The week’s news included; SEC awards whistleblower record $279m, Ed Sheeran wins copyright lawsuit, Boohoo settles fake discount lawsuit for $197m, Adidas sued by shareholders over Ye debacle.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page, Facebook page and Instagram Page, for regular posts of important headlines. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- City A.M. – Are housing targets good or bad?
- BBC News – AI: Which jobs are most at risk from technology?
- FT – Three failed US banks had one thing in common: KPMG
- City A.M. – We might not be able to control ChatGPT, but we can control the data it consumes
1. LARGEST SEC WHISTLEBLOWING AWARD
The US Securities and Exchange Commission (SEC) has given its largest whistleblower award in history, a staggering $279 million. An unnamed whistleblower provided critical information and aid that led to a successful enforcement action carried out by the SEC. Over $4 billion of ill-gotten gains and interest was seized as a result. The SEC did not specify which action it was or who it was against. This dwarves the previous largest award of $114 million awarded in October 2020.
The SEC’s whistleblower program rewards those who bring information that is used in the regulator’s enforcement actions. On the contrary, the UK Financial Conduct Authority does not offer monetary awards for whistleblowing. Many analysts have criticised the UK’s approach over failures to award or properly protect whistleblowers who bring forth information on illegal or unethical practices.
2. COLD CALLING BAN
The sale of financial products through cold calling is to be banned in the UK. Consumers have been getting scammed by sham cryptocurrency schemes and insurance products. Cold calling has been an effective means by which scammers have been reaching victims. It is hoped that banning the method altogether will help consumers easily identify illegitimate salespeople and prevent fraud. Anyone who receives a cold call offering financial products such as insurance or cryptocurrency schemes will know it is a scam. Over 41 million people were targeted by fraud last year and it is now the most common crime in the UK. The full list of financial products under scope of the new ban will be confirmed after a consultation period.
3. ARM PICKS US FOR LISTING
British tech firm Arm is taking its $10 billion stock market listing to the US, shunning the UK. The microchip designer has been dubbed as the “crown jewel” of British tech. It produces semiconductor chips that are essential parts of all modern technology such as phones, computers and cars. Arm had previously announced its plans not to list in London. Last week, Arm’s owner SoftBank revealed that a draft registration statement had been submitted to the US Securities and Exchange Commission. Some reports claim the listing could raise up to $10 billion.
This comes after SoftBank’s planned $40 billion sale of Arm to tech giant Nvidia collapsed last year. The deal faced backlash from regulators across the world who threatened to block the deal.
4. UK SHARE LISTING SHAKE UP
The Financial Conduct Authority (FCA) has announced plans to make the UK more attractive for companies looking to list on stock exchanges. Rules requiring shareholder votes on transactions could be revoked under the plans. Two listing categories, standard and premium, could be replaced by a single category to help streamline the listing process. This move follows the decision by British tech firm Arm to list in the US Stock Exchange instead of London, as discussed above. The FCA has said it is keen to make the UK more competitive for companies seeking to float their shares. Listings in the UK have fallen by 40% since 2008. The move has been widely welcomed across the financial industry but there are concerns about the potential erosion of shareholder rights.
5. US & EU INTEREST RATES RISE
The US Federal Reserve has raised interest rates again although there are signs this could be the last hike. The target interest rate range rose to 5% to 5.25%. This marks the highest interest rates in the US since 2009. Interest rates in the US were near 0% barely a year ago but the Federal Reserve has hiked interest rates 10 times in the last 14 months. Rapidly rising interest rates have been partly blamed for the woes in the US banking sector. Increased borrowing costs and a consequent slowdown in the wider economy has taken its toll on mid-sized banks. Fortunately the Fed has signalled that this raise may be the last for a while.
In Europe, the European Central Bank also raised rates by 0.25%. Like its counterparts, the ECB is aiming to stem inflation. The benchmark rate in the EU will now sit at 3.25%.
6. ED SHEERAN WINS COPYRIGHT LAWSUIT
Ed Sheeran has won his copyright lawsuit against the heirs of Marvin Gaye. The heirs claimed Sheeran copied Marvin Gaye’s “Let’s Get It On” in composing his 2014 song “Thinking Out Loud”. A court ruled that Sheeran had independently created his song and did not infringe on the copyright of Marvin Gaye. Sheeran had always stated that he had written the song independently in his house and he took inspiration from his grandparents and his love life. Sheeran had also said that if he lost this case he would quit music. Ed Sheeran is no stranger to copyright lawsuits after he won a UK case in 2022 over his 2017 song “Shape of You”.
7. UK PAY DISPUTES
After months of dispute, the government has struck a pay deal with NHS staff in England. Over 1 million staff will receive a 5% pay rise and a one-off sum of £1655 or more. The deal was hashed out between the government and 14 health unions. There are still some three unions who have rejected the deal and could take further strike action. A deal with junior doctors is yet to be agreed. They fall under a different contracts so do not fall under the recently agreed pay deal. The British Medical Association, who represent junior doctors, is seeking a 35% pay rise to compensate workers of 15 years of below-inflation pay increases.
On the railways however, RMT union members have voted for further strikes. 90% of members who voted backed further strikes, covering 14 train operating companies. The dispute is over pay and working conditions and has been ongoing since May 2022. In schools, teachers in England were on strike last week after rejecting the government’s most recent offer, describing it as “insulting”. The National Education Union (NEU) is considering further strikes in the coming months.
8. JP MORGAN BUYS FIRST REPUBLIC
JP Morgan Chase has bought collapsed US bank First Republic in a $10.6 billion deal. The bank was shut down by US regulators in April and became the second largest consumer bank collapse in US history. JP Morgan will pay the sum to Federal Insurance Deposit Corp (FIDC), the regulator overseeing First Republic.
First Republic was a consumer bank specialising in home loans. The bank was rocked by the collapses of Silicon Valley Bank and Signature Bank in March. Over $100 billion in deposits were withdrawn as consumers feared about the bank’s stability. Despite a $30 billion cash injection from America’s largest banks, this was not enough to help First Republic weather the storm and it collapsed. All 84 of First Republic’s offices now operate as JP Morgan Chase banks. As part of the deal the FIDC will share some of the losses and issue the bank with $50 billion in financing. Check out our article exploring the recent banking crisis.
9. BOOHOO SETTLES FAKE DISCOUNT LAWSUIT
Boohoo has settled a lawsuit over fake discounts for $197 million. The fashion company was sued by customers alleging that Boohoo issued fake discounts. Boohoo reportedly artificially raised prices then offered discounts to dupe customers into thinking savings were greater than they were. A class action lawsuit was filed in the US seeking damages for customers. Boohoo denied all allegations but settled the matter to avoid the cost and effort of further litigation. The $197 million sum will see affected customers receive a $10 gift card and free shipping. Boohoo also owns brands PrettyLittleThing and Nasty Gal.
10. ADIDAS SUED OVER KANYE WEST LOSSES
Shareholders of Adidas have sued the sportswear retailer over the heavy losses incurred due to their relationship with Kanye West. The shareholders claim Adidas knew of West’s problematic behaviour well before the relationship ultimately collapsed. Adidas cut ties with West after he made a series of controversial rants. Shareholders claim Adidas failed to take precautionary measures to reduce their exposure to West’s actions despite their awareness of his behaviour. Adidas has reported that the company could lose €1.2 billion of unsold Yeezy products if they are not sold. The shareholders claim that Adidas management ignored the risks of an oversupply of Yeezy products if demand fell due to West’s behaviour. In 2018, employees had reportedly raised concerns about their partnership with Kanye West but management brushed this off. Despite this, Adidas rejects the shareholders’ claims and will defend itself “vigorously”.
