Manufacturing, building activity rise

U.S. manufacturing activity surged in June, but a strong economy and import tariffs were causing bottlenecks in the supply chain, which could weigh on production in the months ahead.

Other data Monday showed construction spending increasing solidly in May, although investment in April was not as robust as initially thought.

The Institute for Supply Management said its index of national factory activity jumped to a reading of 60.2 last month from 58.7 in May. An ISM index reading above 50 indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy.

The ISM noted that demand remained “robust, but the nation’s employment resources and supply chains continue to struggle.” It said manufacturers were “overwhelmingly” concerned about the impact of tariffs imposed by the Trump administration on a range of imported goods, including steel and aluminum.

In a separate report Monday, the Commerce Department said construction spending increased 0.4 percent in May. Data for April was revised to show construction outlays rising 0.9 percent instead of the previously reported 1.8 percent surge.

Spending on private construction projects gained 0.3 percent in May after rising 0.4 percent in April.

— Reuters

PwC ordered to pay FDIC $625 million

A federal judge on Monday said PricewaterhouseCoopers must pay $625.3 million in damages to the Federal Deposit Insurance Corp. for failing to uncover fraud that led to one of the largest bank failures of the global financial crisis.

U.S. District Judge Barbara Rothstein found it more likely than not that PwC’s negligence was the proximate cause of FDIC damages from the August 2009 demise of Colonial BancGroup of Montgomery, Ala., once among the 25 largest U.S. banks.

Rothstein said PwC failed to uncover a multiyear fraud between Colonial, its former client, and Florida-based Taylor, Bean & Whitaker mortgage lending firm, a major Colonial customer.

The FDIC sued in its role as receiver for Colonial Bank, which once had more than $25 billion of assets and 340 branches.

Taylor Bean also failed in August 2009. Its former chairman, Lee Farkas, is serving a 30-year prison term for his 2011 conviction for fraud and conspiracy.

Rothstein had found PwC liable for negligence in December, after a nonjury trial and tried the damages issue in March, also without a jury.

PwC had argued that the FDIC could recover $306.7 million at most and that no damages were justified because Colonial employees had interfered with its audits.

“We intend to pursue an appeal of this matter at the earliest opportunity,” its outside lawyer, Phil Beck, said in a statement provided by PwC.

— Reuters

Also in Business

A divided California Supreme Court has ruled that online review site cannot be ordered to remove posts against a San Francisco law firm that a judge determined were defamatory. The 4-to-3 ruling Monday came in a closely watched case that Internet companies warned could be used to silence online speech. A San Francisco judge determined the posts against attorney Dawn Hassell’s firm were defamatory and ordered Yelp in 2014 to remove them. A second judge and a state appeals court upheld the decision. urged the state Supreme Court to overturn the ruling, saying it could lead to the removal of negative reviews on the popular website.

Charles Schwab Corp. said it settled a lawsuit with the Securities and Exchange Commission over claims the company failed to file reports on suspicious transactions by independent investment advisers that Schwab terminated from its platform. The lawsuit, filed Monday in San Francisco federal court, claims Schwab's adviser services division failed to file suspicious activity reports in 2012 and 2013. The advisers are independent and contract with Schwab and provide investment advice, the complaint said. Schwab spokeswoman Mayura Hooper said the company settled with the SEC without providing terms.

A onetime payday-loan mogul was indicted on federal charges that he made up millions of fake debts and sold them to bill collectors, victimizing people across the country. Joel Tucker, 49, was able to pull off the scheme because he already had his victims’ personal data from loan applications, according to an indictment unsealed Friday in Kansas City, Mo. But many of those people never took loans, let alone failed to pay them back, and Tucker didn’t own the loans anyway, prosecutors said. From 2014 to 2016, he earned $7.3 million from packaging and selling the data to collectors, they said. Tucker was charged with interstate transportation of stolen money, bankruptcy fraud and falsifying bankruptcy records.

— From news reports

Coming today

10 a.m.: Commerce Department releases factory orders for May.

All day: Automakers release vehicle sales for June.