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The Federal Reserve's recent interest rate cuts are presenting chief financial officers with the opportunity to borrow money on more favorable terms for priorities like expansion or acquisitions. Last week's 0.25% interest rate cut came after a larger 0.5% cut in September. "The market definitely feels like there are more rate cuts to come," said UHY audit partner Ro Sokhi. "The last few years we saw the use of private capital, used to finance different transactions, but that's expensive. There's a lot of excitement these days that the Fed is lowering the borrowing rate, and CFOs can reenter the traditional funding market," particularly in the life science, retail, and technology sectors. "It's never certain as to what direction the interest rates will definitely go and whether companies can absolutely take advantage of the capital once the money comes in," he added. "But in the near term we're continuing to see companies finding alternative ways to free up capital, either through cost reductions or working capital programs, and then divesting of non core assets, brands and things like that. What we're seeing is a combination of using capital that's available, as well as using the newfound lower interest rates."

 

Accounting Today

Chipotle Mexican Grill has announced Scott Boatwright as its permanent chief executive, with immediate effect. He has been serving as interim leader since August, when Brian Niccol left to become CEO at Starbucks. Previously at Arby’s for 18 years, Mr. Boatwright has been Chipotle’s chief operating officer since 2017. In his prior role, he focused on improving customer experience, integrating technology in restaurants and speeding up restaurant service. In other Chipotle news, the company is being sued by shareholders for concealing how many of its restaurants were skimping on portions, forcing the chain to spend more on ingredients and hurting its stock price. The proposed class action suit, filed in Santa Ana, California federal court, said Chipotle failed to disclose growing unhappiness among customers with inconsistent portion sizes for its burritos and rice bowls. The lawsuit seeks unspecified damages for purchasers of Chipotle stock and options from February 8th to October 29th 2024.

 

Fortune

Bloomberg

Reuters

Wall Street Journal

The SEC has issued a $17.5m penalty to Invesco Advisors to settle allegations that the company misled investors about the extent of its assets that included environmental, social, and governance (ESG) factors. The Atlanta-based investment adviser suggested that 70%-94% of its parent company’s assets were ESG integrated, according to its marketing materials and client communications. However, the SEC’s findings reveal that these figures included assets in passive ETFs that did not incorporate ESG considerations in their investment decisions. 

 

FinTech Global

Compliance Week

Marsh is rolling out a new insurance facility that aims to de-risk carbon credit investments and protect companies from potential “fraudsters.” The new product, developed with carbon credit insurer We2Sure, will insure against counterfeit certificates, theft and certificates for non-existent projects, and is backed by global insurers Sompo, Brit and Talbot. “Businesses are increasingly using carbon credits as a core element of their strategy to meet net zero targets, and this leaves them exposed to fraudsters seeking to take advantage of this growing market,” explained Rupert Poland, Marsh’s digital asset leader for the United Kingdom. “The lack of standardization and transparency in the market makes it difficult for businesses to assess the legitimacy of the carbon credits they are buying.”

 

ESG Dive

Insurance Insider

A new Reuters/Ipsos poll has found that most Americans believe President-elect Donald Trump will push the U.S. government deeper into debt in his new term. The two-day poll, which closed on Thursday, showed that 62% of respondents, including 94% of Democrats and 34% of Republicans, said it was likely Trump's policies "will push the U.S. national debt higher." Some 89% of Democratic respondents said they were concerned by the prospect of Trump pushing the debt higher, compared to 19% of Republicans. Republicans in Congress point to buoyant gains in federal tax receipts since 2017 as proof that Trump's tax cuts raised revenues and say his current agenda will bring more of the same.

 

Reuters

The IRS is facing potential budget cuts following President-elect Donald Trump's victory. Accounting Today notes that funding for the agency has become a political issue, with Republicans successfully pushing to cut the extra $80bn funding from the Inflation Reduction Act of 2022 already during battles over the debt limit. "I think IRS funding is at significant risk right now, both the annual appropriation funding as well as the remaining IRA funding," said Washington National Tax Office principal Rochelle Hodes at Crowe LLP, adding "The only question for me on funding is, will any portion of the funding remain available for taxpayer service-related improvements at the IRS?" 

 

Accounting Today

Telefónica has agreed to pay $85m to resolve a U.S. investigation into an alleged scheme to bribe officials in Venezuela to obtain preferential access to U.S. dollars. The agreement charges a subsidiary of the Spanish telecom company with conspiring to violate the Foreign Corrupt Practices Act. The settlement marks the second time a Telefónica subsidiary has been fined for violating the statute, which prohibits companies from bribing foreign officials to secure a business advantage.

 

Wall Street Journal

Amazon has confirmed a data breach involving employee contact details through a third-party vendor, but assured that no sensitive data was compromised and its systems remain secure. The breach includes the employees’ name, work contact information, and what location they work at. “Amazon and AWS systems remain secure, and we have not experienced a security event. We were notified about a security event at one of our property management vendors that impacted several of its customers including Amazon. The only Amazon information involved was employee work contact information, for example work email addresses, desk phone numbers, and building locations,” Amazon spokesperson Adam Montgomery said.

 

TechCrunch

404 Media

Forbes

The Verge

Yuet-Peng Cheong, a former product manager at Meta, has filed a whistleblower lawsuit alleging wrongful termination and retaliation after she raised concerns about inflated revenue projections for the company's generative AI technology. Cheong claimed that her supervisor, Maryam Gholami, pressured data scientists to increase revenue estimates by $1.5 bn, a figure which Cheong believed was “pulled out of thin air.” After expressing her concerns, Cheong said she faced harassment and was ultimately fired in June 2023. Meta has denied the allegations, stating they are “without merit” and that it will “vigorously defend against them.” Cheong is seeking unspecified damages for the alleged mistreatment and retaliation she experienced during her employment.

 

The Columbian

Capri Holdings has reported a larger-than-expected 16.4% drop in second-quarter revenues, bringing in $1.08bn, below the $1.17bn expected by analysts surveyed by Zacks. Earnings, adjusted for asset impairment costs and non-recurring costs, were 65 cents per share, below the 74 cents anticipated on Wall Street. Michael Kors sales dropped 16% to $738m, with a 12% decline in the Americas, a 15% fall in EMEA, and a 43% decrease in Asia. Versace revenues were down 28.2% to $201m. However, at Jimmy Choo they grew 6.1% to $140m. The group's quarterly margin was 64.3%, compared with 64.4% a year earlier, due to higher expenses and increased promotional activity. Relatedly, Tapestry said Thursday that it has paused its plans to integrate with Capri, as both companies jointly appeal a US judge's decision to block the $8.5bn deal. The Coach and Kate Spade parent company posted a profit of $186.6m, on sales of $1.51bn. Revenues were up 1% at Coach and 2% at Stuart Weitzman, but down 7% at Kate Spade.

 

Business Wire

Market Watch

Reuters

San Francisco Chronicle

President-elect Donald Trump is reportedly keen to appoint someone with a Wall Street pedigree as Treasury Secretary, with potential contenders including Cantor Fitzgerald chief executive Howard Lutnick, hedge-fund billionaire John Paulson, and former George Soros money manager Scott Bessent. Robert Lighthizer, who served as Trump's U.S. trade representative in the first term and is the architect of his sweeping tariff proposals, is also reportedly among the candidates for Treasury.

 

Accounting Today