Securities Attorney Briefing 1 November 2016

International

Ukrainians shocked as politicians declare vast wealth

An anti-corruption reform requiring senior Ukrainian officials to declare their wealth online has exposed a vast difference between the fortunes of politicians and those they represent. Some declared millions of dollars in cash. Others said they owned fleets of luxury cars, expensive Swiss watches, diamond jewelry and large tracts of land – revelations that could further hit public confidence in the authorities in Ukraine, where the average salary is just over $200 per month. Officials had until Sunday to upload details of their assets and income in 2015 to a publicly searchable database, part of an International Monetary Fund-backed drive to boost transparency and modernize Ukraine’s recession-hit economy.  Prime Minister Voldymyr Groysman, who last week likened the declarations process to jumping out of an airplane, revealed that he and his wife had a total of $1.2 million and 460,000 euros in cash and a collection of luxury watches. The database also shows that Groysman, a former businessman and provincial mayor, is not alone in preferring to keep much of his money out of Ukraine’s banking system. Reuters calculations based on the declarations show that the 24 members of the Ukrainian cabinet together have nearly $7 million, just in cash. The declarations of two brothers in President Petro Poroshenko’s faction, Bohdan and Yaroslav Dubnevych, show holdings of over $26 million, also in cash only. “When the Economy Ministry says that in some areas around 60 percent of the economy is in the shadows, then this is accounted for by the volume of cash registered by civil servants, officials and lawmakers,” said Taras Kachka, deputy executive director at George Soros’s International Renaissance Foundation. “This is a reflection on the state of our society.” Justice Minister Pavlo Petrenko, who declared $1 million in a bank account and a further $500,000 in cash, said officials’ decision to hold cash pointed to a mistrust in the banks that many Ukrainians could relate to. “Of course to EU countries it seems uncivilized that people hold cash,” he said. “But it is linked to the fact that the banking system could, let’s say, be doing better. This is a problem for many Ukrainians who lost their savings in the bank.” More:

http://www.reuters.com/article/us-ukraine-crisis-corruption-idUSKBN12V1EN

Spooked by Russia, Tiny Estonia Trains a Nation of Insurgents

TURI, Estonia — Her face puffy from lack of sleep, Vivika Barnabas peered down at the springs, rods and other parts of a disassembled assault rifle spread before her. At last, midway through one of this country’s peculiar, grueling events known as patrol competitions, she had come upon an easy task. Already, she and her three teammates had put out a fire, ridden a horse, identified medicinal herbs from the forest and played hide-and-seek with gun-wielding “enemies” in the woods at night. By comparison, this would be easy. She knelt in the crinkling, frost-covered grass of a forest clearing and grabbed at the rifle parts in a flurry of clicks and snaps, soon handing the assembled weapon to a referee. “We just have to stay alive,” Ms. Barnabas said of the main idea behind the Jarva District Patrol Competition, a 24-hour test of the skills useful for partisans, or insurgents, to fight an occupying army, and an improbably popular form of what is called “military sport” in Estonia. The competitions, held nearly every weekend, are called war games, but are not intended as fun. The Estonian Defense League, which organizes the events, requires its 25,400 volunteers to turn out occasionally for weekend training sessions that have taken on a serious hue sinceRussia’s incursions in Ukraine two years ago raised fears of a similar thrust by Moscow into the Baltic States. Estonia, a NATO member with a population of 1.3 million people and a standing army of about 6,000, would not stand a chance in a conventional war with Russia. But two armies fighting on an open field is not Estonia’s plan, and was not even before Donald J. Trump, the Republican presidential candidate, said European members of NATO should not count on American support unless they pay more alliance costs. Since the Ukraine war, Estonia has stepped up training for members of the Estonian Defense League, teaching them how to become insurgents, right down to the making of improvised explosive devices, or I.E.D.s, the weapons that plagued the American military in Iraq and Afghanistan. Another response to tensions with Russia is the expansion of a program encouraging Estonians to keep firearms in their homes. The Jarva competition entailed a 25-mile hike and 21 specific tasks, such as answering questions of local trivia — to sort friend from foe — hiding in a bivouac deep in the woods and correctly identifying types of Russian armored vehicles. On a recent weekend, 16 teams of four people had turned out, despite the bitter, late fall chill. The competition was open to men, women and teenagers. More:

http://www.nytimes.com/2016/11/01/world/europe/spooked-by-russia-tiny-estonia-trains-a-nation-of-insurgents.html?emc=edit_th_20161101&nl=todaysheadlines&nlid=53476364&_r=0

Exclusive: International Criminal Court Poised to Open Investigation into War Crimes in Afghanistan

The prosecutor’s office of the International Criminal Court (ICC) is ready to initiate a full investigation of a range of possible war crimes and crimes against humanity in Afghanistan, including some by U.S. personnel, according to several knowledgeable sources. The ICC move would mark the first time that a formal ICC investigation has scrutinized U.S. actions and sets up a possible collision with Washington. Multiple sources have indicated that the chief prosecutor, Fatou Bensouda, will seek to initiate an investigation in the coming weeks, likely after the U.S. presidential election but before the end of the year. U.S. officials visited The Hague recently to discuss the potential investigation and to express concerns about its scope. The prosecutor’s office has repeatedly called attention to alleged abuses of detainees by U.S. personnel between 2003 and 2005 that it believes have not been adequately addressed by the United States. In a report last year, it noted that “crimes were allegedly committed with particular cruelty and in a manner that debased the basic human dignity of the victims.”  Bensouda may also want to probe further the attack by U.S. forces on a Médecins Sans Frontières facility in Kunduz that killed several dozen people. Even once an investigation begins, it is not clear that the prosecutor would ever bring charges against Americans. Doing so would require significantly more evidence than the prosecutor’s office currently possesses. The ICC normally does not interview witnesses, take testimony, or gather forensic evidence during its preliminary examinations, and that work would be just the beginning. In order to charge Americans with war crimes, Bensouda would likely also have to demonstrate a link between the conflict in Afghanistan and U.S. detention policies, which may not be easy; the United States reportedly brought several detainees to Afghanistan from other parts of the world. Perhaps most controversial, the prosecutor’s office would have to determine that the United States has failed to address allegations of torture through its own domestic prosecutions, investigations, and reviews. Moreover, any indictments related to Afghanistan would be months if not years away. Because no ICC member has referred the situation to the court, Bensouda will need the approval of a three-judge panel before launching an investigation. ICC judges have approved all three previous investigative requests from the prosecutor (in Kenya, Cote d’Ivoire, and Georgia), but their review can take several months, and the judges might request additional information before authorizing an investigation. Still, the readiness of the prosecutor’s office to open an investigation represents a sharp setback for President Barack Obama’s administration, which has sought several times to discourage an investigation in Afghanistan and even to avoid ICC mention of possible U.S. crimes. One former U.S. official familiar with the dialogue between the United States and the court described it as cordial, but said that prosecution officials appeared to have decided to include some U.S. activities in their investigation. “They would listen,” the official said, “but it was clear that minds were not being changed.” The U.S. relationship with the court — which was hostile in the first George W. Bush administration — has become increasingly friendly in recent years. Although U.S. legislation still prohibits direct financial assistance to the court, U.S. officials have facilitated the transfer of several indictees to the court and have sought to assist the ICC in other ways. A full investigation in Afghanistan would pose new complications for the next administration as it develops a policy toward the court. Early in her tenure as secretary of state, Hillary Clinton expressed “great regret” that the United States was not able to join the court, but she has given no sign that she would support becoming a member.

http://foreignpolicy.com/2016/10/31/exclusive-international-criminal-court-poised-to-open-investigation-into-war-crimes-in-afghanistan/?utm_source=Sailthru&utm_medium=email&utm_campaign=New%20Campaign&utm_term=%2AEditors%20Picks

We’re not in perfect control’: U.S. plans operation against Islamic State in Syria despite obstacles

The Obama administration is racing to settle questions that could scuttle a planned offensive against the Islamic State in the Syrian city of Raqqa that Defense Secretary Ashton B. Carter has said will begin “within weeks . . . and not many weeks.” Senior administration officials have attributed the newly described urgency to Raqqa’s symbolic role as the “capital of the caliphate” claimed by the militants and intelligence indicating that it is the center of Islamic State planning for terrorist attacks in Europe and the United States. But the officials acknowledged a wealth of problems that could derail the offensive, including the need to gather and train additional Syrian forces. More ominously, they cite the explosive dynamics between two allies: Turkey and Syrian Kurdish fighters, who form the bulk of the existing offensive force. “This is one of the situations in which we have contacts and influence over all the actors. But we’re not in perfect control,” said one of several officials who discussed the operation on the condition of anonymity to speak candidly about its planning and potential pitfalls. President Obama approved the Raqqa plan in meetings with top national security aides in early October. But concerns about unresolved problems have put off initial hopes that the offensive could take place simultaneously with a major operation to retake the Iraqi city of Mosul that began two weeks ago. Lt. Gen. Stephen Townsend, the U.S. commander of the anti-Islamic State coalition, described the current Raqqa plan as “overlapping” the Mosul offensive. “We want to pressure Raqqa” so that militants escaping Mosul do not “have a convenient place to go,” Townsend said last week, after Carter’s description of the timing during a news conference at NATO. The Pentagon, at least temporarily, has withdrawn a controversial request to provide direct arms shipments to the Kurdish People’s Protection Units, known as the YPG, which forms the bulk of the U.S.-backed Syrian Democratic Forces slated to undertake the Raqqa offensive. Consideration of the weapons was deferred, officials said, because initial plans to encircle the city by taking control of surrounding villages and access routes would not require additional weaponry and because conflicts with Turkey remain unresolved. Turkey, a NATO ally and part of the U.S.-led coalition against the Islamic State, considers the YPG a terrorist force, allied with Turkey’s own Kurdish separatist movement. Its concern has grown as the Syrian Kurds, with strong U.S. backing, have taken control of much of the Syria-Turkey border from the militants. More:

https://www.washingtonpost.com/world/national-security/were-not-in-perfect-control-us-plans-operation-against-islamic-state-in-syria-despite-obstacles/2016/10/31/b649605e-9d1b-11e6-9980-50913d68eacb_story.html?hpid=hp_hp-top-table-main_ussyria-0810pm%3Ahomepage%2Fstory

National

Early Turnout Tilts Toward Democrats in Swing States

Hillary Clinton has established a slim edge over Donald J. Trump in early-voter turnout in several vital swing states, pressing her longstanding advantages in state-level organization and potentially mitigating the fallout from her campaign’s latest scrap with the F.B.I. Even as Democrats continued to reel from revived questions about Mrs. Clinton’s use of a private email server as secretary of state — a jolt delivered 11 days before the election in an abstruse letter from the F.B.I. director, James B. Comey — turnout tallies and interviews with dozens of early voters suggest that even a vintage “October surprise” may pack less of a punch than it once did. In a race between two deeply polarizing candidates, opinions appear to have been cemented weeks if not months ago for most voters. And the contest is well underway in some of the most important battlegrounds. At least 21 million people have voted so far across the country. In the states that are most likely to decide the election — among them Florida, Colorado and Nevada — close to a quarter of the electorate has already cast ballots. While their votes will not be counted until Election Day, registered Democrats are outperforming Republicans in key demographics and urban areas there and in North Carolina, where extensive in-person voting began late last week and which has emerged as one of the most closely contested battlegrounds for the White House and control of the Senate. Though Democrats can take solace from the fact that their large organizational advantage has supplied a cushion when they need it most, the race is still exceedingly close. And the latest eruption in the email affair still threatens to turn many voters against Mrs. Clinton — and put Democrats in lower-level contests on the defensive — just when it appeared Mr. Trump and other Republican candidates were falling out of contention. “We cannot get distracted by all the noise in the political environment,” Mrs. Clinton urged voters on Sunday in Fort Lauderdale, Fla. reminding them that three million Floridians had already voted. “We’ve got to stay focused.” While the early-voting numbers appear strong for Mrs. Clinton, there were signs of weakness over the weekend, especially among African-Americans in North Carolina, where the turnout as of Saturday night showed that they had not voted at their 2012 levels so far. Among both supporters and critics of Mrs. Clinton, early returns suggest the latest uproar has changed few minds, despite seeming to break through the campaign din. More:

http://www.nytimes.com/2016/10/31/us/politics/early-voting-trump-clinton.html?emc=edit_th_20161031&nl=todaysheadlines&nlid=53476364&_r=0

Donald Trump Used Legally Dubious Method to Avoid Paying Taxes

Donald J. Trump proudly acknowledges he did not pay a dime in federal income taxes for years on end. He insists he merely exploited tax loopholes legally available to any billionaire — loopholes he says Hillary Clinton failed to close during her years in the United States Senate. “Why didn’t she ever try to change those laws so I couldn’t use them?” Mr. Trump asked during a campaign rally last month.

But newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidance maneuver so legally dubious his own lawyers advised him that the Internal Revenue Service would likely declare it improper if he were audited. Thanks to this one maneuver — which was later outlawed by Congress — Mr. Trump potentially escaped paying tens of millions of dollars in federal personal income taxes. It is impossible to know for sure because Mr. Trump has declined to release his tax returns, or even a summary of his returns, breaking a practice followed by every Republican and Democratic presidential candidate for more than four decades. Tax experts who reviewed the newly obtained documents for The New York Times said Mr. Trump’s tax avoidance maneuver, conjured from ambiguous provisions of highly technical tax court rulings, clearly pushed the edge of the envelope of what tax laws permitted at the time. “Whatever loophole existed was not ‘exploited’ here, but stretched beyond any recognition,” said Steven M. Rosenthal, a senior fellow at the nonpartisan Tax Policy Center who helped draft tax legislation in the early 1990s. More:

http://www.nytimes.com/2016/11/01/us/politics/donald-trump-tax.html?emc=edit_na_20161031&nlid=53476364&ref=cta&_r=0

The Dairy Industry Lost $420 Million From a Flaw in a Single Bull

It started with a bull named Pawnee Farm Arlinda Chief, who had a whopping 16,000 daughters. And 500,000 granddaughters and more than 2 million great-granddaughters. Today, in fact, his genes account for 14 percent of all DNA in Holstein cows, the most popular breed in the dairy industry. Chief—let’s call him Chief for brevity’s sake—was so popular because his daughters were fantastic milk producers. He had great genes for milk. But, geneticists now know, he also had a single copy of a deadly mutation that spread undetected through the Holstein cow population. The mutation caused some unborn calves to die in the womb. According to a recent estimate, this single mutation ended up causing more than 500,000 spontaneous abortions and costing the dairy industry $420 million in losses. That’s a crazy number, but here’s an even crazier one: Despite the lethal mutation, using Chief’s sperm instead of an average bull’s still led to $30 billion dollars in increased milk production over the past 35 years. That’s how much a single bull could affect the industry. Chief embodies the power and the perils of selective breeding, which has made tremendous gains for the dairy industry. The average cow today produces four times as much milk as one from the 1960s. And over the past decade, the dairy industry has embraced big data, sequencing thousands of dairy cows to pinpoint the genetic markers that correlate with prodigious milk production. It took some clever geneticists to realize they could also look for bad genes that have been lurking undetected. More:

https://www.theatlantic.com/health/archive/2016/10/the-dairy-industry-lost-420-million-from-a-flaw-in-a-single-bull/505616/

Cashew Prices Are About to Go Nuts

Get ready for some cashew sticker shock. The global popularity of the kidney-shaped nut has been growing faster than any other tree nut — even almonds. Demand jumped 53 percent since 2010, industry data show. Now the worst drought in a century for Vietnam, the largest exporter, is raising concern that supplies will be even tighter in a market valued at $5.2 billion. A lack of rain in the once-fertile Mekong Delta and elsewhere in Vietnam has cut output of its major agricultural exports including rice, black pepper, coffee and seafood. This year’s cashew harvest fell 11 percent, and domestic prices jumped by as much as a third to an all-time high, a growers’ group estimates. That spells trouble for buyers in the U.S., by far the biggest importer. “There’s been no year like this year,” Nguyen Duc Thanh, chairman of the Vietnam Cashew Association, said during an interview in Ho Chi Minh City. Prices probably will remain high until the next harvest arrives early next year, said Thanh, who has been in the industry for three decades. While peanuts, which grow underground, are by far the most popular in the nut world, cashews have overtaken walnuts and pistachios in recent years to trail only almonds in the $30 billion market for tree nuts, International Nut and Dried Fruit Council data show. Global cashew consumption in 2014, the most-recent data available, reached a record 716,682 metric tons, up from 469,241 tons in 2010, council data show. For discussion about food demand by Asia’s expanding middle class, click here. Rising demand, including from China and parts of Europe, helped spark a 70 percent jump in exports over a decade to 503,713 tons in 2014. A quarter of all shipments end up in the U.S., to be eaten as a snack or used to make foods like protein bars and cashew milk. India accounts for almost a third of global consumption and is the second-largest exporter. Ivory Coast ranks No. 2 in production, followed by Vietnam.

http://www.bloomberg.com/news/articles/2016-10-31/snack-food-sticker-shock-for-cashew-eaters-after-vietnam-drought

How a Smooth Talker Convinced Bankers to Invest $32 Million, Then Vanished

Inside Hong Kong’s posh American Club, few worked a room quite like Avery Stone.  Over steak dinners and cigars, Stone charmed a Who’s Who of financiers into investing millions in his fledgling business. Then, earlier this year, everything unraveled–and he vanished. Left behind are the questions, including the big one: How did Stone and his partners at Global Merchant Funding Ltd. apparently dupe Hong Kong’s princes of finance into believing their business was on solid-footing? Accountants are still trying to piece together the answers. “This isn’t a deal that went bad, these guys systematically preyed off their friends,” said Thomas Gallagher, one of GMF’s investors, who had set up Citigroup Inc.’s fixed-income prime brokerage in Asia and now works for a hedge fund services firm. “The fact of the matter is, these guys essentially were in our circle.” For many, the money in question — $32.5 million, a pittance by Wall Street standards — is far less astounding than whose money it is. Documents related to the liquidation of Stone’s company show that many of its investors were drawn from prominent international banks. For them, weighing financial risks is crucial to their day-to-day jobs. In this case, they didn’t see the danger until it was too late. Among those on a list of more than 80 creditors seen by Bloomberg News are Morgan Stanley’s co-chief executive officer for Asia excluding Japan, Gokul Laroia; Martin Wong, now chief integrity officer at a U.S. software startup for online lenders and previously chief administrative officer and general counsel for the Asia-Pacific region at Citigroup; and Peter Tattersall, chief operating officer for fixed-income sales in Asia with Morgan Stanley, a role that involves responsibility for auditing and for implementing regulations. Others include Daniel Turner, a managing director for equities trading at Bank of America Merrill Lynch, where he has stock purchasing authority at the bank ranked No. 1 for equities trading market share in Asia last year; and Dermot Mayes, Nomura Holdings Inc.’s former head of fixed income and syndicate who is now chairman and CEO of Riviera Asia, which advises Asians investing in real estate in the south of France. All of them directly or through a spokesman declined to comment. Hong Kong police began investigating GMF after the company’s liquidator, accounting firm JLA Asia, reported in April that it suspected the three directors — Stone, Richard Grainger and Simon Zoen — may have misappropriated some of the money owed to the investors. None of the three replied to telephone calls, registered letters or e-mails. More:

http://www.bloomberg.com/news/articles/2016-10-31/a-list-bankers-ensnared-by-one-of-their-own-in-hong-kong-fiasco

Valeant Ex-CEO, Ex-CFO Are a Focus of U.S. Criminal Probe

U.S. prosecutors are focusing on Valeant Pharmaceuticals International Inc.’s former CEO and CFO as they build a fraud case against the company that could yield charges within weeks, according to people familiar with the matter. Authorities are looking into potential accounting fraud charges related to the company’s hidden ties to Philidor Rx Services LLC, a specialty pharmacy company that Valeant secretly controlled, the people said. Federal prosecutors in Manhattan and agents at the Federal Bureau of Investigation in New York have been investigating the company for at least a year. Prosecutors are examining the actions of J. Michael Pearson, Valeant’s former chief executive officer, and Howard Schiller, the ex-chief financial officer who became interim CEO during a medical leave by Pearson, according to the people, who discussed the confidential proceedings on the condition of anonymity. Prosecution of individual executives could go beyond just those two, one person said, adding that Philidor executives could also be charged. “We are in frequent contact and continue to cooperate” with U.S. authorities, Valeant said in a written statement. “We do not comment on rumors about investigations, and cannot comment on or speculate about the possible course of any ongoing investigation. Valeant takes these matters seriously and intends to uphold the highest standards of ethical conduct.” A Pearson lawyer, Bruce Yannett, declined to comment. Dan K. Webb, a lawyer for Schiller, didn’t immediately comment. Spokesmen for the FBI and Preet Bharara, the U.S. attorney in Manhattan, declined to comment. Jonathan Rosen, a lawyer for Philidor, didn’t respond to requests for comment. More:

http://www.bloomberg.com/news/articles/2016-10-31/valeant-ex-ceo-ex-cfo-said-to-be-a-focus-of-u-s-criminal-probe

Newest weapon in U.S. hunt for insider traders paying off

When plumber Gary Pusey pleaded guilty in May to insider trading, it was a victory not just for New York prosecutors but for a little-known squad inside the U.S. Securities and Exchange Commission that uses data analysis to spot unusual trading patterns. Formed in 2010, the Analysis and Detection Center of the SEC’s Market Abuse Unit culls through billions of rows of trading data going back 15 years to identify individuals who have made repeated, well-timed trades ahead of corporate news. The new strategy is starting to show results, enabling the SEC to launch nine insider trading cases, around 7 percent of cases the agency brought since 2014 against people who trade on confidential corporate information. It signals a shift in how the agency initiates insider trading probes, which more often are launched based on referrals from Wall Street’s self-regulator Financial Industry Regulatory Authority, or an informant’s tip.

“It’s essentially the new frontier,” said Andrew Ceresney, the SEC’s enforcement director. “We have tremendous amounts of data available to use, and we’ve been developing tools to take advantage of that.” That data was key to spotting trades by Pusey ahead of at least 10 deals from 2014 to 2015 involving Barclays Plc, where his friend Steven McClatchey worked. The SEC has also used data mining in a high-profile probe of traders who it says made more than $100 million using information obtained by Ukrainian hackers. Others charged include former employees of law firm Wilson Sonsini Goodrich & Rosati and investment bank Goldman Sachs Group Inc.. In August, former Perella Weinberg Partners banker Sean Stewart was convicted in a case credited to the SEC unit. He denies wrongdoing and is expected to appeal. More:

http://www.reuters.com/article/us-usa-insidertrading-insight-idUSKBN12W2X4

Victims Seek Mercy for a Wall St. Scion Who Defrauded Them

Some of the people that Andrew Caspersen bilked out of millions of dollars are asking a federal judge to show mercy on the now-disgraced scion of a well-known Wall Street family. In letters to the judge, Mr. Caspersen’s mother, friends and former colleagues on Wall Street paint a picture of a modest man who had a “firm grasp of the ‘right’ thing to do.” Even his wedding photographer and the doorman in the Upper East Side apartment building where Mr. Caspersen lives wrote in support. Their depictions are at odds with the government’s, which has detailed how Mr. Caspersen ran a Ponzi-like scheme to steal nearly $40 million, only to lose it all in high-stakes bets on the stock market. He pleaded guilty to one charge of security fraud and one charge of wire fraud in July. The most important letter of all, however, may be one from Dr. Marc N. Potenza, a professor of psychiatry at Yale University School of Medicine, who called Mr. Caspersen’s “severe gambling” a mental illness. The lawyer for Mr. Caspersen contends that it was an extreme compulsion to trade stock options that drove his client with an Ivy League pedigree to lie and steal from his friends, family and a hedge fund foundation. In an unusual departure from the typical white-collar sentencing, Judge Jed S. Rakoff has agreed to hear testimony from Dr. Potenza on what constitutes a gambling addiction before imposing a sentence on the 40-year-old Mr. Caspersen. Judge Rakoff is set to sentence Mr. Caspersen at the Federal District Court in Manhattan on Friday. It is not known whether federal prosecutors in Manhattan will call any witnesses of their own or simply look to cross-examine Dr. Potenza. The testimony could be critical to Mr. Caspersen’s attempt to persuade Judge Rakoff to impose a more lenient sentence than the more than 15 years in prison that federal prosecutors have said is appropriate. More:

http://www.nytimes.com/2016/11/01/business/dealbook/victims-seek-mercy-for-a-wall-st-scion-who-defrauded-them.html?ref=dealbook&_r=0

Wells Fargo agrees to $50 million settlement over homeowner fees

Wells Fargo & Co (WFC.N) has agreed to pay $50 million to settle a racketeering lawsuit accusing it of overcharging hundreds of thousands of homeowners for appraisals ordered after they defaulted on their mortgage loans. The proposed settlement, which requires court approval, was disclosed in a filing on Friday in an Oakland, California federal court. If approved, it will resolve nationwide claims that Wells Fargo charged much more than it paid for third-party appraisals, exploiting borrowers who could least afford it and driving them further into default. Wells Fargo’s settlement of the lawsuit comes as the bank is still recoiling from a scandal over sales targets that drove employees to create unauthorized accounts for customers. Multiple lawsuits over those practices are pending. Spokesman Tom Goyda said Wells Fargo believes its appraisal practices were proper and disagreed with the lawsuit’s claims but settled to avoid further litigation. Plaintiffs’ lawyer Roland Tellis said: “We’re very pleased to have negotiated a settlement that achieves our litigation goals.” About 250,000 homeowners are covered by the proposed deal, he said. Mortgage agreements allow banks to charge homeowners for the appraisals if they default on their mortgage loans, but Wells Fargo added large mark-ups to the amounts its third-party vendors charged, the 2012 lawsuit said. Wells Fargo typically charged $95 to $125 for the type of expedited appraisal at issue, when the actual cost was $50 or less, the complaint said. The charges added hundreds or thousands of dollars to borrower’s mortgage loans over time, the lawsuit said. Customers did not know they had been victimized because the charges were described on statements with cryptic labels such as “other charges,” the lawsuit said. The plaintiffs had sought triple damages under the U.S. Racketeer Influenced and Corrupt Organizations Act. The lawsuit said sending invoices and statements with the fraudulently concealed fees constituted mail and wire fraud sufficient to allege racketeering. In court filings, lawyers for Wells had called those claims “far-fetched.” The U.S. Office of the Comptroller of the Currency and courts have recognized that fees similar to Wells Fargo’s can include a profit margin, the lawyers said. The case is: Bias et al v Wells Fargo & Co, U.S. District Court, California Northern District, no 12-cv-664

http://www.reuters.com/article/us-wellsfargo-settlement-idUSKBN12V27F

Clinton holds five-point lead as FBI looks at more emails: Reuters/Ipsos poll

Democrat Hillary Clinton held a five percentage point lead over Republican rival Donald Trump, according to a Reuters/Ipsos opinion poll released on Monday, down only slightly since the FBI said last week it was reviewing new emails in its investigation of the former secretary of state. Some 44 percent of likely voters said they would support Clinton, while 39 percent said they would support Trump, according to the Oct. 26-30 survey. Clinton had held a 6 point advantage over Trump in the five-day tracking poll last Thursday.

Other polls have shown Clinton’s lead slipping more sharply. Real Clear Politics, which averages the results of most major polls, shows that Clinton’s lead has declined from 4.6 points on Friday to 2.5 points on Monday.  Federal Bureau of Investigation Director James Comey told Congress in a letter made public on Friday that his agency was looking into new emails that may be connected to Clinton, who had been probed by the FBI over her use of a private server and how she handled classified information while America’s top diplomat. More:

http://www.reuters.com/article/us-usa-election-poll-idUSKBN12V2DI

White Nationalist’s Pro-Trump Robocall: Evan McMullin Is Gay

Prominent white nationalist William Johnson, an ardent supporter of Donald Trump’s campaign who was previously listed as a California delegate for the Republican National Convention, has paid for a new robocall targeting #NeverTrump independent candidate Evan McMullin in Utah. According to an email from Johnson, he has scheduled the new robocall to begin going out to Utah voters on Monday evening.

“Hello, My name is William Johnson,” the audio recording begins. “I am a farmer and a white nationalist. I make this call against Evan McMullin and in support of Donald Trump. “Evan McMullin is an open borders, amnesty supporter. “Evan has two mommies. His mother is a lesbian, married to another woman. Evan is okay with that. Indeed Evan supports the Supreme Court ruling legalizing gay marriage.

“Evan is over 40 years old and is not married and doesn’t even have a girlfriend. I believe Evan is a closet homosexual. When asked what evidence he has for any of these claims, Johnson emailed The Daily Beast: “Wikipedia tells his story (about his mother). Also, if you Google him, it readily comes up. I said that ‘I think he is a closet homosexual.’ Calling someone a homosexual is no longer defamation. Also, he is a public figure. Word on the street is that he is gay.” The white-nationalist leader added that “There are a lot of homosexual Mormons, some struggling to stay in the Church and some who are bitter.” He cited a Reddit thread full of unverified claims about McMullin’s alleged homosexuality. In response to news of the ad, McMullin tweeted that this is “another desperate attack” by “Trump and his racist supporters” as his lead continues to diminish in Utah. “This attack is consistent with [Trump’s] bigoted, deceitful campaign and vision for America. Utahns won’t be fooled,” he later added. Besides the outrageousness and homophobic nature of the accusations, the call contains some inaccuracies. While he respects the Obergefell v. Hodges decision legalizing same-sex marriage, McMullin has said he personally believes that marriage should be strictly between a man and a woman. As the independent candidate’s polling continues to rise in Utah, where many Mormon voters reject Trump’s candidacy, the loud-mouthed Republican nominee has recently lashed out at McMullin calling him a “puppet” of conservative commentator Bill Kristol.

http://www.thedailybeast.com/articles/2016/10/31/white-nationalist-william-johnson-s-pro-trump-robocall-evan-mcmullin-is-gay.html

FBI making inquiry into ex-Trump campaign manager’s foreign ties

The FBI has been conducting a preliminary inquiry into Donald Trump’s former campaign manager Paul Manafort’s foreign business connections, law enforcement and intelligence sources told NBC News Monday. Word of the inquiry, which has not blossomed into a full-blown criminal investigation, comes just days after FBI Director James Comey’s disclosure that his agency is examining a new batch of emails connected to an aide to Hillary Clinton. And it comes a day after Senate Majority Leader Harry Reid criticized Comey’s revelation and asserted that Comey possesses “explosive information about close ties and coordination between Donald Trump, his top advisors, and the Russian government.” The FBI did not comment. Manafort told NBC News “none of it is true … There’s no investigation going on by the FBI that I’m aware of.” He said he had never had ties to Russian president Vladimir Putin, or had dealings with Putin and his government. He said any suggestion of such ties was “Democratic propaganda.”

“This is all political propaganda, meant to deflect,” he said. NBC News reported in August that Manafort was a key player in multi-million-dollar business propositions with Russian and Ukrainian oligarchs — one of them a close Putin ally with alleged ties to organized crime — which foreign policy experts said raised questions about the pro-Russian bent of the Trump candidacy.

http://www.nbcnews.com/news/us-news/fbi-making-inquiry-ex-trump-campaign-manager-s-foreign-ties-n675881

Washington Post Donald Trump’s donations fall short of his claims

Video:  https://www.youtube.com/watch?v=D1tpiaJEKFs

State/Local

Alabama schools still use zero tolerance policies shown to have little effect

Despite strong evidence that zero tolerance policies contribute to the school-to-prison pipeline and don’t improve school safety, some schools across Alabama are still using the inflexible rules to expel students.

But the number of Alabama school boards using those policies has been shrinking, according to new federal data on school discipline. Just 18 school systems still employed zero tolerance in 2014, with Huntsville City Schools leading the way. Zero tolerance is typically reserved for the most serious offenses. It simply means that no matter what the circumstances are, the punishment will be the same for the offense. For example, a school has a no-weapons policy that mandates expulsion if a weapon is found. A student brings a hunting knife to school accidentally in his car and that knife is found. Regardless of the circumstances, the student gets expelled under that policy. State officials do not support such rigid policies. Dr. Marilyn Lewis, Program Coordinator of Prevention and Support Services for the Alabama State Department of Education, said the department “absolutely discourages the use of zero tolerance policies” in Alabama schools. But in the 2013-2014 school year, Huntsville expelled 169 students under zero tolerance policies. That means more than half of the zero tolerance expulsions statewide came under Huntsville Superintendent Casey Wardynski, a retired Army colonel turned school adminstrator.

Combining zero tolerance and other expulsions, Huntsville expelled 475, or 2 percent of enrolled students, during the 2013-2014 school year. That gave the system the second highest expulsion rate in the state behind Attalla City, which expelled 73 students overall — a rate of 4 percent of its student body — but none under zero tolerance policies. Unlike other states, Alabama’s department of education does not release statewide data on disciplinary actions in Alabama’s public schools. However, the U.S. Department of Education’s Office for Civil Rights requires schools across America to self-report every two years on the use of suspensions and expulsions, broken down by race, gender, and disability status. The most recent federal data, released in June, covers the 2013-2014 school year. Nationally, numbers of students expelled under zero tolerance policies dropped by 31 percent, from 29,677 during the 2011-2012 school year to 20,502 during the 2013-2014 school year. Alabama, led by Huntsville, was one of just 14 states to see an overall increase. More:

http://www.al.com/news/index.ssf/2016/10/zero-tolerance_policies_dont_w.html#incart_river_home

Seven retired judges picked for special court on Roy Moore appeal

Seven retired judges have been selected for the special Supreme Court that will hear Chief Justice Roy Moore’s appeal of his suspension from office. The seven were among 50 whose names were drawn on Thursday under a procedure set up by the Alabama Supreme Court. Gov. Robert Bentley signed an executive order today certifying the members of the special court. The seven retired judges are H. Edward McFerrin, Robert G. Cahill, William R. King, James H. Reid Jr.,  Lynn Clardy Bright, Ralph A. Ferguson Jr., and John D. Coggin. McFerrin was circuit judge in the 2nd Circuit, including Butler, Crenshaw and Lowndes counties, and retired at the end of 2010, according to a story about his retirement in The Greenville Advocate. Cahill served 18 years as a district judge in Jefferson County before retiring in 2006. Reid retired in 2013 after 24 years as a circuit judge in Baldwin County. In September, the Court of the Judiciary suspended Moore without pay for the remainder of his term for violating canons of judicial ethics. The charges mainly concerned an administrative order Moore wrote to the state’s probate judges in January telling them that they still had a duty to enforce the state’s ban on same-sex marriage. Moore’s order to the probate judges came about six months after the U.S. Supreme Court legalized gay marriage nationwide. Moore said he was not telling probate judges to defy federal court orders but was providing a status update on an Alabama case on gay marriage.

http://www.al.com/news/birmingham/index.ssf/2016/10/seven_retired_judges_picked_fo.html#incart_river_home

Elmore County commissioner to plead guilty to using office for personal gain

Elmore County commissioner Joe Faulk will plead guilty to using his office for personal gain, according to state court records filed Friday. Faulk last week turned himself in on the charges and was released on $5,000 bond, The Montgomery Advertiser reported. Between 2011 and 2016, Faulk took checks and cash from Financial Marketing Concepts, Inc. and County RX Card, LLC, Alabama Attorney General Luther Strange’s office wrote in a court filing Friday. Faulk, elected to the county commission in 2000, served on the Millbrook City Council from 1994 until 2000, the county’s website states.

http://www.al.com/news/index.ssf/2016/10/former_elmore_county_commissio.html#incart_river_home

Deposition: Blue Cross misstated rates for years to Alabama regulators

Blue Cross Blue Shield of Alabama had a policy for years of charging rates different from those filed with state regulators, a practice that violated state law according to attorneys suing the company in federal court. The policy resulted in overcharges of $5 million for some small groups and undercharges of $35 million for others, according to depositions. The practice came to light after federal Judge David Proctor unsealed depositions on Oct. 18 in a massive anti-trust case against 38 Blue Cross Blue Shield affiliates, including Alabama. The central issue in the case is whether Blue Cross affiliates in different states conspired to limit competition in order to charge higher rates to subscribers and offer lower payments to medical providers. “We believed and continue to believe Blue Cross is understating the amount of the overcharging,” said Barry Ragsdale, an attorney representing subscribers and providers. In a media response, a Blue Cross Blue Shield of Alabama spokeswoman said the policy actually saved $75 million for a vast majority of small group subscribers, which includes businesses with 50 employees or less.

“Despite the significant overall savings, our research also revealed that a marginal portion of our small business customers may not have received the most favorable rate when renewing their health insurance,” the statement read. “This past summer, Blue Cross self-reported this matter to our regulator, the Alabama Department of Insurance, and is fully cooperating with the Department in its review.  The Company will refund affected small employer groups upon the conclusion of the Alabama Department of Insurance’s review.” Attorneys for Blue Cross have argued that affiliates’ rates have been approved as reasonable by state regulators and shouldn’t be challenged in court. Department of Insurance actuary Steven Ostlund and Blue Cross Blue Shield Chief Actuary Noel Carden both testified about the charged rates in the unsealed depositions. The Alabama case is the first part of the class action to move forward. Blue Cross Blue Shield of Alabama dominates the market for health insurance in the state, with more than 93 percent of the market for large group policies, according to the Kaiser Family Foundation. Next year, Blue Cross will be the only company offering individual plans through the marketplace set up under Obamacare. Blue Cross is required to file rates every year with the Alabama Department of Insurance. For a period of several years, they charged rates that differed from those on file with the department – a violation of Alabama law, according to attorneys suing the company. In his testimony, Ostlund said the department had not yet determined whether the company violated a law or rule by charging different rates. In a deposition unsealed by Proctor, Carden of Blue Cross said the policy of holding rates steady from year to year was intended to reduce the shock of big rate increases. However, the company never told the department of insurance about the policy, Ostlund said. The company stopped holding rates in 2014, at the beginning of the Affordable Care Act. The discrepancy was discovered by Blue Cross Blue Shield officials earlier this year, according to Ostlund’s testimony:

http://www.al.com/news/index.ssf/2016/10/deposition_blue_cross_misstate.html#incart_river_home

7 people severely burned after Shelby County gas line explosion

Fire departments from across the Birmingham area responded to a gas line explosion in Shelby County that severally injured several people this afternoon. At least 10 acres of woods were on fire at one point, according to radio reports. According to public safety radio reports, seven people were severely burned. A UAB Hospital spokesman this afternoon confirmed three patients are already at UAB, three more are coming by ambulance, and one more is coming by air. Eight or nine subcontractors were working on the Colonial gas pipeline when it exploded around 3 p.m., Shelby County sheriff’s Maj. Ken Burchfield confirmed. Colonial has now shut down both pipelines running through the area. “The fire will not be out any time soon,” Burchfield added. Shelby County Sheriff John Samaniego said the Colonial subcontractors were trying to flush one of the lines. As they began to dig, that is when the explosion happened. In addition to the injured victims, Samaniego said there’s a possibility that two workers are still missing. The heat from the blaze, he said, is hindering the search for them. The sheriff said the flames are still reaching about 50 feet in the air. The explosion was in the 300 block of Grey Hill Road in the area of River Road and Highway 13. Firefighters from the Bessemer, Birmingham, Indian Ford and McAdory departments are assisting. There are only two homes nearby – both are roughly a half mile from the explosion site. Those residents have been evacuated but because the area is so rural, Samaniego said he doesn’t expect further evacuations. Colonial has now shut down both pipelines running through the area. This explosion is about five miles west from a recent Colonial Pipeline gasoline leak. The Georgia-based company said in a brief statement Monday evening that its top priorities are the health and safety of its work crews at the scene and protecting the public. Flights in the area have been restricted, Gregory Robinson of the state emergency management agency announced Monday night. Only relief aircraft are authorized in the airspace. More:

http://www.al.com/news/birmingham/index.ssf/2016/10/reported_gas_line_explosion_se.html#incart_big-photo

Donald Trump vs. Hillary Clinton generates record-setting voter registration in Alabama

More than 3.3 million Alabamians are registered to vote ahead of the Nov. 8 presidential election, Secretary of State John Merrill announced Monday. The deadline for Alabamians to register was Oct. 24. Merrill said his office has registered a record 584,252 new voters, bringing the total number of people eligible to cast a ballot in the state to 3.30 million. “When we took office in January of 2015, we committed to make sure every eligible U.S. citizen that is a resident of Alabama be registered to vote and have a valid photo id. With the help of our very capable team and the people of Alabama we have made great strides to accomplish this goal, and for that I say thank you,” Merrill said. Merrill attributed the rise to several factors, including new online registration and  mail-in voter update cards sent through the Electronic Registration Information Center as well as other similar initiatives. A little more than 2 million Alabamians cast their ballots in the 2012 presidential election between Republican Mitt Romney and Democrat Barack Obama. Alabama voted overwhelmingly for Romney but Obama won his second term.

http://www.al.com/news/index.ssf/2016/10/donald_trump_vs_hillary_clinto_43.html

Judge in Gardendale school case to examine Alabama desegregation monitoring

A federal judge has set the first week in December for a hearing to determine whether Gardendale should be allowed to form its own school system. The judge also said before that hearing she would consider issues Gardendale has raised over whether she, or any federal court, should still be in the business of monitoring schools for desegregation issues in Alabama. During a Monday teleconference, U.S. District Court Judge Madeline Haikala told lawyers for all sides that she was setting Dec. 1-2 and Dec. 7-9 for the hearing. The hearing will include testimony from experts. Steve Rowe, one of the attorneys for Gardendale, told the judge that they are interested in streamlining and expediting the process, which has been time consuming and expensive. Gardendale wants a decision as quick as possible in order to prepare for the start of the next school year.  Haikala presides over the 1965 schools desegregation case Stout vs. Jefferson County Board of Education. Since a 1971 order in that case, federal judges have continued oversight – including approval of attendance zones – over county schools to make sure racial balances are maintained and no discrimination occurs. Cities splitting off from the Jefferson County system since the 1971 order have been required to remain under the desegregation order until their system has reached “unitary status” – achieving the goals of becoming a non-discriminatory, desegregated system. Gardendale, like six cities have done before it, wants to form its own school system. Residents voted in November 2013 to form a school system, and in 2014 named a school board and hired a superintendent. The U.S. Department of Justice and NAACP Legal Defense Fund told Haikala in June they oppose the split, setting up a trial on the issue.

http://www.al.com/news/birmingham/index.ssf/2016/10/federal_judge_sets_trial_date.html#incart_river_home

Blogs/Opinions

The FBI’s Clinton Probe Gets Curiouser

Hillary Clinton may win the election in two weeks, but the manner of her victory will bedevil her in the White House. Specifically, evidence keeps turning up suggesting that the FBI probe into her emails was influenced by political favoritism and double standards. The latest news is the Journal’s report Monday that Virginia Gov. Terry McAuliffe, a longtime friend of Hillary and Bill, steered money to the campaign of the wife of a top FBI official. Political organizations under Mr. McAuliffe’s control gave more than $675,000 to the 2015 Virginia state Senate campaign of Jill McCabe, the wife of FBI deputy director Andrew McCabe. Mr. McCabe, director James Comey’s right-hand man, helped oversee the probe into whether Mrs. Clinton mishandled classified information on her server. Some $467,500 of the money came directly from Mr. McAuliffe’s political action committee, Common Good VA, while $207,788 came from the Virginia Democratic Party, which the Governor essentially controls. The funds amounted to more than one-third of all the money Mrs. McCabe raised. Mrs. McCabe announced her candidacy the same month (March 2015) as the news broke about Mrs. Clinton’s private email server. Mr. McCabe was running the FBI’s Washington field office at the time, and he was promoted to the No. 3 FBI slot not long after the formal FBI investigation began in July 2015. The FBI said in a statement that none of this is an issue because Mr. McCabe wasn’t promoted to the No. 2 position until February 2016, months after his wife lost her race, and only then did he assume “for the first time, an oversight role in the investigation into Secretary Clinton’s emails.” All of this asks voters to believe that Mr. McCabe as the No. 3 official at the FBI had nothing to do with the biggest, most sensitive case at that agency. This strains credulity. Before he became No. 3 at the FBI Mr. McCabe ran the bureau’s Washington, D.C. field office that provided resources to the Clinton probe. Campaign-finance records show that 98% of the McAuliffe donations to Mrs. McCabe came after the FBI launched its Clinton probe. Director Comey, the self-styled Boy Scout, somehow didn’t think any of this would look suspicious? Add this to the list of special treatment for Mrs. Clinton: no grand jury, grants of immunity to her aides, no interview until the last minute, a special exonerating public declaration, and a pre-Labor Day dump of damaging FBI notes. More:

http://www.wsj.com/articles/the-fbi-clinton-probe-gets-curiouser-1477352522

Richard Shelby, Hillary Clinton, emails and a false equation

Richard Shelby is happy. Alabama’s longest serving senator is just tickled to death that the FBI is taking another look at Hillary Clinton’s emails. (Shelby referred to this as “reopening” the investigation, but that’s inaccurate and everyone involved, including FBI director James Comey, who violated decades of protocol by publicly discussing an ongoing investigation, knows it.) Yes, Shelby is so happy he wrote a letter to Comey. Ordinarily, a letter wouldn’t be a big deal, but this is Richard Shelby we’re talking about here – a man so busy driving through the 60 Alabama counties (the Black Belt counties don’t count) in his Ford Explorer that he didn’t have time to attend the 50th Anniversary of Bloody Sunday in Selma. That’s a super-busy guy. So, when that guy takes the time to sit down and sign a letter his staff wrote, well, you know it’s a big deal. In his letter to Comey, Shelby relays how pleased he is over this new development. But he urges Comey to hurry up with his review of the new emails – the ones discovered during the investigation of Anthony Weiner’s sexting. “The American people are electing their next Commander-in-Chief only days from now, and they deserve to know the conclusion of your review prior to Election Day,” Shelby wrote. “Let me be clear: This should be your utmost priority.” Never thought I’d say this, but I agree with Richard Shelby. The American people do deserve the truth, and they deserve it before Election Day. They also deserved it in Shelby’s letter, but I guess that ship has sailed. The American people – particularly the conservatives who have been glued to conservative news feeds that have treated Comey’s revelation of more emails like CNN treated that missing airplane – deserve to know the real truth about those emails. And about all of the other emails. And about this whole private server “scandal.” And here’s the truth: It’s a phony scandal. Yes, Clinton screwed up by having a private server at her home that she used. And she and her staff made bigger mistakes by not treating the emails with the security precautions they warranted. And Clinton made the whole thing worse by claiming originally that there were no issues at all. But dear Lord, stop acting like this is a real scandal. Real scandals involve doing illegal things for personal gain. They don’t involve simple carelessness that really only makes life more difficult for you. A real scandal is something like … oh, I don’t know, maybe setting up a fake university that bilks students out of millions of dollars. Or maybe being the first presidential candidate in modern history who hides his personal tax returns. More:

http://www.alreporter.com/richard-shelby-hillary-clinton-emails-and-a-false-equation/

Morning Money

WALL STREET STILL SEES CLINTON WIN — CNBC’s Steve Liesman in a piece going up this a.m.: “Wall Street still expects a Hillary Clinton White House, with 82 percent saying Clinton will win the election, up from 51 percent in … September. By a 46 percent to 39 percent margin, Donald Trump’s policies are still seen as best for the economy, but Clinton gained ground against Trump on the issue.

“On the issue of who is best for the stock market, Clinton has pulled away with 62 percent favoring her policies for equities, a near 10-point gap with Trump. More than half of respondents say the current presidential campaign is negative for the economic outlook. … The CNBC Fed Survey finds that 100 percent of respondents do not expect a rate hike at the Fed’s meeting this week, but 86 percent see one coming in its mid-December meeting”

BUT BETTING MARKET ODDS FOR CLINTON FALL — FT’s Adam Samson: “News that the FBI has opened a new probe into … Clinton’s emails has roiled prediction markets less than two weeks before the presidential election and heightened expectations that market volatility could flare up.. … The decline was particularly stark on the Iowa Electronic Markets, the longest established online exchange. The implied probability of Mrs Clinton winning a majority in the popular vote, beating Republican rival Donald Trump, tumbled to 67.2 per cent on Monday from 88.9 per cent a week ago.

“On Betfair, where people bet on the candidate winning a majority in the Electoral College, Mrs Clinton’s odds have fallen by 7.5 percentage points to 75.2 per cent. Meanwhile, at PredictWise, a service that rounds up performance in several markets, the chances of Mrs Clinton winning have declined by a shallower 4 points to 86 per cent.”
Read more.

DIZZYING BARRAGE OF TRUMP STORIES — Head snapping array of stories popped Monday night about Donald Trump’s taxes and potential ties to Russia. Slate’s Franklin Foer reported on the possible linkage of a Trump corporate server to a Russia’s Alpha Bank … NBC news reported the FBI “has been conducting a preliminary inquiry into … Trump’s former campaign manager Paul Manafort’s foreign business connections” … The New York Times reported that federal officials don’t see any “direct link” between Trump and the Russian government.

The New York times also reported that “newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidance maneuver so legally dubious his own lawyers advised him that the [IRS] would likely declare it improper if he were audited” …

Mother Jones reported on alleged multi-year effort by Russia to “cultivate” Trump. And Richard Eisen and Richard Painter reported in POLITICO Magazine on what Trump’s tax returns, which has refused to disclose, could show about his ties to Russia. … And CNBC’s Eamon Javers reported that FBI Director James Comey opposed publicly naming Russia as opening meddling in U.S. politics because it was too close to Election Day to make such a statement.

MEANWHILE IN CLINTON SCANDAL LAND … POLITICO’s Josh Gerstein reports the DoJ is pushing the FBI to move quickly to review the newly discovered emails on the Anthony Weiner-Huma Abedin laptop. Read more.

FIRST LOOK: CAP ON REG REFORM — New Center for American Progress report out Tuesday by senior fellow Ganesh Sitaraman: “[I]mproving the regulatory process will require strategies to reduce delays and inaction and to counteract regulatory capture … Our suggested reforms fit into three categories: increasing the voice of the people; facilitating agency action; and fostering effective, faithful agencies — and we have a couple recommendations in each of these buckets” Full report.

CLINTON WON’T REWARD BANK DONORS — POLITICO’s Victoria Guida: “Clinton has collected 40 times more money from the financial industry than … Trump has, but she doesn’t seem in any hurry to reward banks for that. Clinton is supporting a move by the Federal Reserve to formally propose more increases to capital standards for eight of the largest U.S. banks early next year, just as a new administration begins. ‘It’s consistent with what we’ve been calling for,’ her spokesman Donte Donald told POLITICO.

“Her endorsement, though not entirely surprising, is hardly welcome news to the megabanks, which are warily anticipating yet another layer of regulations added on to a swath of new capital and liquidity requirements imposed on them as part of the 2010 Dodd-Frank Act. ‘We’re paying very close attention,’ one banking industry official said of the Fed’s proposal, for which the details aren’t yet clear. ‘It’s a top-of-mind issue.’ Read more.

WHAT IF TRUMP WINS? — NYT’s Andrew Ross Sorkin: “Assume, for a moment, that … Trump wins the presidency. … But what exactly happens the day after? To markets? To the economy? The conventional wisdom is that, right off the bat, the stock market would fall precipitously. … In all likelihood, a Trump victory would lead to a swift, knee-jerk sell-off. Many investors will choose to sell stocks and ask questions later.

“But in the days and weeks after a Trump victory, among investors who cull their portfolios carefully, the decision about buying and selling will be company by company, industry by industry, currency by currency and so forth. In truth, it’s impossible to predict how the markets would settle into a Trump presidency, despite the speculation on all sides” Read more.

DRIVING THE DAY — Trump campaigns in Valley Forge, Pa. and Eau Claire, Wisc. … Clinton campaigns in Dade City, Sanford and Ft. Lauderdale, Fla. … President Obama campaigns for Clinton in Columbus, Ohio … Bernie Sanders campaigns for Clinton in New Hampshire and Maine … ISM Manufacturing at 10:00 a.m. expected to rise to 51.7 from 51.5 … Fed begins two day meeting that is likely to produce no change to policy or outlook … Yahoo Finance at 9:00 a.m. hosts a debate between Clinton backer Roger Altman and Trump supporter Peter Navarro of UC Irvine.

CHINA GROWTH BOOSTS MARKETS — Reuters: “Stronger-than-expected factory growth in China helped Asian stocks erase early losses on Tuesday, but investors remained cautious as the acrimonious U.S. presidential election campaign entered its final week. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, after earlier hitting its lowest level since Sept. 19. October marked the first monthly loss for the index since May.

“Activity in China’s manufacturing sector expanded at a faster pace than expected in October, an official survey showed on Tuesday, adding to views the world’s second-largest economy is stabilizing thanks to a construction boom.” Read more.

GE DEAL COULD AVOID ANTI-TRUST CONCERNS — Bloomberg’s David McLaughlin and Gaspard Sebag: “General Electric Co.’s plan to combine its oil and gas business with Baker Hughes Inc. should be able to avoid the opposition from antitrust enforcers that caused Halliburton Co.’s deal for Baker Hughes to collapse earlier this year, analysts and lawyers said. …

“Six months after the sale to Halliburton fell apart under U.S. opposition, Baker Hughes is returning to regulators seeking approval for a transaction that will consolidate the number of companies that provide drilling and other services for oil and gas explorers

MORE ON TRUMP’S DUBIOUS TAX DODGE — NYT’s David Barstow, Mike McIntire, Patricia Cohen, Susanne Craig and Russ Buettner: “Donald J. Trump proudly acknowledges he did not pay a dime in federal income taxes for years on end. He insists he merely exploited tax loopholes legally available to any billionaire — loopholes he says Hillary Clinton failed to close during her years in the United States Senate.

“But newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidance maneuver so legally dubious his own lawyers advised him that the Internal Revenue Service would most likely declare it improper if he were audited.” Read more.

NASA RAISES CONCERNS ABOUT SPACEX — WSJ’s Andy Pasztor: “Months before an unmanned SpaceX rocket exploded on the launchpad during a routine fueling exercise in September, a NASA advisory committee had raised red flags about the company’s intention to use the same procedure to fuel future boosters carrying astronauts.

“On Monday, the committee met and issued further strong warnings about the potential safety hazards of the way entrepreneur Elon Musk’s Space Exploration Technologies Corp. plans to fuel rockets before they are slated to transport U.S. crews into orbit. The committee’s warnings could complicate SpaceX’s technical and financial assumptions for ferrying crews to and from the international space station, with flights anticipated to begin later this decade.” Read more.

WELLS SETTLES FOR $50M — Reuters’ Dena Aubin: “Wells Fargo & Co has agreed to pay $50 million to settle a racketeering lawsuit accusing it of overcharging hundreds of thousands of homeowners for appraisals ordered after they defaulted on their mortgage loans.

“The proposed settlement, which requires court approval, was disclosed in a filing on Friday in an Oakland, California federal court. If approved, it will resolve nationwide claims that Wells Fargo charged much more than it paid for third-party appraisals, exploiting borrowers who could least afford it and driving them further into default.” Read more.

PALANTIR PARRYS PENTAGON — Washington Post’s Christian Davenport: “Palantir Technologies, the Silicon Valley software firm, has won an audacious federal case that could allow it to further break into the Pentagon’s rigid procurement process by competing for a lucrative Army contract, the firm said Monday.

“Earlier this year, Palantir sued the Pentagon, the agency that it is courting as a potential customer, because it said it was blocked from bidding on a program designed to gather all sorts of information — battlefield terrain, weather, enemy locations — and process it for soldiers on the ground. The contract at issue was worth $206 million, but the program could lead to more lucrative work.” Read more.

PHARMA EX-CEO UNDER INVESTIGATION — Bloomberg’s Christian Berthelsen, Greg Farrell, Neil Weinberg and Cynthia Koons: “U.S. prosecutors are focusing on Valeant Pharmaceuticals International Inc.’s former CEO and CFO as they build a fraud case against the company that could yield charges within weeks, according to people familiar with the matter.

“Prosecutors are examining the actions of J. Michael Pearson, Valeant’s former chief executive officer, and Howard Schiller, the ex-chief financial officer who became interim CEO during a medical leave by Pearson, according to the people, who discussed the confidential proceedings on the condition of anonymity. Prosecution of individual executives could go beyond just those two, one person said, adding that Philidor executives could also be charged.” Read more.

ALIBABA INVESTS IN MEDIA GROUP — Bloomberg’s Selina Wang: “Alibaba Group Holding Ltd. is stepping up investments in the entertainment industry with the formation of a new media group along with a fund of more than 10 billion yuan ($1.48 billion) for new projects.

“The change consolidates the Chinese e-commerce giant’s media empire into the Alibaba Digital Media and Entertainment Group, which will include video website Youku Tudou, web browser UCWeb, Alibaba Pictures Group Ltd. and the company’s gaming, literature, music and digital business units.” Read more.

GENSLER-SPERLING OPPOSED NEW GLASS-STEAGALL — POLITICO’s Victoria Guida: “Hillary Clinton economic advisers Gary Gensler and Gene Sperling both recommended that she not endorse a reinstatement of the 1933 Glass-Steagall Act and focus instead on proposing her own approach to addressing bank risk, emails released by WikiLeaks show.

“Clinton ultimately declined to endorse a return to Glass-Steagall, and Gensler’s views echo much of the language in the candidate’s proposal. The exchange highlights an area of divergence between Gensler, widely praised by progressives as an aggressive regulator when he chaired the CFTC, and Sen. Elizabeth Warren, who has drafted legislation to bring back a modernized Glass-Steagall.” Read more.

BARROSO ABSOLVED — FT’s Jim Brunsden: “An EU ethics panel on Monday cleared José Manuel Barroso, the former president of the European Commission, of violating conduct rules when he accepted a job with Goldman Sachs, in a report that nevertheless criticised him for a lapse of judgment in taking the post.

“The panel found ‘there are not sufficient grounds to establish a violation of the duty of integrity and discretion’ by Mr Barroso, whose appointment as non-executive chairman of Goldman Sachs’ London-based investment bank came after the end of a cooling-off period for former commissioners. They must give notification if they take a new role within 18 months of their departure.” Read more.

ASSET BUBBLES THREATEN CHINA — WSJ’s John Lyson and Shen Hong: “A succession of asset bubbles has formed in China, caused by a torrent of speculative money sloshing from stocks to bonds to commodities. The biggest apparent bubble is in housing, but prices have surged for niche assets, too, such as calligraphy, antiques and art.

“In May, futures prices for soybean meal, used as pig feed, jumped 40 percent. The trading volume of 600 million tons was nine times higher than China’s annual consumption. The pipe-making material PVC is up 40 percent so far this year on the Dalian Commodity Exchange.” Read more.

THIEL ON TRUMP — NYT’s David Streitfeld and Celia Kang: “It has been a provocative six months for Peter Thiel. That is the way he likes it. … Eight days before the presidential election, Mr. Thiel went to the National Press Club in Washington on Monday to defend his contrarian positions. He made the case for Trumpism beyond Trump, journalism without malevolence and Silicon Valley shorn of overweening hubris. …

“Given a chance to celebrate the Republican presidential candidate in a significant setting, Mr. Thiel did not mention Mr. Trump until the eighth paragraph of his prepared text, and then he quickly denounced the candidate’s comments about women as ‘clearly offensive and inappropriate.’ … As endorsements go, this was somewhat less than full-throated. ‘We’re voting for Trump because we judge the leadership of our country to have failed,’ Mr. Thiel said.” Read more.

ALSO FOR YOUR RADAR

ICYMI: EL-ERIAN INTERVIEW — Mohamed A. El-Erian spoke with POLITICO’s Daniel Lippman. On the Fed: “I think that there is a high probability that the Fed will raise rates and there are three reasons for that. One is that the employment objective has been largely met. It doesn’t mean that everything is fine in the labor market but it means in terms of the Fed’s assessment, the labor market no longer necessitates exceptional monetary policy” Read more.

CLINTON’S WALL STREET LOOPHOLE — Via IBT on a “new investigative report on Clinton exploiting a little-known loophole in federal anti-corruption rules, allowing her to rake in Wall Street cash from firms that manage hundreds of billions of dollars of federal retirement assets. … One firm managing $250 billion of federal retiree assets has its federal contracts coming up for renewal under the next president.” Read more.

FROM ALEPPO TO PHOENIX — Bloomberg looks at the economic story “at a refugee family’s US resettlement in politically-charged Arizona” Read more.

CREDIT EXPANDS — Via the ABA’s new Credit Card Market Monitor: “[T]he credit card market continued to expand in the second quarter with higher purchase volumes and an 11 percent increase in new credit card accounts” Read more.

POTUS Events

The President will be at a Clinton campaign event in Columbus, Ohio.

Floor Action

The House and Senate are out.

About Thomas Krebs

Securities litigation, regulation and compliance attorney.