Capital One Financial is paying $3.5 million to settle federal civil charges that it underreported as much as $123 million in losses on automobile loans in the months preceding the financial crisis.
The Securities and Exchange Commission said Wednesday that Capital One understated its auto loan losses in financial reports for the second and third quarters of 2007, when they came in higher than the bank expected.
Capital One, based in McLean and best known for its heavily advertised credit cards, is the sixth-largest U.S. bank based on deposits. Most of the profits in its auto finance business came from loans to consumers with weak credit histories, the SEC said.
Two former Capital One executives agreed to pay a total $135,000 in fines to settle the SEC charges. The bank and the executives neither admitted nor denied wrongdoing.
“No consumers were affected, the SEC does not criticize the company’s or the auto finance unit’s reserves [for loan losses] as of 2007 year-end, and the settlement does not require a restatement of Capital One’s financial results,” the company said in a statement. “The settlement will not affect any current or future business activities by Capital One.”
— Associated Press
Zynga said Wednesday that the number of people playing its online games dropped dramatically in the first quarter, a development that overshadowed better-than-expected revenue and sent its stock tumbling 10 percent to $2.99 in after-hours trading.
The San Francisco-based publisher behind such games as FarmVille and Words With Friends said its number of monthly players continued its decline to 253 million, the lowest figure since the number peaked at 331 million at the end of the third quarter of 2012.
On an adjusted basis, Zynga reported earnings of 1 cent per share, beating analyst expectations of a loss of 4 cents per share. But the company also projected that its second-quarter loss would be 3 to 5 cents per share, exceeding the 1-cent-per-share loss analysts had expected.
Zynga has struggled to keep users, who once flocked to its games on Facebook. In recent months, Zynga and Facebook have revised their business partnership as Zynga has sought to establish itself as a more independent gaming network, at the risk of receiving less visitor traffic from Facebook.
l General Motors said Wednesday that the battery-powered version of its Chevrolet Spark mini-car can travel up to 82 miles on a single charge, putting it among the leaders in mass-market electric vehicles sold in the United States. The Spark EV also gets the equivalent of 119 miles per gallon in testing monitored by the Environmental Protection Agency. GM said that makes it the most efficient car available for sale. The tiny electric Chevrolet goes on sale in July in Oregon and California. GM said it will be less than $32,500, excluding a $7,500 federal tax credit. The company has not said when it will go on sale in other states.
l Bank of New York Mellon must face a U.S. lawsuit that accuses the world’s largest custody bank of defrauding clients in foreign exchange transactions, a federal judge ruled Wednesday. Manhattan U.S. Attorney Preet Bharara sued BNY Mellon in 2011, claiming that the bank misled clients of its foreign exchange services by concealing the way it was pricing trades, giving them “the worst or virtually the worst possible” interbank rate available during the trading day. He claims the bank defrauded clients of more than $1.5 billion. BNY Mellon spokesman Kevin Heine said the bank is pleased a number of claims were dismissed.
l T-Mobile and Sprint will delay the launch of Samsung’s new Galaxy S4 smartphone because of shipment delays, the companies said. T-Mobile was planning to take online orders for the phone starting Wednesday but said that will now have to wait until Monday. Sprint said it will delay its full product launch of the much-anticipated phone, which had been slated for Saturday. The phone will be available online Saturday, but Sprint did not set a new date for sales in retail stores. Not all carriers have delayed their launch dates. AT&T said the Galaxy S4 will be available online and in stores Saturday, and Verizon said it will take preorders for the phone starting Thursday. The phone will be available sometime in May.
— From staff reports, news services
l 8:30 a.m.: Weekly jobless claims released.
l Earnings: Amazon.com, Exxon Mobil, Southwest Airlines, Starbucks, United Continental, UPS.