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The Public Company Accounting Oversight Board (PCAOB) is currently deliberating whether to publicly disclose the names of companies that have received deficient audits as part of its inspection reports, responding to longstanding requests from investors. PCAOB Chair Erica Williams confirmed the ongoing evaluation of this issue, which has been under consideration for years and reflects the complexity and longstanding nature of the debate. Historically, the PCAOB has stated, in memos from 2004 and 2012, that the Sarbanes-Oxley Act of 2002, which established the PCAOB, limits its authority to release certain information from its inspection processes. However, investors have continuously argued that the act provides the PCAOB with the discretion to decide what details should be included in inspection reports, advocating for greater transparency in the auditing process. The discussion around disclosing audit deficiencies is part of a broader push by investors to understand which audits specifically failed to meet standards, which they believe could significantly impact investment decisions and market trust. The PCAOB's Investor Advisory Group has even recommended reversing the board’s policy to enhance transparency about the audits that are inspected. Meanwhile, stakeholders such as the Center for Audit Quality and the U.S. Chamber of Commerce have expressed concerns about the potential negative impacts on companies and the market, citing the risks of misinterpretation and unnecessary harm to the companies involved.

 

Wall Street Journal

Multiple U.S. regulators have taken an initial step towards imposing long-delayed rules that would require lenders to claw back some pay from executives who take excessive risks. The Federal Deposit Insurance Corp, Federal Housing Finance Agency, Office of the Comptroller of the Currency, Federal Reserve, Securities and Exchange Commission, and National Credit Union Administration have proposed giving officials more power to hold executives accountable for bad decisions. The plans must be proposed and finalized by all regulators for them to become effective.

 

Bloomberg

Reuters

Microsoft is facing accusations of anti-competitive behavior in Spain after a complaint was filed with the country's antitrust regulator. The complaint, filed by Asociación Española de Startups, alleges that Microsoft is using its dominance in the software market to force the use of its cloud services. The group claims that this is significantly affecting both cloud providers and customers within the startup ecosystem in Spain. Microsoft has faced similar criticism globally, with regulators in the European Union, the U.K., and South Africa investigating its cloud business. The Spanish complaint adds to the growing scrutiny of Microsoft's power in the cloud computing market.

 

Bloomberg

Marty Malinow, founder and CEO of advisory firm Parameter Climate, discusses the surge in demand for weather derivatives. Trading volumes for weather derivatives have increased by over 260% in 2023, with outstanding contracts currently 48% higher than a year ago. The market for weather derivatives is expected to be worth as much as $25bn. This growth is driven by rising climate volatility, supply-chain issues, inflation, and geopolitical factors. Weather derivatives provide a hedge against less severe but more common meteorological threats, such as excessive rainfall or hot summers. The demand for weather derivatives is also fueled by corporations recognizing their exposure to weather risks and the increasing pressure from regulators and stakeholders to address these risks. The weather derivatives market is expanding to cover more locations and industries, including energy suppliers and agriculture. Advances in meteorological science and technology are leading to the development of more sophisticated weather derivative products. Despite challenges such as basis risk and the short-term nature of weather derivatives, market players are optimistic about the future of the weather trading market.

 

Bloomberg

The Massachusetts Institute of Technology (MIT) has decided to drop its controversial hiring practice that required faculty applicants to write a 'diversity statement' as part of the application process. MIT President Dr. Sally Kornbluth removed the requirement, stating that compelled diversity statements impinge on freedom of expression and don't work. The policy change makes MIT the first elite private university to backtrack on this practice. The decision was made with the support of the Provost, Chancellor, and all six academic deans, and comes after a survey revealed that students and faculty at MIT were unclear if the administration protects free speech. Last month, a Harvard Law School professor urged the elimination of mandatory diversity statements, arguing that they pose a challenge to academic freedom. Higher education institutions and companies are revising their diversity, equity, and inclusion (DEI) hiring practices, with some distancing themselves from controversial DEI initiatives. MIT's decision reflects a shift towards focusing on wellbeing and inclusion rather than mandatory diversity statements.

 

New York Times

Daily Mail

U.S. prosecutors have requested a judge to dismiss the bank fraud and other charges against Meng Wanzhou, CFO of Huawei Technologies, adhering to a deal reached last year that would drop charges four years after her arrest. Meng was arrested in Canada in 2018 on a U.S. warrant, a move that significantly strained U.S.-China relations. The dismissal, expected on December 1, 2022, aligns with the terms of a deferred prosecution agreement acknowledging her misleading statements to HSBC about Huawei's business operations in Iran, violating U.S. sanctions. While Meng's personal charges are set to be dropped, Huawei still faces charges including bank fraud and violating sanctions.

 

Reuters

A U.S. judge has approved a $62m Google consumer privacy settlement, resolving claims that the company unlawfully tracked and stored location data for 247.7m U.S. mobile users. The settlement awards $18m to the plaintiffs' lawyers and $42m to various advocacy groups, but no money to class members. The judge called the settlement "fair, adequate and reasonable" and said Google was making "meaningful" business practice changes benefiting millions of Americans. The settlement will face an appeal to the 9th US Circuit Court of Appeals. The 21 recipients of settlement funds include the Electronic Frontier Foundation, ACLU Speech, Privacy, and Technology Project, Center for Democracy & Technology, and Yale Law School's Information Society Project.

 

Reuters

TikTok has filed a lawsuit challenging a new bill that requires its China-based owner, ByteDance, to sell the app or face a ban in the U.S. The company argues that the law likely violates the First Amendment and claims that a nine-month timeline for a possible sale is not feasible. TikTok warns that the law will force a shutdown of the app by January 19, 2025, impacting the 170m Americans who use the platform for unique communication.

 

Forbes

U.K. armed forces personnel had personal data accessed in a recent cyberattack likely carried out by China. The hackers breached the payroll system used by Britain's defense ministry, obtaining names, bank account details, and personal addresses of military members and veterans. Defense Secretary Grant Shapps will outline a plan to support and protect personnel. The U.K.'s security services are investigating whether China is building profiles of armed forces members through database hacks. This breach adds to the increasing number of cybersecurity breaches attributed to the Chinese government. The defense ministry's payroll system, managed by an external contractor, has been taken offline for security. The government is expected to publicly attribute blame in the coming weeks. China has previously been accused of accessing voter details and hacking British parliamentarians.

 

Bloomberg

Paris 2024 is preparing to face an unprecedented cybersecurity challenge as organisers expect immense pressure on the Games this summer. Organized crime, activists, and states pose the main threats during the Olympics and Paralympics. Paris 2024, in collaboration with the French national agency for information security (ANSSI), and cybersecurity companies Cisco and Eviden, are working to limit the impact of cyber attacks. Vincent Strubel, the director general of ANSSI, stated that while attacks cannot be prevented entirely, their impact on the Olympics must be minimized. Paris 2024 has conducted extensive preparation work, including stress testing its systems with "ethical hackers" and using artificial intelligence to triage threats. The Games will face an unprecedented level of threat, but Paris 2024 believes it is a step ahead of the attackers. The number of cybersecurity events is expected to increase tenfold compared to the Tokyo Games. The Games take place amid a complex global backdrop, including geopolitical conflicts.

 

Reuters

A joint cybersecurity advisory by the FBI, NSA, and the U.S. Department of State warns of ongoing state-sponsored email hack attacks that bypass authentication security measures. The attackers, identified as APT43 or Kimsuky, are linked to the North Korean military intelligence agency. They impersonate journalists, researchers, and academics in spear-phishing campaigns to steal data and provide geopolitical insight to the North Korean regime. The advisory urges all email users to update their DMARC security policy to prevent such attacks. The Kimsuky group exploits misconfigured DMARC policies to spoof legitimate-looking personas.

 

Forbes

An international coalition of police agencies has brought back the dark web site of the notorious LockBit ransomware gang, which they had seized earlier this year. The site reappeared online with new posts that suggest the authorities are planning to release new information about the hackers. In February, the coalition infiltrated LockBit's official site, arrested two alleged members, took down servers, and seized cryptocurrency wallets. LockBit is one of the most prolific ransomware gangs, and even after the takedown, they have re-emerged with a new dark web leak site. The seized website has posts with countdowns, indicating that law enforcement will announce new actions against LockBit. The identity of LockBit's leader, known as LockBitSupp, is still unknown, but there are promises to reveal the hacker's identity.

 

Techcrunch

JPMorgan Chase & Co. has started a new round of layoffs in Asia, cutting at least seven more investment banking jobs. The reductions mainly affect staff at vice president and associate levels in sectors such as consumer, energy, and healthcare. Other banks, including Morgan Stanley, HSBC Holdings, UBS Group, and Goldman Sachs Group, have also made job cuts in their Asia investment banking units due to factors like the sluggish economy and political risks. JPMorgan had already made two rounds of job cuts in Asia last year. Despite the challenges in the region, the bank recently promoted employees to executive level in Asia and other regions.

 

Bloomberg

The United States and its allies must encourage mining projects in countries where Western corporations are reticent to do business to guarantee a reliable and sustainable global supply of critical minerals needed to combat climate change, according to a senior White House official. Amos Hochstein, White House senior adviser for energy and investment, emphasized the importance of mineral resources in nations like the Democratic Republic of Congo and Zambia in meeting the global demand for clean energy components and power infrastructure. Hochstein also highlighted the need to reduce dependence on China. The United States and other nations must collaborate to unlock capital and offer incentives to improve communities and quality of life in countries with large mineral resources but poor labor and environmental standards, Hochstein said.

 

Reuters

New research suggests that a recession could be the best time to launch a tech start-up. The researchers - Daniel Bias, an assistant professor of finance at Vanderbilt University’s Owen Graduate School of Management, and Alexander Ljungqvist, Stefan Persson Family Chair in Entrepreneurial Finance at the Stockholm School of Economics - found that tech startups that began operations during the 2007-09 recession, and received their first patent in that time, tended to last longer than tech start-ups founded a few years before or after. Drawing on data from the U.S. Patent and Trademark Office, the authors examined a sample of 6,946 tech startups that launched and received their first patent approval between 2002 and 2012. One group - about 5,734 companies - launched and received their patent outside of the 2007-09 recession. Of those, approximately 70% made it to their seventh year. In contrast, the start-ups that launched and got their first patent during the recession - about 1,212 companies - were 12% more likely to be in business in their seventh year. For startups started during the 2007-09 recession, founding inventors were 25 percentage points less likely to leave their company within the first three years. 

 

The Wall Street Journal

U.S. taxes are likely to rise as lawmakers look to narrow the federal deficit, according to Warren Buffett. Speaking at Berkshire Hathaway's annual meeting, Buffett stated that his company will pay whatever the tax rate is, whether it remains at the current 21% or increases. He believes that higher taxes are quite likely given the present fiscal policies. Buffett said: "I think higher taxes are likely. They may decide that some day they don’t want the fiscal deficit to be this large because that has some important consequences. So they may not want to decrease spending and they may decide they’ll take a larger percentage of what we own, and we’ll pay it." Asked whether he was concerned about the rapidly rising levels of U.S. government debt, Buffett said what worried him was the fiscal deficit more than the size of the Treasuries market - which is now nearly $27trn. He added that while the market focus is on the next steps the U.S. central bank will take to tackle inflation, fiscal policies could be more problematic. "Jay Powell is ... a very, very wise man," he said, referring to the chairman of the Federal Reserve. "But he doesn't control fiscal policy."

 

Bloomberg Tax

Bloomberg

Reuters

Figures from the Institute of International Finance (IIF) show global debt has hit a record high of $315trn, with emerging markets the prime source of the surge in borrowing. Analysis by the IIF showed total world debt rose by $1.3trn to a new record high of $315trn in the first quarter of the year as global debt-to-GDP “resumed its upward trajectory” after falling for a sustained period after Covid lockdowns.

 

The Daily Telegraph

Palmer Candy has issued a recall on several "white coated confectionery items" sold in 17 states due to a salmonella risk. The Iowa-based company was notified by its liquid coating supplier of a potential for salmonella contamination. The recalled confectionery items were distributed nationwide in Walmart, HyVee, Target, Dollar General, and to distributors in Alabama, California, Florida, Illinois, Iowa, Kansas, Missouri, Nebraska, North Dakota, Oregon, Pennsylvania, South Carolina, South Dakota, Texas, Virginia, Wisconsin, and Wyoming. Production of the product has been suspended while the FDA and the company continue their investigation. No illnesses have been reported to date. Consumers who have purchased the affected items are urged to return them for a full refund.

 

Al.com

The Oregonian