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A college admissions scandal hits business leaders
Federal prosecutors in Boston charged dozens of wealthy parents yesterday in a scandal focused on the use of fraud and bribery to help children get into elite schools.
Plenty of big financial figures were indicted: They include Bill McGlashan, the managing partner of TPG’s growth-investment arm; Gordon Caplan, the co-chairman of the law firm Willkie Farr & Gallagher; and Douglas Hodge, a former C.E.O. of the investment firm Pimco. The actresses Lori Loughlin and Felicity Huffman also face charges.
Fallout is already coming. Mr. McGlashan was put on indefinite administrative leave from TPG.
How the scheme worked, according to prosecutors:
• William Singer masterminded the scheme through his Edge College & Career Network.
• “There is a front door which means you get in on your own,” Mr. Singer told one parent in a conversation that was wiretapped. “The back door is through institutional advancement, which is 10 times as much money.” He promised a cheaper “side door.”
• Parents paid Mr. Singer a total of about $25 million over eight years to bribe school officials into designating their children as recruited athletes.
• Mr. Singer was accused of bribing athletic coaches to campaign for certain students who lacked athletic credentials to be admitted.
• Indicted parents were also said to have paid to fake their children’s standardized tests, at a rate of $15,000 to $75,000 per exam.
Theresa May’s Brexit deal is rejected, again
Britain is hurtling toward unknown political territory after Parliament again rejected Prime Minister Theresa May’s plan for leaving the E.U., Stephen Castle of the NYT writes.
“Mrs. May had hoped that last-minute concessions from the E.U. would swing the vote in her favor, but many lawmakers dismissed those changes as ineffectual or cosmetic and voted against the deal, 391 to 242,” Mr. Castle writes.
Lawmakers vote today on whether they wish to proceed with a no-deal Brexit. If they don’t, they will then vote on seeking an extension to the schedule for leaving.
That course of action “does not solve the problems,” Mrs. May said last night. “The E.U. will want to know what use we mean to make of such an extension, and the House will have to answer.”
But the result throws Britain into chaos. There are just 16 days to go before Brexit is scheduled to happen by default, and with control effectively wrestled from Mrs. May the nation is seemingly rudderless. Mrs. May could seek approval for her deal one last time; Parliament could try to arrange a second referendum; or there could be a general election to break the deadlock.
And the business community is unimpressed. “It’s time for Parliament to stop this circus,” said Carolyn Fairbairn, the director-general of Confederation of British Industry. “This must be the last day of failed politics. Jobs and livelihoods depend on it.”
More: The British government revealed plans to temporarily loosen tariffs under a no-deal Brexit, while also seeking to protect some industries, including ceramics and farming.
America keeps Boeing’s 737 Max 8s aloft
While most of the world has grounded the jets, which have been involved in two fatal crashes within five months, American regulators have decided to keep them flying.
European authorities banned the planes from the air, joining regulators in China, Indonesia, Singapore, India and Australia, as well as numerous airlines. Roughly two-thirds of the 737 Max 8 aircraft in the world are now grounded.
President Trump spoke with Boeing yesterday, shortly after he had tweeted that airplanes were becoming “far too complex to fly.” In a conversation with Dennis Muilenburg, the company’s C.E.O., Mr. Trump was reportedly reassured about the safety of the Max 8 jets.
The F.A.A. stands firm on its decision not to ground the aircraft, saying that it found “no basis” to do so. Elaine Chao, the U.S. transportation secretary, said that she and the F.A.A. would “take immediate and appropriate action” if necessary. (She also flew on a Max 8 yesterday.)
But others disagree. Ray LaHood, a former secretary of transportation who grounded Boeing’s 787 Dreamliner in 2013 following fires in its lithium-ion batteries, said that it was the F.A.A.’s duty to ground the jets “until there is 100 percent assurance” of safety. Scott McCartney of the WSJ writes that the Department of Transportation, which is home to the F.A.A., has “shown a pattern of lax regulation” recently.
Britain gently joins the Big Tech antitrust assault
The U.K. has joined the growing army of voices calling for checks on the power of Big Tech, with a government report that calls for an overhaul of antitrust policies. It was prepared by a panel led by Jason Furman, who was a top economic adviser to President Barack Obama. More on the news from Adam Satariano of the NYT:
• “The 150-page report, ordered by the chancellor of the Exchequer, Philip Hammond, the country’s top Treasury official, said the country needed stricter rules on acquisitions in the technology industry and stronger oversight to make sure that new rivals cannot be squashed.”
• “Mr. Furman’s panel called for the creation of a ‘digital markets unit’ that would require companies to allow consumers to move data from one service to another. Large companies would also have to make data available to competitors, a bid to lower barriers to entry by forcing them to share information.”
• “The report also calls for a code of conduct to be drafted for the biggest tech companies that would be enforceable with fines.”
• As Grep Ip of the WSJ notes, this is “a carefully calibrated proposal designed to contain Big Tech’s threat to competition while keeping the government’s hand on the industry and the internet as light as possible.”
Expect trade results soon, good or bad
The White House’s chief trade negotiator, Robert Lighthizer, won’t say whether he believes that trade talks with China will yield the results that President Trump has demanded.
“Our hope is we are in the final weeks of an agreement,” Mr. Lighthizer told the Senate Finance Committee yesterday, reports Alan Rappeport of the NYT.
“We’re either going to have a good result or we’re going to have a bad result before too long, but I’m not setting a specific time frame and it’s not up to me,” he added. “I’ll work as hard as I can, and the president will tell me when the time is up, or the Chinese will.”
The chances of success have risen and fallen in recent weeks. Negotiations have appeared to make progress on issues including currency manipulation and enforcement provisions. But fears about Mr. Trump’s erratic bargaining style — compounded by his decision to walk out on talks with North Korea — have given Chinese officials some jitters.
Wells Fargo’s C.E.O. is grilled in Washington
Timothy Sloan went to Capitol Hill on Tuesday seeking to convince members of Congress that Wells Fargo had become a better bank — but by the time he left, few seemed to believe him, Emily Flitter of the NYT writes. Some highlights:
• “Representative Katie Porter, Democrat of California, questioned Mr. Sloan about exactly how meaningful the bank’s commitment to change was, pointing out that its own lawyers had called such statements ‘corporate puffery’ in response to a lawsuit.”
• “Representative Lance Gooden, a Republican from Texas, asked why Wells Fargo was taking longer than expected to refund money to customers it had tricked into buying auto insurance. Mr. Sloan said the bank had engaged in ‘a give-and-take’ with the comptroller about how much to refund.”
• “A spokesman for the bank’s primary regulator, the Office of the Comptroller of the Currency, released a statement on Tuesday saying officials were ‘disappointed’ in the bank.”
Mr. Sloan was the first of a parade of bank executives summoned to testify before the committee. Jamie Dimon of JPMorgan Chase and David Solomon of Goldman Sachs will appear at a hearing on April 10.
Dr. Ned Sharpless, the director of the National Cancer Institute, was named acting director of the F.D.A.
Morgan Stanley promoted Lauren Cummings and Ashley MacNeill to lead its technology equity capital markets practice in the Americas.
The speed read
• Vice Media reportedly plans to raise another $200 million, perhaps at a steep discount to its last valuation of $5.7 billion. (Information)
• Walt Disney expects to close its acquisition of the major assets of 21st Century Fox on March 20. (WSJ)
• Edward Lampert’s hedge fund took $57.5 million from Sears days before the two organizations struck a deal to create a new, streamlined version of the retailer, according to court documents. (NY Post)
Politics and policy
• Democrats want to tax the rich, but that may not raise enough to fund a liberal agenda. (Politico)
• E.U. officials blacklisted 10 more jurisdictions, including the U.A.E. and Bermuda, as tax havens. (Bloomberg)
• Robert Mueller’s report has Washington in a spin — and it’s not even published yet. (NYT)
• Joe Biden and Senator Elizabeth Warren have a rivalry that dates to the 2008 financial crisis. (Politico)
• President Trump’s threat to place tariffs on imported cars is losing its bite in the face of legal challenges and disgruntled consumers. (WSJ)
• Nissan said that it would stop producing Infiniti cars at its plant in Sunderland, England, and withdraw the brand from western Europe. (Bloomberg)
• The S.E.C. has been given a judge’s permission to respond to Elon Musk’s claims of unconstitutional censorship by the agency over his use of Twitter. (Reuters)
• Meanwhile, Tesla has reportedly laid off 150 people from its recruiting team as part of its cost-cutting, and a leaked email suggests that Mr. Musk now approves every hire. (Electrek, Business Insider)
• America’s beef with Huawei isn’t just about 5G: It stretches to undersea internet cables, too. (WSJ)
• Here are 15 steps to disappearing from the grid while staying online, from a Bitcoin evangelist. (NYT)
• Uber settled a long-running legal battle with drivers in California and Massachusetts, agreeing to pay them $20 million but not to change their status as independent contractors. (NYT)
Best of the rest
• Nissan and Renault have overhauled their alliance, as they seek to move past their former top executive, Carlos Ghosn. (NYT)
• The Fed banned two former Goldman Sachs executives, Tim Leissner and Roger Ng, from the banking industry over their roles in the 1MDB fraud. (NYT)
• Shell hopes to become the world’s largest electricity company by the 2030s, as it attempts to transition from fossil fuels toward lower-carbon energy sources. (FT)
• Dick’s Sporting Goods is moving further away from selling guns, and taking a hit to its earnings. (NYT)
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Good Wednesday. (Want this by email? Sign up here .) A college admissions scandal hits business leaders
Federal prosecutors in Boston charged dozens of […]