Paul Marciano, co-founder of fashion retailer Guess Inc., is under investigation for alleged improper sexual conduct. In a tweet late January, model Kate Upton accused Paul Marciano of sexual harassment and of using his power to intimidate her while she was 18 and working for a company campaign, tweeting: “It’s disappointing that such an iconic women’s brand @Guess is still empowering Paul Marciano as their creative director #metoo.” A week following the tweet, in an interview with Time Magazine, Upton detailed the harassment and stated that she was fired after refusing Marciano’s advances. Her allegations of Marciano’s lengthy misconduct were corroborated by the campaign photographer, Yu Tsai, who was also fired during Upton’s time at Guess Inc.
Indian Federal Agency Launches an Investigation of Billionaire Jewelry Designer for Bank Fraud
On Monday, February 5, the Central Bureau of Investigation (CBI) of India launched an investigation into billionaire Indian jeweler, Nirav Modi, his brother Nishal, his wife Ami, and his business partner Mehul Chinubhai Choksi for cheating Punjab National Bank of over $44 million. The CBI acted on a complaint by the bank alleging that the aforementioned business partners were in collusion with the officials of the bank, and cheated it. The money was obtained by Nirav Modi and others on the pretext of advance payments to international suppliers.
Nirav Modi, a celebrity in his own right, grew up in a family of diamantaires and has been in the business for over a decade. His designs have been worn by international celebrities such as Kate Winslet and Aishwarya Rai. He is one of the richest people in India with a net worth of over $1.8 billion, according to Forbes. This news will certainly cause alarm in the international circle as he has stores all around the globe with two stores that recently opened in the United States.
What Do We Not Know about Bitcoin?
Have you ever gotten the feeling that everyone knows something you don’t know? Many people are starting to feel that way about Bitcoin.
Most recently, China has blocked everyone in its country from accessing websites that offer cryptocurrency trading services or initial coin offerings (“ICOs”). Yes, no more Bitcoin in China! The initial response is to ask why, but I think we have a better chance of figuring out who created Bitcoin than determining the ultimate motives of the Chinese government. The question that concerns me is: does the Chinese government know something about Bitcoin that other people or governments do not know?
China’s Trade Investigation Takes Aim at Trump’s Voter Base
Trade disputes between two of the world’s largest economic powerhouses, China and the U.S., escalated, as China has opened an anti-dumping and anti-subsidy investigation into sorghum imports from the United States. Chinese Foreign Ministry spokesman Geng Shuang said the issue was an “individual, normal trade remedy investigation case.” The decision, announced by China’s Commerce Ministry, could lead to steep tariffs on sorghum – a seemingly direct response to President Trump’s announcement of steep tariffs on imports of washing machines and solar energy cells and panels. That announcement sought to promote the President’s “America First” agenda, which seeks to protect manufacturers in the United States, and create new jobs on American soil. As such, it is not surprising that China has chosen to target Trump’s base in the agricultural industry.
Woman Sues Walmart for Discriminating Against African-American Customers
Imagine this scenario: you are walking to your local retail chain to buy basic hygiene products, like a comb, hair conditioner, and skin lotion. And every time you want access to this product to either hold it or read the label on the back, you must walk all the way to the cashier and wait for them to be free so that they can unlock the product for you. The vast majority of customers do not have to go through this process, but you do.
A California woman, Essie Grundy, and many African-American shoppers at a local Walmart do not have to imagine this scenario. Earlier this year, she noticed that beauty products targeted for African-American consumers at her store were locked up, requiring an employee’s attention in order to unlock the products from a security case. Ms. Grundy went through this inconvenient process on three different occasions.
As a result of this disparate treatment, Ms. Grundy has decided to sue Walmart. Citing her feelings of humiliation and discrimination, Ms. Grundy initially spoke with the store’s employees to try and see if the policy of locking up products could be modified. However, she was unsuccessful.
According to Walmart, items are locked up for security purposes and the products to be locked up are decided on a store-by-store basis. Moreover, items are locked up because they are more likely to be stolen. Still, despite this rational intent, many African-American customers at Walmart find themselves bearing the disproportionate burden when shopping at the store.
Ms. Grundy is represented by Gloria Allred, a high-profile civil rights attorney who is known for taking controversial cases and focuses on the protection of women’s rights. Ms. Allred is known for representing Nicole Brown Simpson’s estate during the O.J. Simpson trial, and more recently, at least 28 women who have accused Bill Cosby of sexual assault.
Ms. Grundy is asking for modification of Walmart’s policy toward African-American shoppers, lawyer fees, and $4,000 in damages.
Woman Sues Walmart for Discriminating Against African-American Customers (PDF)
Broadcom Raises Its Takeover Bid for Qualcomm to $121 Billion
On February 5, 2018, Broadcom once again presented an offer to acquire all outstanding shares of common stock of Qualcomm Inc.—although this time, it hopes to seriously bring Qualcomm to the negotiating table.
After its initial proposal to Qualcomm was rejected in November 2017 for “dramatically undervaluing” the company, Broadcom has raised the stakes to offer $82 per share, or about $121 billion total. The offer constitutes an ambitious attempt by Broadcom to produce the largest tech industry takeover to date. The hostile takeover of Qualcomm would combine the two mobile phone chipmakers’ businesses to make Broadcom the third-largest chipmaker in the world. Its products would appear in nearly every smartphone, and thus affect several global tech companies, including Apple, Google, and Microsoft.
The bid, which Broadcom called its “best and final offer,” comes one month before Qualcomm’s annual shareholder meeting in March. Broadcom hopes to entice Qualcomm shareholders with the higher offer to pressure its executives to begin negotiations. While Qualcomm said in a statement that it would be reviewing the revised proposal, its leadership was sternly opposed to the first takeover offer in November, arguing that Broadcom’s approach was opportunistic as Qualcomm was engaged in a harrowing legal battle against Apple.
Further, analysts and investors have expressed doubt as to whether Broadcom’s proposal could realistically win regulatory approval. To mitigate these concerns, Broadcom’s antitrust lawyer Daniel Wall, of Latham & Watkins, said that the company has already begun regulatory approval processes in the U.S., China, and the European Union. Further, the revised offer includes a “significant” breakup fee in case regulators reject the deal, as well as additional cash if the merger transaction has not closed one year after its announcement. With these extra measures, Broadcom hopes to emphasize its commitment to the proposal, although concerns remain about the increasing concentration of the chip industry.
While it is unclear whether Qualcomm executives will decide to accept this offer, the industry giant has been struggling following recent legal disputes with customers over licensing fees. Qualcomm recently reported a 96 percent drop in operating income, and its shares slumped 18% in 2017 before rising in November upon news of Broadcom’s first bid. While Broadcom awaits review by Qualcomm’s Board of Directors, only time will tell whether Qualcomm decides to continue investing in its own development, or accept Broadcom’s buyout offer at the highest price offered yet.
Broadcom Raises Its Takeover Bid for Qualcomm to 121 Billion (PDF)
Facebook Follows Trend Away from Cryptocurrencies, Banning Advertisements
Amidst growing pressure to protect the integrity of Facebook’s advertising, Mark Zuckerberg has banned all cryptocurrency ads on the social media platform. According to Facebook’s product management director Robert Leathern, Bitcoin and cryptocurrency ads are frequently associated with “misleading or deceptive promotional practices.” This ban targets ads such as those that read “Use your retirement funds to buy bitcoin!” or other “get-rich-quick” schemes that appear to have no legitimate business behind them.
Fraudulent ads have emerged amidst the wave of Bitcoin’s successful, although volatile, growth. As have a number of new currencies and Initial Coin Offerings (ICO’s), which encourage people to buy into cryptocurrencies before they launch in hopes of high future growth. Many companies have used ICO’s to get access to unregulated capital and regulators are noticing. South Korea and China have banned raising money through ICOs and other countries have warned against getting involved with ICOs at all. At home, the SEC recently cracked down on an ICO scam by AriseBank which asked people to fund the world’s first decentralized bank.
Many of the ads Facebook is targeting with its new regulation are that of James Altucher, a self-described “crypto genius.” Altucher’s ads have been frequently associated with bad faith companies and scams. The public criticism surrounding Altucher’s ads likely inspired Zuckerberg to rethink his statement made at the beginning of this month, which hinted at admiration for cryptocurrency’s ability to decentralize power. Facebook now claims that Altucher’s ads, as well of those from other well-known cryptocurrency exchanges, will be banned in an effort to protect Facebook users. Leathern stated that Facebook’s intention was to allow users to continue to explore new products on Facebook without “fear of scams or deception.”
Facebook’s advertising ban extends to other company-owned platforms such as Instagram, and is just the start of their review of the positives and negatives of cryptocurrencies. While the social network admits that it won’t catch every fraudulent ad, they have has also said that the policy will evolve over time. This update in policy rides the tail of Facebook’s recent changes to its News Feed aimed at limiting the reach of untrustworthy sources. Facebook already attempts to ban many sorts of deceptive ads, such as those that redirect users from seemingly trustworthy news sites to those asking for credit card details. It remains to be seen how Facebook will enforce this new policy along with others recently implemented. More significantly, it seems to be an attempt from Facebook to regain trust following Russian meddling and fake news exploitations on its site.
Facebook Follows Trend Away from Cryptocurrencies, Banning Advertisements (PDF)
Volkswagen: $30 Billion Later and No More Monkeying Around
Volkswagen’s chief lobbyist, Thomas Steg, was suspended in January after news broke that the German carmaker sponsored inhumane chemical testing on humans and monkeys.
The controversial study was conducted in 2014 amongst growing public concern about the effects diesel exhaust has on human health. The test consisted of scientists exposing ten monkeys to diesel fumes emitted from a Volkswagen Beetle in a sealed chamber. Volkswagen funded the testing in an effort to show that new diesel vehicles were less harmful than old models. However, the company intentionally manipulated the test’s results: the Beetle used for the experiment was altered to emit much lower pollution levels than similar models out on the market.
Steg was in in charge of overseeing Volkswagen’s sustainability matters, which included the European Research Group on Environment and Health in the Transport Sector (EUGT), the organization that employed the testing. EUGT has since been dissolved. According to a Volkswagen senior official, Steg was aware of the monkey testing, but did not make any attempt to stop it.
The news of Steg’s departure follows Volkswagen pleading guilty to conspiracy and fraud charges in 2015, in which they fabricated results of emissions tests by putting software in millions of diesel vehicles. Volkswagen doesn’t appear to be the only automaker being called into question. Records from investigations and government documents revealed that Volkswagen and several other European carmakers heavily funded research in an effort to maintain tax benefits for diesel fuel.
In spite of the recent illegalities, Volkswagen’s 2017 sales did not reveal any significant decline in revenue. Analysts say the coverage of the animal testing may change this.
Volkswagen’s monkey scandal has cost them $30 billion to date.
Volkswagen 30 Billion Later and No More Monkeying Around (PDF)
Four French Women Score Upset Win in Workplace Sexual Harassment Lawsuit
Earlier this month in Paris, four women emerged victorious in a workplace sexual harassment and discrimination suit against employer H. Reinier, a subsidiary of large French cleaning company, ONET. France’s national state-run rail company SNCF subcontracted with H. Reinier to sanitize its facilities. The plaintiffs cleaned trains in Paris’ Gare du Nord Station.
The women alleged that their team leader subjected them to frequent bullying and lewd acts over multiple years, including groping one of the women as she leaned over to clean a washroom sink. The harassment intensified when the women supported fellow employee, Rachid Lakhal, after he exposed a kickback scheme within the company. Despite repeated complaints to management, the company refused to transfer the employee responsible to another post. Instead, H. Reinier sanctioned the women for complaining about the harassment.
A French labor court heard the women’s claims alongside Lakhal’s whistleblower suit. The court agreed with the plaintiffs and found that H. Reinier failed to implement sufficient measures to protect the women.
The court awarded each of the women 30,000 euros for sexual harassment and discrimination. Lakhal was awarded 100,000 euros, in part for giving testimony that corroborated his co-worker’s claims. The case marks precedent as one of the first times a French court has awarded a whistleblower enhanced recovery for supporting workplace harassment allegations.
The victory against H. Reinier happens to coincide with an ongoing revolution against sexual harassment in France. Following allegations that Harvey Weinstein sexually harassed various French actresses, French journalist Sandra Muller confessed her own sexual harassment encounter on twitter. She branded the hashtag “balancetonporc” or “expose your pig” and has inspired hundreds of other French women to post their own experiences. The movement has also reignited discussion about some of France’s past political scandals, including an incident that forced International Monetary Fund Director Dominique Strauss-Kahn to resign.
Attorney for the plaintiffs against H. Reinier acknowledged that winning a workplace sexual harassment suit is a rare victory in France. Scholars and litigators blame the lack of effective laws and enforcement mechanisms. In fact, France only began providing a civil cause of action for workplace sexual harassment in 1992. However, commentators are hopeful that the recent anti-sexual harassment movement will put pressure on French corporations to root out sexual harassment in the workplace.
As of this article, H. Reinier has yet to terminate the employee responsible for the harassment, but plans to implement risk prevention training for all managers and salaried employees. SNCF stated that they agreed with the court’s decision, but do not plan to cut ties with H. Reinier in the near future.
Four French Women Score Upset Win in Workplace Sexual Harassment Lawsuit (PDF)
Wild Takeover Bid for Buffalo Wild Wings
Last month, Roark Capital Group, the private equity owner of several fast-food chains, made an all-cash offer to Buffalo Wild Wings Inc. in the hopes of purchasing the chicken wing chain for close to $2.3 billion at reportedly $150 per share. Reports of this potential deal sent shares of the chicken franchise flying up as much as 28 percent.
This takeover bid comes following a difficult year for B-Dubs, as the company struggled due to rising food costs and poor sales. Longtime CEO Sally Smith announced her resignation at the end of the year following a failed proxy battle against activist shareholder Marcato Capital Management. Marcato has since appointed three of its own candidates to the company’s board. Buffalo Wild Wings has yet to name Smith’s replacement.
Some argue Roark’s offer to B-Dubs marks an effort to re-enter the chicken market following a failed attempt to purchase Popeyes.
Earlier this year, Roark Capital Group backed Arby’s Restaurant Group Inc. as the company submitted a rival bid against Burger King to purchase Popeyes Louisiana Kitchen Inc. In this particular bid, shareholders “would have received $40 a share in cash as well as equity in the combined company…with Roark owning 80 percent.” Popeyes ultimately agreed to be bought by Restaurant Brands International Inc. for about $1.8 billion.
The acquisition of Buffalo Wild Wings would fit well in Roark’s restaurant-heavy portfolio of sandwich chain restaurants – Arby’s, Carl’s Jr., and Jimmy John’s, among others.
For now, some are left wondering whether Roark’s $150 per share offer comes even remotely close to the right price for Buffalo Wild Wings stock. Just a year ago the stock reached a high of $175 per share and has climbed as high as $200 a share. It is also worth noting Marcato paid $143 for its own stock. The current bid represents a very modest yield for investors. Other potential buyers have yet to express their interest in purchasing the company for more.
Representatives by Buffalo Wild Wings and Roark have yet to comment on this rumored deal.