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North American Edition
17th March 2023
Wall Street banks shore up First Republic
A group of Wall Street’s biggest banks has propped up troubled lender First Republic. Eleven major US lenders have agreed to deposit a combined $30bn into the bank after the US government convened talks following a collapse in First Republic’s share price. First Republic has been caught up in the fallout from the collapse of Silicon Valley Bank. Concern over deposit outflows has driven a near-70% fall in First Republic's share value. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo are each making a $5bn deposit into First Republic, while Goldman Sachs and Morgan Stanley are each making deposits of $2.5bn, and BNY Mellon, PNC Bank, State Street, Truist and US Bank are depositing $1bn each. Meanwhile, US Treasury Secretary Janet Yellen has assured Congress that the US banking system is “sound,” saying Americans “can feel confident that their deposits will be there when they need them.”
SEC proposes new cybersecurity rules for financial firms
The Securities and Exchange Commission (SEC) has proposed new cybersecurity and resiliency rules that would require brokers and asset managers to inform their customers of data breaches. The customer-notification requirement would give firms no more than 30 days to alert individuals whose sensitive information was likely to have been accessed without authorization. The new rule would come alongside additional expansions to the SEC’s 24-year-old regulation governing financial firms’ protection of customer data. SEC chair Gary Gensler said the market turmoil since last week’s failure of Silicon Valley Bank highlights the importance of such projects. Meanwhile, the U.S. Consumer Financial Protection Bureau (CFPB) has launched an inquiry to examine companies that track and collect personal data, requesting public feedback about the business models and practices data brokers use. It marks the latest move from the regulator to explore how various firms use personal financial data, and could inform future rulemaking. “Modern data surveillance practices have allowed companies to hover over our digital lives and monetize our most sensitive data,” said CFPB Director Rohit Chopra in a statement. “Our inquiry will inform whether rules under the Fair Credit Reporting Act reflect these market realities.”
Swiss banks oppose idea of forced merger
UBS and Credit Suisse are opposed to a forced merger, Bloomberg has reported, citing people with knowledge of the matter. UBS prefers to focus on its own wealth-centric strategy and is reluctant to take on risks related to Credit Suisse, the report said, as the smaller rival seeks additional time to complete its restructuring efforts after receiving financial support from the Swiss central bank. Wall Street bank JPMorgan on Wednesday said that Credit Suisse's takeover by another lender, probably UBS, was the most likely scenario for the beleaguered bank.
HR layoffs at Meta
Meta has begun the job cuts announced by the social media company earlier this week, starting with 1,500 employees in recruiting and human resources, according to people familiar with the matter. During an internal meeting with employees, CEO Mark Zuckerberg said the economic climate of layoffs and restructuring could last “many years,” the people said.
Courts siding with large companies in privacy appeals
The Wall Street Journal looks at how big companies are winning appeals to overturn regulatory decisions they claim violate European privacy laws. In recent rulings, courts in the U.K., Spain, Italy and Germany sided with companies including Experian, Amazon and Italian energy giant Enel SpA, in some cases quashing multimillion-dollar fines and reaffirming companies’ arguments that their data practices comply with the General Data Protection Regulation (GDPR). Edward Machin, a lawyer in the London office of Ropes & Gray, said: "We’re starting to see the through line of companies starting to pick their battles and spend the time and effort on the appeals they think they can win and would have an effect on their business models." Flora Egea Torrón, a partner at Spanish law firm Legal Army S.L., said appeals of major GDPR decisions show a significant amount of “gray area” where privacy lawyers, regulators and courts disagree over what the law allows. “There’s so much room still to interpret GDPR, so that’s why [companies] have to fight against the decisions” from regulators, she said. 
Exxon must repay workers for suspended 401K match
Oil and gas company Exxon Mobil has been ordered to make whole 1,800 employees at two refineries for lost earnings during a suspension of matching employer contributions for all employees between October 1st, 2020 and October 1st, 2021 to cut costs while sustaining heavy financial losses during a pandemic-related downturn in fuel demand. National Labor Relations Board (NLRB) administrative law judge Christal Key said Exxon had engaged in bad-faith bargaining when it met with United Steelworkers (USW) union locals representing workers at the company’s refineries in Baytown, Texas and Baton Rouge, Louisiana. “(Exxon’s) conduct establishes that they came to the bargaining table with, a mere pretense at negotiations, a completely closed mind and no intent to reach an agreement,” Key wrote. Mike Smith, chair of the USW’s National Oil Bargaining Program, described Exxon’s denial of benefits to workers as “outrageous.” Exxon spokesperson Todd Spitler said the company disagrees with Key’s ruling and would appeal.
Bankman-Fried secretly transferred $2.2bn from FTX
FTX co-founder Sam Bankman-Fried received more than $2bn from entities linked to the collapsed cryptocurrency exchange into his personal accounts, according to court filings. Mr. Bankman-Fried and five members of his inner circle transferred a total of $3.2bn to their personal accounts in the form of “payments and loans.” The money primarily came from Alameda Research, a crypto trading hedge fund affiliated with FTX. Mr. Bankman-Fried faces 12 federal charges and is awaiting trial after pleading not guilty to fraud.
U.S. regulators to visit Hong Kong for audit inspections
Officials from the Public Company Accounting Oversight Board (PCAOB) are set to start a fresh round of inspections of Chinese companies' auditors in Hong Kong. The audit watchdog will reportedly look at branches of EY, Deloitte, PwC and some other audit firms in both Hong Kong and mainland China. Sources say a group of Chinese officials from the China Securities Regulatory Commission and the Ministry of Finance will assist the inspection in Hong Kong. The U.S. last year agreed a deal with China to settle a dispute over auditing compliance of U.S.-listed Chinese firms. Authorities in China had been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns. The first round of inspections saw the PCAOB select a mainland branch of KPMG and a Hong Kong branch of PwC.
Swedbank handed administrative fine
Swedbank has been fined 850m Swedish crowns ($81.52m) due to a "lack of internal control" after changing its IT systems last year, Sweden's banking regulator has confirmed. It said the bank did not follow internal procedures when changing its system, and it did not have suitable control mechanisms in place to ensure it followed internal procedures.  "Swedbank regrets and has apologised to customers for the problems that the IT incident caused. The bank has taken forceful measures to prevent this type of incident from happening again," Swedbank said in a statement.
Microsoft adds OpenAI technology to Word and Excel
Microsoft says it is bringing generative artificial intelligence technologies such as the ChatGPT chat assistant to its Microsoft 365 suite of business software. The company said the new AI features, dubbed Copilot, will be available in some of its most popular business apps including Word, PowerPoint and Excel. In February, Microsoft debuted a new version of its Bing search engine that included a chatbot powered by OpenAI’s GPT-4 language technology. OpenAI publicly revealed its GPT-4 software earlier this week and pitched it as being more capable than the GPT-3 technology. “Today marks the next major step in the evolution of how we interact with computing, which will fundamentally change the way we work and unlock a new wave of productivity growth,” Microsoft CEO Satya Nadella said, adding “With our new copilot for work, we’re giving people more agency and making technology more accessible through the most universal interface — natural language.”
Job applicants are using ChatGPT to boost their hiring chances
Job applicants are using ChatGPT, the artificial intelligence chat assistant from OpenAI, when looking for new roles, using it to help write cover letters, finesse résumés and formulate answers to expected interview questions. Employers - who the Wall Street Journal observes have long used AI to screen hires - aren’t always disqualifying applicants who use ChatGPT, but they want to figure out how to assess candidates who may be using the tool to give them an advantage. Sarah Baker Andrus, chief executive of Avarah Careers, a career coaching firm in Delaware, cautions job applicants who use ChatGPT that they need to combine the tool’s edits with their own editing and voice. Whatever a candidate submits for a job should accurately reflect their skills, she says. “We’re responsible for how we present ourselves . . . If you decide to use ChatGPT, it’s worthwhile to ask, ‘Is that representing the me that I want to present?’”
TikTok banned on U.K. government issued phones
The U.K. government has announced that TikTok has now been banned from phones and other devices issued to government ministers and civil servants. Government Minister Oliver Dowden told lawmakers that the app would be banned on security grounds with immediate effect, describing it as a "precautionary" move, following a review by the National Cyber Security Centre. Mr Dowden said: "The security of sensitive government information must come first." But he told MPs that the ban would not apply to the personal phones of ministers and civil servants, or to the general public, because this was a response to a "specific risk with government devices."
Google workers in Switzerland stage walkout
Hundreds of Google staff members at the company's office in Zurich, Switzerland, walked off the job on Wednesday after more than 200 workers were laid off. In January, Google's parent company Alphabet announced plans to cut 12,000 jobs around the world, equivalent to 6% of its global workforce. A representative for IT workers' union Syndicom said more than 2,000 employees had offered to reduce their wages and working hours in a bid to prevent job losses. Google apparently rejected this proposal. "Our members at Google Zurich and all employees joining the walkout are showing solidarity with those laid off," a Syndicom spokesperson said, adding "They are bothered by the non-transparent nature of the layoffs, and are especially disappointed that Google is laying off workers at a time when the company is making billions in profit every year." A Google spokesperson said the company had made cuts to ensure the number of roles remained aligned with its highest priorities. "The consultation process has now concluded in Switzerland and employees whose roles were impacted have been notified,” the spokesperson said.
U.S. business inventories fall for first time in nearly two years
U.S. business inventories fell for the first time in nearly two years in January. The Commerce Department reported Wednesday that they fell 0.1% for their first decline, and their weakest reading, since April 2021. Economists polled by Reuters had expected inventories, a key component of gross domestic product, would be unchanged. Inventories increased 11.1% on a year-on-year basis in January. Inventory accumulation surged in the fourth quarter, mostly reflecting an unwanted piling up of goods, as growth in consumer spending decelerated because of higher interest rates. Retail inventories increased 0.2% instead of 0.3% as estimated in an advance report published last month. Motor vehicle inventories advanced 0.6% as estimated last month. Retail inventories excluding autos, which go into the calculation of GDP, gained 0.1% instead of the 0.2% rise estimated last month. Wholesale inventories fell 0.4%. Stocks at manufacturers were unchanged.
FASB opens comment period on income tax disclosure improvements
The FASB is inviting public comment on a proposed accounting standard update that would require preparers and companies to provide more explicit breakdowns on the taxes they pay and where they pay them. The more stringent standards would make companies detail the income taxes paid to federal, state and foreign entities and, in effect, require companies to identify any jurisdiction that receives more than 5% of the company’s total tax payments. FASB Chair Richard Jones said: “The FASB’s proposed improvements to income tax disclosure, primarily related to the rate reconciliation and income taxes paid information, are intended to help investors better assess how an entity’s worldwide operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows." Comments on the proposed ASU, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, will be accepted ahead of a May 30th deadline.

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