The failure of parties to nail down definitions in deal contracts in many instances leads to litigation. This seems to happen more than one would think. In this story, the failure to define “indebtedness” has resulted in the buyer successfully -thus far-claiming the sellers of a California supermarket owe them over $109 million. This is a cautionary tale of how accounting can be weaponized by an aggressive and sophisticated party.
https://www.ft.com/content/7ef1559a-0b7c-48cd-80dc-084081bea8ad
Multiple federal regulators including the Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), and other Treasury Department offices are probing Morgan Stanley over how it vets clients who are at risk of laundering money through the bank’s sprawling wealth-management division. Regulators are determining whether Morgan Stanley sufficiently investigated the identities and sources of wealth of prospective clients. Also, how the bank monitors its clients’ financial activity. The SEC and the Treasury’s Financial Crimes Enforcement Network (FinCEN) sent Morgan Stanley a list of client names with questions about the bank’s vetting process. Morgan Stanley’s wealth division accounts for about half of the bank’s total revenue and uses it to smooth out downturns in investment banking and trading.
Ippei Mizuhara, Shohei Ohtani’s interpreter, was charged with unlawfully transferring $16 million from Ohtani’s bank account so he could place bets with an illegal California bookmaker. According to the criminal complaint, Mizuhara controlled access to Ohtani’s account where his MLB checks were deposited. He made “approximately 19,000 wagers between December 2021 and January 2024, and nearly 25 bets per day on average.” Mizuhara initially told ESPN that Ohtani covered his debts, although Ohtani and his lawyers stated, “Shohei has been the victim of a massive theft and we are turning the matter over to authorities.” Federal prosecutors are unsure of which specific sports Mizuhara wagered on, but it appears no bets were placed on baseball. MLB is investigating Mizuhara and Ohtani, but are waiting for the results of the federal investigation.
In the business world, the use of ChatGPT and other forms of generative AI is growing at a rapid rate, yet there are some businesses that still are hesitant to use it. There are concerns that AI isn’t worth the cost and it is unclear on how useful it can be for certain businesses. Andrew Burt, co-founder of a small law firm called Luminos Laws says, “We’ve talked about it, but the truth is that the real value of generative AI is to get knowledge and insights, at scale, to a lot of people. We are pretty small and pretty elite, and it just doesn’t make sense.” Other concerns of generative AI include potential security risks and the amount of time it takes to adopt it because of how fundamentally different the technology is. Aaron Gwinner, Chief Information Officer at tobacco company Reynolds American, states, “If you think about the revolutions in the last 100 years in technology, this is going to be one of the biggest. But it’s going to take us time to be ready for it.”
Jan Marsalek, fugitive, and former Wirecard COO, used compromised intelligence officials in Vienna to spy on European citizens and plot break-ins and assassinations by elite Russian hit squads. As COO of a top financial services provider, Marsalek used his power to facilitate secretive operations across the continent and in Africa. He commissioned Austrian police and intelligence official Egisto Ott and other officials to facilitate undercover work for Russia’s military intelligence and domestic intelligence groups. https://www.ft.com/content/c3b50060-aa53-40fd-a698-579e8e1ae67d
After the collapse of the Francis Scott Key Bridge in Baltimore, Maryland, a legal fight will take place over who will pay for the damage and loss. The Singaporean owner of the cargo ship that took down the bridge is expected to invoke a law dating back to the 19th century called the Limitation of Liability Act. This law limits the liability of the cargo ship’s owner and insurers at the value of the goods the ship was carrying and the value of the ship itself. The legal fight could take as long as a decade which will include insurance claims, claims by the families’ victims, loss of revenue for the port, and the for the business affected. Only some insurance policies will cover this, and the insured losses could total between $2 billion and $4 billion.
Nigerian tax authorities charged cryptocurrency, Binance, and two of its top executives with tax evasion, including one executive that escaped custody. Tax authorities allege that Binance has not filed tax returns, paid value added taxes, nor corporate tax. Furthermore, Binance is unregulated in Nigeria. Binance executives, Nadeem Anjarwalla and Tigran Gambaryan, flew into the country where they were detained and their passports were seized. Shortly after, on March 23rd, Anjarwalla escaped custody, using a “smuggled” passport. The National Security Advisor in Nigeria, said, “Security agencies are working with Interpol for an international arrest warrant on the suspect.”
https://www.ft.com/content/feeab797-8e92-4737-8401-699e6ef4d2f0
The U.S. is suing Apple for allegedly using its power to suppress competition from rivals and limiting consumer choice in the smartphone sector. The landmark lawsuit filed by the Department of Justice accuses Apple of imposing contractual limitations on developers while making it more difficult for users to switch devices. It also accuses Apple of abusing its power to squash the growth of innovative apps and messaging services, reduce the appeal of rival smartwatches, keep rival tap-and-pay apps from its devices and block the development of game streaming apps. According to U.S. attorney-general Merrick Garland, “Apple has maintained its power not because of its superiority but because of its unlawful exclusionary behavior.”
https://www.ft.com/content/e3f83740-f44a-4e1d-9dec-0439ef2ebf58
The SEC fined two investment advisors, Delphia (USA) and Global Predictions, for allegedly making false statements about their use of AI technology which is known as “AI washing.” The SEC alleged that between 2019 and 2023, Delphi misled the public in SEC filings about their use of AI for investment opportunities. The SEC also alleged that Global Predictions claimed that its platform provided “[e]xpert AI-driven forecasts” on their website and social media which was false. Delphia and Global Predictions agreed to settle with the SEC on March 18th paying $225,000 and $175,000, respectively in civil penalties.
The Financial Action Task Force removed the United Arab Emirates from the Global Watch List for money laundering and terrorism on February 23rd. According to the FATF, U.A.E. took significant steps to address an action plan in 2022 addressing its strengthening financial compliance efforts. According to FATF President, T. Raja Kumar, “Exiting the gray list doesn’t mean that the U.A.E. has a perfect system, but the U.A.E. has committed essentially to continuing its virtuous path to further enhancing its [anti-money-laundering/counter-terrorism financing] regime, and I encourage the U.A.E. to continue along this virtuous path.”
