FILE PHOTO: Junichiro Hironaka, chief lawyer of the ousted Nissan Motor Co Ltd chairman Carlos Ghosn, attends a news conference in Tokyo, Japan, March 4, 2019. REUTERS/Issei Kato/File Photo
TOKYO (Reuters) - Japanese attorneys representing Carlos Ghosn, including lead lawyer Junichiro Hironaka, quit on Thursday following the former Nissan chief’s flight to Lebanon from Japan, where he had been fighting financial misconduct charges.
In an emailed statement, Hironaka said that everyone involved in the case at his practice had resigned. A spokeswoman there declined to give a reason.
A second lawyer in Ghosn’s three-person legal team, Takashi Takano, also quit on Thursday, according to an official at his office.
A person who answered the phone at the office of the third lawyer, Hiroshi Kawatsu, said she didn’t know if he still represented the former automotive executive.
Ghosn, who fled from Tokyo last month, told Reuters in an interview in Beirut with his wife Carole on Wednesday that he was happy to stay in Lebanon for the rest of his life and claimed he was treated with “brutality” during his detention and bail in Japan. Carole said she was “done with Japan.”
Japan has issued international wanted notices for the couple, which means the two will live in Lebanon as fugitives and could be arrested if they leave their country. Japan’s Justice Minister Masako Mori has described Ghosn’s criticism of her country’s judicial system as “absolutely intolerable.”
Hironaka, who earlier expressed disappointment at his client’s decision to abscond, had said he would quit once his client had settled his account.
Hired by Ghosn in February, the 74-year-old lawyer is known for his combative style. He has been called the “Razor” after winning high-profile cases, including the acquittal of a senior lawmaker on financial misconduct charges and the exoneration of a bureaucrat jailed for four months on corruption charges fabricated by prosecutors.
Reporting by Sam Nussey and Tim Kelly; Editing by Muralikumar Anantharaman and Raju Gopalakrishnan
A surge in litigation charges led Goldman Sachs to miss earning expectations for the second quarter in a row, setting a sombre tone as chief executive David Solomon prepares for a landmark investor day later this month.
The Wall Street giant suffered a 26 per cent fall in net income in the three months to the end of the year, a performance starkly worse than rival JPMorgan Chase, which reported record profits for both the quarter and the 2019 year.
Litigation provisions took more than $1bn off the bank’s bottom line, leaving it with net income of $1.7bn in the quarter — well below the $2bn expected by analysts in a Bloomberg poll.
The bank did not disclose with what was behind the provisions but they were likely to be related to final negotiations over the 1MDB bribery and money-laundering scandal.
Revenues across the group rose 23 per cent, to $9.96bn, for the quarter, fuelled by a 63 per cent surge in fixed income revenues versus a year earlier.
“We aim to drive higher returns in the future, and look forward to sharing our strategic goals and financial targets at Investor Day later this month,” Mr Solomon said, nonetheless describing the fourth quarter’s performance as “strong”.
The results mark the first time Goldman has reported under a new divisional structure which was unveiled earlier in the year. The changes mean that the old investing & lending division, which was prone to big swings in results, has been split among the four divisions.
Investment banking was Goldman’s worst performing division in the fourth quarter, with revenues falling 6 per cent year-on-year, versus a 6 per cent rise at both Citigroup and JPMorgan Chase.
Goldman blamed the result on lower deal volumes, and said comparisons were tough because the bank had such strong results in the fourth quarter of 2018.
The global markets arm, which includes fixed income and equities trading, enjoyed a 33 per cent jump in fourth-quarter revenues, fuelled by fixed income trading performance, which also lifted rivals JPMorgan and Citi.
Revenues in Goldman’s newly-created ‘consumer and wealth management division’, which includes online bank Marcus, the Apple credit card, United Capital and Goldman’s traditional wealth management business, rose 1 per cent, as provisions for loan losses fell 8 per cent year on year.
The results also included a $120m provision for credit losses at Goldman’s asset management division — a 155 per cent increase from the fourth quarter of 2018.
The results come a fortnight before Mr Solomon is due to host Goldman’s first investor day since it went public 20 years ago.
He has promised to tell investors more about new ventures such as Marcus and the Apple card, as well as the bank’s push into cash management and its plans to turn its investing and lending business into a mini Blackstone by raising more outside capital.
He will also have to convince investors that his team has found a way to improve returns at Goldman’s trading businesses, which has struggled with profitability after post-crisis regulations made trading more costly.
Goldman Sachs shares slid 0.5 per cent in pre-market trade to $244.50.
Treasury Secretary Steven Mnuchin told CNBC on Wednesday that a future "phase two" trade deal with Beijing would ease U.S. tariffs on goods purchased from China even if the next agreements are segmented into multiple rounds.
"Just as in this deal there were certain rollbacks, in phase two there will be additional rollbacks," he told CNBC. "It's really just a question of — and we've said before — phase two may be 2A, 2B, 2C. We'll see."
"The first step is really focusing on enforcement, but this gives China a big incentive to get back to the table and agree to the additional issues that are still unresolved," he added.
Mnuchin joined CNBC hours before top American and Chinese negotiators planned to sign the phase one deal that is expected to include an agreement by China to purchase some $200 billion of U.S. goods over two years.
But the deal is also expected to lower structural barriers for American companies hoping to do business in China. Specifically, the pact is said to address concerns of U.S. executives who have long complained that they are routinely pressured, if not outright forced, to share key technologies in exchange for market access.
Though Beijing denies it forces foreign companies to surrender proprietary technologies, American companies say they're often compelled to share business secrets through backdoor tactics like joint ventures. Such practices, combined with Beijing's policy of subsidizing domestic business, can build competitive rivals to American companies seemingly overnight.
One of the thorniest issues between the U.S. and China over the last two years, accusations of forced technology transfers and intellectual property theft, should be remedied in the first phase deal, Mnuchin said.
"It's not a question of admission, it a question of what they're going to do," the Treasury secretary said. "And China has agreed to put together very significant laws to change rules and regulations and have made very strong commitments to our companies that there will not be forced technology going forward."
Other areas of concern expected to be tackled in the deal include the misuse of pharmaceutical-related intellectual property and access for U.S. financial companies to Chinese markets. Those qualms helped drive President Donald Trump to start a tit-for-tat trade war with China nearly two years ago, when he first announced tariffs on imported steel and aluminum.
"I think [it's] a very big win for our technology companies, for our businesses and for American workers," Munchin added. Further, should Beijing fail to abide by the phase one stipulations, Mnuchin said Trump can always reimpose or hike tariffs on Chinese imports.
The feud between the globe's two largest economies has resulted in each side slapping levies on billions of dollars' worth of imports and forced major American corporations to shift supply chains throughout Asia.
U.S. farmers, in particular, have taken a heavy hit after China began buying soybeans and other agricultural commodities from Brazil and other South American countries.
Bank of America posted profit that exceeded analysts' expectations on a rebound in trading revenue and as the company repurchased shares.
The bank on Wednesday posted fourth-quarter profit of $7 billion, a 4% decline from a year earlier, or 74 cents a share, which was an unexpected 6% increase helped by a reduction in outstanding shares. That figure exceeded the 68 cent estimate of analysts surveyed by Refinitiv. Revenue fell 1% to $22.5 billion, edging out the $22.35 billion estimate.
"In a steadily growing economy marked by solid client activity, our teammates produced another strong quarter and year, allowing us to increase investments in our customers, communities, and employees," CEO Brian Moynihan said in the release. "We also delivered for shareholders in 2019 by returning a record $34 billion in excess capital through dividends and share repurchases."
Of the bank's three main divisions, only its global markets business posted a quarterly increase in profit. The firm's Wall Street trading division posted a 13% increase in earnings to $574 million as bond trading revenue surged 25% to $1.8 billion, exceeding the $1.68 billion estimate. Stock trading produced $1 billion in revenue, a 4% decline that was just under the $1.07 billion estimate.
The impact of lower interest rates was felt widely at Bank of America, impacting its core lending and banking operations. Companywide net interest income fell 3% to $12.3 billion, and the bank's net interest margin fell 17 basis points to 2.35%, just under analysts' 2.36% estimate.
At the lender's giant retail bank, profit dropped 10% to $3.1 billion on the impact of lower rates. The company also cited interest rates as a reason for lower revenue in its global banking and wealth management divisions.
The second-biggest U.S. lender after J.P. Morgan Chase is among the most sensitive of large banks when it comes to changes in interest rates, according to analysts. So investors will be keen to hear how rates – which were cut three times last year by the Federal Reserve — impacted the quarter, as well as guidance for 2020.
Last month, Moynihan said that the U.S. economy remained strong as consumer spending continued to grow. He also said that fourth-quarter trading revenue is expected to climb 7% to 8% from a year earlier (his guidance proved conservative -- trading revenue actually climbed 13% in the quarter) and that investment banking revenue was headed 3% to 4% higher.
Shares of the bank surged more than 40% last year, exceeding the 29% gain in the Standard & Poor's 500.
On Tuesday, J.P. Morgan and Citigroup both posted profit that beat analysts' expectations on surging bond-trading results and strong revenue from credit-card operations. Wells Fargo missed analysts' profit estimates as it booked costs tied to its fake accounts scandal.
Here's what Wall Street expected:
Earnings: 68 cents a share, a 2.3% decline from a year earlier, according to Refinitiv.
Revenue: $22.35 billion, a 2.4% decline from a year earlier.
Net Interest Margin: 2.36%, according to FactSet
Trading Revenue: Fixed Income $1.68 billion, Equities $1.07 billion
This story is developing. Please check back for updates.
Shoppers pack an aisle during a Black Friday sale at a Target store, Friday, Nov. 23, 2018, in Newport, Ky.
John Minchillo | AP
Target was expected to be a winner this holiday season, amidst a sea of disappointing reports. But the big-box retailer said Wednesday that its holiday sales were weaker than planned.
Shares tumbled more than 8% on the news.
Target said its same-store sales during November and December were up just 1.4%, compared with growth of 5.7% a year earlier.
The company said that, despite missing the mark, it is maintaining a prior outlook for fourth-quarter earnings. It also said in a press release that the fourth quarter of 2019 remains on track to mark Target's eleventh consecutive quarter of same-store sales gains.
Target said it found strength in apparel and beauty, while lackluster performance in key holiday categories like electronics, toys and parts of its home business offset those gains.
CEO Brian Cornell said Target "faced challenges throughout November and December in key seasonal merchandise categories." But "because of the durability of our business model, we are maintaining our guidance for our fourth quarter earnings per share."
Especially this holiday season, Target was expected to be a winner in the toys category. The company has been devoting more square footage in stores to toys, following Toys R Us' liquidation. It has partnered with Disney to open mini Disney shops within certain Target shops. Target also is now powering the website of the Toys R Us brand that has relaunched post bankruptcy.
But this holiday season, Target said toy sales were about flat with the prior year. The company did say, however, that it continued to gain market share in toys throughout the holidays, based on tracking data provided by The NPD Group.
Target said electronics sales were down more than 6% in November and December, while sales of home items were down about 1%. Apparel sales, meantime, were up about 5%, beauty sales inched up roughly 7%, and food and beverage sales climbed about 3% during the holiday period, according to the company.
Digital sales rose 19% — thanks to more people utilizing Target's same-day options like curbside pickup when they buy online. The company said use of its same-day services grew more than 50% during November and December compared with 2018, driving about 75% of the retailer's overall digital sales growth this past holiday season.
Target said it now expects fourth-quarter same-store sales to fall in line with the 1.4% growth it experienced during November and December, compared with a prior outlook of 3% to 4% growth. It said this means full-year same-store sales should rise more than 3%. Same-store sales represent a key metric used by the retail industry to keep track of purchases made at stores open for at least 12 months.
Analysts had been calling for Target's same-store sales during the fourth quarter, which includes the holiday season, to be up 3.8%, according to a poll by Refinitiv.
"Our fourth quarter performance will benefit from productivity improvements in our stores and supply chain, as well as meaningfully lower clearance inventory compared with a year ago," Cornell said in the release.
Target's announcement on Wednesday might come as a shock to some, because the retailer was largely expected to have had a strong holiday season, while mall-based apparel retail chains and department store operators struggled through it.
Macy's, J.C. Penney and Kohl's all in recent days have reported same-store sales declines during the holiday season. Kohl's specifically called out its women's apparel business as its biggest weak link. And Target, meantime, proved in its latest fiscal quarter that its apparel sales are on fire.
While leggings maker Lululemon reported a strong holiday season, others like Victoria's Secret owner L Brands and discount chain Five Below added to the malaise.
Thanks to its investments in new private labels like a grocery line called Good & Gather, store remodels and mobile app updates, analysts say Target has been taking market share from struggling rivals. The Minneapolis-based retailer in November raised its annual profit outlook, to expect full-year adjusted earnings per share to fall within a range of $6.25 to $6.45. Those expectations weren't adjusted on Wednesday.
While holiday sales for key general merchandise categories climbed a meager 0.2% in 2019 compared with 2018, according to weekly point-of-sale data tracked by The NPD Group, there were "clear winners." The firm called holiday results overall "lackluster," thanks in part to companies pushing deals earlier and earlier in the year, thereby lessening the significance of historically key days like Black Friday.
The holiday season also had six fewer days in between Thanksgiving Day and Christmas this year compared with last, making for the shortest possible calendar. Many retailers said they kicked off promotions earlier because of the calendar setup, hoping to win shoppers before their peers.
Speaking about the holiday season in October, Cornell had said, "Every day is going to count."
The company also on Wednesday announced that its chief stores officer Janna Potts is retiring, to be replaced internally by Mark Schindele, effective immediately.
And it announced changes to the structure of its merchandising team — appointing Christina Hennington to executive vice president and chief merchandising officer of hardlines, essentials and capabilities, and Jill Sando to executive vice president and chief merchandising officer of style and Target's owned brands, also effective immediately.
Target's former chief merchandising officer Mark Tritton resigned late last year to take the CEO post at Bed Bath & Beyond.
Target, which has a market value of about $63.6 billion, has watched its shares rally more than 82% over the past 12 months. The stock on Dec. 20 hit an all-time intraday high of $130.24.
Dating apps Grindr, OkCupid, and Tinder are allegedly spreading user information like sexual preferences, behavioural data, and precise location to advertising companies in ways that may violate privacy laws, according to a study conducted by the Norwegian Consumer Council (NCC).
The study tracked the activity of 10 popular apps during the period June to November 2019 in order to identify howpersonal data is transmitted from these apps to commercial third parties.
The apps tested include the dating apps Grindr, Happn, OkCupid, and Tinder; the period tracker apps Clue and MyDays; the makeup app Perfect; the religious app Muslim: Qibla Finder; the children's app My Talking Tom 2; and the keyboard app Wave Keyboard.
The ten apps were chosen for the study as they were the most popular apps on Google Play at the time in "certain categories where sensitive category personal data were deemed likely to be processed, such as data about health, religion, children, and sexual preferences".
Only the Android versions of these apps were tested, with NCC explaining that this was due to Android being the largest mobile operating system worldwide, in addition to Google being a key player in the ad tech industry.
Following testing, a majority of the ten apps were found to transmit data to "unexpected third parties", with users not being clearly informed about where their information was being sent, and how it was being used.
The study also found that Grindr was among the apps with the most glaring privacy issues as it failed to do the following: Share clear information regarding the way it shares data with non-service provider third parties; share clear information about how user data is used for targeted ads; and provide in-app options to reduce data sharing with third parties.
Image: The Norwegian Consumer Council
When analysing the data flow from the Grindr app, the researchers observed the Twitter-owned company MoPub acted as a mediation network, which facilitated personal data transmissions to other third parties, who then used the data to determine whether they wanted to purchase advertisements directed toward Grindr users.
According to the study, MoPub's advertising partners could also potentially distribute that user data to other companies under certain situations despite not receiving explicit consent from Grindr's users. For example, one of MoPub's partners, AppNexus, could potentially provide data such as users' IP addresses and advertising IDs to other companies such as its parent entity AT&T to sell and target ads, the study said.
"AT&T can use the data from the online tracking industry in combination with first-party data from its TV boxes, in order further to refine its targeted advertising," it added.
Privacy-wise, Grindr encourages users to read the privacy policy from MoPub; meanwhile, MoPub's privacy policy recommends that consumers read the privacy policies of the company's 160 partners in order to understand how their personal data may be used.
According to the study, although MoPub claims to rely on consent in order to process personal data, its partners do not necessarily use consent as a legal basis. This means that if a consumer wants to withdraw their consent from MoPub, the partners may choose not to respect this withdrawal. Thus, the consumer would have to track down each of those partners to ensure their data is not shared.
"This is clearly an impossible task for anyone, illustrating the lack of consumer control when data is being shared widely across the adtech industry," the study said.
And where the consumers do have control, such as from opting out of location data tracking by changing their device settings or by not giving apps access to location data, the study said MoPub's advertising partners like AppNexus could still infer a user's location based on their IP address.
The NCC argues, through the study's findings, that there are widespread breaches of Europe's General Data Protection Regulation (GDPR), especially given that key principles of that EU framework -- such as data protection by design and default -- are not present in a majority of the apps tested.
With consent being a core component of the GDPR's application of data protection, the study added that the language of ad tech companies' privacy policies were often "incomprehensible" with "questionable legal basis".
Under the GDPR, the legal concept of consent requires that users receive clear and easily understandable information about what they are consenting to. Consent also needs to be explicit and freely, meaning that "users must actively opt in, rather than having to jump through hoops to opt out of data sharing", the study said.
"In the cases described in this report, none of the apps or third parties appear to fulfil the legal conditions for collecting valid consent," it writes.
In response to the study's findings, the Norwegian group has since filed complaints asking for domestic regulators to undertake investigations into Grindr and five ad tech companies [PDF] for possible violations of the European data protection law.
If the companies are found to be in breach of the GDPR, they could face fines of up to 4% of their global revenue.
"The multitude of violations of fundamental rights are happening at a rate of billions of times per second, all in the name of profiling and targeting advertising," the NCC writes in the study's conclusion.
"It is time for a serious debate about whether the surveillance-driven advertising systems that have taken over the internet, and which are economic drivers of misinformation online, is a fair trade-off for the possibility of showing slightly more relevant ads."
In 2018, another Norwegian nonprofit group found that Grindr had shared users' HIV status with the third party analytics companies Apptimize and Localytics. Grindr subsequently announced that it had stopped the practice.
OPINION: If Ashley Madison was a honeypot for people who had something to hide, its breach reveals a harsh reality about websites who safeguard our secrets.
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JPMorgan Chase’s (JPM), the largest U.S. bank by assets, kicked off earnings season for the big banks on Tuesday, with fourth-quarter results that beat Wall Street estimates.
The bank beat on the top and bottom lines, bolstered by higher lending and deal-making. The results sent JPM’s shares higher by nearly 2% from Monday’s close to $139.50.
Here were the key figures versus the expectations, according to analysts polled by Bloomberg.
Revenue (adjusted): $29.2 billion vs $27.9 billion expected.
Earnings per share (adjusted): $2.57 vs$2.36 per share expected
JPMorgan’s net income for the fourth quarter came in at $8.5 billion, up 21%. Even amid widespread economic uncertainty and market volatility, the bank posted record full-year net income of $36.4 billion, or $10.72 per share — making 2019 its most profitable year ever.
In a statement, JPMorgan CEO Jamie Dimon highlighted the resilience and strength of U.S. consumers as he applauded a “solid year” of record revenue and income.
“While we face a continued high level of complex geopolitical issues, global growth stabilized, albeit at a lower level, and resolution of some trade issues helped support client and market activity towards the end of the year,” Dimon said.
“The U.S. consumer continues to be in a strong position and we see the benefits of this across our consumer businesses,” he added.
Indeed, brisk consumer activity was a major reason for JPMorgan’s success during the fourth quarter. The bank’s consumer and community units saw client investment assets up 27% and posted a 5% leap in average deposits.
Meanwhile, credit card sales volumes were up 10%, which Dimon noted was driven by a “robust holiday season” as merchant processing volumes climbed 7%.
Net interest income, a closely-followed metric, came in at $14.3 billion, down by 2% amid a mix of lower interest rates, rising balance sheets and a boost to net interest income.
Elsewhere, JPMorgan maintained its No. 1 spot for global investment banking fees, with 9% of the wallet share in 2019. Dimon noted that the firm grew its investment banking wallet to the highest level in a decade, and held the top spot for the 11th consecutive year.
During the quarter, the bank experienced a big rebound in trading, with total markets revenue coming in at $5 billion, up 56% from last year. Fixed income revenue rebounded 86% to come in at $3.4 billion, “benefitting from a favorable comparison against a weak prior year.” Equity markets revenue rose 15% to $1.5 billion, driven by higher revenue in prime and cash equities.
The stock, traded on the New York Stock Exchange, gained more than 41% in 2019, outperforming the S&P 500 Index’s (GSPC) 25.8% rally during the year.
Dimon reiterated the firm’s commitment to investing and growing its lines of business. Last year, JPMorgan added more than 70 new branches across 16 markets, while expanding its commercial banking footprint internationally.
Dimon also touted that the firm became “the first U.S. bank to be approved for a majority-owned securities business in China.”
The CEO touted JPMorgan’s “large investments in technology, including AI, cloud, digital and payments, as well as other investments in innovation, talent, security and risk controls. These actions will help us continue to grow and serve our clients going forward,” he said.
Wells Fargo (WFC) and Citigroup (C) will also report on Tuesday, followed by Bank of America (BAC) and Goldman Sachs (GS) on Wednesday and Morgan Stanley (MS) on Thursday.
