Investment firms under DOJ lens; Fiserv to acquire Finxact for $650M

TOP NEWS IN BANKING & FINANCIAL SERVICES

* The U.S. Department of Justice is investigating certain investment firms and researchers that practice short selling as part of a larger hunt for potential trading abuses, Bloomberg News reported, citing people with knowledge of the matter. The Justice Department has also subpoenaed certain market participants seeking communications, calendars and other records that are tied to nearly 30 investment and research companies and three dozen associated persons, the sources told the news outlet. The SEC has also sent out requests for information, according to the report.

* Fiserv Inc. agreed to acquire the remaining ownership interest in cloud-native banking solutions provider Finxact Inc. for $650 million in a transaction expected to close later in 2022. "Through this combination, Fiserv will create a streamlined path for clients to offer digital solutions to their customers. Finxact also enhances our ability to support a growing number of financial institution and business clients," Fiserv CEO Frank Bisignano said.

* Almost three years after former The Goldman Sachs Group Inc. banker Roger Ng went to the U.S. to face federal charges in his role in the 1Malaysia Development Bhd., or 1MDB, scheme, the start of his trial is finally set to begin Feb. 7 with jury selection, Bloomberg reported. Ng, who has pleaded not guilty and is facing up to 30 years in prison, is the only person from Goldman to stand trial in the U.S., according to the report.

➤ Many US banks on the prowl for M&A opportunities

Remarks from executives on recent earnings calls show that several U.S. banks are open to pursuing acquisitions.

➤ Payments companies post double-digit YOY EPS growth in Q4'21

Payments companies that released 2021 fourth-quarter financial results as of Jan. 31 recorded double-digit EPS growth, according to data compiled by S&P Global Market Intelligence.

BANKING

* Bank of America Corp.'s board approved CEO Brian Moynihan's 2021 total compensation at $32 million, up from 2020's pay of $24.5 million. Moynihan's compensation comprises $1.5 million in annual base salary and $30.5 million in aggregate value of his 2021 equity incentive award.

* A coalition of advocacy groups sent federal financial regulators a letter telling them to prevent banks they regulate from "engaging in high-cost predatory lending" through their partnerships with financial technology companies under "rent-a-bank" schemes. President Joe Biden signed a resolution last year repealing the Office of the Comptroller of the Currency's "true lender" rule that he said would protect borrowers against predatory lending. "Unfortunately, the end to the OCC fake lender rule did not end rent-a-bank schemes, which are continuing using FDIC-supervised banks," according to the coalition's letter.

FINANCIAL SERVICES

* The Carlyle Group Inc. is in advanced talks to acquire CBAM Partners LLC in a potential deal that could value CBAM at $750 million to $850 million, Bloomberg reported, citing people with knowledge of the matter.

* Walker & Dunlop Inc. will acquire Netherlands-based commercial real estate technology company GeoPhy BV for $85 million in cash to be paid at transaction closing, which is expected to take place during the first quarter, with an additional $205 million of cash earnout potential.

* Everi Holdings Inc. will acquire Australia-based developer and fintech solutions provider ecash Holdings Pty. Ltd. for guaranteed payments totaling A$33 million, with an initial payment of A$20 million, or approximately US$14 million, at the close of the transaction, which is expected within 60 days.

* In a report, JP Morgan Asset Management's market and investment strategy chair, Michael Cembalest, expressed his skepticism of crypto; decentralized finance, or DeFi; non-fungible tokens, or NFTs; and blockchain adoption in financial services. Among other things, Cembalest mentioned bitcoin's continued volatility, the overcollateralized nature of cryptocurrency loans in DeFi lending and the highly concentrated ownership in NFTs.

* Elevate Credit Inc. reached agreements to settle its legacy litigation related to its 2014 spinoff from Think Finance and the latter's alleged insolvency at the time of the spinoff. As a result of the settlement, Elevate Credit will pay a total of $33 million and purchase 924,495 shares of its stock currently held by the Think Finance Litigation Trustee.

POLICY AND REGULATION

* The Federal Reserve Board named Jerome Powell as chair pro tempore, pending his Senate confirmation to a second term as Fed chair. The central bank said the action, effective Feb. 5, enables Powell to continue to carry out his duties after the expiration of his term on the same day.

Click here for a summary of indexes on the S&P Capital IQ Pro platform.

The Daily Dose is updated as of 8 a.m. ET. Some external links may require a subscription. Links are current as of publication time, and we are not responsible if those links are unavailable later.