Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.

A High Court judge is to rule on a bid to combine thousands of claims against the company that oversaw the fund run by Neil Woodford. London law firms Harcus Parker and Leigh Day have applied for a group litigation order in the High Court to bring together claims by nearly 3,000 investors in Woodford Equity Income Fund (WEIF), which at one stage had more than £10bn under its management. The High Court was told that it initially performed well, but by 2017, its management was “characterised by an imprudent spread of risk and, in particular, inappropriate levels of investment in illiquid, speculative, hard-to-value stocks and small-cap stocks.” Link Fund Solutions, the authorised corporate director to WEIF, is said to have “breached its statutory duties” causing substantial losses for investors.

 

The Times

The London Stock Exchange Group (LSEG) has bought risk management firm Acadia as part of ongoing moves to grow its capabilities in both the public and private markets. Acadia provides risk management, margining and collateral services to global financial firms and enables over $1tn in collateral exchanges daily. The transaction is expected to strengthen LSEG’s provision of resilient and systemically important financial market infrastructure to its customers, says LSEG.

 

Securities Finance Times

City AM

Over-complex regulations and reporting burdens could leave Europe trailing behind the US in attracting investment, warns Björn Rosengren, chief executive of ABB.

 

Financial Times

The Financial Reporting Council (FRC) will focus on going concern, fraud risks and climate related issues in the next cycle of audit inspections, the regulator has said. These sectors are considered by the FRC to be higher risk, for corporate reporting and audit, by virtue of economic or other pressures.

 

Accountancy Daily

Accountancy Today

The Competition and Markets Authority (CMA) has appointed interim CEO Sarah Cardell to the top spot on a permanent basis. Ms Cardell has been running the regulator since July following Andrea Coscelli’s departure. “Having served at the CMA for over 9 years – most recently as Interim CEO – Sarah’s expertise in competition, regulation and digital markets is unrivalled and she will help to ensure the regulator continues making competition work for consumers and businesses. I look forward to working with her closely,” Business Secretary Grant Shapps said.

 

City AM

Rules laid out by the Basel Committee of global banking regulators for how much capital banks should hold to cover crypto assets on their books have been endorsed by The Group of Central Bank Governors and Heads of Supervision. They will form a new section of the Basel Framework, which global regulators have agreed to put in place by the start of January 2025.

 

Reuters

Honeywell International has agreed to pay $202.7m to settle charges it paid bribes to obtain contracts with government entities in Brazil and Algeria. The US Securities and Exchange Commission (SEC) and the Justice Department said that Honeywell, a conglomerate which primarily operates in four areas of business: aerospace, building technologies, performance materials and technologies, and safety and productivity solutions, violated the Foreign Corrupt Practices Act (FCPA) by allegedly paying bribes to obtain business with the Brazilian state-owned oil company Petrobras. Additionally, the SEC said Honeywell’s Belgian subsidiary paid more than $75,000 in bribes in 2011 to an Algerian government official to win business with the Algerian state-owned oil company Sonatrach. “For years, Honeywell neglected to implement sufficient internal accounting controls to mitigate against known corruption risks in countries like Brazil and Algeria,” said Charles Cain, chief of the SEC enforcement division’s FCPA unit. “This failure created an environment in which Honeywell employees and agents could and did facilitate bribes.”

 

Bloomberg

Financial Times

Reuters

British prosecutors would be able to seize £1bn of suspect assets from oligarchs and kleptocrats under new anti-mafia laws such as those employed by Italian authorities to destroy organised crime networks. Researchers at the Royal United Services Institute (RUSI) say adopting such a law would allow investigators to confiscate property and other assets if they can show that oligarchs and kleptocrats are a national security threat because of their association with corrupt governments and individuals. Maria Nizzero, a RUSI fellow and financial crime expert, said changing the law this way would solve the UK government’s dilemma about what to do with the assets seized from Russian oligarchs since Vladimir Putin’s invasion of Ukraine.

 

The Daily Telegraph

The UK government has launched legal proceedings against medical goods provider PPE Medpro as the Department of Health and Social Care (DHSC) seeks the return of £122m it paid to the company to secure 25m sterile surgical gowns in June 2020. The company has been linked to Baroness Michelle Mone, whose husband Douglas Barrowman received £65m in profits from PPE Medpro in 2020, £28.8m of which was transferred to a trust whose beneficiaries were Mone and her children. PPE Medpro claimed that the department was fighting over “contract technicalities” and the case will “show the utter incompetence of DHSC to correctly procure and specify PPE during the emergency procurement period.”

 

Financial Times

The Times

City AM

The Treasury has announced that compulsory use of HMRC’s Making Tax Digital (MTD) scheme for Income Tax Self-Assessment (ITSA) will be delayed by two years to April 2026. It had already been postponed from next year to April 2024 because the technology was not ready. “A phased approach to mandating MTD for Income Tax will allow us to work together with our partners to make sure that our self-employed and landlord customers can make the most of the opportunities this will bring,” HMRC chief Jim Harra said. The government also changed the annual income threshold for MTD to £50,000 from April 2026, up from its initial proposal of £10,000, because of fears that the lower limit would impose too great a burden on small businesses. The threshold will be reduced to £30,000 from April 2027. 

 

Accountancy Age

Financial Times

Mortgage Solutions

The Times

The European Union has adopted a plan for a global minimum 15% tax on big business. The plan, which was drawn up with the guidance of the Organisation for Economic Cooperation and Development, has been backed by nearly 140 countries and aims to stop governments racing to cut taxes in a bid to attract companies. While implementation of the minimum tax in the EU was delayed as member states raised objections or adopted blocking tactics, EU economy commissioner Paolo Gentiloni has announced that the bloc has now “taken a crucial step towards tax fairness and social justice" by adopting the minimum rate. He added: “Minimum taxation is key to addressing the challenges a globalised economy creates."

 

BBC News

Euronews

France 24

Money managers are selling off private equity holdings via the secondary market at a rapid rate, investors say, as asset managers cash out to cover losses elsewhere and rebalance portfolios. Analysis firm Preqin estimates the value of secondary transactions up until the third quarter was about $65bn – close to 2021's total of just over $70bn and far higher than previous years.

 

Reuters

BlackRock has said in an annual update on its stewardship policies that it would not be making significant changes in the way it engages with companies and votes on environmental and social issues in the year ahead, despite a backlash against its stance on climate change from some conservative politicians in the U.S. One change the asset manager said it would make, however, was that it would offer its support for enhanced disclosures from companies exposed to risks and opportunities relating to nature. Another was to encourage companies to release reports on their sustainability performance far enough in advance of their annual meeting so that investors could properly assess the data.

 

Reuters

A new survey of manufacturing businesses by the CBI reveals that output over the three months to December fell at its fastest pace since the start of the pandemic. The decline was mainly driven by a fall in production of food, drink, tobacco, paper and the mechanical engineering sectors. Anna Leach, deputy chief economist at the CBI, said: “The corrosive effect of higher inflation on demand is increasingly clear, as manufacturing output contracted at the fastest pace in two years over the last quarter. While some global price pressures have eased in recent months, cost and price inflation will likely remain very high in the near term, with rising energy bills a key concern for manufacturers.”

 

The Times

The Chancellor will deliver the first official UK Budget since 2021 on March 15th next year. Jeremy Hunt yesterday asked the Office for Budget Responsibility to prepare forecasts for a Budget on that date.

 

Financial Times

Salesforce boss Marc Benioff has questioned the productivity of staff working from home in a leaked Slack message. Mr Benioff, the joint chief executive of the business software company, said new employees hired during the pandemic were much less productive, adding: “Are we not building tribal knowledge with new employees without an office culture?” Salesforce was one of the first tech companies to embrace remote work during the pandemic but is now among the major players to experience a slowdown in growth for the first time. The Times notes that Benioff is also facing an exodus of senior management, with Bret Taylor, the co-chief executive, and other senior staff, announcing their resignations in recent weeks.

 

CNBC

The Times

CCLA Investment Management is spearheading a group of investors in a campaign to help protect the rights of migrant seasonal workers in the UK. CCLA, along with 10 investment firms including Evelyn Partners, has signed a statement calling on retail companies and companies sourcing staff from the UK agriculture supply chain to investigate recruitment costs that might be being unfairly paid by workers. The group said migrant workers, recruited and employed through the UK government’s Seasonal Worker Scheme, “are being obliged to pay excessive fees to agents and middlemen in addition to other fees, travel and visa costs for crucial, but temporary roles, supporting the UK’s food sector,” to the tune of more than £35m in 2022 alone, according to some estimates.

 

Citywire Wealth Manager

ESG Clarity

IFA Magazine

A special investigation by Reuters finds the crypto exchange Binance has processed trades worth over $22trn this year, but details of its finances remain largely hidden. The exchange is trying to shore up confidence following the collapse of FTX, a surge in customer withdrawals last week and a steep drop in the value of its digital token. Binance's attempts to reassure investors following the $6bn in outflows were set back when Mazars – the accounting firm it hired to verify its reserves - suspended all work for crypto firms. Now, the UK press is reporting that former British prime minister Boris Johnson’s brother, Lord Johnson of Marylebone, has resigned from the UK advisory board of one of Binance's subsidiaries, Bifinity. It is thought Jo Johnson and fellow peer Lord Vaizey, who is also an advisor to Bifinity and sits on Binance's global advisory board, were attempting to help the company build legitimacy with regulators and politicians after the Financial Conduct Authority last year blocked Binance from launching a UK division over concerns about its transparency.

 

Reuters

The Daily Telegraph

The Guardian

Figures show the world’s largest investment banks will earn more dealmaking fees in India this year than in China, in what has been described as an historic reorientation away from the Chinese economy.

 

Financial Times

Some 200 countries have signed a deal to halt the destruction of Earth's ecosystems after two weeks of intense negotiations at the UN biodiversity summit in Canada. The US and the Vatican were among those not to sign, while several African countries objected. The deal includes targets to protect 30% of the planet for nature by the end of the decade, reform $500bn of environmentally damaging subsidies, and restore 30% of the planet's degraded terrestrial, inland water, coastal and marine ecosystems.

 

Reuters

The Guardian