– In the first five months of 2017, 13 companies with market values of more than $40 billion installed new CEOs, more than double the rate of change at such firms in the same period last year, according to an analysis for The Wall Street Journal by executive recruitment firm CristKolder Associates.
This trend reflects a broader reality, in that an array of challenges – from increasing impatience on Wall Street and in boardrooms to a corporate landscape rapidly transformed by new technologies and rival upstarts – has made the top job tougher and more precarious than just a few years ago, top executives say. ‘In boardrooms, sentimentality is officially dead,’ said Constantine Alexandrakis, head of the US for recruiting firm Russell Reynolds Associates.
– The WSJ reported that Lloyds Banking Group promoted several executives ahead of a strategy revamp and in an effort to appease investors concerned that the bank had too few potential internal replacements for CEO António Horta-Osório. The reshuffle also sees key lieutenants to Horta-Osório handed extra responsibilities. Lloyds will outline its next strategic plan in February, following years of reshaping after its taxpayer bailout in 2009.
– The Washington Post reported that, according to an SEC complaint, Kamilla Bjorlin secretly paid writers – some of whom used pseudonyms and falsely claimed to have MBAs – to produce hundreds of positive articles, tweets and Facebook posts that attempted to pump up the stock prices of specific companies.
Bjorlin, who is expected to go to trial on civil charges as soon as this month, said she can’t tell her side of the story yet. ‘This has ruined my life,’ she said. ‘No one has any idea what really happened.’ Her case has become a reminder that allegations of fake news are not confined to the political world. The SEC recently issued an alert warning investors of the danger of promotion schemes on social media. Bjorlin appears to be preparing for a fight. Her attorney did not return emails seeking comment.
– The WSJ cited a recent report by the National Crime Agency as saying the UK remains a favored destination for politically exposed people and money launderers, with technological developments such as crypto currencies and ewallets offering fraudsters new ways to commit crime and evade law enforcement. But the Criminal Finances Act will help recover proceeds of crime and encourage greater information sharing to track money laundering, the report said.
– Reuters reported that the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) disclosed how eight of the largest US banks would wind themselves down in the face of collapse and gave American International Group (AIG) and Prudential Financial an extra year to submit their plans. Introduced in the wake of the financial crisis, the living wills outline how banks would go bankrupt without needing a taxpayer bailout.
The Fed and the FDIC gave AIG and Prudential Financial until the end of next year to submit their living wills; this is an extension of the original deadline of the end of 2017. The extension was granted to enable the companies to incorporate any guidance regulators may provide on their plans.
– Andrew Bailey, CEO of UK financial regulator the Financial Conduct Authority (FCA), called on the government to clarify by the end of the year the length of any transitional period after the UK leaves the EU, according to the Financial Times. He stressed the importance of transitional arrangements to smooth the economic and financial effects of the process. Bailey did not say how long would be necessary, only that the period needed to be ‘sensible’ to allow the UK ‘to continue with current arrangements while whatever comes next is put into effect.’ Tensions at the top of the UK government over whether the country should opt for a sharp break from the EU or a long transition period have become apparent.
– Also on the topic of Brexit, the WSJnoted that regulators and government officials across Europe are trying to lure financial services firms away from London ahead of the UK’s departure from the EU. The sweeteners range from the promise of cheap rents to protection of bankers’ bonuses. ‘It’s like an auction,’ said a lawyer advising several firms on their Brexit plans. The efforts are fostering tension among European regulators and raising concerns that risk is being siphoned unchecked into the EU.
– Meanwhile, Bloomberg reported that, according to lawyers and advisers, investment firms may have to move thousands of jobs to the EU after regulators said ‘letterbox entities’ nominally based in the region but run from abroad will not be tolerated. At issue is the undertakings for the collective investment of transferable securities (Ucits), a type of mutual fund domiciled in the EU. The European Securities and Markets Authority said in May that passports to sell funds should be rejected unless major decisions are made by management teams based within the bloc. Ucits products are often domiciled in Luxembourg and Ireland, but their fund managers can be based anywhere in the world to focus on local markets.
– The Financial Industry Regulatory Authority (Finra) issued an investor alert warning job seekers that individuals claiming to be involved in the hiring process for legitimate organizations – including Finra – have turned to Skype and other online video call platforms as a way to phish for personal information and money. Phishing scammers may also use fraudulent emails or copycat websites to get unsuspecting consumers to provide valuable personal information, and then use it to steal their money or identity, Finra warned.
– The Confederation of British Industry (CBI) business lobby group said the UK should stay in the single market and customs union until a final Brexit deal is in force, according to the BBC. CBI head Carolyn Fairbairn said it was ‘impossible’ for all the details of a new trade deal with the EU to be in place by March 2019, when talks about the UK’s withdrawal are due to formally finish. To minimize disruption, UK businesses need a ‘bridge’ instead of a ‘cliff edge’ for the new deal, she said. Businesses are delaying investment because of the uncertainty, according to the CBI.
– Meanwhile, the EU warned against protectionism as the G20 summit started, threatening retribution against any new barrier the US puts up as well as challenging US President Donald Trump to match his words with deeds after he called for defending western civilization, the WSJ said. With the global economic recovery slowly taking hold, some G20 members, including the EU, are pushing the group to also tackle international crises from migration to climate change and the inequality wrought by globalization.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
