9 Feb, 2021
Robinhood sued over trader's suicide; Citi to refund to overcharged clients
By Pranav Nair
TOP NEWS IN BANKING & FINANCIAL SERVICES
* The family of a stock trader, who died by suicide, has filed a lawsuit against Robinhood Markets Inc. over "misleading communications," Reuters reported. Alex Kearns' family claimed in the suit that he was unable to get in touch with anyone at Robinhood after the broker notified him of a $730,000 loss on a trade, and was subsequently put in a distressed mental state.
* Citigroup Inc. reached an agreement with attorneys general from Pennsylvania, Iowa, Massachusetts, New Jersey and North Carolina to refund $4.2 million to its credit card customers who were overcharged. The bank in 2018 reached a settlement with the Consumer Financial Protection Bureau in which it agreed to repay $335 million in restitution to affected consumers.
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The S&P European Leveraged Loan Index, or ELLI, posted a 0.89% gain (excluding currency) in January, following a 0.53% return in December, as leveraged loan prices continued to climb. January’s positive performance means the return over the last 12 months has increased to 3.02%, up from a full-year return of 2.74% at the end of 2020.
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Developed economies have been hit particularly hard by the coronavirus pandemic partially because they are so dependent on consumer spending. S&P Global Ratings economists forecast that 2020 GDP in the U.S., eurozone, Japan and U.K. shrank by 3.9%, 7.2%, 5.5% and 11% respectively.
EARNINGS SPOTLIGHT
* Fidelity National Information Services Inc. reported adjusted net earnings of $1.02 billion, or $1.62 per share, for the fourth quarter of 2020, compared to $977 million, or $1.57 per share, in the year-ago quarter.
BANKING
* Wells Fargo & Co. made equity investments in six African American minority depository institutions as a part of its pledge to invest up to $50 million in Black-owned banks. The six banks will also have access to a dedicated Wells Fargo relationship team, as a part of the investment.
* Cash, Treasuries and other securities guaranteed by the federal government account for more than 35% of the combined balance sheets of the 25 biggest U.S. banks, while loans and leases now account for less than half of their books for the first time on record, Bloomberg News reported, citing data compiled by the Federal Reserve. Lending has been affected due to lower borrower demand and tightened standards amid the coronavirus pandemic, according to the report.
* After the termination of its planned deal with Tampa, Fla.-based Suncoast CU, another potential sale for Miami-based Apollo Bank is "highly unlikely," Chairman and CEO Eddy Arriola told American Banker. Apollo Bank is now looking to grow over the next decade as an independent bank and is open to revisiting M&A in the future as a buyer, Arriola reportedly said.
FINANCIAL SERVICES
* American Express Co. plans to offer loans to small businesses in Australia, The Australian Financial Review reported. The company will offer loans between $5000 and $250,000 on annual interest rates starting at 10.95% to its cardholders and merchants who accept American Express card payments. The loans will be unsecured.
* A three-person Financial Industry Regulatory Authority arbitration panel ordered J.P. Morgan Securities Inc. and two former brokers to pay $19 million for unauthorized trading of complex products in a client's account by her grandsons, InvestmentNews reported.
* Cetera Financial Group Inc. plans to offer retention bonuses to roughly 900 reps and advisers from Voya Financial Advisors Inc., whose independent financial planning channel it agreed to acquire, InvestmentNews reported.
* Remote working and the availability of liquidity were some of the top daily challenges faced by traders, according to a survey of 260 fixed income, currencies and commodities traders conducted by JPMorgan Chase & Co. in December 2020, Reuters reported. The challenge could boost the use of technology and electronic trading in the months ahead, according to the survey.
POLICY AND REGULATION
* The U.S. Securities and Exchange Commission asked companies to provide certain disclosures if they seek to raise capital in securities offerings amid market and price volatility. The regulator provided a sample letter it may send to companies in which it asks for information, such as risks associated with recent volatility in their share prices and recent changes in their financial conditions.
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