By Katanga Johnson
WASHINGTON (Reuters) - An official with the U.S. Securities and Exchange Commission's (SEC) accounting oversight arm on Thursday said it sees "no prospects" of being able to properly do its job overseeing disclosures and preventing accounting fraud in China, amid ongoing consideration by the Trump administration of how to stave off the possible investor risk.
The comments by William Duhnke, chairman of the Public Company Accounting Oversight Board (PCAOB), comes as the latest in a series of statements in response to pressure from the White House and lawmakers to reduce the perceived risks Chinese companies pose to U.S. investors.
"I have been actively engaged with the (Big Four accounting firms) about how, in the absence of access, do we make sure staff can ensure audit quality of U.S.-listed Chinese companies," said Duhnke, who sat on a virtual SEC panel on the topic with other U.S. regulatory authorities.
"We must trust and verify, but we have no ability to verify in China, and no prospects to do so on the horizon."
The SEC has been locked in a decade-long struggle with the Chinese government to inspect audits of U.S.-listed Chinese companies, and its accounting arm is still unable to access those critical records, it has said.
The PCAOB, which was set up by the 2002 Sarbanes-Oxley Act and is overseen by the SEC, is tasked with policing the accounting firms that sign off on the books of the nation’s listed companies. Its problems with Chinese audit quality have been festering since 2011, when scores of Chinese companies trading on U.S. exchanges were accused of accounting irregularities.
Chinese authorities have long resisted audit papers leaving China, making it hard for U.S. regulators to check the quality of audits of Chinese companies.
But a bill passed by the U.S. Senate which, if signed by President Donald Trump, would require U.S.-listed foreign companies to disclose levels of government control. It would also require that Chinese companies comply with U.S. oversight of their audits or potentially face being delisted.
Chinese firms accounted for about a third, or some $279 billion, of funds raised globally via IPOs in the past five years. About half of that was offshore of China, mostly through New York and Hong Kong floats.[nL4N2DL03X]
Amy McGarrity, the chief investment officer at the Public Employees' Retirement Association of Colorado said that investors should have access to "ample" disclosures, but was worried restricting listing of Chinese companies could harm U.S. capital markets and force investors to private markets.
By Jonathan Stempel
(Reuters) - A U.S. judge on Thursday refused to grant immediate bail to a Massachusetts father and son who are trying to avoid extradition to Japan, after being accused of helping smuggle former Nissan (OTC:NSANY) Motor Co chairman Carlos Ghosn out of that country.
U.S. District Judge Indira Talwani in Boston said Michael Taylor and Peter Taylor, who have been detained since their May 20 arrests, have yet to show they deserve freedom, in part because a magistrate judge also weighing bail has yet to rule.
The Taylors said bail was warranted because they might contract COVID-19 at the suburban Norfolk County Correctional Center, where 36 inmates and staff have tested positive. Michael Taylor, a Special Forces veteran, is missing part of one lung.
Talwani also said the Taylors have not shown it likely there was no probable cause to detain them, after they argued that the offenses described in Japan's extradition requests would not support their extradition.
"Petitioners have not demonstrated here the high probability of success necessary to establish special circumstances justifying release on bail in an extradition case while these legal issues are being resolved," Talwani wrote.
Lawyers for the Taylors did not immediately respond to requests for comment.
Ghosn escaped in late December to his childhood home of Beirut via Istanbul from Japan, where he had been under house arrest on financial crimes charges. He was transported in a large black box to an awaiting private jet.
Lebanon has no extradition treaty with Japan.
At a Wednesday hearing, federal prosecutor Stephen Hassink called the Taylors an "extraordinary flight risk."
Lawyers for the Taylors disagree, and have said their clients will abide by all reasonable bail conditions.
On Tuesday, the magistrate judge, Donald Cabell, refused to quash the Taylors' arrest warrants. He has yet to explain why. Another hearing before Talwani is scheduled for July 28.
By Christiana Sciaudone
Investing.com -- Financials traded lower on Thursday ahead of earnings reports that start being released next week. The S&P 500 Financials fell 2.2%, and the Dow fell 1.4%.
Banks are falling as parts of the U.S. close back down amid growing coronavirus infections across the country. Citigroup Inc (NYSE:C) dropped 2.8%, and Wells Fargo (NYSE:WFC) by 2.1%
Bank of America (NYSE:BAC) fell 1.4%, to $22.77, after DA Davidson downgraded the stock to neutral from buy with a $25 price target, according to Briefing.com. BofA has nine buy ratings, six holds and no sells, according to data compiled by Investing.com, with an average price target of $28.33.
BofA shares are down about 35% in 2020.
DA Davidson upgraded JPMorgan Chase (NYSE:JPM) to buy from neutral, but the stock still dropped 2.2%, to $91.28. The bank has seven buys, six holds and no sells, according to data compiled by Investing.com. JPMorgan has an average price target of $107.58.
JPMorgan is down about 33% this year.
Both JPMorgan and BofA report earnings next week.
By Yasin Ebrahim
Investing.com – The Nasdaq closed at a record high for the second straight day Thursday as investors continued to seek refuge in megacap tech stocks at a time when the spread of the coronavirus threatens a V shape recovery.
The S&P 500 lost 0.52%, while the Nasdaq Composite rose 0.63% to close at record hghs, and the Dow Jones Industrial Average fell 1.38%.
Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) and Amazon.com (NASDAQ:AMZN), the so-called Fab 5, which collectively make up about 40% of the Nasdaq, ended higher to help keep broader market losses in check.
Beyond tech, however, investors had to contend with losses in stocks tied to the progress of the economy amid rising Covid cases.
Total cases rose to about 3.05 million from 2.98 million yesterday, with the death toll rising to deaths 991 from 932, according to the Center for Disease Control.
As the outbreak continues to hit key hotspots including Texas, Florida and California, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases said states should opt to pause reopening measures rather than revert to a complete shut down.
"Rather than think in terms of reverting back down to a complete shutdown, I would think we need to get the states pausing in their opening process," Fauci said.
But that did little quash investor jitters of looming shutdowns that threatened to undo the economic progress seen recently.
The U.S. Department of Labor reported Thursday that initial jobless claims decreased by about 100,000 to 1.31 million in the week ended July 3, beating forecasts for a decline to 1.3 million.
Continuing claims fell 698,000 to 18.06 million, extending a trend of downside momentum that is "encouraging," Jefferies (NYSE:JEF) said. "Continuing claims are down 2.5 million over the past 4 weeks."
Energy led the selloff, paced by a decline oil prices as the pause of reopening measures in pockets of the U.S. offset signs of a recovery in gasoline demand seen a day earlier.
Financials were not far behind, falling 2% just days ahead of quarterly results from banks. The second-quarter earnings reports for a slew of Wall Street banks are likely to underscore a rough quarter amid rising loan loss provisions and weaker profit from lending activity weighed down by near-zero interest rates.
Elsewhere, AMC Networks (NASDAQ:AMCX) rallied as rumors swirled the company had hired Morgan Stanley (NYSE:MS) to explore a sale.
Philip Morris (NYSE:PM) Stock fell by 3.07% to trade at $70.08 by 15:32 (19:32 GMT) on Thursday on the NYSE exchange.
The volume of Philip Morris shares traded since the start of the session was 2.93M. Philip Morris has traded in a range of $70.08 to $72.10 on the day.
The stock has traded at $73.7600 at its highest and $69.3659 at its lowest during the past seven days.
By Christiana Sciaudone
Investing.com -- F5 Networks Inc (NASDAQ:FFIV). rose almost 8% after being upgraded at Morgan Stanley (NYSE:MS). Shares are around $144, up about 66% from a 2020 low in March.
Morgan Stanley upgraded the cybersecurity company to overweight from equalweight and increased its price target by $40, to $175.
Analyst Meta Marshall cites "uncaptured value" in the software business, diminishing hardware headwinds, and "increased confidence" in F5's earnings power, according to Seeking Alpha.
F5 has six buys, three holds and no sells, according to data compiled by Investing.com, with an average price target of $158.
NVIDIA (NASDAQ:NVDA) Stock rose by 3.39% to trade at $422.50 by 15:15 (19:15 GMT) on Thursday on the NASDAQ exchange.
The volume of NVIDIA shares traded since the start of the session was 10.25M. NVIDIA has traded in a range of $409.34 to $422.74 on the day.
The stock has traded at $422.7400 at its highest and $370.8200 at its lowest during the past seven days.
(Bloomberg) -- The Washington advocacy group Better Markets has spent a decade fighting big banks and railing against the government’s 2008 financial industry bailout. Now it has taken one of its own.
The organization received between $150,000 and $350,000 in loans from a key U.S. coronavirus relief program, according to data released by the Small Business Administration earlier this week. While that pales in comparison to the $700 billion taxpayer rescue banks got at the height of the credit crunch, Better Markets’ adversaries haven’t been able to hide their amusement.
“Apparently Better Markets didn’t enter this crisis as well capitalized as our nation’s largest banks,” quipped Bank Policy Institute President Greg Baer. Goldman Sachs Group Inc (NYSE:GS)., JPMorgan Chase (NYSE:JPM) & Co., Citigroup Inc (NYSE:C)., Wells Fargo (NYSE:WFC) & Co. and other members of Baer’s trade association have long been castigated by Better Markets.
The circumstances of Better Markets’ loan are dramatically different than what prompted the lifeline for banks. Wall Street played a starring role in causing the 2008 meltdown by packaging subprime mortgages into securities that triggered staggering losses, prompting Congress to approve the bailout to head off a collapse of the global financial system.
Better Markets -- like millions of other loan recipients -- was the victim of a health crisis and used its funds to save more than a dozen jobs, according to Dennis Kelleher, the group’s president. In an interview, he said it’s “ironic” that Wall Street would be “chuckling about a small nonprofit” getting aid, considering that financial firms have benefited significantly from Federal Reserve actions that have kept markets functioning during the pandemic.
“These guys are getting everything they want from the Trump administration and their regulators,” Kelleher said. “Yet they get angered by the mere slightest opposition.”
Bank lobbyists and others who have clashed with Better Markets have expressed their glee in emails fired off to each other -– and the press -- that note the loan won’t even be big enough to cover Kelleher’s annual compensation, which is roughly $400,000, according to public filings. Also making the rounds is a recent interview Kelleher gave in which he stressed that the government Paycheck Protection Program loans should be given to “Main Street small businesses in need.”
Bankers say that hardly describes Better Markets, which is located on Washington’s K Street lobbying corridor. It was co-founded and funded by Atlanta hedge fund manager Michael Masters, who is chairman of the nonprofit’s board.
A number of think tanks, lobbying groups and nonprofits tapped the aid program, a list that includes Americans for Tax Reform Foundation and Citizens Against Government Waste. As of Wednesday night, almost 4.9 million loans had been approved totaling $521.1 billion, according to the SBA.
Since its founding in 2010, Better Markets has become Wall Street’s leading antagonist in the regulatory arena, where deep-pocketed banks with legions of lobbyists have few opponents equipped to argue esoteric policy points. Small tweaks in rules can often provide profit windfalls, and financial firms routinely use the complexity to their advantage.
Kelleher also has a knack for getting under bankers’ skins, peppering his public comments with phrases like “too-big-to-jail banks” and “financial industry predators.”
The forgivable SBA loan, Kelleher said, helped keep Better Markets’ 15 workers employed. Before the PPP program was announced, he was drawing up plans for layoffs because the group’s fundraising had completely dried up. Virtually all of it is done in person, which has been impossible since the coronavirus hit, Kelleher said.
“Our entire annual budget is less than the pay raise that Goldman’s CEO got this year,” he said.
©2020 Bloomberg L.P.
Amazon.com (NASDAQ:AMZN) Stock rose by 3.05% to trade at $3,175.14 by 14:58 (18:58 GMT) on Thursday on the NASDAQ exchange.
The volume of Amazon.com shares traded since the start of the session was 4.71M. Amazon.com has traded in a range of $3,075.59 to $3,175.97 on the day.
The stock has traded at $3,175.1399 at its highest and $2,676.0100 at its lowest during the past seven days.
By Yasin Ebrahim
Investing.com – Wall Street moved pared some losses on Thursday, as tech rebounded from intraday lows though weakness in stocks tied to the progress of the economy kept the broader market in the red.
The S&P 500 lost 0.54%, while the Nasdaq Composite rose 0.44% and the Dow Jones Industrial Average fell 1.27%.
The U.S. Department of Labor reported Thursday that initial jobless claims decreased by about 100,000 to 1.31 million in the week ended July 3, beating forecasts for a decline to 1.3 million.
Continuing claims fell 698,000 to 18.06 million, extending a trend of downside momentum that is "encouraging," Jefferies (NYSE:JEF) said. "Continuing claims are down 2.5 million over the past 4 weeks."
Despite the backdrop of resilience seen in the labor market, investors have cooled expectations for a V-shape economic recovery, as several states have paused, or rolled back reopening measures to contain a surge in cases in Covid-19 hotspots including Texas, California, and Florida.
Stocks tied to the progress of the reopening, and ultimately the economy, continue to come under pressure.
Airlines and cruise stocks retreated, with American Airlines (NASDAQ:AAL) and Carnival (NYSE:CCL), both down more than 4%, among the notable decliners.
In tech, the so-called Fab 5, continued to hold onto slender gains. Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) and Amazon.com (NASDAQ:AMZN), all which collectively make up about 40% of the Nasdaq, traded above the flatline.
Energy led the selloff, paced by a decline oil prices as the pause of reopening measures in pockets of the U.S. offset signs of a recovery in gasoline demand seen a day earlier.
Financials were not far behind, falling 2% just days ahead of quarterly results from banks. The second-quarter earnings reports for a slew of Wall Street banks are likely to underscore a rough quarter amid rising loan loss provisions and weaker profit from lending activity weighed down by near-zero interest rates.
Elsewhere, AMC Networks (NASDAQ:AMCX) rallied as rumors swirled the company had hired Morgan Stanley (NYSE:MS) to explore a sale.
By Mark Hosenball
WASHINGTON (Reuters) - Geoffrey Berman, the former top federal prosecutor in Manhattan who was ousted last month, told lawmakers on Thursday that U.S. Attorney General Bill Barr strongly pressed him to resign, according to a copy of his written congressional testimony.
Berman, who departed as his office continued a probe into President Donald Trump's personal attorney Rudolph Giuliani, was warned by Barr that if he did not leave and was fired, it would "not be good for my resume or future job prospects," Berman said.
Berman said Barr also repeatedly urged him to take another job, either in the Justice Department running its civil division or possibly as chairman of the Securities and Exchange Commission. Berman said Barr told him he wanted to appoint current SEC chairman Jay Clayton to replace Berman as Manhattan-based U.S. attorney.
Berman said he told Barr he regarded Clayton as an "unqualified choice" for the prosecutor job because he had never served as a federal prosecutor and "had no criminal experience."
Berman said he initially issued a news release saying he had "no intention of resigning and that I intended to ensure that our Office's important cases continue unimpeached."
However, he ultimately agreed to leave.
Berman was scheduled to meet behind closed doors on Thursday with the U.S. House of Representatives Judiciary Committee following his June 20 firing.
Barr is scheduled to appear before the panel on July 28.
Democrats have accused Barr of improperly meddling in a number of criminal and antitrust investigations to protect Trump and his allies. Barr has defended his actions.
Last month, career prosecutor Aaron Zelinsky told lawmakers on the panel that the U.S. Attorney's Office for the District of Columbia faced political pressure to scale back its sentencing recommendation for Trump's longtime friend Roger Stone.
Court papers filed in Stone's case indicate that the Justice Department said Stone should report to a federal prison in Jesup, Georgia, next Tuesday. That could pave the way for a possible presidential pardon or sentence commutation after Stone was found guilty of obstruction as part of former Special Counsel Robert Mueller's Russia probe.