Tag Archives: U.S.

U.S. regulator stands by decision to block Winklevoss bitcoin ETF
July 27, 2018 12:00 am|Comments (0)

NEW YORK/WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission on Thursday stood by a decision blocking an exchange-traded fund that would have tracked bitcoin, citing concerns about market manipulation.

Brothers Cameron (L) and Tyler Winklevoss talk to each other as they attend a New York State Department of Financial Services (DFS) virtual currency hearing in the Manhattan borough of New York January 28, 2014. REUTERS/Lucas Jackson

The securities regulator found “unpersuasive” arguments that the bitcoin ETF proposed by Cameron and Tyler Winklevoss, the twin brothers who founded crypto exchange Gemini Trust Co LLC, would be sufficiently protected from manipulation, it said in a 92-page analysis bit.ly/2K3GoWG posted on its website.

“Regulated bitcoin-related markets are in the early stages of their development,” the SEC said, saying that it “cannot…conclude that bitcoin markets are uniquely resistant to manipulation.”

But the agency did not completely shut the door to such products coming to market once the bitcoin market has matured, offering some hope for at least five other bitcoin ETF proposals that are still pending before the regulator.

Bitcoin BTC=BTSP turned negative after the SEC’s ruling, and last traded down 2.9 percent.

The virtual currency can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government. A fund holding the currency could attract more investors and push its price higher.

The SEC said there was not enough evidence that efforts to thwart manipulation of the ETF’s price or that of the underlying bitcoin market would be successful.

The SEC had blocked the Winklevoss ETF from coming to market in March 2017, but then faced an appeal from CBOE Holdings Inc’s (CBOE.O) Bats exchange, which applied to list the ETF.

The parties can appeal the SEC’s decision in federal court.

CBOE and Gemini did not immediately respond to requests for comment.

The Winklevoss twins are best known for their feud with Facebook Inc (FB.O) founder Mark Zuckerberg over whether he stole the idea for what became the world’s most popular social networking website from them. The former Olympic rowers ultimately settled their legal dispute, which was dramatized in the 2010 film “The Social Network.”

The SEC’s decision to block the ETF was voted for 3-1 by its sitting commissioners, with Republican commissioner Hester Peirce voting against. In a statement, Peirce said she believed the product met the legal standard.

“More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order,” she said, adding that the ruling “sends a strong signal that innovation is unwelcome in our markets.”

Reporting by Trevor Hunnicutt in New York and Michelle Price in Washington; additional reporting by Anna Irrera in New York; editing by Phil Berlowitz and Leslie Adler

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U.S. tech enforcer says will read 'closely' EU statement on Google
July 18, 2018 6:56 pm|Comments (0)

WASHINGTON (Reuters) – The head of the U.S. Federal Trade Commission, which has investigated Alphabet’s Google in the past for abuse of web dominance, said on Wednesday he would take a close look at Europe’s recent decision to fine the company 4.34 billion euros ($ 5 billion).

European Competition Commissioner Margrethe Vestager addresses a news conference on Google in Brussels, Belgium, July 18, 2018. REUTERS/Yves Herman

Speaking at a hearing in Capitol Hill, FTC Chairman Joseph Simons said he had spoken on Tuesday with EU antitrust chief, Margrethe Vestager.

“We’re going to read what the EU put out very closely,” Simons told a subcommittee of the House of Representatives Energy and Commerce Committee.

In addition to the fine, equal to about two weeks’ revenue, EU antitrust regulators ordered Google to stop using its Android mobile operating system to block rivals. The U.S. tech company said it would appeal.

Asked about the dominance of Google and Apple in the smartphone market, Simons said: “There is the two of them so they compete pretty heavily against each other.”

He added that markets dominated by few companies are where antitrust enforcers often expect to find “problematic conduct.”

The FTC had previously investigated Google for abusing its huge market share in web search, but ended the probe in early 2013 with a mild reprimand.

Also at the hearing on Wednesday, lawmakers from both political parties pressed the five agency commissioners to do more to stop robocallers and to ensure better security for sensitive data.

To tackle these and other issues, the commissioners – three Republicans and two Democrats – said the agency needed more resources and more authority, specifically the ability to create rules relatively quickly.

Simons and others also called for legislation to give the FTC the authority to seek civil penalties in the case of a data breach.

Reporting by Diane Bartz; Editing by Bernadette Baum

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Chinese online group Pinduoduo targets up to $1.63 billion in U.S. IPO
July 16, 2018 6:53 pm|Comments (0)

(Reuters) – Chinese online group discounter Pinduoduo is planning to raise up to $ 1.63 billion from a U.S. listing, its latest filing with the U.S. Securities and Exchange showed, in what will be one of the biggest U.S. float by Chinese firms in four years.

Pinduoduo, owned by Walnut Street Group, plans to sell about 85.6 million American Depositary Shares in its initial public offering (IPO) at a price range of $ 16 to $ 19 each, according to its filing, which was uploaded to the exchange website on Monday.

The company, backed by Chinese internet giant Tencent Holdings, will open the book to institutional investors on Tuesday and price its IPO next Wednesday, said two people close to the transaction.

Pinduoduo expects to list on the Nasdaq under the symbol “PDD.”

The company is the latest in a series of Chinese tech groups flocking to list in New York or Hong Kong, seeking to replenish its coffers amid the fierce competition with domestic rivals, notably e-commerce giants Alibaba and JD.com, even as trade tensions between China and the United States rattle global markets.

China’s Meituan Dianping, an online food delivery-to-ticketing services platform which rivals Alibaba-backed food-delivery peer Ele.me, is also looking to launch its IPO of over $ 4 billion in Hong Kong in coming months.

Loss-making Pinduoduo, set up by former Google engineer Colin Huang in 2015, also counts Sequoia Capital China as a major investor.

In an initial filing, the company, which allows consumers to group together to increase the discounts offered by merchants, claimed 103 million active users of its mobile platform as of the end of March.

The Shanghai-based firm was valued at $ 15 billion in an April fundraising round and was looking to double that, Thomson Reuters publication IFR has reported.

Thanks to its low-priced products and larger user base in China’s smaller cities, the company’s gross merchandise volume exceeded 100 billion yuan last year, a milestone for Chinese e-commerce firms that took Alibaba’s Taobao marketplace five years and JD.com 10 years to reach. Pinduoduo’s revenues have grown sharply, reaching 1.38 billion yuan ($ 206.4 million) in the first quarter of 2018 from 37 million yuan a year ago. Net losses, however, remained broadly steady at 201 million yuan.

CICC, Credit Suisse, Goldman Sachs and China Renaissance are advising Pinduoduo, according to the filing.

Reporting by Julie Zhu in Hong Kong and Nikhil Subba in Bengaluru; Editing by Maju Samuel

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Exclusive: U.S. clears hurdle to lifting ban on China's ZTE
July 11, 2018 6:44 pm|Comments (0)

(Reuters) – The United States signed an agreement with ZTE Corp (000063.SZ) that paves the way for the Chinese tech company to resume operations after a nearly three-month old ban on doing business with American suppliers, the U.S. Commerce Department said on Wednesday.

FILE PHOTO: The logo of China’s ZTE Corp is seen on the building of ZTE Beijing research and development center in Beijing, China June 13, 2018. REUTERS/Jason Lee

The ban on China’s No. 2 telecommunications equipment maker will be removed once the company deposits $ 400 million in an escrow account, the Commerce Department said, which it can do now that Commerce officials signed an escrow agreement.

FILE PHOTO: The logo of China’s ZTE Corp is seen at the lobby of ZTE Beijing research and development center building in Beijing, China June 13, 2018. REUTERS/Jason Lee

“Once ZTE has completed the $ 400 million escrow deposit,” the Commerce Department said in a statement, it will “issue a notice lifting the denial order.” ZTE did not immediately respond to a request for comment.

The escrow agreement is part of a $ 1.4 billion settlement ZTE reached with the U.S. Commerce Department last month to regain access to U.S. suppliers, whose components it relies on for its smart phones and networking gear.

The escrow account gives the United States an additional $ 400 million if ZTE violates the settlement. ZTE paid the $ 1 billion fine to the U.S. Treasury last month.

Once lifted, ZTE, which employs around 80,000 people, is expected to restart major operations, which would remove a sticking point within the broader U.S.-China trade war. The reprieve for ZTE coincides with a new Trump administration threat of 10 percent tariffs on $ 200 billion of Chinese goods.

In its statement, the Commerce Department said the ZTE action is a law enforcement matter unrelated to broader discussions of trade policy.

Reporting by Karen Freifeld; Editing by Cynthia Osterman

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ZTE given temporary reprieve from U.S.; removes more executives
July 4, 2018 6:31 am|Comments (0)

NEW YORK/HONG KONG (Reuters) – China’s embattled ZTE Corp (0763.HK) has received a temporary reprieve from the U.S. government to conduct business needed to maintain existing networks and equipment as it works toward the lifting of a U.S. supplier ban.

FILE PHOTO: The logo of China’s ZTE Corp is seen at the lobby of ZTE Beijing research and development center building in Beijing, China June 13, 2018. REUTERS/Jason Lee/File Photo

ZTE (000063.SZ), which makes smartphones and networking gear, was forced to cease major operations in April after the United States slapped it with a supplier ban, saying it broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran and North Korea.

The authorization seen by Reuters from the U.S. Commerce Department’s Bureau of Industry and Services runs from July 2 until Aug. 1.

It allows China’s No.2 telecommunications equipment maker to continue operating existing networks and equipment and provide handset customer support for contracts signed before April 15. It also permits limited transfer of funds to or from ZTE.

On Tuesday, ZTE also announced the departure of 1 senior executive in a stock exchange filing, while a source who saw an internal memo told Reuters seven others were removed. As part of its settlement agreement reached in June with U.S. authorities, ZTE had promised to radically overhaul its management.

The company also agreed to pay a $ 1 billion penalty and put $ 400 million in an escrow account as part of the deal to resume business with U.S. suppliers – which provide almost a third of the components used in ZTE’s equipment.

ZTE said in exchange filings late on Tuesday that Xu Weiyan, a shareholders’ representative supervisor in the company’s supervisory committee, has resigned due to personal commitments with immediate effect and no longer holds any position in the company.

An insider source told Reuters a memo was sent out on Tuesday announcing the removal of seven other executives, without providing a reason. They included vice presidents Wang Keyou, Xie Jiepeng and Ma Jie, who were in charge of the legal, finance and supply chain departments, respectively.

Reuters could not immediately contact them for comment. The source declined to be identified due to the sensitivity of the matter.

As part of the deal to lift the supplier ban, ZTE had agreed to remove all members of its leadership at or above the senior vice president level, along with any executives associated with the wrongdoing within 30 days.

It is not immediately clear whether the eight departures on Tuesday were related to ZTE’s compliance violation.

ZTE announced a new board last week in a radical management shakeup. Li Zixue was appointed the new chairman while the previous board led by Chairman Yin Yimin resigned with immediate effect.

Despite the agreement reached almost a month ago, the ban is yet to be lifted amid strong opposition among some U.S. politicians. ZTE has made the $ 1 billion payment but has yet to deposit the $ 400 million in escrow, according to sources.

The uncertainty over the ban amid intensifying U.S.-China trade tensions has hammered ZTE shares, which have cratered around 60 percent since trading resumed last month following a two-month hiatus, wiping out more than $ 11 billion of the company’s market valuation.

ZTE’s Hong Kong shares were down 0.5 percent on Wednesday, while its Shenzhen shares were up more than 4 percent.

Jefferies on Monday upgraded ZTE to a “buy” rating from “underperform”. Its analyst, Edison Lee, said in a note on Tuesday that the temporary reprieve was “a very positive indication that ZTE is on track to a full lifting of the export ban”.

A representative for ZTE declined to comment. The U.S. Department of Commerce did not respond to requests for comment.

Reporting by Karen Freifeld, Anirban Paul and Sijia Jiang; Writing by Tim Ahmann; Editing by Leslie Adler and Marguerita Choy

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Trump to use U.S. security review panel to curb China tech investments
June 27, 2018 6:20 pm|Comments (0)

WASHINGTON (Reuters) – U.S. President Donald Trump said on Wednesday he will use a strengthened national security review process to thwart Chinese acquisitions of sensitive American technologies, a softer approach than imposing China-specific investment restrictions.

FILE PHOTO: U.S. President Donald Trump speaks during a lunch meeting with Republican members of Congress at the White House in Washington, U.S., June 26, 2018. REUTERS/Kevin Lamarque

The Treasury Department has recommended that Trump use the Committee on Foreign Investment in the United States (CFIUS), whose authority would be enhanced by new legislation in Congress, to control investment deals. The legislation expands the scope of transactions reviewed by the interagency panel to address security concerns, Trump said.

The decision marks a victory for Treasury Secretary Steven Mnuchin in a fierce White House debate over the scope of such curbs.

Mnuchin had favored a more measured and global approach to protecting U.S. technology, using authority approved by Congress, while White House trade adviser Peter Navarro, the administration’s harshest China critic, had argued for China-specific restrictions.

“We are not, on a wholesale basis, discriminating against China as part of a negotiation,” Mnuchin said on CNBC on Wednesday.

The investment restrictions are part of the administration’s efforts to pressure Beijing into making major changes to its trade, technology transfer and industrial subsidy policies after U.S. complaints that China has unfairly acquired American intellectual property through joint venture requirements, unfair licensing and strategic acquisitions of U.S. tech firms.

“I have concluded that such (CFIUS) legislation will provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity,” Trump said in a statement that did not specifically name China.

U.S. stocks rose after Trump announced the new approach to U.S. investment restrictions but reversed gains in afternoon trading.

Senior administration officials told reporters on a conference call that sticking with CFIUS, a process companies are familiar with, would ensure strong inward investment into the United States while protecting the “crown jewels” of U.S. intellectual property.

Trump said in his statement that upon final passage of the legislation, known as the Foreign Investment Risk Review Modernization Act, he will direct his administration “to implement it promptly and enforce it rigorously, with a view toward addressing the concerns regarding state-directed investment in critical technologies.”

If Congress fails to pass the legislation quickly, Trump said, he would direct the administration to implement new restrictions under executive authority that could be applied globally.

The decision to stick with CFIUS was a pragmatic move because the new CFIUS legislation “will put a crimp in China’s efforts to move up the value chain in high tech,” said Scott Kennedy, head of China studies at the Center for Strategic and International Studies in Washington.

But it will likely do little to stop the activation of U.S. tariffs on $ 34 billion worth of Chinese goods, scheduled for July 6, or jump-start trade negotiations between the two economic superpowers, Kennedy said.

And the mixed messages from the administration do not help Trump’s negotiating position, he said.

“It shows the Chinese that the Trump administration is still undependable and can be moved back from the most hardline positions,” Kennedy added.

Mnuchin on CNBC downplayed the dissent within the administration, saying that Trump wants to hear differing views on important issues, but the administration’s economic team typically comes together on major recommendations such as the investment restrictions.

Mnuchin said the new CFIUS legislation, passed 400-2 in the House of Representatives on Tuesday, would broaden the types of transactions that could be reviewed by the panel on national security grounds, including minority stakes, joint ventures and property purchases near U.S. military bases.

“This isn’t a question about being weak or strong, this is about protecting technology. We have the right tools under this legislation to protect technology,” Mnuchin said.

COMMERCE EXPORT CURBS

Trump also said that he has directed Commerce Secretary Wilbur Ross to examine U.S. export controls and recommend modifications that may be needed “to defend our national security and technological leadership.”

A Commerce Department spokesman could not be immediately reached for comment on the study.

The CFIUS legislation is headed for negotiations between U.S. House and Senate lawmakers in the coming weeks to craft a final version, with guidance from the Treasury.

A sticking point that could emerge is language in the Senate version that would reinstate the ban on Chinese telecom equipment maker ZTE Corp (000063.SZ) from purchasing U.S. components for a year. The Commerce Department ban had effectively shut the Shenzhen-based company down, angering Beijing.

The House version has less stringent language prohibiting the U.S. Department of Defense from purchasing any ZTE communications gear.

Reporting by David Lawder; Editing by Jeffrey Benkoe and Steve Orlofsky

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Sentiment Speaks:  Is It 2016 Again For U.S. Equities, Emerging Markets And Gold?
June 10, 2018 6:07 pm|Comments (0)

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Top U.S. antitrust official uncertain of need for four wireless carriers
June 1, 2018 6:11 pm|Comments (0)

WASHINGTON (Reuters) – The head of the U.S. Justice Department’s antitrust division, Makan Delrahim, declined on Friday to support the Obama administration’s firm backing of the need for four U.S. wireless carriers.

FILE PHOTO: A man uses a smartphone in New York City, in this picture taken November 6, 2013. REUTERS/Mike Segar

Asked about T-Mobile’s plan to buy Sprint for $ 26 billion, Delrahim declined to reiterate the view of President Barack Obama’s enforcers, who had said that four wireless carriers were needed.

Instead, Delrahim told reporters, “I don’t think there’s any magical number that I’m smart enough to glean.”

He also said the department would look at the companies’ arguments that the proposed merger was needed for them to build the next generation of wireless, referred to as 5G, but that they had to prove their case.

Bill Baer, a former head of the antitrust division, had told the New York Times in 2014: “It’s going to be hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of American consumers.”

Reporting by Diane Bartz; Editing by Dan Grebler

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U.S., China nearing deal to remove U.S. sales ban against ZTE: sources
May 22, 2018 6:00 am|Comments (0)

BEIJING (Reuters) – Washington and Beijing are nearing a deal that would remove an existing U.S. order banning American firms from supplying Chinese telecommunications firm ZTE Corp, two people briefed on the talks told Reuters.

FILE PHOTO – Visitors pass in front of the Chinese telecoms equipment group ZTE Corp booth at the Mobile World Congress in Barcelona, Spain, February 26, 2018. REUTERS/Yves Herman/File Picture

The people, who declined to be identified because the negotiations were confidential, also said the deal could include China removing tariffs on imported U.S. agricultural products, as well as buying more American farm goods.

ZTE, hit by a seven-year ban in April which effectively crippled its operations, would gain a major reprieve after the world’s two largest economies stepped back from the brink of a fully blown trade war following talks last week.

The company did not immediately reply to requests for comment.

White House advisors have said publicly that the ban against ZTE is being reexamined, but that the firm would still face “harsh” punishment, including enforced changes of management and at board level.

One person told Reuters there was a “handshake deal” on ZTE between U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He during talks in Washington last week that would remove the U.S. Commerce Department’s ban on American companies selling to ZTE in exchange for the purchase of more U.S. agricultural products.

The second person said China may also eliminate tariffs on U.S. agriculture products it assessed in response to U.S. steel duties as a part of the deal, and that ZTE could still be forced to replace its corporate leadership, among other penalties.

Both sources said the deal, while not yet cemented, was likely to be finalised before or during a planned trip by U.S. Commerce Secretary Wilbur Ross to Beijing next week to help finalize a broader trade agreement to avert a trade war.

The company, publicly traded but whose largest shareholder is a Chinese state-owned enterprise, had been hit with penalties for breaking a 2017 agreement after it was caught illegally shipping U.S. goods to Iran and North Korea, in an investigation dating to the Obama administration.

Reporting by Michael Martina; Additional reporting by Se Young Lee and Adam Jourdan; Editing by Muralikumar Anantharaman

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U.S. court revives challenge to Seattle's Uber, Lyft driver union law
May 11, 2018 6:02 pm|Comments (0)

(Reuters) – A U.S. appeals court on Friday revived a business group’s challenge to a Seattle law, the first of its kind, that would allow drivers for ride-hailing services such as Uber Technologies Inc UBER.UL and Lyft to unionise.

A driver displays Uber and Lyft ride sharing signs in his car windscreen in Santa Monica, California, U.S., May 23, 2016. This logo has been updated and is no longer in use. REUTERS/Lucy Nicholson

The San Francisco-based 9th U.S. Circuit Court of Appeals said the city did not have the power to regulate payment arrangements between companies like Uber and Lyft and their drivers.

The litigation is unfolding amid a national debate over whether workers in the “gig economy” are independent contractors, who typically cannot form unions, or employees.

The U.S. Chamber of Commerce, which sued over the law last year and counts Uber and Lyft among its members, did not respond to a request for comment. Neither did a spokesman for the Seattle city attorney’s office.

Seattle’s law, passed in 2015, requires the city to select a union as the exclusive bargaining representative of the estimated 9,000 drivers in Seattle who work for Uber, Lyft and other services. The law was put on hold pending the outcome of the Chamber’s lawsuit.

The Chamber argued that by allowing drivers to bargain over their pay, which is based on fares received from passengers, the city would permit them to essentially fix prices in violation of federal antitrust law.

A federal judge in Seattle last year disagreed, saying the state of Washington had specifically authorized its cities to regulate the for-hire transportation industry.

But the 9th Circuit on Friday said state law allows the city to regulate rates that companies charge to passengers, but not the fees that drivers pay to companies like Uber or Lyft in exchange for ride referrals.

The court sent the case back to the judge in Seattle to reconsider the Chamber’s antitrust claim.

The city and supporters of the law, including labor unions, have said that allowing drivers to unionize would improve their working conditions, making ride-sharing services safer for passengers.

Lawyers for the city had told the 9th Circuit that in some cases, drivers were engaging in unsafe behavior such as driving on little or no sleep because they are not paid adequately.

Uber is appealing a state’s judge dismissal of a separate lawsuit the company filed challenging Seattle’s law. A third lawsuit by Uber drivers was dismissed last year.

The case is U.S. Chamber of Commerce v. City of Seattle, 9th U.S. Circuit Court of Appeals, No. 17-35640.

Reporting by Daniel Wiessner in Albany, New York; Editing by Alexia Garamfalvi and Phil Berlowitz

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