U.S. Continues to Tweak Cuba Regulations
The Obama administration continued its loosening of U.S. sanctions on Cuba, announcing a new presidential policy directive that aimed toward normalization of relations between Washington and Havana. The aim was to make the normalization “irreversible,” according to a U.S. official. “Congress should lift [the U.S. embargo on Cuba] but we will do what we can within that context to make these changes irreversible,” he said. A legal expert, however, said that the announced changes were more tweaks and tinkering at the edges.
Douglas Jacobson, a partner at the international-trade focused firm Jacobson Burton Kelley PLLC, said the changes “represent further tweaks to the Cuban embargo” that are primarily intended to support the Cuban people and facilitate authorized transactions. While the increased limits on allowed imports of rum and cigars are sexy, he said, the changes “will not likely have a major impact on most U.S. business activities that have been authorized to date.”
Mr. Jacobson said that the changes announced Friday affect certain parties and certain types of transactions, likely due to things the administration has heard since December 2014, when Washington and Havana announced their warming relations after a half-century in the cold. But, there’s a limit to how far the administration can go, he said .”The administration has gone up to the edge, and some may consider over the edge, on what is authorized under the law, but Congress has not challenged it. Regulatory changes to the embargo that individually can have a positive impact on certain sectors don’t allow normalized trade with Cuba,” he said.
U.K. proposes new money laundering law. The U.K. government proposed a bill this week in the House of Commons that it says would help with the fight against money laundering and the financing of terrorism. The Criminal Finances Bill is “one of the most significant changes” to the U.K. anti-money laundering regime in a decade, the government said in a statement. It is part of a broader action plan laid out in April that tackles holes in the U.K. legal regime against money laundering and terrorist financing.
China detains casino employees. Chinese authorities said they have detained a number of employees of casino operator Crown Resorts, including Australian citizens, for suspected gambling crimes, the WSJ reports. Melbourne-based Crown, part-owned by Australian billionaire James Packer, has been benefiting from an upsurge in Chinese tourists at its Australian casinos even as a graft clampdown by the Chinese government has hurt its operations in the gambling enclave of Macau. It is illegal to advertise casinos in mainland China, but casino operators such as Crown can promote tourism to the resorts where the casinos are located. “According to the authorities overseeing the case, some Australian nationals have been detained by the Chinese authorities on suspicion of gambling crimes,” a Chinese foreign ministry spokesperson said in an emailed statement Sunday. “The case is currently under investigation.”
Regulators eye M&A valuations. When the Ultimate Fighting Championship put itself up for sale this year, the mixed-martial-arts organization showed one measure of earnings of about $170 million, people familiar with the deal told the WSJ. But with a few tweaks, the figure presented to debt investors helping finance the sale climbed to $300 million, the people said. The higher number allowed the buyer, talent agency William Morris Endeavor, to borrow $1.8 billion for the deal without exceeding a regulatory “leverage” guideline. Banking regulators have shown increasing concern about such moves in the leveraged-loan market. In recent weeks, Fed examiners have notified William Morris Endeavor’s lenders, Goldman Sachs Group and Deutsche Bank, that the way the UFC loans stayed under leverage guidelines could be problematic, according to people familiar with the matter.
U.S., U.K. threaten new Russia sanctions. U.S. and U.K. leaders on Sunday threatened Russia with sanctions and other measures to pressure it to change course on Syria, saying the onus is on Russia to help bring an end to violence in the more than five-year-long conflict there, the WSJ reports. Secretary of State John Kerry and British Foreign Secretary Boris Johnson didn’t rule out military action in Syria’s civil war but came close, emphasizing there is little appetite in Europe or the West for it. For now they suggested that diplomatic talks would continue for the foreseeable future to end fighting that has killed more than 400,000.
New rules to limit coolants.A global pact to limit planet-warming emissions is likely to force manufacturers of air conditioners and refrigerators to consider passing the additional cost of alternative coolants to consumers, the WSJ reports. Global envoys agreed on Saturday to phase out hydrofluorocarbons from cooling appliances beginning in 2019. Meeting in Rwanda, major emitters including the U.S., China and India agreed to aim for an 80% reduction in their use by 2045. Alternative coolants exist to power window-unit air conditioners, commercial chillers and household refrigerators, but many are unapproved for use in the U.S. Some are flammable. Manufacturers will have to convince regulators the new compounds are safe before retooling production.
California to consider drug law. The possibility of Democrats capturing the presidency and Congress is worrying enough for pharmaceutical and other health-care investors. But that isn’t the full extent of risk that shareholders face this election season, the WSJ reports: California voters are set to weigh in on a referendum known as Proposition 61. That proposed law would mandate that state agencies would pay no more for prescription drugs than the price paid by the Department of Veterans Affairs. The federal agency by law is owed steep discounts from a given drug’s list price and is also empowered to further negotiate on price.
Swiss regulator warns of money laundering risk. About 15 Swiss banks are particularly exposed to money laundering risks, according to the head of Swiss banking watchdog FINMA who was interviewed in Swiss newspaper SonntagsZeitung.
Cyberthieves target ATMs. The ATM is the newest front in the war against cyberthieves. A year after millions of U.S. merchants began installing equipment at the check-out line to accept credit and debit cards with security chips, the automated teller machine is getting similar technology, the WSJ reports. The move comes as thieves increasingly target ATMs. While chip-enabled credit cards are expected to slow growth in fraud at the checkout counter, the number of ATMs compromised by criminals jumped more than sixfold from 2014, according to a recent report from FICO, a credit-score provider and analytics firm. FICO says the number of 2015 compromises was the highest it ever recorded, though it declined to disclose specific numbers.
Companies try selfies instead of passwords. Selfies, long derided as a symbol of narcissism and oversharing, have found a more serious purpose. The WSJ reports companies and government agencies—ranging from the ride-hailing service Uber Technologies Inc. and credit-card giant MasterCard to the Alabama Department of Revenue—are asking people to snap self-portraits on their smartphones as proof of identity.
Samsung batteries tested by own lab. The batteries used in Samsung Electronics Co.’s troubled Galaxy Note 7 were tested by a lab that belongs to the South Korean electronics giant, a practice that sets it apart from other smartphone manufacturers, the WSJ reports. To sell smartphones at major U.S. carriers, phone makers are required to test phone batteries at one of the 28 labs certified by the U.S. wireless industry’s trade group, the CTIA, to ensure compliance with standards set by the Institute of Electrical and Electronics Engineers. Samsung is the only such manufacturer using in-house battery-testing facilities for CTIA certification, according to the association.
Wells branch business pinched by scandal. Wells Fargo & Co. spent much of its third-quarter earnings report trying to get ahead of its sales-tactics scandal, disclosing that the problems already have crimped its branch business, the WSJ reports. The bank’s Sept. 8 sales-practices settlement arrived with just a few weeks left in the quarter and didn’t affect its broader results. Still, third-quarter net profit of $5.64 billion fell 2.6% from a year earlier. While earnings per share of $1.03 beat analysts’ expectations, they were down from $1.05 a year ago.
Goldman wins Libya case. Goldman Sachs Group Inc. Friday won a lawsuit in which Libya’s sovereign-wealth fund sued the U.S. investment bank for $1.2 billion to cover losses from derivatives it bought in 2008, a High Court judge in London ruled, the WSJ reports. The ruling follows a two-month trial earlier this year in which the Libyan Investment Authority, or LIA, alleged that Goldman executives exerted “undue influence” over its officials, who didn’t understand the trades. Goldman denied wrongdoing and said the Libyan fund understood the risks. Goldman arranged nine equity-derivative trades for the LIA in 2008 that expired worthless in 2011. Goldman earned about $222 million from the trades, according to the fund. Goldman disputes the amount of profit it made.
VW to pay $175 million to drivers’ lawyers. Volkswagen has agreed to pay $175 million to plaintiffs’ lawyers representing U.S. drivers in litigation over the auto maker’s diesel-emissions crisis, a person familiar with the matter told the WSJ. The amount, which still needs a federal judge’s approval, covers work done on a $14.7 billion deal struck between Volkswagen, government agencies and 475,000 drivers of diesel vehicles with 2.0-liter engines. The total is far short of the $324 million in fees and $8.5 million in expenses that the plaintiffs’ committee said in August would be the maximum it sought for its work on the deal.