PRESS DIGEST-New York Times business news - Aug 19

Mon Aug 19, 2013 1:30am EDT

Aug 19 (Reuters) - The following are the top stories on the New York Times business pages. Reuters has not verified these stories and does not vouch for their accuracy.

* Unions, creditors and retirees are expected to file formal objections to Detroit's eligibility for bankruptcy protection before a Monday deadline, the opening of a legal fight over whether the largest municipal bankruptcy in the nation's history should proceed. ()

* The Obama administration has poured billions of dollars into expanding the reach of the Internet, and nearly 98 percent of American homes now have access to some form of high-speed broadband. However, persistent digital inequality - caused by the inability to afford Internet service, lack of interest or a lack of computer literacy - is deepening racial and economic disparities in the United States, experts say. ()

* Federal authorities have opened a bribery investigation into whether JPMorgan Chase & Co hired the children of powerful Chinese officials to help the bank win lucrative business in the booming nation, according to a confidential United States government document. ()

* Baidu Inc's $1.9 billion acquisition of 91 Wireless, an operator of mobile application stores has already sharpened a rivalry among China's digital powerhouses, but the deal could also bring more order to China's messy world of mobile apps. The move should help Baidu regain ground against two other Chinese Internet giants - Alibaba and Tencent - which were quicker to add mobile capabilities. ()

* Al Jazeera America, the most ambitious American television news venture since Fox News Channel, will join cable and satellite lineups on Tuesday afternoon and will go against the grain of seemingly every trend in television news. Ehab Al Shihabi, the channel's acting chief executive said there will be less opinion, less yelling and fewer celebrity sightings. ()

* Investors responsible for more than $2 trillion recently gathered at a resort in the Canadian Rockies, far from the news media and, more important, far from Wall Street. The group holding the gathering, the Institutional Investors Roundtable, is part of a much broader push by the world's biggest pension and sovereign wealth funds to reduce their reliance on the Wall Street firms that used to manage almost all their money. ()

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JPMorgan in $23 mln settlement with clients over Lehman

Fri Aug 16, 2013 3:43pm EDT

* Clients claimed to lose money when Lehman went bankrupt

* JPMorgan denies wrongdoing

By Jonathan Stempel

NEW YORK, Aug 16 (Reuters) - JPMorgan Chase & Co agreed to pay $23 million to settle a lawsuit accusing it of mishandling money of pension funds and other clients by investing it in notes from Lehman Brothers Holdings Inc, which later went bankrupt.

The largest U.S. bank denied wrongdoing in agreeing to settle, and entered the settlement solely to eliminate the burden and cost of litigation, according to papers filed on Friday with the U.S. District Court in Manhattan.

Lawyers for the plaintiffs called the settlement terms fair, reasonable and adequate, according to Friday's filing. The settlement requires approval by U.S. District Judge Katherine Forrest in Manhattan.

The case over the Lehman notes had been bought on behalf of participants in JPMorgan's securities lending program, led by the Operating Engineers Pension Trust of Pasadena, California, and had sought class action status.

Paul Geller, a partner at Robbins Geller Rudman & Dowd representing the plaintiffs, did not immediately respond to a request for comment. JPMorgan spokesman Brian Marchiony did not immediately respond to a similar request.

The settlement is one of two disclosed on Friday over claims against JPMorgan tied to the recent credit and financial crises.

Liquidators for two Bear Stearns hedge funds that collapsed in 2007 because of problems with subprime mortgages agreed to drop their lawsuit against JPMorgan, which bought Bear in 2008, to recoup at least $1.1 billion of losses.

Terms of that settlement were not disclosed.

In the Lehman case, the plaintiffs said JPMorgan wrongly put their money in Lehman notes despite being "uniquely positioned," as Lehman's main clearing bank, to know that Lehman's survival was in question, and while reducing its own exposure.

The Operating Engineers trust said JPMorgan in 2006 bought $446,000 of Lehman notes on its behalf with collateral it had posted, and refused to sell as Lehman's troubles mounted.

It said these notes lost 85 percent of their value when Lehman went bankrupt on Sept. 15, 2008.

In March, Forrest rejected JPMorgan's motion to dismiss the case. A different federal judge had dismissed an earlier version of the lawsuit, but allowed the case to be brought again.

The plaintiffs' lawyers plan to apply for attorneys' fees not to exceed 30 percent of the settlement fund, court papers show.

Lehman's bankruptcy is by far the largest in U.S. history. It emerged from Chapter 11 protection in March 2012 and is winding down, a process expected to take a few years.

The case is Board of Trustees of the Operating Engineers Pension Trust v. JPMorgan Chase Bank NA, U.S. District Court, Southern District of New York, No. 09-09333.

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Deals of the day -- mergers and acquisitions

Fri Aug 16, 2013 4:19pm EDT

Aug 16 (Reuters) - The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Friday:

** Activist investor Carl Icahn's legal effort to derail a $25 billion takeover of Dell Inc stalled on Friday after a judge refused to fast-track his lawsuit against the company, an integral part of his months-long opposition campaign.

** Broadcast-tower operator Telediffusion de France received bids below the 4 billion-euro ($5.32 billion) asking price for its domestic unit, raising concern about its ability to seal a deal and repay debt, said three sources with knowledge of the process.

** Malaysian state-owned utility Tenaga Nasional Bhd is seeking 1 billion euros ($1.33 billion) in financing to back a bid for Ireland's Bord Gais Energy, Basis Point reported on Friday, citing bank sources.

** Hutchison Whampoa Ltd, controlled by Asia's richest man Li Ka-shing, has received at least seven offers for its Hong Kong supermarkets business, ParknShop, people familiar with the matter told Reuters on Friday. Hutchison set an asking price of between $3-4 billion for the business, which operates 345 stores in Hong Kong, mainland China and Macau, after a review last month.

** Hong Kong-listed Netdragon Websoft Inc said on Friday it will drop plans to list its appstore unit 91 Wireless after selling it to China's top search engine Baidu Inc for $1.85 billion, the biggest acquisition deal in China's IT sector.

** Brazil's tax authority is demanding private-sector lender Itau Unibanco Holding SA pay up to 18.7 billion reais ($7.98 billion) in back taxes related to the merger that made it Brazil's largest bank by market value almost five years ago.

** A handful of potential buyers have submitted bids in excess of 500 million euros ($662.58 million) for private equity firm Quadriga Capital's Austrian refrigeration manufacturer AHT Cooling, three sources familiar with the matter said on Friday.

** L'Oreal SA has offered to buy Chinese facial mask maker Magic Holdings International Ltd, a move that would put the world's largest cosmetics group in the lead of the fastest growing sector in China's $15 billion skincare market.

** German regulator Bafin has set an end of August deadline for investors to submit information needed to approve Deutsche Bank's sale of BHF to a consortium headed by RHJ International, two people familiar with the process said.

** India's new restrictions on capital outflows are likely to delay overseas acquisitions and investment plans by India Inc at a time when many companies are scouting markets abroad to beat the domestic economic slowdown, bankers and companies said.

** The U.S. Securities and Exchange Commission has approved the takeover of NYSE Euronext by IntercontinentalExchange, according to a regulatory filing made available on the regulator's website early on Friday.

** German generic drugmaker Stada has signed a deal to buy British over-the-counter drug manufacturer Thornton & Ross for 259 million euros ($343.21 million) in cash, including assumed debt.

** A U.S. bankruptcy judge on Thursday held off approval of a restructuring plan for American Airlines, citing a U.S. government challenge this week to the airline's proposed merger with US Airways Group Inc. American's parent company, AMR Corp, worked out the $11 billion merger with US Airways as part of a plan to exit bankruptcy, where it has been since 2011.

** IBM, the world's biggest technology services company, said on Thursday it has agreed to buy Trusteer, a company that helps businesses fight computer viruses and fraud.

A person familiar with the matter said IBM was paying close to $1 billion for Trusteer, making it the company's second-largest acquisition of a security company after its 2006 purchase of Internet Security Systems for about $1.3 billion.

** Leonard Green & Partners LP is exploring a sale of Brickman Group Holdings Inc that could value the largest commercial landscaping company in the United States at up to $1.5 billion, three people familiar with the matter said this week.

** Taiwan's Formosa Plastics Group has agreed to invest $1.15 billion as part of a deal to buy nearly a third of a new iron ore project in Australia from partners Fortescue Metals Group and China's Baoshan Iron & Steel (Baosteel) .

Fortescue Metals Group is still pursuing a sale of a minority stake in its TPI rail and port infrastructure unit.

** South Korean financial behemoth Woori Finance put up for sale a controlling stake in its brokerage unit Woori Investment & Securities Co Ltd on Friday, in a deal that analysts say may top 1.2 trillion won ($1.07 billion).

** Amgen Inc, the drugmaker in advanced discussions to buy Onyx Pharmaceuticals Inc, has asked Onyx for some of the data from an ongoing trial on the company's new blood cancer drug, two people familiar with the matter said on Thursday.

** A pair of private equity executives who own a majority of the Philadelphia 76ers basketball team on Thursday reached a deal to acquire the New Jersey Devils hockey team and its arena.

Joshua Harris and David Blitzer bought the team from former owner Jeffrey Vanderbeek. They declined to disclose the purchase price, though The Record newspaper of New Jersey valued the deal at $320 million.

** A unit of Malaysian autos-to-property conglomerate DRB-HICOM is seeking government approval to sell Uni Asia Life Assurance Bhd in a deal valued at 518 million ringgit ($158.10 million).

** Russian state development bank Vnesheconombank, or VEB, is continuing to sell down its 5.02 percent stake in Airbus's parent EADS with the proceeds destined for local plane maker Sukhoi, Vedomosti newspaper said on Friday.

** Indian snack maker Balaji Wafers is in separate talks with private equity funds, including Blackstone Group and Actis, to raise between $100 million and $125 million, two sources with direct knowledge of the matter told Reuters.

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Canada lets Quebec rail disaster company operate through Oct. 1

Fri Aug 16, 2013 8:53pm EDT

Aug 16 (Reuters) - Canada will let the rail company whose tanker train blew up in a Quebec town last month, killing 47 people, operate through early October after the firm provided new evidence about its insurance, a government regulator said on Friday.

The July 6 crash was North America's deadliest rail accident in two decades. It took place when a runaway train hauling tankers of crude oil derailed in the center of the little Quebec town of Lac-Megantic, and exploded in a series of giant fireballs. The town center was flattened and an estimated 1.48 million U.S. gallons (5.6 million liters) of oil were spilled.

The Canadian Transportation Agency said it will now allow Montreal, Maine and Atlantic Railway (MMA) and its Canadian subsidiary to operate through Oct. 1, because the firms had provided evidence of adequate third-party insurance.

That reversed an Aug. 13 order that would have halted the railroad's operations from early next week. MMA must still show it has the funds to pay the self-insured portion of its operations, or the regulator will suspend its operations from Aug. 23, CTA spokeswoman Jacqueline Bannister said in an email.

MMA, which operates rail lines in Quebec and Maine, filed for bankruptcy protection in Canada and the United States last week. It said in a court filing that its insurance covered liabilities up to C$25 million ($24.2 million), while clean-up costs could exceed C$200 million ($193.6 million).

MMA also faces a series of class-action lawsuits in Quebec and in the United States on behalf of the victims, as well as a notice of claim from a firm that is unable to ship from its Lac-Megantic production facilities.

Lac-Megantic, a town of around 6,000, was developed around the railway and businesses have already expressed concern about the impact if the MMA rail link closes permanently.

Under Canadian federal regulations, there is no set minimum or maximum amount of insurance coverage required for railway operators. Coverage is based on a risk assessment carried out by the insurance company and the railway company.

The Canadian Transportation Agency - an independent government body that oversees railway insurance - is now planning to review the adequacy of third-party liability coverage to deal with catastrophic events, especially for smaller railways.

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JPMorgan in $23 mln settlement with clients over Lehman

Fri Aug 16, 2013 3:43pm EDT

* Clients claimed to lose money when Lehman went bankrupt

* JPMorgan denies wrongdoing

By Jonathan Stempel

NEW YORK, Aug 16 (Reuters) - JPMorgan Chase & Co agreed to pay $23 million to settle a lawsuit accusing it of mishandling money of pension funds and other clients by investing it in notes from Lehman Brothers Holdings Inc, which later went bankrupt.

The largest U.S. bank denied wrongdoing in agreeing to settle, and entered the settlement solely to eliminate the burden and cost of litigation, according to papers filed on Friday with the U.S. District Court in Manhattan.

Lawyers for the plaintiffs called the settlement terms fair, reasonable and adequate, according to Friday's filing. The settlement requires approval by U.S. District Judge Katherine Forrest in Manhattan.

The case over the Lehman notes had been bought on behalf of participants in JPMorgan's securities lending program, led by the Operating Engineers Pension Trust of Pasadena, California, and had sought class action status.

Paul Geller, a partner at Robbins Geller Rudman & Dowd representing the plaintiffs, did not immediately respond to a request for comment. JPMorgan spokesman Brian Marchiony did not immediately respond to a similar request.

The settlement is one of two disclosed on Friday over claims against JPMorgan tied to the recent credit and financial crises.

Liquidators for two Bear Stearns hedge funds that collapsed in 2007 because of problems with subprime mortgages agreed to drop their lawsuit against JPMorgan, which bought Bear in 2008, to recoup at least $1.1 billion of losses.

Terms of that settlement were not disclosed.

In the Lehman case, the plaintiffs said JPMorgan wrongly put their money in Lehman notes despite being "uniquely positioned," as Lehman's main clearing bank, to know that Lehman's survival was in question, and while reducing its own exposure.

The Operating Engineers trust said JPMorgan in 2006 bought $446,000 of Lehman notes on its behalf with collateral it had posted, and refused to sell as Lehman's troubles mounted.

It said these notes lost 85 percent of their value when Lehman went bankrupt on Sept. 15, 2008.

In March, Forrest rejected JPMorgan's motion to dismiss the case. A different federal judge had dismissed an earlier version of the lawsuit, but allowed the case to be brought again.

The plaintiffs' lawyers plan to apply for attorneys' fees not to exceed 30 percent of the settlement fund, court papers show.

Lehman's bankruptcy is by far the largest in U.S. history. It emerged from Chapter 11 protection in March 2012 and is winding down, a process expected to take a few years.

The case is Board of Trustees of the Operating Engineers Pension Trust v. JPMorgan Chase Bank NA, U.S. District Court, Southern District of New York, No. 09-09333.

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Deals of the day -- mergers and acquisitions

Fri Aug 16, 2013 4:19pm EDT

Aug 16 (Reuters) - The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Friday:

** Activist investor Carl Icahn's legal effort to derail a $25 billion takeover of Dell Inc stalled on Friday after a judge refused to fast-track his lawsuit against the company, an integral part of his months-long opposition campaign.

** Broadcast-tower operator Telediffusion de France received bids below the 4 billion-euro ($5.32 billion) asking price for its domestic unit, raising concern about its ability to seal a deal and repay debt, said three sources with knowledge of the process.

** Malaysian state-owned utility Tenaga Nasional Bhd is seeking 1 billion euros ($1.33 billion) in financing to back a bid for Ireland's Bord Gais Energy, Basis Point reported on Friday, citing bank sources.

** Hutchison Whampoa Ltd, controlled by Asia's richest man Li Ka-shing, has received at least seven offers for its Hong Kong supermarkets business, ParknShop, people familiar with the matter told Reuters on Friday. Hutchison set an asking price of between $3-4 billion for the business, which operates 345 stores in Hong Kong, mainland China and Macau, after a review last month.

** Hong Kong-listed Netdragon Websoft Inc said on Friday it will drop plans to list its appstore unit 91 Wireless after selling it to China's top search engine Baidu Inc for $1.85 billion, the biggest acquisition deal in China's IT sector.

** Brazil's tax authority is demanding private-sector lender Itau Unibanco Holding SA pay up to 18.7 billion reais ($7.98 billion) in back taxes related to the merger that made it Brazil's largest bank by market value almost five years ago.

** A handful of potential buyers have submitted bids in excess of 500 million euros ($662.58 million) for private equity firm Quadriga Capital's Austrian refrigeration manufacturer AHT Cooling, three sources familiar with the matter said on Friday.

** L'Oreal SA has offered to buy Chinese facial mask maker Magic Holdings International Ltd, a move that would put the world's largest cosmetics group in the lead of the fastest growing sector in China's $15 billion skincare market.

** German regulator Bafin has set an end of August deadline for investors to submit information needed to approve Deutsche Bank's sale of BHF to a consortium headed by RHJ International, two people familiar with the process said.

** India's new restrictions on capital outflows are likely to delay overseas acquisitions and investment plans by India Inc at a time when many companies are scouting markets abroad to beat the domestic economic slowdown, bankers and companies said.

** The U.S. Securities and Exchange Commission has approved the takeover of NYSE Euronext by IntercontinentalExchange, according to a regulatory filing made available on the regulator's website early on Friday.

** German generic drugmaker Stada has signed a deal to buy British over-the-counter drug manufacturer Thornton & Ross for 259 million euros ($343.21 million) in cash, including assumed debt.

** A U.S. bankruptcy judge on Thursday held off approval of a restructuring plan for American Airlines, citing a U.S. government challenge this week to the airline's proposed merger with US Airways Group Inc. American's parent company, AMR Corp, worked out the $11 billion merger with US Airways as part of a plan to exit bankruptcy, where it has been since 2011.

** IBM, the world's biggest technology services company, said on Thursday it has agreed to buy Trusteer, a company that helps businesses fight computer viruses and fraud.

A person familiar with the matter said IBM was paying close to $1 billion for Trusteer, making it the company's second-largest acquisition of a security company after its 2006 purchase of Internet Security Systems for about $1.3 billion.

** Leonard Green & Partners LP is exploring a sale of Brickman Group Holdings Inc that could value the largest commercial landscaping company in the United States at up to $1.5 billion, three people familiar with the matter said this week.

** Taiwan's Formosa Plastics Group has agreed to invest $1.15 billion as part of a deal to buy nearly a third of a new iron ore project in Australia from partners Fortescue Metals Group and China's Baoshan Iron & Steel (Baosteel) .

Fortescue Metals Group is still pursuing a sale of a minority stake in its TPI rail and port infrastructure unit.

** South Korean financial behemoth Woori Finance put up for sale a controlling stake in its brokerage unit Woori Investment & Securities Co Ltd on Friday, in a deal that analysts say may top 1.2 trillion won ($1.07 billion).

** Amgen Inc, the drugmaker in advanced discussions to buy Onyx Pharmaceuticals Inc, has asked Onyx for some of the data from an ongoing trial on the company's new blood cancer drug, two people familiar with the matter said on Thursday.

** A pair of private equity executives who own a majority of the Philadelphia 76ers basketball team on Thursday reached a deal to acquire the New Jersey Devils hockey team and its arena.

Joshua Harris and David Blitzer bought the team from former owner Jeffrey Vanderbeek. They declined to disclose the purchase price, though The Record newspaper of New Jersey valued the deal at $320 million.

** A unit of Malaysian autos-to-property conglomerate DRB-HICOM is seeking government approval to sell Uni Asia Life Assurance Bhd in a deal valued at 518 million ringgit ($158.10 million).

** Russian state development bank Vnesheconombank, or VEB, is continuing to sell down its 5.02 percent stake in Airbus's parent EADS with the proceeds destined for local plane maker Sukhoi, Vedomosti newspaper said on Friday.

** Indian snack maker Balaji Wafers is in separate talks with private equity funds, including Blackstone Group and Actis, to raise between $100 million and $125 million, two sources with direct knowledge of the matter told Reuters.

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Canada lets Quebec rail disaster company operate through Oct. 1

Fri Aug 16, 2013 8:53pm EDT

Aug 16 (Reuters) - Canada will let the rail company whose tanker train blew up in a Quebec town last month, killing 47 people, operate through early October after the firm provided new evidence about its insurance, a government regulator said on Friday.

The July 6 crash was North America's deadliest rail accident in two decades. It took place when a runaway train hauling tankers of crude oil derailed in the center of the little Quebec town of Lac-Megantic, and exploded in a series of giant fireballs. The town center was flattened and an estimated 1.48 million U.S. gallons (5.6 million liters) of oil were spilled.

The Canadian Transportation Agency said it will now allow Montreal, Maine and Atlantic Railway (MMA) and its Canadian subsidiary to operate through Oct. 1, because the firms had provided evidence of adequate third-party insurance.

That reversed an Aug. 13 order that would have halted the railroad's operations from early next week. MMA must still show it has the funds to pay the self-insured portion of its operations, or the regulator will suspend its operations from Aug. 23, CTA spokeswoman Jacqueline Bannister said in an email.

MMA, which operates rail lines in Quebec and Maine, filed for bankruptcy protection in Canada and the United States last week. It said in a court filing that its insurance covered liabilities up to C$25 million ($24.2 million), while clean-up costs could exceed C$200 million ($193.6 million).

MMA also faces a series of class-action lawsuits in Quebec and in the United States on behalf of the victims, as well as a notice of claim from a firm that is unable to ship from its Lac-Megantic production facilities.

Lac-Megantic, a town of around 6,000, was developed around the railway and businesses have already expressed concern about the impact if the MMA rail link closes permanently.

Under Canadian federal regulations, there is no set minimum or maximum amount of insurance coverage required for railway operators. Coverage is based on a risk assessment carried out by the insurance company and the railway company.

The Canadian Transportation Agency - an independent government body that oversees railway insurance - is now planning to review the adequacy of third-party liability coverage to deal with catastrophic events, especially for smaller railways.

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UPDATE 1-Detroit pension funds to object to city's bankruptcy

Thu Aug 15, 2013 6:22pm EDT

* Meeting set for Monday

By Bernie Woodall

DETROIT Aug 15 (Reuters) - Detroit's two public pension funds will file an objection on Monday to the city's bankruptcy filing on Michigan constitutional grounds, a representative of the pension boards said on Thursday.

The challenge expected from the pension funds is the first to emerge from among several parties likely to object to the city of Detroit's claim that it is bankrupt.

For Detroit's Chapter 9 bankruptcy to proceed U.S. Bankruptcy Judge Steven Rhodes, who is overseeing the case, must first find the city has proved it is insolvent and negotiated in good faith with its creditors, or that there were too many creditors to make negotiation feasible.

In a court filing earlier this month, Detroit released a list of creditors, including current, former and retired workers, that filled 3,504 pages. If Detroit is ultimately deemed eligible for municipal bankruptcy, it would be the biggest such case in U.S. history.

The city's two pension boards will claim that Michigan Governor Rick Snyder violated the state's Constitution when he allowed Detroit's state-appointed emergency manager, Kevyn Orr, to make the bankruptcy filing.

The pension boards also will claim Detroit violated state constitutional language that prohibits the impairment of vested retirement benefits for public workers, said Bruce Babiarz, spokesman for the Police and Firefighters Retirement System.

In a June 14 proposal to creditors, Orr called for "significant cuts in accrued, vested pension amounts for both active and currently retired persons."

Babiarz also said Monday's filing by the pension funds will include a provision seeking assurance that Judge Rhodes' approval of a city request to establish a committee to represent retired city workers during the bankruptcy process will not keep Detroit from negotiating directly with the pension boards.

Rhodes approved the creation of a creditors' committee Aug. 2, despite concerns by trustees of the two pension boards that creation of a committee might undermine their ability to negotiate with the city, Babiarz said.

One of Detroit's pension boards manages the retirement system for Detroit's general service workers and the second one does the same for police and firefighters.

Orr claims that the unfunded liability of the two pension funds is five times what the pension funds claim.

Babiarz said representatives of Orr's office and the two pension boards will meet on Monday to discuss the retirement system's unfunded liability.

The constitutional arguments the pension funds are preparing appear similar to those made in lawsuits filed in state court aimed at derailing Detroit's bankruptcy. In a hearing on July 24, Judge Rhodes suspended those lawsuits and required all bankruptcy-related litigation to be heard in federal bankruptcy court.

The funds, along with creditors and other parties opposing Detroit's July 18 bankruptcy filing, have until 11:59 p.m. Eastern Time on Monday to file their objections with the U.S. Bankruptcy Court in Detroit. Judge Rhodes has set Oct. 23 for the commencement of a hearing process to determine if Detroit is eligible to file under Chapter 9.

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CFTC asks court not to dismiss suit against U.S. Bancorp unit

Thu Aug 15, 2013 8:22pm EDT

* CFTC lawsuit says bank aided Peregrine customer losses

* CFTC opposes motion to dismiss lawsuit, wants restitution

* Lawsuit first against a bank tied to Peregrine

By Dena Aubin

NEW YORK, Aug 15 (Reuters) - U.S. regulators on Thursday asked a federal court not to dismiss their lawsuit against a bank tied to the blow-up of brokerage Peregrine Financial, saying the bank helped bring about millions of dollars of losses for Peregrine customers.

At issue is a lawsuit filed by the U.S. Commodities Futures Trading Commission in June against U.S. Bank N.A., a unit of U.S. Bancorp, based in Minneapolis. The lawsuit accused the bank of letting Peregrine founder Russell Wasendorf Sr secure loans against money that belonged to his brokerage's customers.

The lawsuit was the first against a bank tied to the collapse of Peregrine, which filed for bankruptcy protection in July 2012 after Wasendorf confessed to bilking his clients of more than $100 million in a nearly 20-year-long fraud.

Wasendorf began serving a 50-year sentence in February.

Attorneys for U.S. Bank filed a motion to dismiss the lawsuit earlier this month, saying the CFTC was trying to shift responsibility for a Ponzi scheme to the bank, even though the bank itself was a victim of the scheme.

Attorneys for U.S. Bank could not immediately be reached for comment on Thursday.

In a response to the lawsuit in June, U.S. Bancorp spokesman Tom Joyce denied the allegations and said the lawsuit was "an inappropriate attempt to reassign blame to U.S. Bank."

In its lawsuit, the CFTC said the bank knowingly facilitated the transfer of millions of dollars of customer funds to pay for Wasendorf's private jet, his restaurant and his divorce settlement, among other things.

The lawsuit, filed in the U.S. District Court for the Northern District of Iowa, said the bank had a segregated account for Peregrine's customer funds but treated the account as if it were "a Peregrine commercial checking account."

In a court filing on Thursday, the CFTC said more than $325 million flowed through the segregated customer account between May 2005 and June 2012, and that Wasendorf misappropriated about $215 million of that amount.

U.S. Bank knew the account held customer funds but executed withdrawals on Wasendorf's behalf anyway, the CFTC said.

Restitution is appropriate because the customer losses would not have occurred if the bank had not executed the withdrawals, the CFTC said.

The case is: U.S. Commodity Futures Trading Commission vs U.S. Bank, N.A., U.S. District Court, Northern District of Iowa, No 13-cv-2041.

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Hong Kong July bankruptcy petitions rise 28 pct from June

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