Good morning. Wall Street’s top regulator levied fines totaling $5 billion in its latest fiscal year, reports The Wall Street Journal’s Dave Michaels, continuing the agency’s trend of imposing higher penalties with the goal of discouraging future misconduct.

The Securities and Exchange Commission’s annual penalty haul fell below what the agency logged last year, when total monetary sanctions reached a record $6.4 billion. But the latest tally is still the second-highest total over the past two decades.

Big banks and brokerage firms have handed over bigger checks to settle regulatory cases since Chair Gary Gensler took over the SEC in 2021. Banks whose brokers and traders used prohibited messaging tools such as WhatsApp have paid some of the biggest fines to Biden-era regulators.

The record-keeping probes were meant to stop traders from texting about their business on apps that banks’ compliance departments didn’t monitor in the past, although the SEC never sued individuals or alleged that they were texting to hide misdeeds.

The SEC settled 23 record-keeping cases in the latest fiscal year, Gensler said Wednesday. The targets of those investigations included Wells Fargo, which paid $200 million in August to settle with the SEC and Commodity Futures Trading Commission.

Wall Street has settled record-keeping cases with both the SEC and CFTC, which regulates futures and other derivatives. JPMorgan Chase, Goldman Sachs, Morgan Stanley and UBS Group each paid $200 million to the agencies.

The CFTC obtained more than $4.3 billion in enforcement penalties last year, enforcement chief Ian McGinley said last week.

Jury convicts hedge-fund manager accused of rigging foreign-exchange market

A London hedge-fund manager accused of manipulating the foreign-exchange market was convicted Wednesday of fraud in a trial that opened a window into a complex corner of the global currency-trading business.

A federal jury in Manhattan deliberated for less than a day before finding Neil Phillips guilty of commodities fraud. The jury acquitted Phillips, the former chief investment officer of Glen Point Capital, of a separate conspiracy charge.

• FTX founder Sam Bankman-Fried will testify at his criminal trial, his defense team said Wednesday, in what many legal observers see as a Hail Mary attempt to persuade jurors that he never intended to defraud the crypto exchange’s customers out of billions of dollars.
   
• The Federal Reserve proposed lowering by about 30% the fees merchants pay to many banks when consumers shop with debit cards, setting off a fight with banks that oppose the changes.
   
• Trial proceedings in Donald Trump’s civil-fraud trial took a surprise turn Wednesday when the presiding judge summoned the former president to the witness stand to answer for comments he made in a courthouse hallway—and then fined him $10,000.
   
• Supreme Court Justice Clarence Thomas didn’t report on required financial disclosure forms that a friend forgave some or all of a $267,230 loan, according to a report released Wednesday by Senate Finance Committee Chairman Ron Wyden.
   
• After putting the founder of Evergrande, a heavily indebted property firm, under investigation for possible crimes, Beijing is expanding its probes to include bankers and financial institutions that facilitated developers’ risky behavior, people familiar with the matter say.

Israel agrees to U.S. request to delay invasion of Gaza

Israel has agreed, for now, to a request from the U.S. to delay its expected ground invasion of Gaza so the Pentagon can place air defenses in the region to protect U.S. troops, according to U.S. officials and people familiar with the Israeli planning.

The Pentagon is rushing to deploy nearly a dozen air-defense systems to the region, including for U.S. troops serving in Iraq, Jordan, Kuwait, Saudi Arabia, Syria and the United Arab Emirates, to protect U.S. troops from missiles and rockets. U.S. officials have so far persuaded the Israelis to hold off on sending tanks and foot soldiers into Gaza to end Hamas rule until those pieces can be placed in the region, as early as later this week.

• Behind Hamas’s Piecemeal Hostage Strategy
• Israeli Tanks Carry Out Biggest Raid Inside Gaza Since Oct. 7 Attacks

• Chinese leader Xi Jinping met with California Gov. Gavin Newsom in Beijing’s Great Hall of the People, part of a Chinese charm offensive that appears to be laying the groundwork for Xi to meet with President Biden in San Francisco next month.
   
• China’s jet fighters are harassing American military aircraft and stepping up sorties around Taiwan. Its coast guard is confronting a U.S. security treaty ally in the South China Sea, leading to a recent collision.
   
• President Biden sought to prove he can keep the longer-term goal of countering China in his sights as the Israel-Hamas conflict grinds on, hosting the Australian prime minister at the White House for a series of high-level meetings Wednesday capped with a glittering state dinner.
   
• Interest rates have soared. Can financial blowups be far behind? Maybe, but often it isn’t that simple.
   
• Hurricane Otis rammed into Mexico’s Pacific port and popular beach resort of Acapulco as a powerful Category 5 storm, cutting off communications and complicating government aid efforts as it damaged roads and forced airport closures.

• The House elected GOP Rep. Mike Johnson of Louisiana as speaker, elevating a staunch conservative to the top post after three weeks of Republican infighting doomed other candidates aiming to succeed ousted leader Kevin McCarthy.
   
• The United Auto Workers secured a new tentative labor deal with Ford Motor on Wednesday night, potentially ending a six-week strike at one automaker while negotiations continue at General Motors and Chrysler-parent Stellantis.
   
• New York City officials have discussed distributing tents to newly arriving migrants and creating encampments in parks and other outdoor spaces, according to people familiar with deliberations among Mayor Eric Adams and his top advisers.
   
• As the world becomes more dangerous, the two largest Western crude producers are focusing their investments closer to home.

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