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ALWAYS BE CLOSING
“You don’t have to go home but you can’t stay here.” – Estonia
In an unprecedented, but not entirely unexpected move, Estonian authorities told Danske Bank to GTFO of the country. And just hours later, the only DB more f*cked than Deutsche Bank pulled out of the entire Baltic Region, including Russia. Which is probably a good idea considering oligarchs wearing tracksuits got them into this mess.
You might remember that Danish bank, Danske, is embroiled in one of the largest money laundering scandals of all time. The $230B scheme came to light last year when authorities uncovered that a tiny Estonian branch of the bank was the go-to money launderer for dirty cash heading west from Russia.
More than 3.2k people in the region stand to lose their jobs.
The long arm of the law
The disgraced bank has already lost 50% of its market value since the scandal broke, but share and bondholders are the least of the bank’s worries.
Danish authorities are out for blood, seeking to make an example of Danske, having already passed a handful of laws that increased money laundering fines by 700% and adding potential jail time for execs.
And don’t forget about the land of the free and the home of the brave. The US Department of Justice has launched a criminal investigation of its own.
BECAUSE AFTER ALL, YOU’RE MY WONDER-WAL
Walmart is putting Jeffery Commerce on notice after crushing its Q4 earnings expectations. The news comes on the heels of Amazon reporting a slower than expected growth rate.
Here’s a quick breakdown …
- EPS was $1.41 vs. $1.34 estimate
- Same-store sales rose 4.2% vs. an expected 3.3%
- eCommerce sales jumped 43% YoY
- Sam’s Club sales rose 3.3% and online sales jumped 21%
Smell that? It’s Jeffrey Commerce soiling his pleated khakis.
Walmart has done more than “survive and advance,” laying out a strategic campaign aimed at revamping its online user experience and technology. A strategy that included the purchase of Jet.com. The addition of e-commerce-facilitated grocery pickup has only added to the influx of online revenue. Coupled with Wally World’s signature rollbacks, the Bentonville boys seem to be on to something …
What’s not to like?
It’s not all $5 DVD bins and industrial sized mayo at the big box retailer, though. Profit margins on online shipments don’t exactly scream “Walton money. After all, there’s a reason that the Amazon Web Services team walks around HQ1 with BDE.
CONFLICT OF INTEREST
McKinsey & Company settled with the United States Trustees Program on Tuesday for $15M for ‘allegedly’ failing to make required disclosures about potential conflicts of interest. This, as it turns out, is bad.
The Chapter 11 process expects advisers to disclose any potential interests they may have in the filing. The $15M settlement handed down to McKinsey is one of the largest sums ever paid for noncompliance with the disclosure rules. You see, until now, failure to put change in a parking meter was far more likely to result in a slap on the wrist, as violations of disclosure rules were rarely enforced.
But wait, there’s more!
McKinsey, which entered the bankruptcy biz in 2001, has served 14 businesses and, as it turns out, has had a financial interest in seven of them. The settlement on Tuesday covers just three of the embroiled bankruptcy engagements.
Jay Alix, the founder of Alix Partners, has challenged McKinsey’s bankruptcy disclosure practices and litigated against them in five federal courts. He mentioned that this is a good start but will keep on fighting the good fight. Cliff White, director of the USTP, added, “If this conduct is repeated in future cases, we will seek even more far-reaching remedies.”
IN OTHER NEWS
- Shocker. A startup football league almost missed payroll in its second week. The Alliance of American Football was in jeopardy of missing payroll this week were it not for a $250M investment from Carolina Hurricanes owner, Tom Dundon. Dundon will also become chairman of the league. Remember, you might be rich, but you’ll never be “give a quarter of a billion dollars to a football league that will surely fail miserably” rich.
- The SEC has proposed allowing all companies to “test-the-waters” before diving into an IPO. Currently, only “small” companies are granted the opportunity to gauge investor interest prior to filing publicly, under the JOBS Act. The “Shortseller Enrichment Commission” believes that this will boost the number of IPOs which has dropped almost 50% since the ’90s. Basically, this is the finance equivalent of allowing an NBA prospect to put out feelers before entering the draft.
- Define “Big Swinging D*ck.” HSBC hauled in more than $120M in a single day thanks to the collapse of the Turkish lira. The gainz were driven by unprecedented volatility over the summer.
- CBRE DGAF about WeWork (We?). The massive commercial real estate firm is looking to get into the co-working business that WeWork has proven is incredibly lucrative (see: Softbank). CBRE has set up a new company, called Hana, to manage the business which will work in conjunction with landlords to rent space. First stop: the PWC Tower in Dallas.
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