• Actress Shailene Woodley: Plastics have caused a true ocean, marine crisis
    Yahoo Finance

    Actress Shailene Woodley: Plastics have caused a true ocean, marine crisis

    Actress and environmental activist Shailene Woodley joins Yahoo Finance to chat about her efforts to rid the world of harmful plastics in oceans.

  • Apple Arcade, Apple's new game service, could change the way you play on your phone
    Yahoo Finance

    Apple Arcade, Apple's new game service, could change the way you play on your phone

    On Sept. 19, Apple will officially launch Apple Arcade, the company's new game subscription service.

  • United Increases Its Loyalty Dominance at Denver
    Skift

    United Increases Its Loyalty Dominance at Denver

    In the hub-and-spoke game of legacy airlines, frequent flyers living in a hub city are often forced into loyalty to the carrier that calls the airport home. In Detroit, for example, most passengers who don't want to connect through Chicago or Atlanta fly on Delta. In Charlotte, it's American. And among other airports that United […]

  • Bankers or Mobsters Becomes Question in German Cum-Ex Tax Probe
    Bloomberg

    Bankers or Mobsters Becomes Question in German Cum-Ex Tax Probe

    (Bloomberg) -- Germany’s biggest tax scandal has landed the masters of the financial universe with an unflattering label: criminal organizations.It’s an allegation not leveled by finger-wagging populist crusaders, but prosecutors seeking to push their case beyond a probe of lost revenue. Now two dozen financial institutions caught up in the so-called Cum-Ex dragnet are suspected of forming criminal organizations, money laundering, and in some cases investor fraud, a court document shows.Equating bankers with behavior associated with mobsters lets prosecutors pack more punch into a case exploring whether financial institutions and wealthy individuals illegally engaged in controversial transactions that allowed multiple dividend-tax refunds. The Cum-Ex deals, which peaked between 2007 and 2011 before the government shut them down, cost the German treasury more than 10 billion euros ($11 billion) in lost revenue, lawmakers estimate.While tax crimes remain the central issue, prosecutors have also found evidence that private investors may have been duped and that the trading strategy may have entailed money laundering by sharing illicit profits, the ruling seen by Bloomberg News says. Authorities raided the offices of Deutsche Boerse AG’s Clearstream unit last month, the central depository for any shares in Germany, based on a warrant citing more than 50 probes by Cologne prosecutors.Adding CrimesThe investigations focus on banks, brokers and asset managers over various roles that were necessary for the Cum-Ex transactions, including buyer, short-seller, custody bank and providers of leverage. According to the latest findings, affiliated companies within a group often took on all of these roles at once, according to the document. Besides brokers and investment companies, the warrant list more than 20 lenders, among them Morgan Stanley, JPMorgan Chase & Co. and Bank of America Merrill Lynch.JPMorgan, Bank of America and Morgan Stanley declined to comment. Deutsche Boerse is fully cooperating with the authorities, a company spokesman said, declining to comment further. Prosecutors in Cologne didn’t immediately respond to a request seeking comment.Prosecutors like to add crimes like money laundering in complex investigations because they hand them an investigative toolbox that’s out of reach when only tax crimes are involved, said Marco Mansdoerfer, a criminal law professor at Saarbruecken University. It also makes it easier to add more suspects, he said.Complex Structure"There’s a clear tendency to use it in white-collar crime probes, though originally it was intended only for mafia-type of action," Mansdoerfer said. "It’s a tactical move, because you want to investigate more broadly and use these intelligence methods."Targeting high finance in a similar vein to drug cartels or the mafia would have few tangible material effects should prosecutors decide to charge banks, since possible fines are based on overall profits made, regardless of the number of offenses involved. For employees and managers who are probed individually, on the other hand, a conviction for additional crimes would typically increase prison terms.Before prosecutors file charges, they often drop the additional crimes again to reduce complexity during trial, said Mansdoerfer. As useful as prosecutors may find it at the investigative stage, it’s easier to try a case under tax crimes alone, according to the professor.The first trial looking into Cum-Ex started on Sept. 4 in Bonn, where the court is hearing a case against two former traders, who are cooperating. Their indictment only cites aggravated tax evasion as the alleged crime.Tomorrow, one of the main defendants, Martin Shields, is scheduled to testify. His appearance, slated for two consecutive days, marks a hotly anticipated moment in the Cum-Ex saga, which relied on a complex web of interactions by different financial institutions, many of which have now been caught up in the investigation.To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.netTo contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Benedikt KammelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Decoding Warren Buffett’s Share Buyback Strategy
    Market Realist

    Decoding Warren Buffett’s Share Buyback Strategy

    Berkshire Hathaway CEO Warren Buffett has spoken openly about his stock repurchasing strategy, calling it "simple arithmetic." How does he do it?

  • Could Apple See a Rebound in iPhone Sales?
    Market Realist

    Could Apple See a Rebound in iPhone Sales?

    In a research note released yesterday, Apple (AAPL) analyst Ming Chi Kuo noted that more people from the US could choose the iPhone Pro than the iPhone 11.

  • Oracle Unveils More Autonomous Software to Boost Cloud Growth
    Bloomberg

    Oracle Unveils More Autonomous Software to Boost Cloud Growth

    (Bloomberg) -- Oracle Corp. unveiled an operating system that runs without the need for human oversight, part of a raft of new software tools meant to ease the company’s rocky transition to cloud computing.The operating system expands Oracle’s line of autonomous products beyond databases, the company’s flagship software. Chairman Larry Ellison announced the new Linux-based product Monday during remarks at OpenWorld, Oracle’s annual user conference in San Francisco.“If you eliminate human error in autonomous systems, you eliminate data theft,” Ellison said on stage. The feature makes Oracle’s products more secure than those sold by cloud leader Amazon Web Services, he said.Ellison said the operating system, which the company’s Autonomous Database runs on, will update itself without any downtime.The world’s second-largest software maker has sought to revive sales growth after years of almost stagnant revenue. Oracle hopes that a lineup of “self-driving” programs could help differentiate the company’s offerings against products from Amazon.com Inc. and Microsoft Corp. Those companies are the top two in the market to rent storage and computing power, which is projected to reach almost $39 billion in 2019. The tools may also entice longtime Oracle customers to upgrade their technology to take advantage of artificial intelligence and machine learning capabilities.Oracle disclosed last week that Mark Hurd, one of the company’s two chief executive officers, would take a leave of absence to treat an unspecified illness. Ellison and Oracle’s other CEO, Safra Catz, said they would fill in for Hurd, who has overseen the company’s sales and marketing efforts.The Redwood City, California-based company also announced a variety of changes and new programs to bolster its partner ecosystem:Oracle unveiled an agreement with VMware Inc. to bring virtualization software to Oracle’s cloud, similar to deals VMware has signed with Microsoft and Google.Customers will be able to buy software made by other companies in the Oracle Cloud Marketplace, which may help company partners including Cisco Systems Inc. and Palo Alto Networks Inc.Oracle also said it expanded a relationship with cybersecurity company McAfee Inc. to bring its security incident software to Oracle’s infrastructure cloud.Ellison said Oracle would offer a free version of its Cloud Infrastructure, giving developers, students and others perpetual access to the company’s autonomous database, computing and storage.The company plans to launch 20 additional cloud data-center hubs, called “regions,” by the end of 2020. Ellison said the company would have more regions around the world than AWS.Oracle will let customers run the autonomous database in their own data centers next year, and unveiled new servers with updated memory components from Intel Corp.To contact the reporter on this story: Nico Grant in San Francisco at ngrant20@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Teva Pharmaceutical Industries Ltd. (TEVA) Gains As Market Dips: What You Should Know
    Zacks

    Teva Pharmaceutical Industries Ltd. (TEVA) Gains As Market Dips: What You Should Know

    Teva Pharmaceutical Industries Ltd. (TEVA) closed the most recent trading day at $8.04, moving +1.26% from the previous trading session.

  • How the 737 MAX Grounding Affects United Airlines Stock
    Market Realist

    How the 737 MAX Grounding Affects United Airlines Stock

    One of 2018’s top airlines, United Airlines stock has struggled to gain altitude in 2019. UAL has returned ~9% YTD, lagging the broader market.

  • 3 Mega-Cap Cloud Stocks for Tech Investors to Buy in September
    Zacks

    3 Mega-Cap Cloud Stocks for Tech Investors to Buy in September

    Check out these three mega-cap cloud computing stocks that tech investors should consider buying right now...

  • JPMorgan Inherited ‘Spoof’ Method From Bear Stearns, U.S. Says
    Bloomberg

    JPMorgan Inherited ‘Spoof’ Method From Bear Stearns, U.S. Says

    (Bloomberg) -- When JPMorgan Chase & Co. took over Bear Stearns more than a decade ago, it got two traders with a new trick.Their strategy: Use multiple fake orders to manipulate the prices of precious metals futures. The maneuver, adopted by the traders’ new colleagues at JPMorgan, became part of a spoofing and rigging campaign so expansive that federal authorities have now likened it to a criminal enterprise operating inside the U.S.’s biggest bank.In a criminal indictment unsealed on Monday, U.S. prosecutors accused three JPMorgan traders of rigging futures trades in precious metals for nearly a decade, making millions of dollars for the bank at the expense of counterparties that included the bank’s own clients.The charges were the latest turn in a years-long investigation that has previously yielded guilty pleas from traders at several banks, including two from JPMorgan. Prosecutors said more than a dozen JPMorgan employees ultimately helped make manipulative “spoof” trades for the bank, in part by using the strategy their new colleagues brought in May 2008.That pair, Gregg Smith and Christiaan Trunz, showed their new JPMorgan colleagues “a new style of layering multiple deceptive orders at different prices in rapid succession,” prosecutors wrote. The strategy made their market spoofing more difficult to execute and detect, prosecutors wrote in the indictment of Smith and two others. Trunz pleaded guilty last month and is cooperating with authorities.The strategy was adopted by Michael Nowak, who was JPMorgan’s global head of precious metals trading when he was put on leave last month. Federal prosecutors charged Nowak, Smith and a third man, Christopher Jordan, of “conspiracy to conduct the affairs of an enterprise involved in interstate or foreign commerce through a pattern of racketeering activity” -- counts more commonly known as RICO charges. That language, rarely used in big bank cases, suggests that JPMorgan may face deeper legal jeopardy that goes beyond the individuals who have already been prosecuted.JPMorgan declined to comment.Earlier: JPMorgan’s Metals Desk Was a Criminal Enterprise, U.S. SaysJordan and Nowak appeared in handcuffs in federal court in Newark, New Jersey, where U.S. Magistrate Judge Michael Hammer released them on $250,000 bond. They each face as long as 30 years in prison on the most serious count.Jordan was released to the custody of his parents pending his admission this week into a residential treatment program for alcohol. Hammer said Jordan must abstain from alcohol. “Chris Jordan is innocent of these heavy-handed charges, and we intend to defend him vigorously,” his attorney, Jim Benjamin, said.Nowak, 45, must undergo mental health testing or treatment, the judge said. His lawyers, David Meister and Jocelyn Strauber, said it was “truly regrettable” that prosecutors charged him because he did “nothing wrong.” They said he’d be fully exonerated.The judge ordered that they have no contact with co-defendants, witnesses, and current or former employees of JPMorgan’s precious metals desk unless their lawyers are present. Both men will be arraigned Oct. 4 in federal court in Chicago, where the case was brought.The Commodity Futures Trading Commission also filed a lawsuit against Nowak and Smith on Monday and settled a suit against Trunz.The JPMorgan investigation grew out of a multibank U.S. crackdown on manipulation of commodities markets using techniques including spoofing, in which traders place orders without intending to execute them to try to move prices in their favor. The Justice Department had already brought criminal charges against 16 people, including traders who worked for Deutsche Bank AG and UBS Group AG. Seven pleaded guilty, one was convicted at trial and another was acquitted.Guilt AdmissionsTrunz and the other former JPMorgan trader who admitted guilt said the manipulation was routine, sanctioned by higher-ups and went on for years.“While at JPMorgan I was instructed by supervisors and more senior traders to trade in a certain fashion, namely to place orders that I intended to cancel before execution,” former trader John Edmonds said at a October 2018 hearing, after admitting to commodities fraud and conspiracy. Edmonds entered into a cooperation agreement with the CFTC in July.Trunz told a federal judge in Manhattan last month that spoofing trades of precious metals was rampant at the bank and that he learned the technique from other traders at Bear Stearns and JPMorgan. Trunz, who entered his guilty plea on Aug. 20, said he manipulated futures markets for gold, silver, platinum and palladium from offices in New York, London and Singapore from 2007 to 2016.Read More: The indictment against Smith, Nowak and JordanJPMorgan bought Bear Stearns in a marriage arranged by the U.S. Federal Reserve during the height of the financial crisis in 2008.Already, people inside JPMorgan were using deceptive trading methods, prosecutors said. Their new colleagues brought new ones. In May, the same month the deal was completed, Smith executed the deceptive-layering technique, the indictment said.The new style involved the layering of multiple deceptive orders at nine different prices in rapid succession that together were larger than the portion visible to other traders in the marketplace, known as “iceberg orders.” Prosecutors said this trading style “took hold of the precious metals desk” at JPMorgan and was adopted by Nowak and other conspirators.The indictment lays out dozens of trades that prosecutors allege are just a tiny fraction of the the thousands of transactions the conspirators made as part of the scheme. The charges also pull from electronic chats between the traders that prosecutors allege serve as examples of the criminal purpose behind the deals.In an electronic chat on Feb. 24, 2009, less than a year after Trunz arrived from Bear Stearns, he had the following conversation with a co-conspirator identified only as “CC-7” in the filing:Trunz: so you know its gregg bidding up on the futures trying to get some offCC-7: sweet mateTrunz: In case you were watching some large bids come into marketCC-7: appreeshCC-7: that worked!(Updates with Bear Stearns as origin of trading technique.)\--With assistance from Neil Weinberg and Greg Farrell.To contact the reporters on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net;David Voreacos in Newark, New Jersey at dvoreacos@bloomberg.netTo contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net, David S. JoachimFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Success in China Is All About Having the Right Formula
    Bloomberg

    Success in China Is All About Having the Right Formula

    (Bloomberg Opinion) -- Selling infant formula to China seems so 2016.The country abandoned its one-child policy three years ago, spurring expectations of a baby boom. These have been well and truly dashed. Fertility rates remain stuck around the levels they’ve been at for two decades, and the 15 million children born in 2018 was the lowest figure since 1961. Roughly five Indians are born each year for every three Chinese.So what’s the country’s second-biggest milk producer China Mengniu Dairy Co. doing paying an Amazon.com Inc. valuation for milk-powder producer Bellamy’s Australia Ltd.? The answer tells you a lot about the changing prospects for the Chinese consumer.Bellamy’s, which makes organic milk and infant foods and first sold shares to the public as recently as 2014. Mengniu’s cash offer, which Bellamy’s board has recommended, is a 59% premium to the last pre-deal closing price and values the company at A$1.5 billion ($1 billion), about 30 times its Ebitda in the last fiscal year (Amazon gets just 27 times).Formula producers such as Bellamy’s, Nestle SA, and Danone SA have gone through a rough patch in China recently, driven by the slowing birth rate and a general softening in consumer spending.China’s retail sales grew just 7.5% from a year earlier in August, the National Bureau of Statistics reported Monday, the second-slowest pace since the SARS epidemic in 2003. Fixed-asset investment in food processing plants year-to-date slumped 9.4% from a year earlier, suggesting companies see dismal prospects for growth.So what’s so special about Bellamy’s? For one thing, it still benefits from the long shadow of China’s 2008 tainted-milk scandal, when products including those made by Mengniu, its majority-controlled affiliate Yashili International Holdings Ltd., and arch-rival Inner Mongolia Yili Industrial Group Co. were found to have contained the toxic chemical melamine.That’s made foreign-branded infant formula such a hot commodity in China that Australian retailers have had to implement maximum-purchase rules to stop the booming buy-overseas, post-back-home trade from clearing their shelves.That’s not enough on its own, though, given the general headwinds. After all, Mengniu tried to capitalize on this trend back in 2015 when Yashili invested 1 billion yuan ($141 million) in a New Zealand factory. The mid- to high-end image of the Kieember and Kieevagour brands produced there clearly haven’t been a Bellamy’s-level success.Yashili announced plans to sell a 49% stake in the New Zealand business to Danone for the equivalent of about $201 million last December, but the sale was canceled last month amid unsuccessful attempts to strike a broader agreement between the two companies. While the valuation uplift was clearly a positive, it’s notable that neither side was desperate to gain or retain control of the asset without getting something else in return.What makes Bellamy’s different is that it eschews the mid-range altogether. Its cans of formula sell on Alibaba Group Holding Ltd.’s Tmall marketplace for 50% more than shoppers pay in Australia, where the organic branding means it’s already a premium line. It’s not so much a bet on China’s baby boom, as on growing wealth disparities and rising affluence in a country that already accounts for a third of the world’s luxury spendingEven in that context, Mengniu will struggle to make a good return on its investment. The company plans to invest to increase capacity and drive sales, Chief Executive Officer Minfang Lu said in a statement. That’s easier said than done, given that it takes three years to convert dairy farms to organic production. Australia is a relatively small organic milk producer, with output of about 50 million liters in 2017 compared with 880 million liters in China, according to KPMG.Mengniu will need to be confident this brand can hold its own against Yili, Nestle and Danone at the top end of a fiercely competitive Chinese market. Three-quarters of its revenue at present comes from sales in Australia. While Bellamy’s is often treated as a play on Chinese demand, it’s not there yet.Shareholders in the target would do well to sell into this offer. Those in Mengniu should hope they don’t end up crying over spilled milk.To contact the author of this story: David Fickling at dfickling@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • What's Next for Apple (AAPL) Stock: Holiday Shopping, iPhone 11, Apple TV+
    Zacks

    What's Next for Apple (AAPL) Stock: Holiday Shopping, iPhone 11, Apple TV+

    Associate Stock Strategist Ben Rains dives into Apple's (AAPL) new iPhone 11s, as well as its streaming TV service and video game push. The episode also breaks down what's next for Apple stock and why the tech firm looks strong heading into the holiday shopping season. - Full-Court Finance

  • SoftBank Backers Rethink Role in Next Vision Fund on WeWork
    Bloomberg

    SoftBank Backers Rethink Role in Next Vision Fund on WeWork

    (Bloomberg) -- The biggest backers of SoftBank Group Corp.’s gargantuan Vision Fund are reconsidering how much to commit to its next investment vehicle as an oversized bet on flexible workspace provider WeWork sours.Saudi Arabia’s Public Investment Fund, which contributed $45 billion to the $100 billion Vision Fund, is now only planning to reinvest profits from that vehicle into its successor, according to people familiar with the talks. Abu Dhabi’s Mubadala Investment Co., which invested $15 billion, is considering paring its future commitment to below $10 billion, the people said, asking not to be identified in disclosing internal deliberations.A partial retreat of the two anchor investors would complicate fundraising for SoftBank Chief Executive Officer Masayoshi Son, who upended venture capital by making huge bets on promising yet unproven companies and spurring others to follow suit. Perhaps more than any other startup, WeWork has come to symbolize that brash style, and the success or failure of its IPO is likely to impact Son’s ability to raise cash for future deals.PIF executives are still considering options and no final decision has been made, one of the people said. A spokesman for the Saudi Arabian wealth fund declined to comment. Mubadala said discussions are continuing on whether or not any investment will take place. A representative for SoftBank’s Vision Fund didn’t immediately have a comment.“The suggestion we have made any decisions on the size or timing of a potential investment is simply unfounded,” said Brian Lott, a spokesman for Abu Dhabi’s sovereign fund. “Our discussions continue at an appropriate and deliberate pace, given the importance of this effort.”Sagging ValuationThe Wall Street Journal previously reported that Saudi Arabia’s sovereign wealth fund wasn’t planning to be a significant investor in the new fund but may still make a more modest commitment. A decision to only reinvest proceeds from the first fund would mark a significant shift. Saudi Arabia’s Crown Prince Mohammed bin Salman said last October that he planned to invest another $45 billion into any new fund.“We would not put, as PIF, another $45 billion if we didn’t see huge income in the first year with the first $45 billion,” he said in an interview with Bloomberg.WeWork is one of SoftBank’s flagship investments, along with Uber Technologies Inc., messaging software provider Slack Technologies Inc. and U.K. chipmaker ARM Holdings Plc. SoftBank, which with its affiliates, owns a 29% stake, and in January invested at a valuation of $47 billion, more than triple the $15 billion that’s currently being discussed in an IPO.Tensions have erupted within SoftBank over how it has handled its investment in WeWork. The Vision Fund, along with PIF and Mubadala, scuttled a $16 billion investment early this year Son had championed. SoftBank ended up making only a $2 billion investment from its parent entity, rather than the Vision Fund.SoftBank said in July that other investors had expressed interest in pledging a combined $108 billion for the second Vision Fund, though that was before WeWork forged ahead with plans for an IPO. The new fund is expected to collect money from Apple Inc., Microsoft Corp., Foxconn Technology Group and various Japanese financial institutions, with seven having signed memorandums of understanding to participate.(Adds that talks are ongoing in fourth paragraph.)\--With assistance from Matthew Martin.To contact the reporters on this story: Gillian Tan in New York at gtan129@bloomberg.net;Giles Turner in London at gturner35@bloomberg.netTo contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Christian Baumgaertel, Sree Vidya BhaktavatsalamFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    IBM CEO Sees Amazon and Microsoft as Cloud Allies, Not Rivals

    (Bloomberg) -- In IBM’s vision of cloud computing, Amazon.com Inc. and Microsoft Corp. will be allies rather than rivals.Chief Executive Officer Ginni Rometty is betting on the hybrid cloud, which lets IBM offer services on corporate customers’ cloud-based servers as well as on third-party clouds operated by the likes of Amazon and Microsoft. International Business Machines Corp. has traditionally viewed these cloud giants as direct competitors, but it now aims to partner with them by supporting clients as they shift sensitive databases on to the cloud, regardless of which provider they use.Armonk, New York-based IBM has gone through many transformations in its 108-year history: shifting from punched card tabulating equipment to mainframe computers and now to the cloud.“This company has had to be reinvented many times,” Rometty said in an interview on Bloomberg Television’s CEO Spotlight show. “It’s something many other companies have yet to face. It is one thing to put out new products, but it is something else when the competitive landscape attacks your core business models and you have to develop a new one.”After struggling to keep up in the cloud market for more than a decade, IBM has switched to a hybrid cloud strategy, cementing its future with last year’s $34 billion acquisition of Red Hat, the Raleigh, North Carolina-based open source software provider.In the interview with BTV, Rometty said Red Hat would continue to operate as a separate and distinct business unit within IBM. “They must remain committed and neutral. They have to be on all our competitor’s platforms,” she said. “You have competition and cooperation -- and in this case Red Hat is a platform that goes across all of them.”To contact the reporters on this story: Olivia Carville in New York at ocarville1@bloomberg.net;Caroline Hyde in London at chyde3@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly Schuetz, Robin AjelloFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • JPMorgan’s Metals Desk Was a Criminal Enterprise, U.S. Says
    Bloomberg

    JPMorgan’s Metals Desk Was a Criminal Enterprise, U.S. Says

    (Bloomberg) -- U.S. prosecutors took an unusually aggressive turn in their investigation of price fixing at JPMorgan Chase & Co., describing its precious metals trading desk as a criminal enterprise operating inside the bank for nearly a decade.The prosecutors charged the head of JPMorgan’s global precious metals trading operation and two others on Monday, accusing them of “conspiracy to conduct the affairs of an enterprise involved in interstate or foreign commerce through a pattern of racketeering activity.”That’s a reference to the Racketeer Influenced and Corrupt Organizations Act, or RICO, a law often used against organized crime rings. The U.S. has rarely invoked RICO law in big bank cases. Its use suggests that JPMorgan may face deeper legal jeopardy, going beyond the several individuals who have already been prosecuted.Former prosecutors agreed the move was bold, with at least one questioning whether the Justice Department was overreaching. Others said the use of RICO was merited given the complexity and duration of the manipulation, echoing the U.S. official who announced the charges Monday morning.“Based on the fact that it was conduct that was widespread on the desk, it was engaged in in thousands of episodes over an eight-year period -- that it is precisely the kind of conduct that the RICO statute is meant to punish,” Assistant Attorney General Brian Benczkowski told journalists.“We’re going to follow the facts wherever they lead, whether it’s across desks here or at any other bank or upwards into the financial institution,” he added.Peter Carr, a Justice Department spokesman, said the RICO law has been invoked in cases involving small trading operations and in corporate-conduct cases. But he and several former prosecutors said they couldn’t recall another use of the law to prosecute traders at a big bank.This case differs from previous market-rigging cases in other ways, too, including the number of bank personnel who have been implicated by the government. JPMorgan pleaded guilty in a 2015 investigation of price fixing in currency markets, a matter in which one of the bank’s traders was charged. In the metals-manipulation matter, more than a dozen people participated in the scheme, prosecutors said. Two of them have pleaded guilty and are cooperating with authorities.The head of the bank’s global precious metals desk, Michael Nowak, 45, and two others ripped off market participants and even clients as they illegally moved prices for gold, silver, platinum and palladium, the Justice Department said Monday. Nowak was placed on leave last month, a person familiar with the matter has said. The other traders charged were Gregg Smith, 55 and Christopher Jordan, 47.JPMorgan declined to comment. Smith and Jordan didn’t respond to requests for comment. Nowak has done nothing wrong and “it’s truly regrettable that the DOJ decided to go forward” with a prosecution of him, said his attorneys, David Meister and Jocelyn Strauber of Skadden, Arps, Slate, Meagher & Flom LLP.‘Undeterred’ ProsecutorsThe indictments, which come after the government lost two manipulation cases in court, are a good indication that prosecutors are “undeterred and are becoming more, not less, aggressive” in cracking down on market manipulation, said Benjamin Singer, a former head of the Justice Department’s securities fraud unit who is now at O’Melveny & Myers LLP in Washington.Ex-prosecutor Justin Weddle said the Justice Department was doubling down on already-aggressive efforts to crack down on spoofing, the practice of making buy and sell orders for precious metals futures contracts with the intent to cancel those orders before execution.Market spoofing was criminalized in 2011, he said, noting that many of the trades and text messages described in this indictment predate that. “It is not obvious to me how the RICO charges satisfied the Department’s internal guidelines saying that the Criminal Division will not approve ‘imaginative’ prosecutions under RICO, which are far afield from the congressional purpose of the RICO statute,” said Weddle, of Weddle Law Plc.Prosecutors said the three men charged on Monday placed fraudulent orders electronically and by phone calls to floor brokers in trading pits. They were able to generate millions of dollars in trading profits for themselves and JPMorgan and cause millions in losses for counter-parties, prosecutors said.The practice began before JPMorgan’s May 2008 purchase of Bear Stearns and grew even larger after that acquisition, the U.S. said. Jordan also engaged in manipulation while with Credit Suisse Group AG for about six months in 2010, prosecutors said. Credit Suisse declined to comment.The banks weren’t identified in the filings, but their descriptions match those of JPMorgan, Bear Stearns and Credit Suisse.Jordan and Smith also lied to law enforcement investigators and bank compliance officers for years, according to the indictment. In 2010, Jordan intentionally lied to an investigator for the Commodity Futures Trading Commission about manipulation of silver prices, while Smith lied three years later to a CME Group investigator about his trading practices, it said.Nowak and Jordan also lied on annual statements certifying that they were in compliance with JPMorgan’s code of conduct in 2008 and 2009, while Smith lied in 2009 and 2010, they said.Smith is expected to make an initial appearance Monday in federal court in New York, and Nowak and Jordan will appear in federal court in New Jersey. The case was brought in federal court in Chicago.The JPMorgan investigation grew out of a multibank U.S. crackdown on manipulation of commodities markets using techniques including spoofing, in which traders place orders without intending to execute them to try to move prices in their favor. The Justice Department had already brought criminal charges against 16 people, including traders who worked for Deutsche Bank AG and UBS Group AG. Seven pleaded guilty, one was convicted at trial and another was acquitted.Earlier: JPMorgan Traders Charged by U.S. With Rigging Metals Deals(Updates with comments from former prosecutors)\--With assistance from Neil Weinberg, Greg Farrell, Michelle F. Davis and Patrick Winters.To contact the reporters on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net;David Voreacos in New York at dvoreacos@bloomberg.netTo contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net, David S. JoachimFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Why Amazon Web Services Is Expanding in Germany
    Market Realist

    Why Amazon Web Services Is Expanding in Germany

    Amazon is taking significant strides in cloud computing. AWS has set up a new unit in Munich and will roll out almost 500 new permanent contracts.

  • Engineers Are the Reason Many of Us Are Alive
    Bloomberg

    Engineers Are the Reason Many of Us Are Alive

    (Bloomberg Opinion) -- Where would we be if not for engineers? The truth is, many of us wouldn't be here at all, according to this week's guest on Masters in Business.“Engineers have saved far more lives than all of the doctors in the world” through their inventions, said John Browne, the chairman of L1 Energy and chief executive officer of BP Plc from 1995 to 2007. Engineering and science are the “golden thread” that runs throughout almost all of humanity’s progress, from health care, economics and defense, to transportation, shelter and more, he said.In our conversation, Browne, a member of the House of Lords, explains how many of humanity’s most pressing problems already have engineering solutions; the impediment is typically a political impasse. This is as true for global warming and energy production as it is for wealth inequality, longevity and public health. Browne, author of numerous books including the recent "Make, Think, Imagine: Engineering the Future of Civilisation," discussed why coming out of the closet is good business. He argues that being inclusive and building teams where people feel wanted and valuable should be every company’s goal.  Brown points out that there are only a handful of openly gay CEOs at Standard & Poor's 500 companies, when statistically, there should be 25 to 50. The lack of role models is a detriment to gay employees advancing. After he came out, one of his competitors said “John, we all knew you were gay, only none of us were ever brave enough to discuss it with you.”His favorite books are here; a transcript of our conversation is here.You can stream/download the full conversation, including the podcast extras on Apple iTunes, Overcast, Spotify, Google Podcasts, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.Next week we speak with Sarah Ketterer, chief executive officer and co-founder of Causeway Capital Management LLC, which has $52 billion under management. Ketterer was Morningstar's International Manager of the Year in 2017.To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.netTo contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

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