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North American Edition
23rd November 2022
Facebook works to improve content quality
The Wall Street Journal reports on the work done by Facebook to eradicate content that was spammy, oversexualized or generally what the company classified as regrettable. Facebook executives and researchers had become increasingly embarrassed that the platform’s widely viewed content report, a quarterly survey of the posts with the broadest reach, was consistently dominated by stolen memes, engagement bait and link spam for dubious online shops. Now, Facebook says it is cautiously optimistic of the progress it has made as it works to improve content quality on the platform. Facebook “should be proud of this,” said Jeff Allen, a former data scientist at the company who now works at the Integrity Institute, a nonprofit that advises policy makers and companies on social media platform design and governance.
Amazon customer satisfaction declines
New research reveals that consumer satisfaction with Amazon has declined. The number of Amazon customers who said they were “extremely” or “very satisfied” with the company in a recent survey has fallen, measuring at 79% in 2022, according to Evercore ISI. The research shows that the number reached a low of 65% in 2020 during the pandemic but remains down from a peak of 88% almost a decade ago. According to the American Customer Satisfaction Index, which analyses consumer satisfaction at more than 400 of the biggest U.S. corporations, customer satisfaction at Amazon fell to a record low last year. Amazon scored 78 out of 100, down from 86 out of 100 five years earlier and its worst performance since 2000 — the year the index started tracking the company. In 2020 and 2021, Amazon fell behind the shopping sites of Costco and Nordstrom. Earlier this year, a survey of more than 1,000 U.S. Amazon customers by Brooks Bell found that nearly a third of them reported regularly receiving products late or getting an item of low quality. Nevertheless, Amazon remained the country’s biggest online retailer by a wide margin, with a loyal base of more than 200m users globally who pay for Prime membership.
Organized crime groups hit retailers
Forbes looks at how shoplifting has become a $100bn problem for U.S. retailers. A National Retail Security Survey (NRSS) found that 88% of retailers surveyed said that the pandemic resulted in an increase in overall risk for their company. On average, retailers saw a 26.5% increase in organized retail crime incidents in 2021. Beyond theft of goods, eight-in-ten retailers surveyed reported that violence and aggression associated with incidents increased in the past year. According to the survey, 37% of retailers' shrink is due to external theft, followed by employee or internal theft at 28.5%, and process or control failures at 25.7%. Mark Mathews at the National Retail Federation said: "The kind of theft that's mostly happening isn't run-of-the-mill shoplifting. It's organized crime." The survey states that organized retail crime groups target easily concealable, removable, available, valuable, enjoyable, and disposable items. The top categories of items that are being stolen are apparel, electronics, health and beauty, accessories, and footwear.
Bankman-Fried ran FTX as personal fiefdom, court hears
The first bankruptcy hearing for FTX was held on Tuesday with attorneys for the collapsed crypto exchange describing how former CEO Sam Bankman-Fried ran the business as his "personal fiefdom" with $300m spent on real estate for his parents and senior staff. FTX filed for protection in the U.S. after traders pulled $6bn from the platform in three days and rival exchange Binance abandoned a rescue deal. The collapse has left an estimated one million creditors facing losses totalling billions of dollars. James Bromley, a U.S. restructuring lawyer at Sullivan and Cromwell, said the company’s lawyers had seen “a lack of corporate controls at a level that none of us in the profession have ever seen.” 
RBS ex-banker's whistleblower award bid is declined
The U.S. Supreme Court has rebuffed a bid by former Royal Bank of Scotland managing director Victor Hong to collect a U.S. government whistleblower award of at least $490m for reporting alleged misconduct related to the lender's sales of mortgage-backed securities. There has been dispute over whether Hong's tips met the law's definition of "covered judicial or administrative action brought by the commission under the securities laws." The justices declined to hear Hong's appeal of a lower court's ruling that even though his tips helped federal agencies win large settlements against the bank he was not eligible for an award under the U.S. Securities and Exchange Commission whistleblower program because the SEC did not take enforcement action itself. "The federal government . . . is putting its financial interests ahead of whistleblowers, without whom there would be little or no recoveries," Hong's attorney, Richard Corenthal, said.
GSAM fined $4m over ESG failures
The Securities and Exchange Commission has fined Goldman Sachs Asset Management $4m for failing to follow its policies and procedures involving environmental, socially oriented and other investments. The charges were specifically over "policies and procedures failures involving two mutual funds and one separately managed account strategy marketed as Environmental, Social, and Governance (ESG) investments," the regulatory agency said.
Deutsche Bank mulls cuts to its leveraged finance unit
Deutsche Bank is considering cuts to its leveraged finance unit as part of a review by CEO Christian Sewing into the lender’s under-performing businesses ahead of the scheduled conclusion of his three-year restructuring exercise next month. The review of the bank’s businesses may result in less capital and other resources including employees being allocated to the business of providing loans to highly indebted companies, according to people with knowledge of the matter. At the same time, resources may be redirected to other areas, including potentially the deals advisory business, the people said. In a recent speech at a Frankfurt conference, Sewing said that European regulation surrounding leveraged finance is making it harder for local banks to compete in that area.
‘Anti-woke’ lender GloriFi to shut down
GloriFi, the Texas start-up that sought to build a conservative banking alternative for people who saw Wall Street as too liberal, is shutting down. The company says it has laid off most of its employees. Cathy Landtroop, GloriFi’s chief marketing and communications officer, wrote in an email to employees that the “financial challenges related to start-up mistakes, the failing economy, reputational attacks, and multiple negative stories took their toll.”  The Wall Street Journal notes that some employees said that founder Toby Neugebauer “had a volatile temper and drank on the job, and that the company’s unusual workspace—Mr. Neugebauer’s home—added distractions.”
ESG to increasingly influence insurers’ strategies, Fitch says
Fitch Ratings’ latest ESG report predicts ESG-driven decisions will influence insurers’ credit ratings in the medium term as social and regulatory pressures push more insurers to account for ESG considerations. “We believe that most insurance companies’ decision-making on ESG issues will be steered by risk appetite defined at the governing board and delegated board levels, which will be subject to change over time as internal knowledge and experience grow,” the authors of the ‘Global Insurance Through an ESG and Sustainability Lens: Influence of ESG on Insurers’ Underwriting and Investment Decisions Will Increase’ report write. “This will include discussion of which ESG issues are most material across the lines of business from either a financial or regulatory/supervisory perspective, or whether stakeholders are raising specific ESG issues that may result in reputational or ethical risks.” In the longer term, the report’s authors say sectors most exposed to ESG-related risks will face more significant challenges as stakeholders demand greater rigor and disclosures, including insurers’ ESG implementation strategy.
Increase in U.S. taxpayers trading cryptocurrencies
Data from the IRS show that around 2.3m U.S. taxpayers traded cryptocurrencies in 2020 - a 149% increase from 2019, when nearly 928,000 taxpayers answered “yes” to a question of whether they had received, sold, sent or otherwise acquired virtual currency. Bloomberg says the figures underscore crypto's growing popularity before this year's painful market rout, and the extent to which Americans may be exposed to losses as platforms collapse. However, it notes that the bump may also reflect the IRS's efforts to ensure that filers disclose holdings and pay taxes on any gains. The IRS report on individual tax return data also showed Americans’ unemployment compensation jumped to $405bn in 2020, from $21.4bn in 2019. Despite the economic fallout from the pandemic, government relief payments and a rise in investors’ capital gains helped total U.S. individual income climb 5.2% to $12.7trn. Wages and salaries increased more slowly, by 1.7% to $8.4trn. The average federal income tax rate in 2020 was 12.6%, up from 12.3% in 2019. Americans earning from $2m to $10m paid the highest average rate: 28%. The richest taxpayers, earning $10m or more, paid less, at 25.5%, because their income was more likely in the form of long-term capital gains, which are subject to lower rates. 
Chicago Fed: Economic growth slows in October
Data from the Federal Reserve Bank of Chicago shows economic growth slowed in the U.S. in October. The Chicago Fed National Activity Index (CFNAI) decreased to minus 0.05 in October from 0.17 in September. The reading suggests U.S. economic activity grew slightly below its average historical trend over the month. The CFNAI index is composed of 85 economic indicators from four broad categories of data: production and income; employment, unemployment and hours; personal consumption and housing; and sales, orders and inventories. The Chicago Fed said three of the four broad categories of indicators used to construct the index made negative contributions in October. Driven by a slight decrease in industrial production, production-related indicators contributed by minus 0.05 to the index. Employment-related indicators also dragged the index's performance, contributing by minus 0.02 as the unemployment rate edged up to 3.7%. The contribution of sales, orders and inventories category also was negative, a slight minus 0.01. The personal consumption and housing group was the only which added to the index, by 0.03 in October, the Chicago Fed said.
Alcoa supports call for LME to reveal origin of all metal stocks
U.S. aluminum producer Alcoa is backing a call from Russian producer Rusal for the London Metal Exchange (LME) to provide details about the origin of all metal in LME-approved warehouses. Rusal and Russian metal have not been directly targeted by sanctions imposed on Moscow following the invasion of Ukraine, but Alcoa has actively campaigned to ban Russian metal from being traded and stored on the LME. The U.S. producer is concerned that large amounts of aluminum in the LME system could distort pricing. Alcoa said in a statement to Reuters: “We support proposals that would provide market participants with more data, including monthly reports that would disclose the origin of all metal stocks on warrant. The important issue at present is to ensure that the market has increased visibility on Russian-origin aluminum, which will allow both the LME and market participants to carefully monitor this situation.” Rusal has called for the LME to start regularly disclosing the origin of all metal stocks rather than singling out Russian metal.
Twitter postpones relaunch of blue check
Elon Musk has said Twitter is holding off the relaunch of its blue check subscription service. "Holding off relaunch of Blue Verified until there is high confidence of stopping impersonation," Twitter's new owner wrote in a tweet, adding "Will probably use different color check for organizations than individuals." Musk also tweeted that Twitter added 1.6 million users this past week, which he described as "another all-time high."

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