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Cryptocurrency's upcoming once-every-four-years software update called “halving", set to occur in late April, will result in significant revenue declines for mining companies. The halving will reduce the amount of Bitcoin that miners can earn each day, potentially leading to annual revenue losses of around $10bn for the industry. Miners have been investing in new equipment and acquiring smaller rivals to mitigate the drop in revenue. However, they now face increased competition for power from the artificial intelligence industry, which is drawing massive amounts of capital and willing to pay higher electricity rates. This competition for power, coupled with the rising cost of mining, poses challenges for miners. Private mining companies, in particular, may struggle to secure favorable electricity rates as they typically rely on debt financing or venture capital. The halving update comes at a time when Bitcoin has reached new highs and the mining industry is experiencing significant growth. However, the industry's success is becoming increasingly dependent on continuous investment and technological advancements. The halving update is the fourth since 2012 and was designed to maintain the hard cap of 21 million Bitcoin tokens.

 

Bloomberg

[REPORT] 2024 IT Risk and Compliance Benchmark Report

It’s that time again! Hyperproof’s fifth annual IT Risk and Compliance Benchmark Report is here. Each year, we ask over 1,000 GRC professionals about their pain points, IT risk and compliance budgets, staffing, risk management best practices, and much more to compare results from the previous year, provide an in-depth view of the market’s current state, and prepare for this year and into the future.

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The U.S. Embassy in Jerusalem has told all U.S. government employees to shelter in place until further notice, according to a security alert posted after Iran began launching drones and missiles at Israel. “In response to security incidents and without advance notice, the U.S. Embassy may further restrict or prohibit U.S. government employees and their family members from traveling to certain areas of Israel (including the Old City of Jerusalem) and the West Bank,” the statement said.

 

The Jerusalem Post

The Times of Israel

The U.S. Department of Commerce has added four Chinese companies to its export blacklist for supporting China's military modernization efforts. The companies, involved in providing AI chips to the Chinese military, will likely be unable to purchase U.S.-origin items in the future. This move is part of Washington's efforts to sanction and punish companies and organizations in China and elsewhere on national security grounds. U.S. President Joe Biden has increased the use of the entity list to curb Chinese companies. The affected companies are LINKZOL (Beijing) Technology Co., Xi'an Like Innovative Information Technology Co., Beijing Anwise Technology Co., and SITONHOLY (Tianjin) Co. Beijing has criticized the entity list policy and other sanctions as attempts to hinder its development and harm its firms. The Commerce Department has also banned exports to two other Chinese firms, one for supporting Russian military procurement and one for assisting Iran in buying components for unmanned aerial vehicles.

 

Bloomberg

Borrowers are increasingly swapping loans from direct lenders for more affordable debt from Wall Street banks. About $16bn of debt has moved from private funds to syndicated loan and bond markets this year. Thryv Holdings, the owner of the Yellow Pages, and software firm Encora Digital are among the latest issuers to prefer traditional leveraged loans. As leveraged loan prices rally, companies switching to the public side can lock in lower rates and shake off more onerous debt covenants. Marina Cohen, a high-yield portfolio manager at Amundi, said, "Private credit has been more expensive for companies and carried more stringent covenants. Now they can refinance at a lower cost in the public market, with looser covenants so the competition is tougher for private credit."

 

Bloomberg

Steady investor demand and comprehensive regulations in Europe are helping the finance industry withstand political pressures that have caused some U.S. peers to backtrack on their green agendas. While conservative politicians in the U.S. have been successful in suppressing environmental, social, and corporate governance (ESG) marketing and regulations, Europe has remained committed to ESG principles. European investors have seven times more capital in sustainable fund assets than their U.S. counterparts. The finance industry in Europe benefits from a solid framework of ESG regulations and greater political and consumer support for green initiatives. Despite some watering down of regulations, Europe remains an ESG stalwart. The commitment of European financial firms to ESG is crucial for international climate alliances, as U.S. firms have seen defections while European membership remains intact. Europe's finance industry is focused on implementing ESG while also delivering performance. The demand for ESG in Europe is driven by public pension funds, with climate change being a priority for 73% of European schemes.

 

Reuters

Securities and Exchange Commission (SEC) documents have revealed a series of impersonation scams targeting SEC officials. Fraudsters posed as commissioners and top officials, tricking victims into handing over tens of thousands of dollars. The SEC's internal watchdog, the Office of Inspector General, conducted the investigations into the security breaches and threats.

 

Bloomberg

Academics have disputed research by McKinsey which claimed companies with diverse leadership teams perform better financially. Report authors Jeremiah Green, an associate professor at the Mays Business School in Texas, and John Hand, professor of accounting at the Kenan-Flagler Business School in North Carolina, found no statistically significant difference in financial outperformance between businesses with diverse leadership teams and those without. They criticised McKinsey's work, saying that it neither conceptually nor empirically supports the argument for increased diversity in executive positions. The authors emphasised a lack of robustness in McKinsey's studies and called for further research on the connections between diversity and performance. They said that McKinsey’s tests were “erroneous” and could not be replicated when academics used data from businesses in the S&P 500.

 

The Times

The head of Airbus, Guillaume Faury, has said t it is "not unlikely" for Airbus to take control of two U.S. and U.K. plants run by Spirit Aerosystems if Boeing proceeds with its plans to purchase the supplier. Faury mentioned that Airbus could be a legitimate owner of the activities in Belfast and the Kinston plant. The fate of the plants, which employ 4,000 workers, has been affected by Boeing's crisis and its intention to buy its supplier. Airbus, Boeing, and Spirit have been working towards a potential framework for Spirit's break-up, with each planemaker taking some operations. However, valuations have been a hurdle.

 

Reuters

U.S. consumer sentiment dipped in April while inflation expectations for the next 12 months and beyond increased, according to a survey by the University of Michigan. The preliminary reading on the overall consumer sentiment index came in at 77.9, slightly lower than the final reading of 79.4 in March. The survey also showed that one-year inflation expectations rose to 3.1% in April from 2.9% in March, while the five-year inflation outlook increased to 3.0% from 2.8% in the prior month. The survey suggests that consumers are reserving judgment about the economy due to the upcoming election. "Overall, consumers are reserving judgment about the economy in light of the upcoming election, which, in the view of many consumers, could have a substantial impact on the trajectory of the economy," said Joanne Hsu, Director of Surveys of Consumers.

 

Bloomberg

Reuters

The IRS has concluded its Dirty Dozen campaign with a warning to taxpayers about promoters selling bogus tax strategies and fraudulent offshore schemes. These schemes include syndicated conservation easements, micro-captive insurance arrangements, and international elements such as concealing money in foreign accounts. IRS Commissioner Danny Werfel advises taxpayers to be cautious of anything that seeks to completely eliminate a legitimate tax responsibility. The Dirty Dozen campaign, which lists 12 scams and schemes, aims to raise awareness and protect taxpayers from common tax scams. The IRS emphasizes that it can identify and track anonymous transactions of foreign accounts and digital assets. Taxpayers are urged to report abusive tax schemes and unscrupulous tax preparers to the IRS. The IRS continues to improve investigation and enforcement using data analytic tools and enhanced document matching.

 

Tax Notes

U.S. law firm Orrick, Herrington & Sutcliffe has agreed to pay $8m to settle class action claims from people who said their personal information was compromised in a breach of some of the firm's client data. Hackers accessed the names, addresses, dates of birth, and Social Security numbers of more than 600,000 people. The settlement is subject to approval by U.S. District Judge Susan Illston. Orrick denied any liability or wrongdoing and initially offered identity monitoring to the victims. The compromised personal data included patient information collected by Orrick clients Delta Dental of California and EyeMed Vision Care. The case is In re Orrick, Herrington & Sutcliffe, LLP Data Breach Litigation, U.S. District Court for the Northern District of California, 3:23-cv-04089. "This was a hard-fought case and a fair and reasonable settlement," said William Federman, a lawyer representing the plaintiffs.

 

Reuters

New filings in the Federal Trade Commission's lawsuit against Kroger's $24.6bn bid to buy Albertsons detail the intense competition between the two companies in Portland. “We must stay hungry, sharp and on top of our business. Kroger is hurting and looking to gain share back. WE MUST NOT LET THEM,” Albertsons's vice president of marketing and merchandising wrote in an internal email about Kroger's promotional ads in Portland, according to newly unredacted passages in the suit filed in federal court in Portland. Kroger executives, in turn, refer in internal communications to Albertsons and Safeway stores as their “#1 direct competitor” and “biggest competitors.” The statements were previously censored over concerns that they contained confidential information that could competitively harm Kroger and Albertsons. The FTC argues that the proposed merger would reduce competition, resulting in higher food prices and lower wages. The companies refer to each other as their biggest competitors. The lawsuit also highlights concerns about the divestiture plan and the lack of experience of the buyer, C&S Wholesale Grocers.

 

The Oregonian

The U.S. Justice Department is investigating whether private equity firms intentionally withheld information in previous mergers. Richard Mosier, special counsel for private equity in the DOJ's antitrust division, stated that the agency is focusing on ensuring compliance with the Hart-Scott-Rodino Act, which requires companies to notify antitrust enforcers of their transactions. Mosier warned that companies that try to manipulate the system may have their filings scrutinized and face liability. The probe, which has not named any specific companies, follows KKR's disclosure of a criminal investigation into the accuracy of its merger notification filings. The DOJ's intensified scrutiny of the private equity industry under President Joe Biden includes a broader investigation into overlapping board seats. The agency is also reviewing merger filings to ensure companies are providing all required documents. Failure to comply with merger notification laws is seen as an existential threat to merger enforcement.

 

Bloomberg

National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo has responded to challenges to the agency's structure by "deep-pocket, low-road employers" who are attempting to divert attention from their violations of workers' labor rights. Abruzzo, appointed by President Joe Biden, made the remarks during a virtual panel discussion. Companies such as SpaceX, Amazon, Starbucks, and Trader Joe's have claimed that the NLRB's structure violates the U.S. Constitution. Abruzzo predicts that courts will reject these arguments and accuses the companies of using legal tactics to delay or distract from their labor law violations. The panel members, including a labor economist and three law professors, believe these challenges are part of a long-standing resistance by U.S. businesses to workers' labor rights. They attribute the emergence of these challenges to an increase in organizing and union drives. The companies challenging the NLRB's structure argue that administrative judges and board members have improper insulation from presidential removal and that the NLRB wields executive, legislative, and judicial powers. They also claim that administrative proceedings violate their constitutional right to a jury trial.

 

Reuters

A new report by Cornerstone Research reveals that the PCAOB is increasingly targeting firms in its enforcement actions, as opposed to individuals. The report discloses that out of the 46 total enforcement actions, 37 were related to auditing performance, marking a 28% increase from the previous year. Monetary penalties reached $19.7m, nearly doubling the previous record. "There was a notable shift in the types of respondents in 2023 auditing actions," said Jean-Philippe Poissant, who co-authored the report and is co-head of Cornerstone Research's accounting practice, in a statement. "In the past, two-thirds of respondents were individuals. Yet in 2023, two-thirds of respondents were firms. This shift was the result of a substantial jump in the number of auditing actions that only involved firms." The majority of auditing actions involved alleged violations of auditing standards, with some including additional allegations related to ethics and independence standards. The report also notes that a significant portion of the penalties were imposed on non-U.S. respondents.

 

Accounting Today

CPA Practice Advisor

A man has filed a lawsuit against a group of women who discussed his behavior on dating apps in a private Facebook group. Stewart Lucas Murrey claims that the comments made by these women have damaged his social status and is seeking $2m in damages. However, one woman has already had the suit against her dismissed. The lawsuit revolves around the Facebook group "Are we dating the same guy? — Los Angeles," which serves as a platform for women to share negative experiences with men they have encountered on dating apps. The judge ruled that the woman's posts were a matter of public interest and dismissed all claims against her. Murrey plans to continue pursuing his legal case, but legal experts believe that the other defendants will likely have similar success in having the claims against them dismissed. This is not the first time Murrey has taken legal action over similar claims. The court must consider if a person is being sued for exercising their right to free speech in an anti-SLAPP motion. California was the first state to pass an anti-SLAPP law in 1992. Defamation lawsuits are difficult to win, and Murrey would have to prove that the statements made about him were false and that he suffered damages.

 

Los Angeles Times