After finishing flat yesterday, U.S. stocks are lower on Wednesday morning, with the benchmark S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES:^DJI) down 0.29% and 0.42%, respectively, at 10:15 a.m. EDT. Megacapitalization stocks Bank of America (NYSE:BAC) and Apple (NASDAQ:AAPL) are in the headlines this morning due to regulatory risk.

Apple is much admired for the "clean" design of its products. While the design of its tax and corporate structures is anything but streamlined, it has certainly proved extremely effective when it comes to tax avoidance. However, those structures are now attracting the attention of European regulators; the Financial Times reported that the European Union is set to open a formal investigation into Apple's Irish tax setup.

Ireland is central to Apple's tax minimization strategy: Not only does the country have a low 12.5% corporate tax rate, but it also enables companies to incorporate while establishing their tax residency in a separate low-tax territory or having no tax residency whatsoever, as Apple opted for. However, Ireland is moving to remove that option and says companies with no tax residency will be liable to pay their full corporate tax rate by 2015.

Apple CEO Tim Cook vigorously defended his company's behavior in this area before a Senate subcommittee last year, saying it pays "all the taxes we owe, every single dollar," before adding that "we not only comply with the laws, but we comply with the spirit of the laws. We don't depend on tax gimmicks." Cook is quite right to press U.S. lawmakers to reform the tax treatment of corporate profits earned abroad; nevertheless, Apple investors may want to consider that the company could face a rise in its tax bill over the next couple years. Still, the market doesn't look concerned about the issue this morning: Apple shares were up 0.4% at 10:15 a.m. EDT.

The market is being less forgiving with shares of Bank of America this morning, which were down 0.8% on a New York Times report that talks with the Justice Department for a multibillion-dollar legal settlement have stalled. That is a marked change from last week, when I noted that the market appeared to be shrugging off the first reports that Bank of America was seeking a $12 billion settlement regarding allegations of misselling of mortgage securities.

It seems that Bank of America's offer falls well short of the $17 billion figure from the Justice Department. Investors are reacting to new uncertainty regarding whether the bank and regulators will ultimately settle, and how much money it might involve. While the amount remains in doubt, I firmly believe the parties will come to an agreement that will avert the need for litigation.

As the Times noted [my emphasis]: "The Justice Department, which had imposed a Monday evening deadline for the bank to deliver its near-final offer, has sought a settlement worth roughly $17 billion, which would be the largest payout by any bank to date." We are still in the negotiation phase and this is nothing more than negotiation tactics.