Over the last few months there were growing fears that the US tech industry, a stock market stalwart, might be poised for a damaging crackdown by regulators. This fear had somewhat subsided in the last few weeks as no new worries had arisen, until now. Treasury Secretary Mnuchin has just now called for an anti-trust review of the US tech industry following a 60 Minutes story on Google’s monopoly power. Mnuchin said the power to do so was not part of his mandate, but that someone in the government needs to be looking at the issue. “These are issues that the Justice Department needs to look at seriously — not for any one company — but obviously as these technology companies have a greater and greater impact on the economy”.
FINSUM: This is a very worryingly development for the tech industry and its investors, but not one we think is unwarranted. We suspect this is going to wound tech stocks, especially if the idea of an anti-trust review gets traction in Washington.
The scandal for Wells Fargo’s wealth management division is deepening. The bank has already experienced major reputational damage following its checking account scandal, and now the US Department of Justice is investigating the wealth management division’s alleged misconduct. The move is part of an extension of the investigation into the retail banking misconduct, and the FBI is reportedly holding interviews in the Phoenix area. Earlier this month the bank disclosed its own independent review of its wealth management unit included “whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the company’s investment and fiduciary services business”.
FINSUM: This scandal looks like it is going to keep moving deeper and deeper. We wonder how much damage this might ultimately have on Wells Advisors’ own businesses. This seems like a situation where advisors might be seen by clients as guilty by association.
The huge public pushback against Apple’s revelation that it intentionally slowed older iPhone speeds to keep them from crashing is now turning into an ugly, and possibly legal, scandal. The US Department of Justice and the SEC are now launching probes into Apple’s handling of the situation. While the DOJ probe will likely look broadly at behavior, the SEC is looking into whether Apple violated securities laws with regard to its disclosures about software updates.
FINSUM: We have a feeling there is a big fine on the horizon for Apple. The bigger question is whether this hurts their public image and could spark the beginning of the end of the Age of Apple.
President Trump has mostly been very quiet about the DOJ investigation into the White House’s potential ties to Russia. Until today, that is. Yesterday, coming just days after Mike Flynn pled guilty to lying to federal investigators about his connections with Russia, Trump went on a Twitter tirade lambasting the DOJ. The focus of his tirade was on the unfair handling of Mike Flynn and “Crooked Hillary Clinton”. Trump said, amongst other tweets, “So General Flynn lies to the FBI and his life is destroyed, while Crooked Hillary Clinton, on that now famous FBI holiday “interrogation” with no swearing in and no recording, lies many times . . . and nothing happens to her? Rigged system, or just a double standard?”.
FINSUM: We think Trump has decided to go on offense instead of playing it cool. Why not?
In what has amounted to an intensification of the suspicion surrounding President Trump’s administration, the president has recently discussed ousting Jeff Sessions, attorney general, in an effort to end special counsel Mueller’s investigation of him. This has caused some alarm because of the extent of measures Trump would need to take to do so. However, the Senate has bound together, promising to block any of Trump’s efforts to fire Sessions. Led by Republicans, the Wall Street Journal reports that “senators said they would try to thwart him through legislation, control of the calendar and the chamber’s parliamentary rules”. Unusually given the current climate, Democrats are siding with Republican senators and backing the push.
FINSUM: We don’t like a limitless investigation like Mueller’s, but in anyone’s book it is hardly fair for someone to be able to fire the man investigating him.