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19th January 2022
New York AG outlines pattern of fraud at Trump Org
New York State attorney general Letitia James yesterday accused the Trump Organization of repeatedly misrepresenting the value of its assets to bolster its bottom line, saying in court papers that the company had engaged in “fraudulent or misleading” practices in order to get loans and tax benefits. The filing came in response to former President Donald Trump’s recent effort to block Ms. James from questioning him and two of his adult children under oath as part of a civil investigation of his business. Many of the financial statements to the IRS, lenders and insurers, Ms. James said, were “generally inflated as part of a pattern to suggest that Mr. Trump’s net worth was higher than it otherwise would have appeared.” Ms. James’s inquiry into Mr. Trump and the company is ongoing, and it is unclear whether her lawyers will ultimately file a lawsuit against them. A case could be hard to prove. Property valuations are often subjective, and Mr. Trump’s lawyers are likely to note that his lenders and insurers, sophisticated financial institutions that turned a profit off their relationship with the Trumps, did not rely on the company’s estimates.
IRS readies electronic filing of Form 8038-CP
The IRS has revised its Form 8038-CP to facilitate electronic filing. “The January 2022 revisions simplifies the filing process for issuers when providing certain explanations and supplemental information,” the IRS said in an instructional video introducing the new form. “Additionally, revisions to the form were needed to facilitate electronic filing which is planned for later in 2022.”
BDO reports 15% rise in global revenues
BDO has posted $11.8bn in global revenues for its 2021 financial year, which ended in October - a 14.9% increase when measured in U.S. dollars. Audit and assurance continues to be BDO’s largest service line, accounting for 42% of total revenues. The firm’s tax and advisory practices each contributed 21.5%, and business services and outsourcing added 15% – with the revenue split by practice almost identical to the previous reporting period. EMEA revenue rose 17.4%, ahead of Asia Pacific on 16.9% and the Americas with 12.6%. While the Americas are still the firm’s largest region, contributing 53% of revenues, this means EMEA and Asia Pacific offices are catching up – adding contribute 35% and 12% respectively. 
EY Americas names new vice chair of strategy and transactions
Mitch Berlin has been promoted to EY Americas strategy and transactions vice chair, succeeding Bill Casey, who led the business since 2016. He will oversee a business that numbers more than 8,500 professionals across the U.S., Canada, Mexico, Central and South America, the Caribbean, and Israel. EY’s strategy and transaction practice supports CEOs and business leaders with consulting in capital strategy, M&A, public company spin-offs, IPOs, and securities offerings. 
Homebuilder confidence down for first time in four months
Homebuilder confidence fell one point to 83 in January, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, the first reported drop in four months, although it is still well above the 50-mark separating positive sentiment from negative. It was unchanged on an annual basis. A component measuring buyer traffic decreased two points to 69. The component measuring current sales conditions held steady at 90, and the component measuring sales expectations in the next sixth months fell two points to 83. Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 73, the Midwest increased one point to 75 and the South and West each posted a one-point rise to 88, respectively. “Higher material costs and lack of availability are adding weeks to typical single-family construction times,” said NAHB Chairman Chuck Fowke. “NAHB analysis indicates the aggregate cost of residential construction materials has increased almost 19% since December 2020.”
BlackRock's Larry Fink wants companies to value more than profits
BlackRock CEO Larry Fink has defended so-called ‘stakeholder capitalism’ in his annual letter to CEOs. The head of the world’s largest asset manager rejected suggestions that an investor focus on the interests of wider society rather than profit is “woke,” writing in his missive, entitled The Power of Capitalism, “It is not a social or ideological agenda . . . It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your company relies on to prosper.” He urged his fellow CEOs to find a purpose and to take into account issues like climate change as part of stakeholder capitalism. Fink also defended BlackRock's engagement with companies on carbon transition rather than divesting altogether, saying the companies themselves cannot be the "climate police" but instead should work with governments. "Divesting from entire sectors – or simply passing carbon-intensive assets from public markets to private markets – will not get the world to net zero," he said. "And BlackRock does not pursue divestment from oil and gas companies as a policy." Meanwhile, Fink said that companies can no longer expect employees to come to the office five days a week, neglect workers' mental health and keep wages low for those at the lower end of the income scale. "No relationship has been changed more by the pandemic than the one between employers and employees. CEOs face a profoundly different paradigm than we are used to," he wrote in his closely watched annual communication.
Employers boost 401(k) benefits to compete for workers
A growing number of U.S. companies are putting more money into their employees’ 401(k) retirement accounts as they seek to attract and retain staff amid high turnover and competition for talent. The boost to 401(k) benefits comes as the American workforce is rapidly changing. In August, 4.3 million U.S. workers quit their jobs, in what is being called the ‘Great Resignation.’ About 16% of large and midsize employers plan to raise their 401(k) contributions or reinstate a previously suspended match in 2022, and another 8% said they are weighing such a move, according to the preliminary results of a poll of about 100 companies by investment-consulting firm Callan. About 12% of large and midsize employers took similar action in 2021. “Employers are very nervous about this ‘Great Resignation,’” said Dave Stinnett, head of strategic retirement consulting at Vanguard Group, which administers 1,700 401(k)-type plans for employers. “They have a lot of job openings, and it’s taking longer to fill them,” adding “There is a realization that they need to do more” by enhancing benefits as well as raising wages. Vanguard has gotten more questions from clients about raising their matches than any other topic over the past six months, he said.
Variety of scoring systems make it difficult to quantify ESG risks
The Wall Street Journal’s James Mackintosh says Zurich-headquartered lender Credit Suisse has endured repeated scandals and executive departures, including  the exit of chairman António Horta-Osório who quit after it turned out he had breached Covid-19 quarantine rules, but done well on many scoring systems designed to spot nonfinancial risks. He observes that “Wall Street’s hottest investment trend is to score companies on environmental, social and governance criteria, in an attempt to steer investors away from potholes . . . [but] If the experts have wildly differing opinions on a basic matter such as good governance, how can we expect agreement on more controversial topics such as the environment, employee relations or social impact?”
Up to 75% of the $800bn PPP went to business owners instead of workers
The benefits of the landmark small-business relief program designed at the height of the pandemic mostly went to business owners rather than workers, according to a study from authors including famed Massachusetts Institute of Technology economics professor David Autor, as well as several Federal Reserve economists. The research looked into the $800bn Paycheck Protection Program, which ended up sending loans to approximately 93% of small businesses, in just two months. The end result, the authors estimate, is that the program preserved up to 3m “job years” of employment at a cost of between $170,000-$257,000 per job-year retained. Put another way, between 23% to 34% of PPP dollars went directly to workers who otherwise would have lost jobs, the study found. The program also was highly regressive, with three-quarters of PPP funds accruing to the top quintile of households. The study said the primary job retention goal of PPP could be better achieved through expanding “work sharing,” or having employers reduce work hours rather than make layoffs. There are 26 U.S. states with work-sharing programs, though they’re not well subscribed, and the authors say these programs should be simplified and automated.
CRYPTO halts withdrawals following suspicious account activities
Cryptocurrency exchange and digital wallet temporarily paused withdrawals on Monday over worries of “suspicious activity." No user funds were lost, chief executive Kris Marszalek said, adding that the company will offer a full report after it completes an investigation. has become one of the larger cryptocurrency platforms, currently ranked 10th in spot trading, according to CoinMarketCap, and the company has become far more visible in recent months. Next month, it will run a Super Bowl ad, following up a campaign that features the actor Matt Damon. 
Super-rich call for tougher tax hit and fairer system
A group of 102 global millionaires and billionaires has called on governments to hit them with heftier taxes to help cover the costs of the pandemic, arguing that the current tax system is rigged in their favor and needs to be rewritten to make taxation fairer. In an open letter, they say: “We know that the current tax system is not fair . . . Most of us can say that, while the world has gone through an immense amount of suffering in the last two years, we have actually seen our wealth rise during the pandemic - yet few if any of us can honestly say that we pay our fair share in taxes." They have called for the introduction of "permanent wealth taxes on the richest to help reduce extreme inequality and raise revenue for sustained, long-term increases in public services.” The group says an annual wealth tax on those with fortunes of more than $5m could raise more than $2.52trn. The proposed tax would see those with more than $5m pay 2%, rising to 3% for those with more than $50m, with a 5% rate for billionaires. Calling for a heavier taxation hit, the super-rich signatories urged: “The world - every country in it - must demand the rich pay their fair share. Tax us, the rich, and tax us now."
NTEU President: IRS employees want modernization
In a letter to the Wall Street Journal Tony Reardon, President of the National Treasury Employees Union, reiterates the union's support for efforts to modernize and upgrade the agency’s computer systems, especially those that will improve efficiency and productivity.

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