Citigroup Inc said on Friday it recorded an additional $390 million in operating expenses in the 2020 fourth quarter after a federal judge ruled that it was not entitled to recoup the money it mistakenly wired to lenders of Revlon Inc last year.
As a result, Citigroup revised its fourth-quarter earnings to $1.92 per share down from $2.08, according to a filing.
Key quotes from the GameStop testimonies: ‘I am not a cat’
(Reuters) – At a grilling by lawmakers over the frenzied trading in retailer GameStop, Keith Gill, a YouTube streamer known as Roaring Kitty, hedge fund managers and the head of Robinhood and Reddit defended their actions.
Those testifying were Robinhood CEO Vlad Tenev, Melvin Capital CEO Gabriel Plotkin, Citadel CEO Ken Griffin and Reddit CEO Steve Huffman.
Here are the testimonies here of the players involved and a link here to biographies of some of them.
Some quotes from the hearing:
“A few things I am not. I am not a cat. I am not an institutional investor, nor am I a hedge fund. I do not have clients and I do not provide personalized investment advice for fees or commissions. I am just an individual whose investment in GameStop and posts on social media were based upon my own research and analysis.”
“Investing can be risky and my approach can be risky but for me personally, yes (I would buy GameStop now). Yes, I do find it attractive at this price point.”
“My investment in Gamestock was based on the fundamentals.”
“Increased transparency could help. That someone like me could have a better understanding of how those things work … would help retail investors.”
ROBINHOOD CEO VLAD TENEV:
“We always felt comfortable with our liquidity… The additional capital we raised wasn’t to meet capital requirements or deposit requirements… ”
“I recognize customers were very upset (from the restrictions on trading)… it would have been significantly worse if we had prevented customers from selling.”
“Not at all, zero pressure (from anyone on the panel to decide to restrict trading), it was a collateral depository decision.”
“I’m sorry for what happened. I apologize. I’m not going to say that Robinhood did everything perfect and we haven’t made mistakes in the past, but what I commit to is making sure that we improve from this, learn from it, and we don’t make the same mistakes in the future. And Robinhood as an organization will learn from this and improve and make sure it doesn’t happen again, and I will make sure of that.”
CITADEL CEO KEN GRIFFIN
“As I was trying to explain… the quality of the execution varies by the channel of the order, this is a commonly understood phenomenon in economics.”
“We have fought for 15 years to make that the basis by which orders are allocated because we strongly believe Citadel is better to provide better execution for retail orders in the long run.”
“We are able to share our trading acumen with retail investors, give them a better price and give payments for orderflow to firms like Robinhood.
“This has been very important for the democratization of finance.”
“I believe that the short interest in Gamestop was exceptional. I’m not sure it’s worth us delving into legislative corrections for a very unique situation.”
MELVIN CAPITAL CEO GABRIEL PLOTKIN
“I think it is a really good question (regarding more reporting around shorting). It is not for me to decide. But if those are the rules then I will certainly abide by them.”
“Anytime we short a stock, we locate a borrower. Our systems actually force us to find a borrower.”
REDDIT CEO STEVE HUFFMAN
“We spend a lot of time at Reddit ensuring the authenticity of our platform. So we’ve got a large team dedicated to this exact task. Everything on Reddit – all of the content is created by users, voted on by users and ranked by users, and we make sure that that is authentic, and as unmanipulated as possible. And in this specific case, we did not see any signs of manipulation.”
(Reuters) – Italy’s competition watchdog said on Wednesday it had fined Facebook 7 million euros ($8.5 million) for not complying with a request by the regulator to correct improper commercial practices in the group’s treatment of user data.
Facebook was not immediately available for comment.
In November 2018, the antitrust body ruled that Facebook had not informed users properly about its collection and use of data.
It fined the U.S. company 5 million euros ($5.5 million) and asked it to publish an amended statement on the homepage of its website for Italy, on the Facebook app and on the personal page of each registered Italian user.
“The current investigation has proved that …(the company has) not published the amended statement and has not stopped the established unfair practice,” the regulator said in its statement.
Given the economic value of the data for Facebook, it said users should be put in a position to decide whether it should be used.
(Reuters) – The U.S. Securities and Exchange Commission (SEC) on Tuesday sued Morningstar Credit Ratings LLC for allegedly violating U.S. securities laws in rating commercial mortgage-backed securities, the regulator said in a statement.
Morningstar allegedly violated disclosure and internal controls requirements in 30 commercial mortgage-backed securities transactions from 2015 to 2016 when the agency allowed analysts to make undisclosed adjustments to key stresses in its modeling, the SEC said.
Counsel for Morningstar could not be reached immediately for comment.
A former professional baseball player who was once the largest black McDonald’s operator in the US has sued the company for racial discrimination.
Herb Washington said the firm had denied black owners the opportunities it gave to whites, including by steering them to stores to “distressed, predominantly black” areas.
He accused the company of retaliating against him after he raised concerns.
McDonald’s blamed his troubles on “mismanagement”.
In a statement, the firm said it was reviewing the complaint, adding that Mr Washington was facing “business challenges that we don’t want for anyone in our system.”
“This situation is the result of years of mismanagement by Mr Washington, whose organisation has failed to meet many of our standards on people, operations, guest satisfaction and reinvestment,” the company said.
“His restaurants have a public record of these issues, including past health and sanitation concerns, and some of the highest volumes of customer complaints in the country.”
McDonald’s has faced similar claims from black franchise owners before. In a lawsuit last year, more than 50 former franchise owners accused the company of steering them to stores in less desirable neighbourhoods.
Mr Washington, who opened his first McDonald’s franchise in 1980 at the age of 29 after a brief stint playing for the Oakland Athletics, said the firm had repeatedly hindered his business.
That included by blocking him from buying stores from a white franchise owner and denying him financial assistance comparable to that offered to white operators.
Despite the challenges, Mr Washington said he at one point ranked as the company’s largest black operator in the US, with 27 restaurants. He continues to own 14 stores.
“I always held out hope that they would live up to their promises and put an end to a two-tiered system,” he said at a press announcing the lawsuit, which was filed in federal court in Ohio. “I believed that McDonald’s was going to do the right thing.”
Since 2017, he said the company had targeted him for “extinction” in retaliation for his speaking up about racial disparities, pushing him to sell certain stores in exchange for contract extensions on others.
At the press conference, he rejected the firm’s characterisation of his business, saying that McDonald’s wouldn’t have allowed him to be a franchisee for 40 years if he were consistently “bringing down the brand”.
“When I stood up for myself and other black franchisees, McDonald’s began to dismantle my life’s work,” he said. “I didn’t quit on McDonald’s. McDonald’s quit on me.”
‘Racist policies and practices’
In his lawsuit, Mr Washington said the company’s discriminatory policies worsened after British-born Steve Easterbrook took over in 2015.
Mr Easterbrook was fired from the company in 2019 for having a consensual relationship with a subordinate in violation of the firm’s policies.
During his tenure, the company implemented remodelling initiatives that were “designed to force black franchisees out of the McDonald’s system,” the lawsuit says.
The number of black McDonald’s franchisees in the US has dropped from 377 to 186 since 1998, the lawsuit says. It also says black-owned restaurants average $700,000 less in sales annually than white-owned ones.
“These numbers are not a coincidence; they are the result of McDonald’s intentionally racist policies and practices toward black franchisees,” the lawsuit says.
McDonald’s, which announced a diversity initiative in July amid the Black Lives Matter protests, said performance at black-owned restaurants have improved and it did not place franchisees in specific locations, but made recommendations.
It added that the company had taken steps to reduce the number of overall number of operators across all demographic groups as part of a restructuring initiative. Nearly 30% of its franchises are “ethnically diverse”, it said.
(BBC) – Online travel agent Lastminute.com will be taken to court unless it pays more than £1m of outstanding refunds, the competition regulator has said.
Lastminute.com had promised to refund people for package holidays cancelled due to the Covid-19 pandemic.
But it missed a repayment deadline at the end of January.
The Competition and Markets Authority (CMA) said the company needed to pay people back within seven days to avoid court action.
“It is wholly unacceptable that thousands of Lastminute.com customers are still waiting for full refunds for package holidays despite the commitments the company signed with us,” said CMA chief executive Andrea Coscelli.
“We take breaches of commitments extremely seriously. If Lastminute.com does not comply with the law and pay people their outstanding refunds quickly, we will take the company to court.”
Lastminute.com has been approached for comment. Last week, the online travel agent said the refund process had been “very complex and difficult”.
Firms thought they had paid for insurance cover when lockdowns first hit last year
A legal ruling on business insurance could be the “saviour” of Wales’ food, drink and leisure industries, according to lawyers.
Thousands of small firms had been told interruption of trade from Covid was not covered by policies.
But Supreme Court judges ruled that most policyholders hit during the first coronavirus lockdown did have cover.
Insurance firms have been urged to act quickly, with the sector expected to pay out close to £2bn.
“It’s a huge relief for the thousands of businesses who were denied insurance cover,” said Guto Llewelyn, of Capital Law.
His firm represents more than 100 businesses on the issue, many from Wales, across the hospitality sector, and also in the leisure, retail, healthcare and the creative industries.
“The Supreme Court’s decision now shows that this collective pressure has finally borne fruit,” he explained.
“Now is the time for insurers to repair their reputation by respecting the court’s judgement and paying their policyholders as soon as possible.
“If they don’t, they expose themselves to legal action and serious reputational damage.
“Whatever it takes, we’ll fight for our clients until they get the money they’re owed and need to survive.”
Golf firm founder Eryl Williams said having a claim rejected was frustrating
While the hospitality industry has been particularly badly hit by Covid, many other companies were also affected by the insurers’ decision not to pay out.
Asbri Golf has 12 members of staff and has been trading since 2004 in Caerphilly, into a global market, and hopes to benefit from the ruling.
“We got our original business interruption claim rejected, which was a body blow after the impact of the first lockdown on the company,” said founder Eryl Williams.
“We spend thousands on business insurance every year and have never claimed previously, so it was very frustrating when a legitimate claim was rejected because Covid-19 wasn’t written on the list of diseases, even though it didn’t exist when we took out the policy.”
How did this end up in court?
Thousands of small businesses were affected
In the lockdown of last spring, many small businesses made claims through business interruption insurance policies for loss of earnings when they had to close.
But many insurers refused to pay, arguing only the most specialist policies had cover for such unprecedented restrictions.
This new ruling has come from a test case brought by watchdog the Financial Conduct Authority (FCA), and involved eight insurers.
It was agreed a selection of policy wordings should be tested in court, setting the parameters for what would be considered a valid claim.
The ruling provides guidance for a wider pool of 700 policies, potentially affecting 370,000 small businesses – although only some of these will end up with payouts.
The complex ruling covers issues such as disease clauses, whether business were denied access to the properties, and the timing of lost earnings.
Claims ‘will be settled’
“Insurers have supported this fast-track legal process every step of the way and we welcome the clarity that the judgment will bring to a number of complex issues,” said Malcolm Tarling, from the industry body, the Association of British Insurers.
“The insurance industry expects to pay out over £1.8bn in Covid-19 related claims across a range of products, including business interruption policies. Customers who have made claims that are affected by the test case will be contacted by their insurer to discuss what the judgment means for their claim.
“All valid claims will be settled as soon as possible and in many cases the process of settling claims has begun.”