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6th December 2021
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THE HOT STORY
U.S. added 'disappointing' 210,000 jobs in November
The U.S. economy added 210,000 jobs in November,  the smallest number of jobs added to the economy since December 2020. Economists polled by the Wall Street Journal had forecast 573,000 new jobs. The unemployment rate fell to 4.2% as more people joined the labor force, the department added, while average wages rose 4.8% from a year ago to $31.03 an hour, as workers continued to see pay increases amid higher inflation. The share of people either working or looking for work rose to 61.8% in November from 61.6% in October, suggesting that wage increases are starting to draw workers off the sidelines. The retail sector lost 20,000 jobs in November, with losses concentrated in general merchandise, clothing and sporting goods stores that were partly offset by increases in food and beverage stores and building supply stores. Transportation and warehousing added 50,000 positions and professional and business services added 90,000. Justin Wolfers, an economist at the University of Michigan, said the report is "doubly disappointing," adding: "This was a moment for people to return to malls and to return to work. The COVID-related news has only gotten worse since then." However, RSM chief economist Joe Brusuelas commented: "We expect that the topline establishment survey will be revised upward over the next two to three months and will look more like what the household survey is showing: the labor market is tightening, and wages are rising in what is the best labor market for workers since the late 1990s."
TALENT RETENTION
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LEGAL
Pharma CFO charged with insider trading
Former Immunomedics CFO Usama Malik and his ex-girlfriend have been charged with using inside information he had obtained about one of the pharmaceutical firm’s drugs to trade in its shares. According to the SEC, Mr. Malik was living with Lauren Wood, Immunomedics’ former head of corporate communications, when he tipped her off in April 2020 that a clinical trial to evaluate the company’s Trodelvy breast cancer drug had been halted because existing data already showed it was effective. Within minutes of receiving the tip, Wood bought Immunomedics shares, eventually realizing profits of $213,618 when she sold the stock after the company announced the favorable news about Trodelvy, the SEC said in a civil complaint. Malik also allegedly tipped off three family members, who made a total of about $21,400 in illegal trading profits. He and Wood were arrested Wednesday on parallel criminal fraud charges.

 
CFO
STRATEGY
Banks risk becoming ‘dumb pipes’
Writing for Bloomberg, Ben Ashby says big financial institutions “have the wrong strategy, the wrong structure and usually too much legacy baggage” to develop the new technology that would benefit their businesses, and are instead spending huge sums of money on their core infrastructure. He says the world’s banks risk becoming so-called “dumb pipes” and more nimble entrants to the sector are poised to take advantage of this strategic wrongheadedness. He wonders whether a good alternative is to almost start over and build a new core banking platform within the organization and then migrate the bank onto it. The author cites Lloyds Banking Group’s partnership with Thought Machine as a good example of such a strategy, but cautions that this still only addresses issues with core infrastructure and the final integration carries its own risks.
MANAGEMENT
Fannie Mae promotes controller to CFO
Fannie Mae, the government-sponsored enterprise that guarantees mortgage loans, has promoted Chryssa Halley from controller to chief financial officer. Ms. Halley, who succeeds Celeste Brown in the role, joined the organization in 2006 and has held several senior-level roles with it since then. Jim Holmberg succeeds Ms. Halley as controller. He joined Fannie Mae in 2009 and has served as its vice president of finance accounting.
CORPORATE
WeWork to restate earnings due to accounting error
Office space provider WeWork is to restate its financial results for 2020 and the first three quarters of 2021 for the sponsor of its special purpose acquisition company (SPAC) because calculations were made using the wrong public share count. The restatement comes less than two months after the firm's $9bn merger with BowX Acquisition, which is led by Sacramento Kings owner Vivek Ranadive. In a regulatory filing, WeWork said shares issued as part of BowX’s initial public offering in August 2020 were misclassified as permanent equity when they should have been classified as temporary equity because “certain redemption features” were not solely within WeWork’s control.
TAX
Washington state could delay intro of new payroll tax
Washington Gov. Jay Inslee is in talks with lawmakers about a potential delay in the collection of a mandatory payroll tax to fund Washington state’s new long-term care program, addressing their concerns that it needs to be looked at "through the lens of the pandemic." He said a pause could come as the result of a special session, but said he is also talking to lawmakers about other approaches that would allow a pause of collection of the taxes while the Legislature works on aspects of the bill during its 60-day session that begins January 10th. Under the law, which was passed in 2019, workers will pay a premium of .58% of total pay per paycheck, meaning an employee with a salary of $50,000 will pay $290 a year. Starting January 1st 2025, people who need assistance with at least three “activities of daily living” such as bathing, dressing or administration of medication, can tap into the fund to pay for things like in-home care, home modifications like a wheelchair ramp and rides to the doctor. The benefit also covers home-delivered meals, and reimbursement to unpaid family caregivers. The lifetime maximum of the benefit is $36,500, with annual increases to be determined based on inflation.
IRS CI report highlights pandemic year work
The IRS Criminal Investigation department (CI) identified more than $10bn from tax fraud and financial crimes in the fiscal year that ended September 30th 2021 - 90% of the IRS' entire budget. CI initiated 2,581 investigations, recommending 1,982 potential defendants for trial. Those cases, usually prosecuted by the Tax Department of the Attorney General’s Office of the U.S. Department of Justice, resulted in 1,268 sentencings, a nearly 80% to-prison rate. Agents spent 72% of their investigative man-hours investigating tax-related crimes like tax evasion and tax fraud. They conducted approximately 292 covert operations in areas focused on unscrupulous tax return preparers, offshore tax schemes, money launderers, dark web marketplace operators, and tax evasion. “Looking back at 2021, I am most proud of our employees,” said CI head Jim Lee. “They tenaciously overcame personal and professional challenges during the COVID pandemic and continued to serve the American people by protecting the tax system that funds our country’s services and benefits. These aren’t just good numbers for a pandemic year, these are good numbers, period.”
FUTURE OF WORK
The future of work
The FT’s Emma Jacobs reviews one novel and two non-fiction books that shine a spotlight on dramatic changes in working culture, including working from home, presenteeism, and the ‘Big Resignation.’
INTERNATIONAL
Banks fined over 'Sterling Lads' forex cartel
Barclays, Credit Suisse, HSBC and NatWest have been fined a total of €344m ($390m) by EU antitrust regulators for foreign exchange market rigging. UBS swerved a €94m fine by alerting the European Commission to the cartel, which was set up via a chatroom known as "Sterling Lads." HSBC was fined €174.3m, Credit Suisse’s fine was set at €83.3m, Barclays at €54.3m and RBS at €32.5m. NatWest said the misconduct took place about a decade ago in a single chatroom and involved a former employee, and since then its culture and controls had fundamentally changed. “Our cartel decisions . . . send a clear message that the Commission remains committed to ensure a sound and competitive financial sector that is essential for investment and growth,” EU competition chief Margrethe Vestager said, adding "The collusive behavior of the five banks undermined the integrity of the financial sector at the expense of the European economy and consumers.” The information exchanges enabled the traders "to make informed market decisions on whether and when to sell or buy the currencies they had in their portfolios, as opposed to a situation where traders acting independently from each other take an inherent risk in taking these decisions," the Commission said.
Swiss fund displayed blackface photo for eight years
A Black ex-employee of Swiss-headquartered private equity fund  Partners Group who is suing the firm for racial discrimination and harassment has said that a photo of partying staff in blackface was displayed in the workplace for eight years. Harmonie Mulumba said in the suit that she suffered racial discrimination and harassment during her time on the company's associate program, and she believed the incident to be “reflective of the true character and culture” of Partners. Partners said an external law firm which investigated a series of incidents alleged by Mulumba, including “alleged racial slurs,” didn't uphold any of the claims, and Partners denies any of the racial discrimination and harassment allegations. Bloomberg notes that “Switzerland's financial industry, like those in other countries, has struggled to shake a reputation for lacking diversity and, at times, racial sensitivity.”
Pandemic boosts public faith in researchers and science
An international Gallup poll suggests that trust in science and scientists has increased since the pandemic.  Results published by the Wellcome Trust, a London-headquartered foundation focused on health research, show that about 80% of people from 113 countries said they trusted science either “a lot” or “some.” About three-quarters of the 119,000 surveyed said they trusted scientists, either “a lot” or “some.” Fatima Tokhmafshan, a geneticist and science communicator who was not associated with the survey, said she was “not surprised by the results,” and suggested the interdisciplinary response to the pandemic among scientists in fields including public health, immunology, zoology and epidemiology helped people to understand the connections between science and their own well-being.
OTHER
Government could miss payments as soon as December 21st, warns think-tank
The United States faces a default sometime between December 21st and January 28th if Congress does not act to raise or suspend the debt ceiling, the Bipartisan Policy Center (BPC) warned on Friday. Congress passed legislation on Thursday to fund the government through mid-February, averting the risk of a partial government shutdown this week. But lawmakers have yet to address the fact that they have authorized more borrowing and spending than their debt limit allows. “Those who believe the debt limit can safely be pushed to the back of the December legislative pileup are misinformed,” said Shai Akabas, BPC’s director of economic policy. “Congress would be flirting with financial disaster if it leaves for the holiday recess without addressing the debt limit.” December 15th is particularly important because the Treasury Department is required to make a $118bn payment to the Highway Trust Fund. If corporate tax receipts that are due that day come in weak, Treasury could face a cash crunch and the United States would be unable to fully meet all of its obligations like paying out Social Security and funding military paychecks.

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