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The U.S. Securities and Exchange Commission has backed out of a settlement with the managers of a large money-market fund that "broke the buck" during the 2008 financial crisis, Reuters reported on Friday. Lawyers for defendants including Reserve Management Co. said in a court filing that they had reached a settlement in principle with the regulator at the end of August, only to learn on Sept. 5 that the SEC subsequently rejected it. The breakdown could derail a separate accord reached last week in which the founder of the fund, Bruce Bent Sr., and others agreed to settle a class-action lawsuit by the fund's investors. The case stems from events on Sept. 16, 2008, when the net asset value of the $62 billion Reserve Primary Fund fell below the $1 per share it was designed to maintain.

The Commodity Futures Trading Commission (CFTC) is closing in on rules designed to make the futures market safer in the wake of the implosions at MF Global Holdings Ltd. and Peregrine Financial Group Inc., the Wall Street Journal reported yesterday. The CFTC is expected to recommend as early as this week a package of rules, including a provision that could require futures brokers to put aside about twice as much collateral than firms currently must hold. Trade group Futures Industry Association has estimated that the proposal could require brokers or their customers to put aside roughly $100 billion more in collateral. The agency is also expected to approve rules giving regulators electronic oversight of customer accounts and a new requirement, dubbed the "Corzine rule" for former MF Global Chief Executive Jon Corzine, that requires CEOs to sign off on any significant transfer of customer money. The CFTC said it is trying to strengthen rules for brokers after more than $1 billion was taken out of MF Global customer accounts to keep the firm afloat as it spiraled toward bankruptcy and in the wake of the July 2012 disclosure by the founder of futures broker Peregrine that he stole $215 million in customer funds. Most of the rules have garnered broad support from the industry and have already been implemented by the National Futures Association, the industry's self-regulatory body. But one rule has sent ripples across the industry because it is expected to increase the amount of money firms have to set aside as collateral.

Standard & Poor's Ratings Services has escalated its legal battle with the U.S. Justice Department, accusing it of filing its $5 billion lawsuit against S&P in "retaliation" for the company's downgrade of America's debt in 2011, The Wall Street Journal reported yesterday. S&P's defense, made in a court filing yesterday, shows that the world's largest credit-rating company is digging in as it fights the Justice Department's Feb. 4 lawsuit, which accuses S&P of misrepresenting its ratings process during the years before the financial crisis. The Justice Department said that federally insured banks and credit unions bought debt deals rated highly by S&P because they thought such top-notch ratings indicated that there was less risk than lower-rated securities. But behind the scenes, according to the government, S&P was assigning high ratings to deals in order to please bankers and other clients. S&P says that such claims are "meritless" and believes that the U.S. lawsuit is politically motivated, but the language in yesterday’s court filing is its strongest to date. A Justice Department spokeswoman countered that "the allegation is preposterous." The civil complaint against S&P is a high-stakes lawsuit for the Justice Department, which seeks to demonstrate that it is holding institutions accountable for the financial crisis.

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.

Federal securities regulators accused a former portfolio manager at Oppenheimer & Company yesterday of misleading investors about the performance of a fund, a rare enforcement action involving the private-equity industry, The New York Times reported yesterday. The Securities and Exchange Commission contends that Brian Williamson issued quarterly reports and marketing materials that inflated the performance results of an Oppenheimer private-equity fund. In March, Oppenheimer agreed to pay $2.8 million to resolve its role in the case. But Williamson is fighting the charges and has hired a criminal defense lawyer to represent him. In recent years, the SEC’s asset-management unit, which brought the Oppenheimer case, has stepped up its focus on the private-equity business. One area of focus has been with how private-equity firms value their holdings and calculate performance. Unlike funds that invest in publicly traded stocks, private-equity firms own companies whose values can be hard to measure.

Hedge-fund manager Philip Falcone admitted wrongdoing as part of a civil settlement with securities regulators, a landmark in the government's new drive to push defendants to acknowledge their bad behavior, The Wall Street Journal reported yesterday. As part of the settlement, disclosed Monday, Falcone and his hedge-fund firm, Harbinger Capital Partners, will pay more than $18 million and Falcone will be banned from the securities industry for at least five years. Monday's civil settlement marks the first time that an individual or firm has made such an admission in a deal with the Securities and Exchange Commission (SEC), except in cases where they had previously pleaded guilty in a criminal proceeding or been criminally convicted. The settlement was the resolution of two civil lawsuits filed by the SEC against Falcone and Harbinger last year. The suits alleged, in part, that they had duped investors about a $113 million personal loan that Falcone took out from a Harbinger fund to pay his own taxes, even as other investors in the fund were prevented from pulling their money.

U.S. regulators have approved the proposed $8 billion sale of the venerable New York Stock Exchange (NYSE) to a much-younger futures exchange, and the deal is a symbol of how financial markets are being increasingly reshaped by high technology, The Associated Press reported Saturday. The Securities and Exchange Commission (SEC) disclosed Friday that it has authorized the takeover of NYSE's parent by Atlanta-based IntercontinentalExchange (ICE). The rival acquiring company, founded in 2000, has expanded rapidly through acquisitions over the past decade. The SEC said in a filing that it has determined that the merger of the exchanges would comply with securities laws and regulations. The merger also must be approved by regulators in Europe. The deal is expected to close in the fall.

JPMorgan Chase & Co. expects to be fined by authorities in the U.S. and U.K. over last year’s $6.2 billion trading loss, which led to criminal charges against two former employees, Bloomberg News reported yesterday. The Securities and Exchange Commission signaled in a complaint filed yesterday against Javier Martin-Artajo and Julien Grout that the New York-based bank will be held accountable for providing inaccurate information to investors after the two men “fraudulently” mismarked their trades to conceal losses. The bank also expects to be fined by the Department of Justice, the Commodity Futures Trading Commission and the U.K.’s Financial Conduct Authority.

Federal regulators are seeking to level civil charges against JPMorgan Chase and extract a rare admission of wrongdoing from the nation’s biggest bank as an investigation into a multibillion-dollar trading loss enters its final stage, the New York Times DealBook blog reported yesterday. If JPMorgan concedes to some wrongdoing in a settlement, such an admission would set an important precedent for the Securities and Exchange Commission, coming after decades of allowing defendants to “neither admit nor deny wrongdoing.” The losses in the case — which have now swelled to more than $6 billion — stemmed from outsize derivatives wagers made by traders at JPMorgan’s chief investment office in London.

UBS agreed yesterday to pay $50 million to settle federal accusations that it misled investors about a complex mortgage security, a transaction that loomed over the government’s recent legal battle with a former Goldman Sachs trader blamed for his role in creating a similar security, the New York Times DealBook blog reported today. The Securities and Exchange Commission’s case against UBS, the giant Swiss bank, made a cameo appearance in the trial of the former Goldman trader, Fabrice P. Tourre, whom a jury found liable on six counts of civil securities fraud last week. ACA Management, a company that helped structure the mortgage securities in 2007 for both Goldman and UBS, linked the two financial crisis-era cases. In Tourre’s case, the former trader was blamed for not warning ACA that a hedge fund involved in picking assets for the deal was also betting that it would fail. Two former top ACA executives testified on the SEC’s behalf, contending that Tourre kept them in the dark about the hedge fund’s conflict of interest.