Most banks spend the night before their earnings call polishing the NII slide and fudging the reserve release calculations. Bank of America will be spending it reading a Treasury press release about itself.

Just after the close on Tuesday, Treasury announced more than $1.21 billion in penalties against BofA for violating anti-money-laundering and sanctions laws. Treasury calls it the third-largest penalty in its history, and the OCC calls its piece the largest it has ever handed out. The bank admitted it willfully violated the Bank Secrecy Act. It did not report more than $5 billion in suspicious transactions on time, and more than $1 billion of that was tied to what Treasury calls “priority” national-security risks, including Chinese money-laundering networks and illicit finance along the southwest border.

Here is how the money breaks down, per Treasury’s press release:

The Financial Crimes Enforcement Network (FinCEN) assessed a $1.2 billion penalty for the Bank’s failure to mitigate and report priority national security risks, including Chinese Money Laundering Networks and illicit finance along the southwest border.

The OCC assessed a $750 million civil money penalty for the Bank’s deficient and ineffective BSA/AML (anti-money laundering) compliance program.

The Office of Foreign Assets Control (OFAC) announced an $11.6 million settlement agreement with the Bank over apparent violations of numerous sanctions programs, including on Iran, Russia, narcotics, and global terrorism.

The penalties don’t simply add up. Per CNBC, the OCC’s $750 million is credited toward FinCEN’s $1.2 billion, which gets you to about $1.21 billion once OFAC’s change is added. In other words, it is a $1.2 billion fine with a record attached.

“Prioritized Its Revenues”

The details are where it gets awkward. Treasury did not say BofA was simply overwhelmed. It said this:

As these issues arose, Bank of America prioritized its revenues and minimized the impact on its required compliance resources. The nature and extent of the Bank’s resulting reliance on law enforcement inquiries, requests by other financial institutions, and similar interventions over its own internal, automated controls… meant that the Bank effectively outsourced to third parties a substantial portion of its proactive detection and reporting obligations.

Translation: BofA’s money-laundering detection system often amounted to waiting for a subpoena.

Treasury also says the bank “allowed suspicious activity to accumulate uninvestigated for extended periods.” That meant SARs arrived too late to help law enforcement much. Its customer due diligence also “failed to account for customers’ extensive reliance on payments from unknown third parties,” and the bank didn’t act on red flags that included “potential ties to narcotics trafficking proceeds,” even after its own compliance staff raised concerns about trade-based money laundering and fraud.

The OCC’s language was harsher. Its release says the bank’s transaction monitoring “resulted in the Bank failing to properly monitor trillions of dollars in transactions,” that “the Bank knew for years” it was failing to escalate potentially suspicious activity, and that its BSA Officer and staff “lacked sufficient skills and expertise.” Comptroller Jonathan Gould said:

“The second largest bank’s egregious and continued BSA violations warrant the OCC imposing its largest [civil money penalty] ever assessed against a bank.”

https://t.co/f5Z7atptce

— Comptroller Jonathan Gould (@USComptroller) October 13, 2026

OFAC, for its part, found 475 apparent sanctions violations. They included payments routed through blocked banks and designated individuals who were allowed to withdraw funds “due to poor sanctions alert calibration.” OFAC called the violations “non-egregious,” which is the regulatory version of “could have been worse.”

About That 2024 Order

None of this came out of nowhere. On December 23, 2024, the OCC issued a cease-and-desist order against BofA for BSA and sanctions deficiencies, “including a failure to timely file suspicious activity reports and failure to correct a previously identified deficiency related to its Customer Due Diligence processes.” The order itself described a “systemic failure” to set proper transaction-monitoring thresholds. That order came with no fine, a point American Banker noted at the time. As we reported back in October 2024 (Oct 30, 2024), barely two weeks after TD’s guilty plea, BofA disclosed in a filing that it was in talks with several federal regulators over its

Bank Secrecy Act/anti-money laundering and sanctions compliance programs… including transaction monitoring, training, governance, and customer due diligence… resolution of these discussions may include one or more public orders by the regulators.

At the time we wondered which of the big US banks would be “named next” after TD. It took two years and an extra cease-and-desist, but we can now cross that question off the list.

(The same filing also disclosed a separate CFPB inquiry into payments on the Zelle network, which BofA said it might fight in court. Nothing in today’s Treasury, OCC or OFAC releases mentions Zelle. That was a different matter with a different regulator.)

This time there is a fine, and the reason is what happened afterward. Per Treasury:

After agreeing to the 2024 Order, the Bank still failed to prioritize BSA/AML compliance… For example, more than a year after the 2024 Order, the Bank still failed to escalate potentially suspicious activities to investigators for review.

Put differently, the first notice was free. The follow-up came with a bill.

The TD Comparison

The obvious benchmark is TD Bank. In October 2024 TD pleaded guilty to BSA and money-laundering conspiracy charges and agreed to roughly $3 billion in total penalties across agencies, according to the DOJ. That included a $1.8 billion criminal resolution, a $450 million OCC penalty, and an asset cap on its US operations. We flagged back in May 2024 that the AML mess risked sending TD into a “lost decade.”

BofA’s settlement differs in a few important ways:

• About 40% of TD’s total: $1.2 billion versus about $3 billion.
• Admission, not a plea: BofA admitted willful BSA violations to FinCEN. No source we’ve seen mentions criminal charges or a DOJ resolution. 
• No asset cap: Instead of a growth restriction, BofA gets a third-party lookback and independent reviews of its monitoring, CDD and correspondent-banking due diligence. Those reviews focus on the southwest border and cartels, Iran and Russia.
• OCC records: BofA’s $750 million beats TD’s $450 million OCC penalty by a wide margin.

In other words, a record fine, but nothing like TD’s sentence.

Some Napkin Math

BofA told CNBC the penalties mean a $1.2 billion non-tax-deductible charge in Q3 results (perfect timing for tomorrow’s Adjusted EPS to miss net of “one time almost criminal items”, cutting net income by about 17 cents per share. Against the roughly $1.11 consensus EPS, that is about 15% of the quarter’s expected earnings gone before the call starts.

Another way to measure it: $1.2 billion against “over $5 billion” in suspicious transactions not reported on time works out to about 24 cents per unreported dollar. As compliance budgets go, the cheaper option was always going to be the compliance budget.

The bank says remediation costs are “already reflected in its current expense base,” so the hit should be one-time, at least on paper.

The Stock

The timing was unusual. BAC closed Tuesday at $53.94, down 1.2% in concert with a broader bank selloff (after what were good, if not great earnings by JPM, Citi and Goldman) but the news came out around 4:09pm ET, right after the bell. In other words, regular-session weakness came alongside a soft tape for financials and can’t be pinned on the fine, and sure enough BofA sold off another 2% after hours once the news hit. That leaves BAC down about 3.6% YTD, and well below its 52-week high of $65.22.

TL/DR: the $1.2 billion is not the story. BofA can cover it with about a week of NII (6 days when the 10Y hits 6%); the story is that Treasury, the OCC and Bessent all used the same phrase about the second-largest US bank: it “prioritized its revenues” over compliance. And BofA kept doing so for more than a year after signing a cease-and-desist. For a CEO who has built his tenure on “responsible growth,” that phrase will be hard to escape. The independent reviews and lookback will likely produce more late SARs, and possibly more findings, over the coming quarters.

Next catalysts:

1. Q3 results, Wednesday before the open; call at 8:30am ET. Consensus is about $1.11 EPS on about $30.6–30.7 billion revenue, with FTE NII of about $16.55 billion (Zacks). BofA guided 2026 NII growth to the upper end of 6–8% in July. A Q3 NII print of $16.3 billion or more keeps that credible, per one preview.
2. On the call, listen for whether management reports results excluding the 17-cent charge (it will). Also listen for any change to remediation spending or the expense outlook, whether more regulatory or DOJ exposure remains (a “no comment” will say a lot), whether buybacks are affected, and NII guidance after the September Fed move.
3. Moynihan on CNBC at 10:20am ET, where “responsible growth” is likely to come up more than he’d like.

Going into the quarter, Goldman’s desk said it wanted BofA to show “any NII upside updated for the rate curve and can this flow into operating leverage?” Operating leverage is easier to show without a $1.2 billion penalty line item.

Still, the main lesson for anyone thinking of skimping on AML: it costs about 24 cents on the dollar to make your (allegedly criminal) clients extra happy, and the bill eventually arrives.

Much more in the full Goldman Desk Bank/Fins EPS Preview note, available to pro subs.

Federal regulators are seeking to hold Martin Shkreli in contempt of court, accusing the controversial former pharmaceutical executive of repeatedly violating a lifetime ban on participating in the drug industry.

The Federal Trade Commission, joined by seven states, filed a motion Tuesday alleging that Shkreli has continued trading pharmaceutical stocks and publicly commenting on drug companies despite a 2022 federal court injunction prohibiting him from involvement in the industry.

According to the FTC’s filing, Shkreli has publicly traded shares in at least 60 pharmaceutical companies since leaving prison in May 2022. Regulators also contend that his social media activity, including livestreams discussing biotech investments and individual companies, amounts to additional violations of the court order.

The dispute stems from Shkreli’s involvement with Vyera Pharmaceuticals, formerly Turing Pharmaceuticals, which acquired the rights to Daraprim, a medication used to treat toxoplasmosis, and subsequently increased its price from $17.50 to $750 per tablet. In 2022, a federal judge in Manhattan found that Shkreli had orchestrated an anticompetitive scheme designed to prevent generic competitors from entering the market, allowing the company to maintain its monopoly pricing. The ruling imposed a lifetime pharmaceutical industry ban and ordered Shkreli to pay more than $64 million.

The injunction prohibited Shkreli from directly or indirectly participating in the pharmaceutical industry, including acquiring ownership interests in pharmaceutical companies or attempting to influence their management or business operations.

Regulators now argue that his stock trading and public commentary crossed those boundaries. In their filing, the FTC and state attorneys general pointed to Shkreli’s activity on YouTube, X and Reddit, where he has frequently discussed pharmaceutical companies and investment opportunities.

During one livestream, Shkreli allegedly told viewers, “I’m showing you how to trade and invest in biotech.”

In another, he reportedly boasted about his ability to identify pharmaceutical stocks that would decline, saying, “It doesn’t matter what trades I make because I can always find a couple of biotech stocks to smoke.”

The government further alleges that Shkreli used his online broadcasts to promote bearish positions against pharmaceutical companies, including publicly predicting that certain clinical trials would fail. The FTC maintains that these activities violate restrictions intended to prevent Shkreli from exercising influence over pharmaceutical businesses, even without formally serving as an executive or director.

Daniel Guarnera, director of the FTC’s Bureau of Competition, said the agency intends to enforce the original judgment, emphasizing that defendants are obligated to comply with court orders regardless of whether they result from settlements or trials. The regulators are asking the court to require Shkreli to explain why he should not be held in civil contempt and to impose sanctions designed to secure his compliance.

Those proposed penalties include forcing Shkreli to sell any pharmaceutical shares he currently owns and surrender profits earned from pharmaceutical stock trading, plus interest. Importantly, the government wants those profits calculated without allowing Shkreli to offset gains against losses from other trades.

The filing also seeks escalating penalties for future violations, potentially including additional financial sanctions and incarceration. The case raises an unusual question about the reach of a lifetime industry ban, particularly when applied to publicly traded securities and online investment commentary. The FTC’s position is that Shkreli’s conduct falls within the broad language of the existing injunction, rather than merely representing ordinary market participation.

For now, the allegations remain before the court. Shkreli has not been found in contempt in this latest proceeding, and a judge will determine whether his trading and public activities violated the 2022 order.

If the government prevails, the consequences could extend well beyond the profits from his pharmaceutical stock trades, potentially exposing Shkreli to additional sanctions and renewed incarceration for failing to comply with the injunction.

Authored by AG News Staff via American Greatness,

Newly named 2026 Nobel Peace Prize laureate Navi Pillay is facing serious allegations that she helped China’s communist government identify Uyghur dissidents during her tenure as the United Nations’ top human rights official.

Uyghur activists and human rights watchdogs raised concerns over the weekend, accusing Pillay, a former U.N. high commissioner for human rights, of overseeing the disclosure of sensitive information about dissidents to Beijing, potentially exposing them and their families to persecution.

Dolkun Isa, former president of the World Uyghur Congress, said the U.N. placed significant obstacles in his organization’s path during Pillay’s leadership.

“I later learned that the office she led had shared information about my participation, and that of other human rights defenders, with the Chinese government without our consent,” Isa said.

He described the disclosure as a betrayal by an institution responsible for protecting human rights.

“A Nobel Peace Prize does not place anyone beyond accountability,” Isa added, demanding answers about who authorized the disclosures.

The accusations surfaced days after the Norwegian Nobel Committee announced Friday that Pillay would receive its 2026 Peace Prize, citing her “commitment to universal legal principles and her firm moral compass.”

U.N. whistleblower Emma Reilly also criticized the decision, alleging that Pillay’s office provided Chinese authorities with the identities of more than 50 dissidents.

Reilly claimed relatives of those activists subsequently faced intimidation, detention, torture and disappearance.

UN Watch Executive Director Hillel Neuer called on the Nobel Committee to address the allegations.

“The Nobel committee owes an explanation to the dissidents whose names were handed to China,” Neuer said.

The controversy comes amid longstanding accusations that Beijing has committed genocide against Uyghurs and other predominantly Muslim minorities in Xinjiang through mass detention, forced sterilization and religious persecution. China denies those accusations.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of ZeroHedge.

Brazil’s general elections earlier this month sparked a right-wing wave at the polls. Though most polls forecast socialist President Luiz Inácio Lula da Silva narrowly leading in the first-round presidential race, right-wing Sen. Flávio Bolsonaro beat the unhinged leftist by around 2 percentage points.

Bolsonaro and Lula now head to an October 25 runoff, with the latest polls putting Bolsonaro ahead.

A PoderData/Aya survey released earlier today put Bolsonaro at 51% of valid votes and Lula at 49%, a statistical tie within the poll’s 1.8-percentage-point margin of error. Bolsonaro’s lead narrowed to 2 percentage points from 6 in the October 8 poll. The senator lost 2 points while Lula gained 2 points in the latest survey, conducted over the weekend.

A separate BTG Pactual/Nexus poll released today showed Bolsonaro ahead by a wider margin, with 52% of valid votes against Lula’s 48%. That survey interviewed 2,002 voters over the same period and carries a margin of error of 2 percentage points.

Polymarket odds imply an 86.5% probability of a Bolsonaro victory in Brazil’s presidential election, compared with 14% for Lula (as of early Tuesday morning). 

Just over a week after Brazilian equities surged following Bolsonaro’s first-round win, Goldman Sachs analysts have provided clients with a detailed breakdown of foreign inflows, highlighting how international investors are piling in for a Bolsonaro victory in the runoff.

Goldman’s trading desk described last week as “the busiest week ever in Brazil following the unexpected lead of Flavio over Lula in the first round of the general elections.” 

One day after the first round, on Monday, the trading desk saw record trading volumes: “Trading volumes surged to US$8.7bn a day (Monday was a record of US$20bn traded on a regular session).“

Orange = 2026 Notl Traded (20DMA) Shaded Area = Min and Max of all the past 30yrs

Here’s more color:

Price action was no different. EWZ moved +12.5% in a single day. This was a 5-sigma event (assuming gaussian distribution that would be a 1 in 3.5mn event).

But we know that is not the case. In fact, since EWZ inception in 2000, there have been 5 other instances of a 1 day move larger than >12.5%. Twice during the sharp recovering from the pandemic in 2020, and 3x during the recovery from the 2008 crisis. What is interesting now, is that it seems to be the first move of this order of magnitude not coming from a sharp sell-off.

The rally was driven by foreign inflow – Monday was the largest 1-day-inflow ever at US$2bn.

As you can imagine, our desk was faced with a wave of incomings, on “how do I trade”, and “how far this can go”. We’ve been seeing a lot of interest on our {GSBZRATE Index} and {GSBZRIGH Index}. Both have been outperforming Ibov and EWZ by >15% since election. GS was the largest net buyer of BZ listed names over the last 3 sessions, driven by the almost US$700mn demand for those custom baskets.

So, was that it? No, let me zoom out for you:

Medium- and long-term rates have already compressed 150bps over the last 2 weeks – the spread of BZ 10YR vs. US 10YR is now at around 7.2%. After 2020, it traded as low as 6.5% (-120bps), and the lows were at 4.8% (-240bps)

Historically for every 100bps compression of this spread EWZ price has increased by around 8.3%. (vs. GSBZRATE in USD at 11.2%). If rates do come down to recent lows, we could see EWZ trading between US$47.80/shr and US$52.20/shr

Fundamentally it does not seem to be extremely farfetched. EWZ EPS is running at ~US$4.4/shr, which would mean it trading at 11-12x if trading around US$50/shr. While this is significantly above screens, it is below the pre-2020 levels of 14x.

Bolsonaro faces four hurdles: win the runoff election later this month, assemble a credible economic team, propose a deliverable fiscal plan, and secure congressional support to enact it.

Last Thursday, Bolsonaro’s momentum continued when he secured endorsements from four center-right parties, strengthening his coalition ahead of the October 25 runoff election against Lula.

“We can’t be part of a lost generation,” São Paulo Governor Tarcísio de Freitas told Bolsonaro at a Republicanos event late Wednesday.

Freitas added, “We have to deliver on the work that your father started.”

Freitas described the nation-killing socialist policies of Lula and how a once-in-a-generation conservative sweep has shifted South America from left-wing to right-wing after years of economic despair under socialist rule. A Bolsonaro would cement the complete shift. 

Also last week, UBS hosted Ideia Big Data on Tuesday, during which the consultancy firm assigned Bolsonaro an 85% probability of victory (read the note).

The Saudi coalition, which is calling itself the Coalition to Restore Legitimacy in Yemen, on Tuesday issued a warning for civilians to evacuate a site in Sanaa ahead of a targeted operation. The city has been held by the Houthis going all the way back to 2014, and is the main base of the Iran-aligned government there.

Specifically, civilians are being urged evacuate the Yemen Petroleum Company’s Al-Sabahah central fuel station in Sanaa, and the publication went so far as to issue an illustrative map of the location. There are emerging reports of active bombings of the area.

Additional to this was (on the flip side) a published warning by Ansar Allah on Tuesday for Saudi citizens to “evacuate” areas near Aramco’s headquarters in Dammam, King Khalid Airport in Riyadh, and Aramco’s Riyadh refinery – which comes amid ongoing reports of the Houthis targeting territory of the kingdom.

The Saudi capital’s international airport of Riyadh has been shuttered since deadly weekend attacks, and expectations are that it will remain closed through at least Saturday, according to a fresh NOTAM issued.

We “call on all citizens to evacuate immediately and stay away from the targets that our armed forces will strike if the Saudi enemy proceeds with its announced plan to target the following sites in the capital, Sanaa,” the Houthi statement said.

Saudi Arabia STRIKES missile and oil facilities in and around the Houthi capital, Sanaa https://t.co/Wq8uAWrCN9

— RT (@RT_com) October 13, 2026

This comes simultaneous to the aforementioned Saudi order telling people to evacuate from near Yemen Oil Company site at Al-Sabaha Central Station in Sanaa.

And so tit-for-tat escalation is expected to continue. Saudi authorities have been warning that a “serious” response would come after at least 13 were killed in multiple strikes on Riyadh’s airport over Saturday and Sunday.

“The events of recent weeks are serious. Our response must be equally serious,” Prince Abdul Aziz bin Salman told the WPC Energy Congress in Riyadh – a long planned event which has proceeded despite the threat of Houthi missiles in the air.

The Houthis have indicated they will continue the fight amid the “brutal Saudi aggression” which at the moment is focused on retaking Western Yemen’s Red Sea coastline:

Rashad al-Alimi, chairman of the Presidential Leadership Council in Yemen, says the “Dawn of Yemen” operation is “proceeding toward its goal of ending the Houthi militias’ coup”.

“There is no turning back, no matter the sacrifices,” said al-Alimi.

🚨BREAKING: Eight Saudi Airports Have Now Been Closed Although Saudi Arabia may still periodically open some of them, this is a major catastrophe for the country. The Saudis have imposed a no-fly zone over Yemen since 2015, now the same is being done to them.

— MintPress News (@MintPressNews) October 13, 2026

So far the US has signaled it is staying on the sidelines of the renewed war, only providing the Saudi coalition with intelligence, and presumably targeting information.