street) were solvent and thus eligible for emergency relief. “Even the solvent can be illiquid in that context, and that would make them insolvent,” Geithner testified.

Bank regulators continue to sound the alarm about a type of debt that has become a hot product on Wall Street in recent years, The New York Times Dealbook reported on Friday. As part of an annual review of bank lending, three federal agencies sharply criticized a type of loan that Wall Street firms have been making to companies with low credit ratings. The firms sell most of these so-called leveraged loans on to investors, like hedge funds, pensions and mutual funds, which are on the hunt for higher-yielding investments. Although the banks do not hold on to most of the leveraged loans, regulators have been expressing their concerns about this lending splurge, saying that it could come back to hurt the banks and the wider financial system. Seeing a decline in the quality of leveraged loans, the regulators issued in March 2013 special guidance to the banks that aimed to press them to stop making loans that lacked important legal protections or left the borrowing companies overly indebted. On Friday, the regulators indicated that the banks have yet to fulfill the 2013 guidance.

GT Advanced Technology Inc. said that the U.S. Securities and Exchange Commission has sought information from the company regarding trading of its shares dating back to January 2013, Reuters reported yesterday. The SEC, in a letter dated Oct. 15, also asked for information on the company's sapphire business and a share offering, GT Advanced said. The former supplier to Apple Inc. filed for bankruptcy on Oct 6, decimating its market value and triggering speculation over what may have soured its relationship with the iPhone maker. GT Advanced's shares surged from about $3 in January 2013 to a peak of $19.77 in July 2014 as investors bet on the company's association with Apple. The stock started tumbling after it emerged that the company's scratch-resistant sapphire glass had been left out of Apple's new large-screen iPhones. Apple said in October that GT Advanced's "ambitious" vision of sapphire manufacturing was ultimately not quite ready for primetime. After the bankruptcy, GT Advanced's shares dropped to a low of 30 cents. They were trading at 55 cents in over the counter trading on Thursday.

The Securities and Exchange Commission said that the city of Allen Park, Mich., and two of its former officials settled fraud charges related to the sale of a $31 million municipal bond issue to raise funds for a movie studio project to spur needed economic development, the Wall Street Journal reported today. The SEC and other regulators have been moving to protect the small investors who make up the bulk of the $3.7 trillion municipal-bond market, which the SEC described in a 2012 report as “illiquid and opaque.” That has included fining Kansas, New Jersey and Illinois for failing to disclose that underfunded pension obligations posed a risk to the repayment of some bonds. The states settled without paying a penalty or admitting wrongdoing. This week, the SEC fined 13 brokerage firms for improperly selling junk-rated Puerto Rico bonds in increments below $100,000, the agency’s first action under a rule designed to protect mom-and-pop investors from high-risk debt. The firms didn’t admit or deny the SEC’s findings and agreed to pay fines between $130,000 and $54,000. Andrew J. Ceresney, director of the SEC’s enforcement division, said in a news release Thursday, “Allen Park solicited investors with an unrealistic and untruthful pitch, and used outdated budget information in offering documents to avoid revealing its budget deficit.”