Tag Archives: After
MOSCOW (Reuters) – U.S. sanctions targeting Russia’s nascent high tech industry have caused a Russian microchip company significant financial woes and delayed the launch of an initiative meant to produce substitutes for Western products, the firm’s owner said.
FILE PHOTO: Russian Prime Minister Dmitry Medvedev visits a plant of Russian microchip company Angstrem-T in Zelenograd near Moscow, Russia August 3, 2016. Sputnik/Dmitry Astakhov/Pool via REUTERS
President Vladimir Putin has stressed the need to develop Russia’s domestic tech industry to make it less dependent on Western equipment. But Moscow’s efforts to manufacture Russian microchips and other high tech products have been thwarted by U.S. sanctions against a string of Russian tech companies.
Angstrem-T, which makes semi-conductors, has accumulated significant debts and is set to be taken over by state development bank VEB after failing to reimburse an 815-million-euro ($ 944.75 million) loan dating back to 2008, said Leonid Reiman, chairman of the company’s board of directors.
Reiman, Russia’s former minister of communications and information technologies, said the company’s inability to reimburse its debt was in part tied to U.S. restrictions on the import of dual-use technologies and its addition to U.S. Treasury sanctions in 2016.
The U.S. moves were prompted by Russia’s annexation of Ukraine’s Crimean peninsula in 2014 and its support for separatist rebels in eastern Ukraine. It has imposed further sanctions against Russia since 2016 over other issues.
Prior to the sanctions Angstrem-T purchased most of its equipment from U.S. multinational firm Advanced Micro Devices and bought a license from IBM to produce chips.
The company is heavily reliant on U.S. products, but the sanctions now bar it from doing business with U.S. firms.
“Although we initially received the (U.S.) State Department’s consent for this project and the delivery of the technology here, the sanctions caused the deadlines for its completion to be drawn out,” Reiman told Reuters.
“The factory is working, the products are being produced, but the question of procurement remains.”
VEB, which Reiman said could become the majority owner of Angstrem-T by the end of the year, declined to comment.
When Angstrem-T began producing its first chips in 2016 after nearly a decade of false starts and delays, Prime Minister Dmitry Medvedev depicted the initiative as a way Russia could surmount already existing U.S. sanctions.
“It’s good that we are starting to produce these ourselves,” Medvedev said at the factory’s opening, a month before Angstrem-T itself was targeted by the U.S. sanctions. “It’s a question of import substitution.”
Reiman would not disclose the magnitude of Angstrem-T’s debt. According to a Russian database that aggregates company data, the firm had 87.4 billion roubles ($ 1.34 billion) in debt last year. During the same period it recorded revenues of 101 million roubles.
A source in the field of microelectronics in Russia said the sanctions and repeated delays in the project had caused Angstrem-T’s products to become outdated.
The market for the 90 and 130-nanometre microchips it produces has significantly shrunk in recent years, according to the source.
A draft Russian government roadmap for the development of the microchip industry seen by Reuters says that once VEB’s takeover is complete, Angstrem-T should shift its production to the more modern 28-nanometre chips.
Such chips are used in products made by companies like Apple, Samsung and Sony.
The ministry has for several years lobbied for Russia to build a modern microchip plant, but to no avail.
Reporting by Maria Kolomychenko; Writing by Gabrielle Tétrault-Farber; Editing by Gareth Jones
Over the past year, Facebook has faced a reckoning over the way its plan to connect the next billion users to the internet has sown division, including spreading hate speech that incited ethnic violence in Myanmar and disseminating propaganda for a violent dictator in the Philippines. But even as the company admits that it was “too slow to prevent misinformation and hate” in Myanmar and makes promises to be more proactive about policing content “where false news has had life or death consequences,” Facebook’s efforts in the developing world appear to be speeding up rather than pausing to ensure that history doesn’t repeat itself.
In mid-August, Facebook said it was making progress in Myanmar by adding more Burmese speakers and changing its content-moderation policies to make it easier to report bad conduct and root out hate speech. By the end of this year, Facebook says, it expects to hire 100 Burmese speakers to review content. The changes come more than two years after Facebook pushed into Myanmar. During that time civil-society groups have repeatedly asked the company to do a better job patrolling hate speech, and UN investigators said Facebook had played a “determining role” in the killing of Rohingya Muslims.
But Facebook’s lack of preparedness in Myanmar has not halted its efforts to expand access to the internet—and to Facebook—in the Global South. A couple of weeks after touting its progress in Myanmar, Facebook quietly celebrated plans to expand Wi-Fi access in India, Indonesia, Kenya, Nigeria, and Tanzania through partnerships with companies that sell Wi-Fi hardware. In Tanzania, for example, the World Bank estimates that only 13 percent of people use the internet, roughly the same internet penetration in Myanmar in November 2015.
From Free Basics to Express Wi-Fi
Facebook’s efforts to connect the next billion fall under internet.org, which the company describes as an effort to get 4.5 billion unconnected people on the internet. Initially, Facebook’s preferred vehicle to spread connectivity was Free Basics, an app that provided free access to a limited number of websites. Amid criticism of that approach in India and elsewhere, Facebook in the past year has instead promoted a program called Express Wi-Fi, where local merchants or business owners offer affordable access to Wi-Fi hot spots, using Facebook’s Express software as a platform for billing and managing accounts.
Express Wi-Fi has raised fewer red flags because, unlike Free Basics, users can access the full internet. Facebook provides financial support to set up the hot spots, but the company says Express Wi-Fi is not supposed to be a profit center. Rather, Facebook wants partners to get enough financial return to keep expanding connectivity efforts.
Facebook would not disclose how many Express Wi-Fi hot spots there are or how the program has grown, but it is clearly part of Facebook’s larger push into Africa. Three of the five countries where Express Wi-Fi has launched are in Africa. In March, Facebook launched an Express Wi-Fi app in the Google Play store in Kenya and Indonesia. Facebook’s ISP partner in Kenya, Surf, says it has 1,100 Express Wi-Fi hot spots in the country, up from 100 in February 2017. In September, Facebook announced a partnership with The Internet Society, an American nonprofit, to improve internet connections throughout Africa.
Digital rights advocates in Africa say Facebook has evolved its approach after the problems in Myanmar. Facebook is working more closely with civil society groups, sending more delegations, recruiting native language speakers, planning for contentious elections, and hosting digital literacy efforts.
Ephraim Percy Kenyanito, a digital program officer at the East Africa office for Article 19, a nonprofit that defends freedom of expression, says Facebook’s decision to hire more Africans, especially from civil society groups, has made it easier for concerns to be heard, if not always addressed. During the 2017 presidential election in Kenya, for example, Facebook responded when advocates reported hate speech or fake news, but the company did not always protect female journalists who became targets for harassment on the platform after writing critical stories about politicians. “They’re trying to get there, but they need to do better.”
Still, some of the civil society groups say Facebook’s efforts often fall short. Advocates say it’s hard to get straight answers from Facebook about its content-moderation process, plans for hiring native language speakers, meetings with the government, or the goal of its connectivity efforts, leaving some to suspect that Facebook’s recent overtures are more of a public relations campaign. As governments elsewhere crack down on Facebook and Free Basics, they worry Facebook is targeting Africa because there are fewer protections for user privacy and freedom of online expression. (Kenyanito says only about half of the 50 countries in the African Union have data protection and privacy laws.) What’s more, some critics also suspect that Express Wi-Fi is just a way for Facebook to rebrand its connectivity efforts as something less controversial.
Julie Owono, executive director of Internet Without Borders, says Facebook is facing the same explosive ingredients in Africa that it encountered in Myanmar, including unstable regimes, ethnic tensions, and a flood of new users. She fears that Facebook’s reliance “on algorithms to solve complex issues” means that the brunt of preventing abuse may once again fall on nonprofits. Facebook has pledged to hire 20,000 content moderators in 2018, but will not disclose where those people will be located, partly to protect them.
The need for real transparency became clear during Facebook’s recent activities in Cameroon, which holds elections on Sunday. In September, Facebook helped sponsor a symposium on digital rights and election safety in Yaoundé, Cameroon’s capital. Facebook’s presence shows that the company is “a bit more humble than a few years ago, when they thought they had the solutions to every problem,” Owono says. But just one month earlier, civil society groups were blindsided by news that Facebook met with government officials about fighting fake news during the election. Activists feared Facebook might be planning to censor accounts at the government’s behest. Although concerns were eventually assuaged, Facebook’s initial scripted statements only fueled confusion.
Negotiating with the government becomes fraught in repressive regimes where political parties can manipulate Facebook’s platforms—and may shut down internet access during elections or to silence dissent. “During political moments, the same political actors are the ones fueling misinformation and memes,” says Grace Bomu, a tech policy advocate based in Kenya.
Facebook says it has met with a range of stakeholders in Cameroon, including civil society groups and human rights activists, and made no agreements with the government.
In a statement to WIRED, a Facebook spokesperson said, “We know we were initially too idealistic” about connecting people worldwide, “and didn’t focus enough on preventing abuse or thinking through all the ways people could use the tools on the Facebook platform to do harm. That’s why we have invested in people and technology to build better safeguards. This includes the roll out of third party fact-checking, better detection of bad content, improved enforcement of our policies, and deeper support for digital literacy efforts. There is always more to do, and that’s why we have a dedicated team of product, policy, and partnerships experts who are focused on helping to keep the platform safe.”
But Tessa Wandia, who works at iHub, a hackerspace for technologists and entrepreneurs in Kenya, says Facebook’s connectivity efforts steer users toward choosing Facebook. In Africa, for instance, the Express Wi-Fi app can feature a prominent link to Free Basics, with the tagline “See popular websites for free,” a tempting offer for users in a region where data plans can be relatively expensive. Wandia believes Facebook may be using Express Wi-Fi “to make people quiet down” about Free Basics, and “convince us that they really do have a philanthropic angle.” Facebook says it offers partners the option of including Free Basics in Express Wi-Fi, but it’s not required.
Concerns about social media’s influence are not theoretical. In March, for example, Cambridge Analytica executives were caught on tape bragging about influencing Kenya’s presidential elections in 2017 and 2013. The controversial political consultancy reportedly experimented in Africa in part because of lax privacy rules and access to government data from willing politicians. A case study on Cambridge Analytica’s website says polling data was used to target social media ads to youth voters. Wandia says she reported some inflammatory ads that spread on social media, which contained misinformation and were used to psychologically manipulate citizens. “We have to be worried about how Kenyans are influenced, how they are making decisions,” she says.
To be sure, many of these worries stem from Facebook’s staggering popularity, and would likely exist even without efforts like Express Wi-Fi or Free Basics. Telecom operators in Africa, for instance, often include free use of WhatsApp or Facebook as part of a data bundle to entice users who want to use those services.
But Facebook’s continued push to connect the globe raises questions about who bears responsibility for unintended consequences, which have disproportionately affected people in the Global South. After the violence in Myanmar, we now know how Facebook’s promises to help the developing world can play out.
On Wednesday, Bloomberg reported that a former government official in Sri Lanka had been warning Facebook about abuse on its platform by the Sri Lankan government since 2014. Facebook began to address concerns after the government shut down access, but won’t disclose how many content moderators it has hired.
Mark Zuckerberg’s plan to connect the next billion has been greeted with suspicion since it was announced in 2015, but tensions boiled over when Facebook tried to push Free Basics in India as a philanthropic act. “This isn’t about Facebook’s commercial interests—there aren’t even any ads in the version of Facebook in Free Basics,” Zuckerberg wrote in an op-ed in the Times of India. Eventually, the Indian government banned programs like Free Basics, which favored some content over others.
Some of the skepticism towards Express Wi-Fi is residual distrust from those days. For example, Zuckerberg said Free Basics was for people who had never accessed the Internet before and all content providers were welcome to apply. But a study of Free Basics published by Global Voices, a media organization of advocates and journalists from 170 countries, in August 2017, found that it was often marketed to urban millennials, who used it as a way to access Facebook for free. Within the app, users may have a harder time identifying fake news. The report found that the only local news sites prominently displayed in Kenya and Ghana had either faced pressure to fire journalists or were “known for sensational coverage” and questionable standards.
Facebook says the report reflects the experience of Global Voices volunteers in a limited number of countries, not the people benefitting from the program.
Facebook says it does not track whether expanding Express Wi-Fi has led to more Free Basics users because the programs are separate. But Mark Summer, CEO of Surf the Kenyan ISP working with Facebook, says Free Basics is “very popular,” with Surf’s Express Wi-Fi users. Although Express Wi-Fi is billed as a way to connect communities with limited access, Surf has placed hot spots in major towns and focused on lower-class to middle-class users, who typically already have other, more expensive options, Summer says. “It’s not super low-end users like slum areas or refugee camps and very much not the high end areas where upper class to high income people,” he says. “We provide it in the neighborhoods where the people go and work and shop, where they go on and buy food and go to restaurants and cafes where people sit out and congregate.”
Ellery Biddle, advocacy director of Global Voices, says the availability of Free Basics through Express Wi-Fi can influence users’ media choices. “If you have the one thing that is cheaper than everyone else, it makes it really easy to spread a lot of information quickly,” he says. Facebook successfully neutralized many internet.org critics by positioning its work as a choice between bringing affordable internet access to the neediest members of society or elite concerns about the purity of internet access. But Nikhil Pahwa, founder of news site MediaNama and a key voice during the fight over Free Basics in India, says Facebook does not have to play a central role in expanding access. Fostering competition can lower data prices. Since regulators passed a net neutrality rule in India, he says prices have dropped roughly 90 percent. “There is no need for Free Basics lately,” he says.
More Great WIRED Stories
The summer of 2018 has been another tough period for Sears, but there’s one thing that has reliably helped lift the retailer’s share price: Amazon.
On Tuesday, Sears Holdings announced that it’s expanding a pilot program with Amazon to install and balance automobile tires that consumers buy through Amazon. Under the partnership, Amazon shoppers who buy tires, including the Die-Hard brand made by Sears, can ship the tires to a nearby Sears Auto Center for installation.
Amazon also offers similar ship-to-store programs with, for example, local bike shops. In May, when Sears announced it would service tires bought on Amazon, its shares shot up 38% during the following week.
Sears’ stock more than gave up those gains in June, however, after the company said sales fell 31% in its most-recent quarter and announced it would close 72 more stores. That was on top of hundreds of stores that Sears had closed in the previous couple of years. Last week, Sears said it would close yet another 46 stores, dragging its share price down even further to a record low of $ 1.08 a share.
News that Amazon and Sears were expanding the ship-to-store program from 47 initial stores to all Sears Auto Centers in the U.S. offered Sears a reprieve from the weeks of a declining share price. Sears shares surged as much as 23% to $ 1.37 a share Tuesday. While Sears’ stock price drifted down Wednesday, they were trading about 3% higher in afterhours trading at $ 1.26 a share.
Sears has been undergoing a long, painful restructuring for several years, with the stock now down 96% from its high point in 2013. Sears, K-Mart, and other onetime powerful retail brands have been struggling in the era of Amazon retailing. Amazon, meanwhile, has been working with brick-and-mortar retailers, including partnerships with Sears and Kohl’s and the purchase of Whole Foods Market.
TOKYO (Reuters) – Japan’s Sharp Corp scrapped a plan to issue up to $ 2 billion in new shares, changing its mind in a matter of weeks after the initial announcement prompted investors to dump its shares on fears of earnings per share dilution.
In a statement on Friday, Sharp cited worries about trade frictions between the United States and China. “Due to increasing market uncertainties, the company decided that carrying on with the plan to issue new shares would not yield maximum benefit for shareholders,” it said.
Sharp shares rose 17 percent by early afternoon as investors cheered the about-face. The plans to issue new shares, announced on June 5, had sparked a sell-off on the market as they would have eroded Sharp’s earnings per share by about 20 percent.
“The shares fell after the announcement, so they decided to quit. It’s that simple,” said Masayuki Otani, chief market analyst at Securities Japan.
“To announce a new share issue, and then say ‘we changed our mind’ because the shares fell… that’s not common but not unprecedented.”
Sharp had previously said it would use funds from the new shares to buy back preferred shares that were issued to banks in return for a financial bailout in 2015. The plan was finalised just a week ago.
The company had tried to persuade investors that the issuance would benefit them in the long run, saying dilution would be more if the preferred shares were converted into regular stock.
Sharp’s shares sank 21 percent since the June 5 announcement until Friday’s open, compared with a 1 percent fall in the broader Tokyo stock market over the same period.
The company said it would continue to discuss with the banks to dissolve the preferred shares.
Sharp has been showing signs of recovery under Taiwan’s Foxconn, the world’s biggest contract manufacturer which is formally known as Hon Hai Precision Industry Co Ltd.
It recently posted its first annual net profit in four years, helped in large part by cost cuts but also by Foxconn’s sales network in China. It has also said it will buy Toshiba Corp’s personal computer business for $ 36 million.
Some analysts said the Osaka-based electronics maker had become more decisive and responsive to shareholders since it was taken over by Foxconn two years ago.
“My impression is that Sharp has really changed as a company,” said Hajime Nakajima, chief strategist at investment advisory firm AsLink, adding the management’s decision on the matter was a speedy one.
Reporting by Makiko Yamazaki; Additional reporting by Chang-Ran Kim, Shinichi Saoshiro and Yoshiyuki Osada; Writing by Ritsuko Ando; Editing by Richard Pullin and Muralikumar Anantharaman
It found that 47 percent of small businesses reported that they had one attack in 2017, and 44 percent said they had two to four attacks.
The invasions included ransomware, which makes a computer’s files unusable unless the device’s user or owner pays a ransom, and phishing, in which emails that look legitimate are used to steals information. The invasions also include what are called drive-by attacks, which infect websites and in turn the computers that visit them.
Despite the prevalence of the data invasions, only about half of small businesses said they had a clear cybersecurity strategy, the report found. And nearly two-thirds said they didn’t bolster their security after an attack.
Hiscox estimates that seven out of 10 businesses aren’t prepared to handle cyber attacks, although they can cost a company thousands of dollars or more and ransomware can shut down operations. Cybersecurity tends to get pushed to the back burner while owners are busy developing products and services and working with clients and employees. Or owners may see it as an expense they can’t afford right now.
Some basic cybersecurity advice:
–Back up all of a company’s data securely. This means paying for a service that keeps a duplicate of all files on an ongoing basis. The best backups keep creating versions of a company’s files that can be accessed in the event of ransomware — eliminating the need to pay data thieves. Some backups cost just a few hundred dollars a year.
–Install software that searches for and immobilizes viruses, malware and other harmful programs. Also install firewalls and data encryption programs.
–Make sure you have all the updates and patches for your operating systems for all your devices. They often include security programs.
–If you have a website, learn how to protect it from hackers, using software including firewalls. But you might be better off hiring a service that will monitor your site with sophisticated tools that detect and disable intruders.
–Tell your staffers, and keep reminding them, about the dangers of clicking on links or attachments in emails unless they’re completely sure the emails are from a legitimate source. Educate your employees about phishing attacks and the tricks they use. Phishers are becoming increasingly sophisticated and are creating emails that look like they really could have come from your bank or a company you do business with.
–Hire an information technology consultant who will regularly look at your systems to be sure you have the tools you need to keep your data safe.
–The Associated Press
HONG KONG (Reuters) – Tencent Holdings chairman pledged to advance China’s semiconductor industry, saying the blow to ZTE Corp from Washington’s ban on U.S. firms supplying telecommunications company was a “wake-up” call, local media reported.
China’s No.2 telecom equipment maker ZTE was banned in April from buying U.S. technology components for seven years for breaking an agreement reached after it violated U.S. sanctions against Iran and North Korea. American firms are estimated to provide 25-30 percent of the components used in ZTE’s equipment.
While the U.S. administration said on Friday it had reached a deal to put ZTE back in business after the company pays a $ 1.3 billion fine and makes management changes, the plan has run into resistance in Congress, indicating ZTE was still far from out of the woods. Also, ZTE is yet to confirm the deal.
“The recent ZTE incident made everyone more clearly realize that however advanced one may be in mobile payment, without the mobile, the chips and the operating system, you still cannot compete,” Chinese media reports cited Tecent’s Pony Ma as saying at a forum in Shenzhen on Saturday.
Tencent, which alternates with Alibaba Group to be Asia’s most-valuable listed company, is the largest social media and gaming company in China and operates the popular WeChat app.
Ma said “even though the ZTE situation was in the process of being resolved, we must not lose vigilance at this time and should pay more attention to fundamental scientific research”.
Tencent is looking into ways it could help advance China’s domestic chip industry, which could include leveraging its huge data demand to urge domestic chip suppliers to come up with better solutions, or using its WeChat platform to support application developments based on Chinese chips, Ma said.
“It would probably be better if we could get in to support semiconductor R&D, but that is perhaps admittedly not our strong suit and may need the help of others in the supply chain.”
China has been looking to accelerate plans to develop its semiconductor market to reduce its heavy reliance on imports and has invited overseas investors to invest in the country’s top state-backed chip fund.
Reporting by Sijia Jiang; Editing by Himani Sarkar
MELBOURNE (Reuters) – National Australia Bank on Saturday suffered what it described as a “nationwide outage” to some of its technology systems, leaving customers unable to access banking services or withdraw money.
Customers took to social media to vent their frustrations, with some saying they were left unable to pay for groceries or refuel their cars.
“Loyal member for 15 years and you leave me standing at the supermarket altar with a trolley full of shopping,” said one Twitter user.
The bank tweeted just after midday (0200 GMT) on Saturday that some services were coming back online.
“We’re sorry and it’s not good enough … but we’ll get it fixed as soon as possible,” Chief Customer Officer Business and Private Banking Anthony Healy said in a video posted on Twitter.
NAB is one of Australia’s four largest retail banks with a customer base of 9 million, according to its website.
The outage follows growing customer discontent with the so-called “Big Four” banks, which have suffered numerous embarrassing disclosures at an inquiry into financial sector misconduct.
A spokesman from the bank told Reuters by telephone that it was a national outage, without elaborating on its cause.
The Bank of New Zealand [BNZL.UL], a NAB subsidiary, also experienced outages on Saturday across New Zealand, but the spokesman was unable to confirm a connection between the two incidents.
Reporting by Will Ziebell in MELBOURNE; Editing by Joseph Radford
I’m a baseball fan. When I lived in the Bay Area, I was a season ticket holder to the San Francisco Giants. And every baseball fan knows about Pete Rose, the preternaturally talented player who scandalized his sport when it was revealed he bet on baseball, including games involving his own team. Now, no one is contemplating allowing players or managers to bet on games in their own sport. But the Pete Rose story serves as a grim reminder of what can happen with sports gambling.
The trouble is that sports gambling is fun! The thrill of making some dough on your team just adds to the excitement of the sport. It’s also hugely profitable for business and government. So when the Supreme Court of the United States released their decision on Murphy vs. NCAA last week, the gambling-loving world rejoiced. SCOTUS determined that the 1992 federal law called Professional and Amateur Sports Protection Act (PAPSA) violated the Constitution’s anti-commandeering clause, thus striking down the law.
Mark Conrad is a professor of law and ethics at Fordham University, where he has taught in the School of Law and in the Gabelli School of Business. He’s also the director of Gabelli’s Sports Business Concentration, and is the author of The Business of Sports -; Off the Field, In the Office, On the News. Professor Conrad was kind enough to share with me some of his thoughts on this landmark decision.
1. Nothing’s Actually Changed…Yet.
The Court’s decision caused an avalanche of news and commentary, but, “At the moment, not much has changed,” says Conrad. The decision opened the door to huge change, but nothing is actually different yet. Conrad explains, “The court declared unconstitutional the Federal law that prohibits sports gambling. It did not sanction or permit sports gambling.” So what happens now? Conrad says no one really knows: “It is now up to the states, or the federal government, to decide.” Here’s where it get interesting!
2. The Devil Is in the Details.
“This story is only beginning,” says Conrad, who also has a degree from Columbia’s School of Journalism. “No state has enact a gambling scheme, although New Jersey may soon,” he says. The question is what happens next. For starters, Conrad asks, “Will states legalize it? And if so, which ones, and when?” Next comes the what. Conrad wants to know, “Will it apply to all sports or just pro sports?” And finally, the how. Conrad ponders: “What will be the license fees for companies wishing to do business in the state? Taxes? Anti-corruption measures?” The potential complexities are endless.
3. Congress May Not Be Done.
The Court may have struck down Congress’ PAPSA law, but that doesn’t mean Congress can’t still have the final word. Conrad explains, “The problem with PAPSA was it prevented states from exercising their powers. The law did not mandate a ban on sports gambling – rather, it told the states they were not allowed to enact laws ‘authorizing’ such gambling schemes.” The problem was the way this law was structured, but not the idea behind the law. In fact, Conrad says, “The decision did state that Congress has the power to enact a ban on gambling.” It’s possible Congress could throw some very cold water on all the excitement.
4. Integrity May Be an Issue…Or May Not.
The potential implications for the integrity of sport are fascinating. As with any gambling, there’s risk of corruption. Conrad recalls, “It has occurred in the past, notably in point-shaving in college sports.” But cheating isn’t a given. “In fact, the risk of corruption may decrease with a properly regulated integrity oversight,” Conrad explains. There are examples the US could look to for inspiration. Conrad says, “The UK model has worked well. The betting companies engage in analytics and metric systems to police suspicious gambling patterns and report these anomalies.” The key is not to over-regulate or over-tax it, which may push otherwise legal gambling underground.
5. This Decision Could Have Major Implications for State Versus Federal Authority.
“This is the underlying constitutional issue in this ruling,” Conrad explains. “Ultimately, it is a constitutional law case regarding state powers under the Tenth Amendment.” Here’s his plain-English explanation of the finer constitutional points: “PAPSA was problematic because it ‘commandeered’ states rights. Instead of banning sports gambling, it said could not enact laws authorizing gambling. It’s a subtle difference, but a constitutionally defective one.” This is an important decision in part of a greater shift. According to Conrad, “It continues a trend to give greater deference to state sovereignty.” It will be fascinating to watch as the complexities continue to develop.
BOSTON (Reuters) – Facebook Inc named a new director this month and timed his appointment to avoid a shareholder vote, raising concern among some investors who want to see more accountability from the social media company.
The decision by Facebook’s board comes as the company is under scrutiny from regulators and shareholders about its internal controls and oversight after it failed to protect the data of some 87 million users that was shared with now-defunct political data firm Cambridge Analytica.
Jeffrey Zients’ appointment does not take effect until “immediately following the conclusion” of the company’s May 31 shareholder meeting, according to a securities filing on May 8, meaning he could be able to serve a year without facing shareholder approval.
“The optics of this are questionable,” said John Wilson, head of governance at Cornerstone Capital Group, whose clients have about 30,000 Facebook shares.
For one thing, Wilson said, some shareholders could be looking for the largest social media network to add a board member with more of a background on privacy issues and will not have the chance to register objections to Zients, president of holding company Cranemere Group.
Zients and Mark Zuckerberg, the company’s chairman and chief executive, declined to comment via a Facebook spokeswoman. The spokeswoman, Nora Chan, said the board has authority to appoint directors between annual meetings.
“Since this appointment is effective after this year’s annual meeting, it is not on the ballot this year. It would be on the ballot at future annual meetings,” Chan said via e-mail.
Exactly when Zients should be voted in is something of an academic question since Facebook’s structure gives Zuckerberg a majority of its voting power.
Still Facebook has been at pains to address its issues in order to reassure investors. Its share price fell during the first three months of the year as details of its data-protection problems emerged. The shares have since recovered, but a number of funds that call themselves socially responsible are selling the stock, concerned Facebook has not fully addressed its issues.
Proxy adviser Institutional Shareholder Services on May 16 recommended investors withhold support from five of eight directors on the company’s ballot including Zuckerberg, and vote in favor of shareholder proposals aimed at improving its response to problems like election interference and harassment.
In recommending that investors withhold support from Zuckerberg, ISS cited the lack of a formal board-nominating committee, a concern it has raised in past years.
ISS Special Counsel Patrick McGurn said the lack of a vote on Zients is “suboptimal.”
“Best governance practice generally dictates that a board should provide shareholders with a timely opportunity, typically at the next scheduled meeting, to elect a director who is appointed by the existing board members to fill a vacancy,” he said.
However, McGurn said the timing may not have been entirely in Facebook’s control, given that departing director Jan Koum did not immediately leave the company’s board at the same time he quit as a company executive.
James McRitchie, a private investor who filed one of two pending shareholder resolutions calling on Facebook to revamp its voting rules, said the lack of a vote on Zients will not look good at a time when the company needs to seem responsive and not be seen as “cutting out shareholders.”
Reporting by Ross Kerber; Editing by Frances Kerry
We had previously looked at the positioning of large commercial traders in the oil futures market. While the consensus view had been that this meant that oil prices were due to fall significantly, we basically took the stance that the data implied no such thing.
Since then crude oil prices have risen, with Brent oil futures threatening to break the $ 80 barrier and by our count, at least 4 grades of oil trading above the critical $ 80 mark. With prices firmly entrenched in a long-term upswing, we were surprised to see that the commercial traders had started to actually go long crude oil futures.
This was the second consecutive week where commercials expanded their net long position after shorting this market for what seemed like an eternity.
So what do we make of this change in behavior?
Where is this coming from and what it means
The one group that has been notoriously absent from trading crude oil positions in the last few years has been the airline group. Having been burnt a few times by hedging oil prices too high, they have stayed on the sidelines since 2016.
While carriers saved hundreds of millions of dollars from oil prices halving since June, they forfeited a large chunk of that gain because of the fuel hedges they bought as protection against oil rising.
The bulk of those hedges – which effectively lock in fuel costs in advance – are set at levels that force airlines to pay more for fuel than current market prices, turning them into a hindrance rather than a help.
As a result, three of the four biggest carriers – Delta, Southwest and United – said this week they were rethinking their hedging tactics. Meanwhile, American, which does not hedge fuel costs at all, is reaping the biggest savings.
Southwest Airlines Co. said on Thursday its outstanding hedges represented a loss of $ 1.8 billion through 2018, at Jan. 15 prices. However, it still expects a fuel bill that is more than 30 cents per gallon lower this year compared to 2015, or a roughly half-billion dollar net benefit.
It was this group’s absence that distorted the futures positioning in the crude oil market and gave the appearance that collectively “the hedgers” were bearish on oil. That logic proved very costly as anyone who went by the commitment of traders report, stayed away from long positions and missed the entire rally.
However, with prices breaching past levels that no analyst thought possible last year, the airlines may be getting religion. Fuel represents the single biggest cost factor for airlines and it is hard to pass on unless capacity utilization is extremely high. While for most part airlines have denied that they will hedge, we believe some in the group are now breaking ranks. There are two likely reasons for this. The first being the certainty of cash flow is likely to assuage investor concerns, even if it is at a much higher price than they should have hedged. The second is this.
While the front end of the curve is flirting with much higher prices, airlines still have the opportunity to lock in sub-$ 60/barrel prices further out. So in a sense, oil prices have to fall more than $ 15/barrel from today’s prices for them to actually lose money on further out hedges. We think that they will embrace this opportunity as world oil fundamentals continue to tighten and supply surprises will continue to be on the downside.
As they do so, we think the incredible backwardation currently visible will begin to ease and the curve will become flatter. To some extent, this will be counterbalanced by increased producer hedging as they see an opportunity to lock in good prices, but on the whole, the curve will flatten in our view. The biggest impact of this though will be on oil producers. Oil producers continued to be priced for a $ 50/barrel market, and as the futures curve reflects the correct longer term supply demand situation, oil producers should embark on a spectacular rally.
Oil producers have outperformed the broader indices recently, but we believe this is a long-term trend that can still be bought. Our favorite oil producers are trading at a fraction of their fair value and offer gains not available anywhere else in the market. Oil itself has had a sensational run and is due for a pullback. But the longer-term story is still intact and we continue to ignore silly stories about EVs denting demand.
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