Securities Attorney Briefing 16 December 2016

Securities Attorney Tom Krebs


The American Leader in the Islamic State

John Georgelas was a military brat, a drug enthusiast, a precocious underachiever born in Texas. Now he is a prominent figure within the Islamic State. Here’s the never-before-reported story of his long and troubling journey.At dawn on a warm September morning in 2013, a minivan pulled up to a shattered villa in the town of Azaz, Syria. A long-bearded 29-year-old white man emerged from the building, along with his pregnant British wife and their three children, ages 8, 4, and almost 2. They had been in Syria for only about a month this time. The kids were sick and malnourished. The border they’d crossed from Turkey into Syria was minutes away, but the passage back was no longer safe. They clambered into the minivan, sitting on sheepskins draped on the floor—there were no seats—and the driver took them two hours east through a ravaged landscape, eventually stopping at a place where the family might slip into Turkey undetected. They disembarked amid a grove of thorny trees. Signs warned of land mines. The border itself was more than an hour’s walk away, through the desert. They’d forgotten to bring water. Tania dragged the puking kids along; Yahya carried a suitcase and a stroller. Midway, Tania had contractions, although she was still several months from her due date. They continued on. At the border itself, while the family squeezed through the barbed wire, a sniper’s bullets kicked up dirt nearby. Yahya had arranged for a human trafficker to meet them, and when the trafficker’s truck arrived, Yahya pressed a few hundred dollars into the man’s hand. Yahya and Tania had been married for 10 years, but they did not say goodbye. Satisfied that his family would not die, Yahya turned and ran across the border, back into Syria—again under gunfire—without even a wave. The trafficker drove Tania and the kids a short distance into Turkey, then dropped them by the roadside without food or water and sped off. Tania carried the children and luggage toward the nearest town. The day ended with the intercession of a stranger on a motorcycle, who helped carry their things to a bus station. Tania started to leak amniotic fluid due to the journey, and she spent the next weeks recovering in Istanbul, and then with family in London. Six months pregnant, she weighed 96 pounds. As his family traveled to London, relieved to have escaped the worst place on Earth, Yahya felt relief of his own—he could now pursue his dreams unencumbered by a wife and children. He felt liberated. He carried visions of the caliphate yet to be declared, and ideas for how to shape it. These thoughts were not idle. Yahya, by then, had a small but influential following, and his calm erudition had won him the respect that his teachers and parents had withheld during his youth. His own destiny seemed to be converging with that of the world’s. It was the best day of his life.

MEP warns of brokers avoiding Mifid II dark pool rules

In a December 13 letter to Valdis Dombrovskis, the EU’s Commissioner for financial services, seen by FN, Ferber said such developments were “quite concerning” and called for the Commission to seek the advice of the European Securities and Markets Authority on the matter. Mifid II, the EU’s flagship markets rulebook that takes effect in January 2018, will tightly regulate over-the-counter equity trading, much of which takes place on bank-run dark pools known as broker crossing networks – the largest of which are run by the big, global banks. These venues, which do not display prices, allow banks to match buyers and sellers internally and therefore avoid exchange fees. But Mifid II will effectively ban these networks, known as BCNs, by forcing almost all share trading onto exchanges, or other types of regulated venues known as multilateral trading facilities or systematic internalisers. Many banks do not want to run MTFs, which are highly transparent, exchange-like venues and allow for very little discretion; while the systematic internaliser, or SI regime is restricted to trades that banks complete using their own capital and require prices to be displayed for orders up to a specified size. Under Mifid II, the SI regime is restricted to brokers that execute trades by taking a position onto their book in the hope that a matching offer appears later in the day, rather than those that use a matched principal model, whereby there is a willing buyer and seller of a security and a bank facilitates the trade by standing in the middle. This has prompted some banks to explore partnerships or structures with electronic or proprietary trading firms – sometimes known as High Frequency Traders – to help them run SIs. Under these arrangements, the bank trades as a principal with a client, but later unwinds the risk to the electronic trading firm. It is also expected that many electronic trading firms will become SIs themselves. As an example, if Bank A provided quotes for orders in Vodafone stock up to a standard size of €10,000, it might receive an order of €20,000 from a client. It may then take this trade on, but unwind the risk to a proprietary trading firm. More:

U.S. Officials: Putin Personally Involved in U.S. Election Hack

U.S. intelligence officials now believe with “a high level of confidence” that Russian President Vladimir Putin became personally involved in the covert Russian campaign to interfere in the U.S. presidential election, senior U.S. intelligence officials told NBC News. Two senior officials with direct access to the information say new intelligence shows that Putin personally directed how hacked material from Democrats was leaked and otherwise used. The intelligence came from diplomatic sources and spies working for U.S. allies, the officials said. Putin’s objectives were multifaceted, a high-level intelligence source told NBC News. What began as a “vendetta” against Hillary Clinton morphed into an effort to show corruption in American politics and to “split off key American allies by creating the image that [other countries] couldn’t depend on the U.S. to be a credible global leader anymore,” the official said.  Ultimately, the CIA has assessed, the Russian government wanted to elect Donald Trump. The FBI and other agencies don’t fully endorse that view, but few officials would dispute that the Russian operation was intended to harm Clinton’s candidacy by leaking embarrassing emails about Democrats. The latest intelligence said to show Putin’s involvement goes much further than the information the U.S. was relying on in October, when all 17 intelligence agencies signed onto a statement attributing the Democratic National Committee hack to Russia. The statement said officials believed that “only Russia’s senior-most officials could have authorized these activities.” That was an intelligence judgment based on an understanding of the Russian system of government, which Putin controls with absolute authority. Now the U.S has solid information tying Putin to the operation, the intelligence officials say. Their use of the term “high confidence” implies that the intelligence is nearly incontrovertible. “It is most certainly consistent with the Putin that I have watched and used to work with when I was an ambassador and in the government,” said Michael McFaul, who was ambassador to Russia from 2012 to 2014. “He has had a vendetta against Hillary Clinton, that has been known for a long time because of what she said about his elections back in the parliamentary elections of 2011. He wants to discredit American democracy and make us weaker in terms of leading the liberal democratic order. And most certainly he likes President-elect Trump’s views on Russia,” McFaul added. Clinton cast doubt on the integrity of Russia’s elections. As part of contingency planning for potential retaliation against Russia, according to officials, U.S. intelligence agencies have stepped up their probing into his personal financial empire.

Tech workers pledge to never build a database of Muslims

When asked a year ago on the campaign trail whether he thought that the United States should create a database of Muslims in the country, Donald Trump said in an interview with NBC News: “Oh, I would certainly implement that — absolutely.” On Tuesday, hundreds of members of the technology industry weighed in on whether they would help build such a database. The answer? Absolutely not. By Wednesday afternoon more than 640 software engineers, designers, business executives and data processing personnel from U.S. firms such as Google, Twitter, Microsoft, Mozilla and Palantir Technologies had signed a pledge “choosing to stand in solidarity with Muslim Americans, immigrants, and all people whose lives and livelihoods are threatened by the incoming administration’s proposed data collection policies.” As part of the pledge, the individuals promised, among other things, to:

  • Refuse to participate in the creation of databases that would allow the government to target individuals based on race, religion or national origin
  • Advocate within their organizations to minimize data collection that would facilitate ethnic or religious targeting
  • Responsibly destroy high-risk data sets and backups
  • Resign from their organization if ordered to build such a database

With the signing of the pledge — reportedly a grass-roots initiative led by engineers at Wave and Slack — the tech industry is drawing battle lines, said Kresta Daly, a civil rights and criminal defense attorney based in Sacramento. When employers see that their workers are openly unwilling to cooperate, “it makes it difficult for a process like that to move forward,” she said. More:

U.S. Faces Tall Hurdles in Detaining or Deterring Russian Hackers

WASHINGTON — When a suspected Russian cybercriminal named Dmitry Ukrainsky was arrested in a Thai resort town last summer, the American authorities hoped they could whisk him back to New York for trial and put at least a temporary dent in Russia’s arsenal of computer hackers. But the Russian authorities moved quickly to persuade Thailand not to extradite him, saying that he should be prosecuted at home. American officials knew what that meant. If Mr. Ukrainsky got on a plane to Moscow, they concluded, he would soon be back at work in front of a computer. “The American authorities continue the unacceptable practice of ‘hunting’ for Russians all over the world, ignoring the norms of international laws and twisting other states’ arms,” the Russian Foreign Ministry said. The dispute over Mr. Ukrainsky, whose case remains in limbo, highlights the difficulties — and at times impossibilities — that the United States faces in combating Russian hackers, including those behind the recent attacks on the Democratic National Committee. That hack influenced the course, if not the outcome, of a presidential campaign and was the culmination of years of increasingly brazen digital assaults on American infrastructure. The United States has few options for responding to such hacks. Russia does not extradite its citizens and has shown that it will not easily be deterred through public shaming. At times, the American authorities have enlisted local police officials to arrest suspects when they leave Russia — for vacation in the Maldives, for example. But more often than not, the F.B.I. and Justice Department investigate and compile accusations and evidence against people who will almost certainly never stand trial. More:

Trump Chooses Hard-Liner as Ambassador to Israel

WASHINGTON — President-elect Donald J. Trump on Thursday named David Friedman, a bankruptcy lawyer aligned with the Israeli far right, as his nominee for ambassador to Israel, elevating a campaign adviser who has questioned the need for a two-state solution and has likened left-leaning Jews in America to the Jews who aided the Nazis in the Holocaust. Mr. Friedman, whose outspoken views stand in stark contrast to decades of American policy toward Israel, did not wait long on Thursday to signal his intention to upend the American approach. In a statement from the Trump transition team announcing his nomination, he said he looked forward to doing the job “from the U.S. embassy in Israel’s eternal capital, Jerusalem.” Through decades of Republican and Democratic administrations, the embassy has been in Tel Aviv, as the State Department insists that the status of Jerusalem — which both Israel and the Palestinians see as their rightful capital — can be determined only through negotiations as part of an overall peace deal. Mr. Friedman, who has no diplomatic experience, has said that he does not believe it would be illegal for Israel to annex the occupied West Bank and he supports building new settlements there, which Washington has long condemned as illegitimate and an obstacle to peace. The Trump transition team’s statement focused on Mr. Friedman’s long history with Israel, portraying him as a friendly supporter of the country whose views were in line with the United States’ position toward it.

Happy 80th Birthday, Pope Francis

Pope Francis turns 80 on Saturday. For most of the Catholic Church’s upper hierarchy, 80th birthdays aren’t necessarily happy. In 1970 Pope Paul VI announced that cardinals 80 and up would lose their right to vote for the next pope. Vatican officials are usually removed from all councils and congregations at age 80. These prelates might continue to work or travel, but only one octogenarian maintains significant influence in the church. Given his predictions that his papacy will be short, it’s natural to wonder whether Pope Francis will choose to retire. When Pope Benedict XVI stepped down in 2013—the first pope to do so since Gregory XII was forced from the throne in 1415—he set a precedent. It is now acceptable for a pope to give up the office when he feels he can’t go on. While Francis has acknowledged he could resign someday, don’t expect it on his 80th birthday. Last year he told Mexican broadcaster Televisa that putting an age limit on popes would “create a sensation of the end of the pontificate that wouldn’t be good.” Put another way, Francis doesn’t think the pope should ever be a lame duck. He’s leaving his mark in a different way. Francis’ simple style and bold pronouncements quickly caught the world’s attention when he became pope in 2013, but this can only take him so far. Francis has positioned himself as an outsider who would drain the swamp. If he wants to implement lasting change, he will have to tame the Vatican bureaucracy, known as the Roman Curia. More:



The $12 Trillion Credit Risk Juggle


After the financial crisis, regulators were worried about too much risk being concentrated in too few hands. They are still concerned, but the hands have changed. The U.S. Treasury’s Office of Financial Research is devoted to worrying about everything and anything that could spur another financial crisis, and near the top of the list is the post-crisis explosion in corporate credit. This pile of debt is “a top threat to stability,” according to this Treasury unit’s latest report, as Bloomberg’s Claire Boston wrote on Tuesday. Size of U.S. Corporate Credit Market, $12.1 trillion. In particular, these researchers are wary of the changing composition of who owns these bonds. Big banks and hedge funds own a much smaller proportion, while insurers and mutual funds own much more of it. More specifically, banks and household and nonprofits, a category that includes hedge funds, have reduced their holdings of U.S. corporate credit by $1.6 trillion since 2008, while insurers, mutual funds and the rest of the world have increased it by $3.6 trillion, according to data compiled by Goldman Sachs that includes foreign sovereign debt and asset-backed securities. This is a salient matter. The Federal Reserve just raised rates for a second time in two years and predicts three rate increases next year, possibly marking the end of this era of financial repression that’s spurred a record pace of corporate-debt sales. More:

Big Banks $70 Billion Short in Fed Push to Prevent Bailouts

Wall Street banks are about $70 billion short in building up funds the Federal Reserve says they’ll need to tap following a collapse, down by almost half from the central bank’s earlier estimates. The eight biggest U.S. financial firms are required to build cushions of long-term debt that can be transformed into equity in a new company if the old one fails, according to a rule the Fed governors approved Thursday. Stockpiles of capital will also be used to meet the new standard known as total loss-absorbing capacity, or TLAC, which is a vital component of the plan to make giant banks easier to unwind without taxpayer bailouts. In October 2015, the Fed estimated banks had a total shortfall of $120 billion. “This requirement means taxpayers will be better protected because the largest banks will be required to pre-fund the costs of their own failure,” Fed Chair Janet Yellen said about the rule, which aims to prevent a repeat of 2008’s financial-sector disaster by making sure the biggest firms can absorb more losses — even after failing. She called it “one of the last critical safeguards” put in place since the crisis. The Fed estimates four banks, without identifying them, need about $70 billion more in qualifying unsecured debt and capital by the Jan. 1, 2019 deadline, while the other four banks already satisfy the standard. New debt issued in the last year by the banks helped to cut the shortfall. Investors buying the debt will know in advance that they could be subjected to losses if the issuer fails. More:

Wall Street’s 2017 Forecasts Are Doomed If Trump Doesn’t Follow Through On Campaign Promises

It’s a good thing that Wall Street analysts didn’t finish up their year-ahead outlooks prior to the U.S. Presidential election, because in the words of Deutsche Bank AG’s Chief U.S. Economist Joe LaVorgna, Donald Trump is “a game changer.” At the end of each year, Wall Street firms publish outlooks for the next 12 months. While it is already difficult to forecast what the S&P 500 Index, for instance, will be trading at in roughly 365 days, having a regime change in Washington makes things even more complicated. Just ask Goldman Sachs Group Inc., which was stopped out of 5 of its 6 top trade ideas last year before Valentines Day. “We can’t recall a time when a change in leadership in Washington had the potential for such large and diverging effects on the U.S. economy,” Bank of America Merrill Lynch analysts said in a recent note. Strategists are thus doing their best to hedge their calls, with JPMorgan Chase & Co.’s equity outlook saying, “Due to uncertainties, these impacts [Trump’s campaign promises] are not incorporated into our base case earnings forecast until there is more clarity around which policies will be emphasized and/or are politically feasible.” But given the market’s forward looking nature, that uncertainty hasn’t stopped a number of banks from at least trying to calculate what a Trump administration will do to their respective areas of coverage. Here are a few highlights.

Trump Has Bond Investors Rethinking What’s Normal

Back when he was the chief executive officer of bond-fund giant Pacific Investment Management Co., better known as Pimco, Mohamed El-Erian popularized the term “new normal” to describe the long period of slow growth the world faced in the wake of the 2008 financial crisis. Others called it “secular stagnation.” By any name it was an idea that powered a bond bull market: Since low growth implied low inflation and low interest rates, investors were willing to accept razor-thin yields on bonds. For example, yields on the 10-year Treasury closed at a record low 1.36 percent on July 8. Bond prices rise as yields fall, and vice versa. If there’s one thing that’s clear about Donald Trump, it’s that he’s not the status quo. For now, markets are taking an optimistic view about the effects of Trump’s calls for deregulation, tax reform, and infrastructure spending. In the U.S. stock market, that’s translated into a rally. Bond investors, on the other hand, began selling in anticipation of higher inflation and interest rates. Their bet was confirmed on Dec. 14 when the Federal Reserve raised short-term rates a quarter point. The yield on 10-year Treasuries has gone above 2.5 percent—meaning the bonds lost 5.4 percent of their value from Election Day to Dec. 13. The 30-year Treasury, which is more sensitive to changing expectations about rates, fell more than 10 percent. The long bond recently saw a 20 percent loss over five months, meeting one definition of a bear market. It’s the first since 2009. “That is a large chunk of loss on something that, until recently, was deemed as risk-free,” said Giuseppe Nuti, head of U.S. rates trading at UBS. “It is something fundamental that has changed,” says Richard Turnill, global chief investment strategist at BlackRock. “Important shifts around real growth, around inflation, around policy all suggest that the move in bond yields we’re seeing now can be sustained. I believe we’ve seen the low point for yields.” Jeffrey Gundlach, chief executive officer of DoubleLine Capital said in a Dec. 13 webcast that Treasury yields may hit 6 percent by the end of Trump’s four-year term. Since that would mean higher borrowing costs throughout the economy, if yields hit even 3 percent in 2017, he said, losses may spread beyond bonds and into stocks and real estate. More:

Hacked Yahoo Data Is for Sale on Dark Web

SAN FRANCISCO — Some time around August 2013, hackers penetrated the email system of Yahoo, one of the world’s largest and oldest providers of free email services. The attackers quietly scooped up the records of more than 1 billion users, including names, birth dates, phone numbers and passwords that were encrypted with an easily broken form of security. The intruders also obtained the security questions and backup email addresses used to reset lost passwords — valuable information for someone trying to break into other accounts owned by the same user, and particularly useful to a hacker seeking to break into government computers around the world: Several million of the backup addresses belonged to military and civilian government employees from dozens of nations, including more than 150,000 Americans. No one knows what happened to the data during the next three years. But last August, a geographically dispersed hacking collective based in Eastern Europe quietly began offering the whole database for sale, according to Andrew Komarov, chief intelligence officer at InfoArmor, an Arizona cybersecurity firm, who monitors the dark corners of the internet inhabited by criminals, spies and spammers. Three buyers — two known spammers and an entity that appeared more interested in espionage — paid about $300,000 each for a complete copy of the database, he said. The attack, which Yahoo disclosed on Wednesday, is the largest known data breach of a company. And neither Yahoo nor the public had any idea it had occurred until a month ago, when law enforcement authorities came to the company with samples of the hacked data from an undisclosed source.

Find out if your Yahoo account was hacked (and what to do next)

In September, Yahoo revealed a hack that compromised 500 million user accounts. Wednesday, the company revealed yet another hack, this time affecting a record 1 billion accounts. And yours might be among them. The hack exposed names, email addresses, telephone numbers, dates of birth, encrypted passwords and unencrypted security questions. Here’s how you can tell if hackers swiped your account information. Log into your Yahoo account:  This might sound obvious, but if you’re like a lot of people, you might not use Yahoo Mail as your primary email account. Yahoo has 1 billion monthly active users on its services overall and just 225 million monthly active users for its Yahoo Mail service, according to figures the company gave CNET in June. So check the email affiliated with your Yahoo account if you haven’t already. Yahoo has started sending out notifications to users, and you should be receiving one at that account if you were affected by the data breach. More:

Facebook will start telling you when a story may be fake

Facebook has struggled for months over whether it should crack down on false news stories and hoaxes that are being spread on its site. Now, it has finally come to a decision. The social network is going to partner with the Poynter International Fact-Checking Network, which includes groups such as Snopes, to evaluate articles flagged by Facebook users. If those articles do not pass the smell test for the fact-checkers, Facebook will label that evaluation whenever they are posted or shared, along with a link to the organization that debunked the story. “We have a responsibility to reduce the spread of fake news on our platform,” Adam Mosseri, Facebook vice president of product development, told The Washington Post. Mosseri said the social network still wants to be a place where people with all kinds of opinions can express themselves but has no interest in being the arbiter of what’s true and what’s not for its 1 billion users. The new system will work like this: If a story on Facebook is patently false — saying that a celebrity is dead when they are still alive, for example — then users will see a notice that the story has been disputed or debunked. People who try to share stories that have been found false will also see an alert before they post. Flagged stories will appear lower in the news feed than unflagged stories.

Users will also be able to report potentially false stories to Facebook or send messages directly to the person posting a questionable article. More:

Go to the Wrong Hospital and You’re 3 Times More Likely to Die

Not all hospitals are created equal, and the differences in quality can be a matter of life or death.

In the first comprehensive study comparing how well individual hospitals treated a variety of medical conditions, researchers found that patients at the worst American hospitals were three times more likely to die and 13 times more likely to have medical complications than if they visited one of the best hospitals. The study, published Wednesday in the academic journal PLOS One, shows “there is considerable variation in outcomes that really matter to patients, from hospital to hospital, as well as region to region,” said Dr. Thomas H. Lee, a longtime health care executive who was not involved in the research. The study’s authors looked at 22 million hospital admissions, including information from both the federal Medicare program and private insurance companies, and analyzed them using two dozen measures of medical outcomes. Adjusting the results for how sick the patients were and other factors, like age and income, the researchers discovered widespread differences among hospitals. Even a hospital that had excellent outcomes for heart care might have poor outcomes in treating diabetes.

The study did not disclose which hospitals had which results. Under the terms of the agreement to receive the data, the researchers agreed to keep the identities of the hospitals confidential. “Fundamentally, there is sort of an implicit assumption that every hospital is the same,” said Dr. Barry Rosenberg, the study’s lead author and a partner at the Boston Consulting Group in Chicago. But if someone has a heart attack, the closest hospital could have a death rate of 16 percent, compared with one a little farther away, where the rate was 4 percent, he said. Earlier research examined the geographic variation in health care spending and how often patients received a medical procedure in a given market or hospital and found that there was wide variation. This study looked specifically at medical outcomes.

While factors like the health and income of a hospital’s patients contribute to its performance, Dr. Rosenberg emphasized that a large part is played by factors like the skill of the physicians and nurses, the culture at the hospital and how they chose to treat a given illness. “There is this other half of the story,” he said. Hospitals that treated a high volume of cases were generally more successful than those that treated a low volume, but there were exceptions, Dr. Rosenberg said. While the study underscored important differences among hospitals, the researchers also acknowledged that patients have little information about those differences. While consumers can use tools like Medicare’sHospital Compare, which offers general quality information about individual hospitals, the data are very limited, Dr. Rosenberg said.

When Daily Intelligence Briefings Prevented a Nuclear War

On Sunday, President-elect Donald Trump said he doesn’t need to get daily intelligence briefings—now or after his inauguration on January 20—because he is, “like, a smart person.” Before he does away with the ritual, he might want to consider a particular time in history when a president did his homework, took his briefings, paid attention to the details and in so doing averted a nuclear war.  It was October 19, 1962—the fourth day of the Cuban Missile Crisis, when a nuclear confrontation with the Soviet Union seemed more likely by the hour—and John F. Kennedy was hosting a tense, 45-minute conversation with his Joint Chiefs of Staff, who had since the very beginning of the confrontation urged a massive airstrike against Cuban targets.  Leaning back in his leather swivel chair, his expression icy and resolute, Kennedy listened with pique as Air Force General Curtis LeMay denounced the president’s plan to impose a blockade on Cuba, rather than launch an offensive military campaign. The blockade was “almost as bad as the appeasement at Munich,” LeMay indecorously told the president. It was a “weak response” and “a lot of our citizens would feel that way, too. In other words, you’re in a pretty bad fix at the present time.” Kennedy was in near-disbelief. “What did you say?” he asked. “You’re in a pretty bad fix.” Letting out an unfriendly chuckle, the president replied, “You’re in there with me.” He also didn’t budge: The U.S. would not launch a military strike. The year before, as a new president—and the youngest ever elected to the office—Kennedy had allowed hawkish elements in the intelligence community and military brass talk him into a disastrous operation at the Bay of Pigs. Not this time. He had grown skeptical of their judgment and broadened his circle of advisers. He became an apt student of intelligence and readiness reports. In short, he evolved into an active, engaged and supremely informed commander in chief—and in the process avoided setting off nuclear conflagration. It’s a moment in history Trump would do well to remember before he shrugs off the details of U.S. intelligence and leaves them to his right-hand men.

Trump—who will be the least-experienced president in modern history—has surrounded himself by retired generals and foreign policy hawks. That’s his prerogative. But Americans require a commander in chief who is informed, astute and engaged—armed with sufficient knowledge and context to ask the right questions and provide the right pushback. There is no delegating this job to a vice president or senior White House aide. As John Kennedy learned the hard way, only one individual bears responsibility. More:

Donald Trump Denies Thing That 66 Million People Watched With Their Own Eyes As It Happened

When presented with the hair-raising evidence that Russian intelligence carried out a successful plan to pick the government of the United States, a principled president-elect would respond with horror and a determination to expose the attack and prevent any recurrence. An unprincipled president-elect would try to make the story disappear by picking away at the evidence around the margins: Russian involvement may be a fact, but while it’s probable that the hacks swung enough votes to decide a very tight race, and it’s extremely likely that Russia specifically hoped to help Trump win, neither of these conclusions can be proven. But the incoming Trump administration is instead going for option No. 3: flat-out lies. Donald Trump insists that if Russia committed the hacks the White House would have said something earlier. In fact, it did say something before the election. Here is the first sentence of Ellen Nakashima’s October 7 Washington Post report: “The Obama administration on Friday officially accused Russia of attempting to interfere in the 2016 elections, including by hacking the computers of the Democratic National Committee and other political organizations.” Trump was even presented with this information onstage at a presidential debate, where he dismissed it. What’s astonishing is that Trump is not only denying the substance of the accusation, he’s denying that the accusation was even made. Let this sink in: The president-elect of the United States is insisting that something that was witnessed on national television by more than 66 million people never happened. More:

Trump’s Pick for Labor Secretary Wrote a Deregulatory Manifesto

Since President-elect Donald Trump’s announcement that he has picked fast-food CEO Andrew Puzder to be labor secretary, there’s been lots of speculation that the administration could undo worker protections. The single best window into Puzder’s thinking may be an obscure book he wrote six years ago. It’s a blistering attack on business regulations, unions, and the Obama administration’s stimulus and health-care policies. “I think first and foremost, he’ll put in place everything we laid out in the book,” Puzder’s co-author, David Newton, told ProPublica in an interview. The 160-page book — “Job Creation: How It Really Works and Why Government Doesn’t Understand It.” — centers on a concept Puzder and Newton dub “The Certainty Factor,” which they argue is key to business expansion and job creation.

“Less federal programs, reduced deficit spending, lower taxes, and cutting back on regulations improve The Certainty Factor,” they write. If confirmed, Puzder will have power to shape a wide range of regulations that govern unions and employers, many of which are designed to protect workers.

Much of the debate in the Obama years has been around whether to push up the federal minimum wage — which since 2009 has been at $7.25 — to $15. Newton, while stressing he was not speaking for Puzder, believes there should be no minimum wage at all, and that pay should be entirely left up to employers. “When you mandate that anybody coming into your company has to be paid a certain minimum — you’re going to kill jobs,” said Newton, a lecturer at the University of California, San Diego, business school. “It’s one of the classic examples of government overreach with regard to regulation.”

Puzder himself has expressed skepticism about raising the minimum wage, while Trump has been all over the map on the issue, contradicting himself multiple times in the course of the campaign.

Newton still has Puzder’s ear: Newton said they have spoken several times in the past month and had contemplated writing a follow-up book, though Newton now thinks Puzder will be too busy. The two met in 2009 in Southern California, where Puzder’s CKE Restaurants, the parent company of Hardee’s and Carl’s Jr., is based. Puzder and the Trump transition team declined to comment. More:


WATCH: Kellyanne Conway says Donald Trump’s team found “an exception” in anti-nepotism law


On MSNBC’s “Morning Joe,” Donald Trump’s former campaign manager Kellyanne Conway suggested the president-elect would find a way to get his daughter Ivanka and son-in-law Jared Kushner into the White House via a loophole in anti-nepotism law. “The anti-nepotism law apparently has an exception if you want to work in the West Wing because the president is able to appoint his own staff” as opposed to the Cabinet, Conway said, adding: “The president does have discretion to choose a staff of his liking. And so, if that actually is true and that legal advice holds, then that will open up a realm of possibilities.”

“We haven’t had adult children in the White House for quite a while. We’ve had minor-aged children in the past several administrations . . . so it is something new,” she continued. “You’re talking about men and women who are incredibly talented and very smart and very involved in their father’s business, obviously. It’s a family business. But I have been talking to them daily and the preliminary advice that I heard is that, first of all, nobody’s made any final decisions, and when they make a final decision of whether they will or will not serve inside the administration, inside the West Wing, everyone will know that.” More:


War of words escalates between White House, Trump camp


Top aides to President Obama and President-elect Donald Trump on Thursday escalated their war of words over allegations of Russian interference in the 2016 election. White House press secretary Josh Earnest hit back at senior Trump adviser Kellyanne Conway after she accused him of making inappropriate comments in stating that Trump encouraged Russian hacking of his political opponents.

“It is just a fact that the Republican nominee for president was encouraging Russia to hack his opponent because he believed it would help his campaign,” Earnest told reporters Thursday.  “I’m not trying to be argumentative, it’s not a controversial statement,” he continued. “I am trying to acknowledge a basic fact. All of you saw it, it was not in dispute.” During a Thursday morning appearance on “Fox and Friends,” Conway slammed Earnest for suggesting that Trump was aware before Election Day that Russia was behind a series of hacks on Democratic political groups. “That is incredibly disappointing to hear from the podium of the White House press secretary because he … essentially stated that the president-elect had knowledge of this, maybe even fanned the flames,” she said. During the campaign, Trump did encourage the Russians to reveal the contents of the private email server Democratic nominee Hillary Clinton used while secretary of State. “I will tell you this, Russia: If you’re listening, I hope you’re able to find the 30,000 emails that are missing,” Trump said at his last news conference on July 27. “I think you will probably be rewarded mightily by our press.” Conway and her Fox News interviewers have characterized that remark as a joke. “I don’t think anybody at the White House thinks it’s funny that an adversary of the United States engaged in malicious cyber-activity to destabilize our democracy,” Earnest responded Thursday. “That is not a joke.” The Russian hacks of U.S. political organizations has emerged as the biggest flashpoint between the Obama and Trump teams in the aftermath of the election. On most other issues, both sides have held their fire with the hopes of ensuring a smooth transition of power. But the hacking allegations have proven to be different. Earnest dismissed charges from Trump’s allies that the White House is among those trying to undermine his election victory by starting a review of the hacking allegations. The White House spokesman called on Trump to tone down his rhetoric on the hacking allegations against Russia and cooperate with a congressional probe into the matter. “It might be time not to attack the intelligence community, but actually be supportive of a thorough, transparent, nonpolitical investigation into what happened,” Earnest said.


The Forgotten Tool in Donald Trump’s ‘Drain the Swamp’ Effort


Donald Trump panned “pay-to-play” politics, blasted “rigged” elections and vowed to “drain the swamp” that is Washington, D.C. But Trump has so far forsaken the very government agency Congress created after Watergate to work as the nation’s campaign season Roto-Rooter. The Federal Election Commission’s six commissioners, including the agency’s three Republicans, say neither Trump nor his transition team has contacted them. Trump, meanwhile, appointed Don McGahn, a former FEC chairman and preeminent enemy of campaign finance regulations, as his top White House lawyer. Representatives for the Trump transition declined to answer questions from the Center for Public Integrity about the FEC.

The developments together are evidence that the FEC — once a reasonably robust and bipartisan judge of political misdeeds — heads into 2017 even more marginalized than ever before by the very politicians it’s supposed to advise and police. Making matters bleaker: See more:


Democrats are Paving the Way to Impeach Donald Trump


Today was supposed to be the day. A couple weeks ago, Donald Trump announced that he would hold his first news conference in five months to, at long last, address the mounting concerns over how he would resolve his financial conflicts of interest before he takes office. “I will be holding a major news conference in New York City with my children on December 15 to discuss the fact that I will be leaving my great business in total in order to fully focus on running the country in order to MAKE AMERICA GREAT AGAIN!” he tweeted. “I am not mandated to do this under the law, I feel it is visually important, as President, to in no way have a conflict of interest with my various businesses. Hence, legal documents are being crafted which take me completely out of business operations. The Presidency is a far more important task!” In the following weeks, some alleged details of those legal documents leaked out. The New York Times reported that Trump would not divest his business, but instead, adhere to a legal strategy that would separate him and his daughter, Ivanka, from the Trump Organization, while handing over responsibilities to his sons, Eric and Donald Jr.. In aninterview with Fox News airing over the weekend, Trump reiterated his plan. “I’m going to have nothing to do with it. And I’ll be honest with you, I don’t care about it anymore,” he said. And then the president-elect canceled, three days before the big event. “I will hold a press conference in the near future to discuss the business, Cabinet picks and all other topics of interest. Busy times!” he tweetedMonday. “No new deals will be done during my term(s) in office.” Transition officials explained the delay as a simple logistical issue—the task of nominating a Cabinet and building a government has taken up more time than anticipated. Kellyanne Conway touted it as a reflection of Trump’s incredible accomplishments. “Normally we have politicians moving from political job to political job. In this case, we have a very successful businessman, who’s brilliant and a billionaire, who has assets and holdings all over the globe, and that needs to have a transfer of power through the proper channels,” she said on CNN. Those global holdings are exactly what are causing concern, particularly because the president-elect has not released his tax returns, which would give the American people a fuller sense of his business dealings. What isknown is that the Trump Organization is in the business of making deals—licensing ones, real-estate ones, hotel ones, branding ones—all over the world. The potential for conflicts of interest—either from foreign officials trying to cozy up to Trump or Trump making decisions in office that benefit his children or post–White House life—is obvious and unacceptable. With Trump now delaying the announcement of his plans until some nebulous future point—presumably before his inauguration on January 20, although given his past history of abandoning promised press conferences, it wouldn’t be a huge shock if this one disappeared, too—Democrats are trying to force his hand. On Thursday, five Democratic senators announced a bill they plan to release next month that would require Trump to divest assets that could pose a conflict of interest, according to Politico. The bill, put forward byElizabeth Warren, Dick Durbin, Chris Coons, Ben Cardin, andJeff Merkley, would require the president-elect to put the proceeds of the sale in a blind trust (the true definition of which does not mean merely handing “business operations” to one’s children, despite what Trump has said). The legislation would symbolically make violations of federal conflict-of-interest rules “a high crime or misdemeanor under the impeachment clause of the U.S. Constitution.” More:




Shelby County mother of 2 found slain in Highland Lakes home


An investigation is underway after a Shelby County mother was found slain inside her Highland Lakes home Wednesday afternoon. Authorities have now identified the victim as Constance “Connie” Lee Overstreet Woolweaver. She was a 1997 graduate of Homewood High School. Shelby County sheriff’s investigators responded to Woolweaver’s home in the 100 block of Sheffield Lane about 3:45 p.m., said Capt. Jeff Hartley. They were called there on a report of a death, reportedly after the woman’s son returned home from school. Hartley said this morning that the death is being investigated as a homicide, and described the scene as “terrible.”The home is in a gated community. They have not released any additional details. The victim, 37, has two children ages 13 and under. The son’s father died last year.

A press release issued later this morning said investigators don’t believe her death was a random act and Sheriff John Samaniego said he wants to reassure the residents of Highland Lakes and Shelby County.

“I do not believe there is a related threat to any of the residents in Highland Lakes or other local communities related to Ms. Woolweaver’s death,” he said in a prepared statement. “Her intentional death was the result of a calculated act and our investigators are making progress identifying her killer. This was a senseless act and I am very saddened for her family and friends.”  Anyone with information is asked to call the Sheriff’s Office at 205-669-4181. Tips may also be sent anonymously to the Sheriff’s Office webpage at by clicking on the “Report Criminal Activity” link.


Emergency trainees mistakenly exposed to deadly ricin


Because of yet another mix-up with bioterror pathogens, a federal terrorism response training center in Alabama says it mistakenly exposed more than 9,600 firefighters, paramedics and other students to a deadly toxin over the past five years. The Federal Emergency Management Agency’s Center for Domestic Preparedness blames an outside laboratory for a series of shipping errors since 2011 that resulted in the first-responder training center using in its classes a potentially lethal form of ricin powder. The a poison, made from castor beans, is capable of killing at small doses. The training center says it submitted order forms asking for a type of ricin extract that is unlikely to cause serious harm. But officials from Toxin Technology, the Florida company that sent nine shipments to the center since 2011, told USA TODAY that its ricin products were all accurately labeled as “RCA60” – a scientific name for the whole ricin toxin, which can be deadly. It’s unclear why training center staff didn’t recognize for years that they were working with a far more dangerous substance. There is no antidote to treat ricin poisoning. Former Homeland Security Secretary Tom Ridge said he’s stunned that over the past five years the training center never verified that that it was receiving the less-toxic ricin product it thought it was ordering.

“It’s beyond careless and outrageous. It’s almost malfeasance,” Ridge said. Nobody was sickened by the exposures, FEMA spokeswoman Alexa Lopez said. Students, who were being trained to detect the presence of biological agents, were wearing protective gear during the exercises. Workers at the Anniston, Ala., training center prepared ricin training materials in special biosafety cabinets designed to protect against exposures. More:


Eight Alabama judges file amicus brief supporting Roy Moore


Thursday, December 14, 2016 eight current and retired Alabama judges filed an amicus curiae in support of suspended Alabama Chief Justice Roy Moore (R) who is suing the Alabama Judicial Inquiry Commission (JIC) over his recent suspension. The judges state several points… First they are subject to the same disciplinary standards and process used by the JIC and the Court of the Judiciary (COJ) in the Moore case and could conceivably be subject to investigation and disciplinary action in the future.

The judges are concerned that the case the JIC brought against Moore will serve as a precedent in future actions against other judges. The judges argue that, under current law, removing a judge requires a unanimous verdict by the Court of the Judiciary (COJ). The jurists argue that the lengthy suspension given to Chief Justice Moore circumvents the purpose of the unanimous decision required by the COJ’s own rules for removal of a judge from office. They further argue that the JIC did not comply with rule six, which deals with notice and investigations. Specifically, Moore’s defenders allege that someone at the JIC released information to the media prior to suspending the Chief Justice. Finally the group of eight jurists claim that, “The severity of the punishment for the Chief Justice’s administrative speech in this particular case calls for modification by the appellate court lest judges misperceive that their judgement and the expression of that legal judgement must comport with a particular political and religious viewpoint, even when they state a valid, though arguable point of law.” Judges Tim Riley, T. Lee Carter, John Bentley, Mark Hammitte, Ashley McKathan, Jerry Stokes, Rusty Johnston, and Frank L. McGuire III all signed the amicus curiae. The group are being represented by Winthrop E. Johnson. Four of the judges are retired but still hear cases. More:




Can Joe Reed save Gwendolyn Boyd at ASU?


A week prior to the annual Turkey Day Classic football game last month at Alabama State University, ASU employees discovered that someone had broken into the school’s football stadium and cut a fiber optic wire – a costly act that threatened some of the activities planned for the game. The act of vandalism also inadvertently revealed another issue to university trustees: While inquiring about the progress on catching those responsible, trustees learned from campus police that there was no video available because the university’s security cameras all around campus were out of operation. In a cost-saving move not presented to the trustees, ASU president Gwendolyn Boyd had authorized the cameras to be turned off last May. Two trustees who spoke with APR about the matter on condition of anonymity said they were “stunned” to learn about the cameras – most of which were installed several years ago as part of a campus-wide upgrade of security following a number of incidents on campus. “I know we need to save money, but there are certain things you just don’t sacrifice and student safety is at the very top of that list,” one of the trustees said. “If you combine this with the fact that we’ve allowed inmates with violent records to enter buildings and dorm rooms … I can only say that we are extremely fortunate that something very, very bad hasn’t occurred.” For some trustees, the security camera issue is the latest in a long line of communication issues between Boyd and the board. That board will meet at 1 p.m. on Friday to decide whether Boyd, who was placed on suspension for failing to maintain the confidence of the trustees, will remain as the school’s president. Sources close to the board told APR earlier this week that Boyd’s fate has been determined since she was placed on leave in early November and that Friday’s meeting is a mere formality. More:


The Irony Of Righteous Indignation


When State Superintendent of Education Mike Sentance told the state school board Dec. 8 that the Office of Inspector General of the U.S. Department of Education had determined that the state’s high school graduation rate was inaccurate, reaction was swift and true to form. Members of the legislature who consistently oppose public education were quick to tell media that there should be consequences for  deceiving the public.  (Would this include the 22 senators and 51 house members who voted for the Alabama Accountablity Act in 2013 and told the public that this was all about “helping poor kids stuck in failing schools by their zip codes?”) Senator Del Marsh said the graduation rate issue “is all the more reason for school choice.” But it was the reaction of state school board members that really got my attention.  Mary Scott Hunter told the Decatur Daily that there will be consequences for dishonesty.

Take the time to go on the ALSDE web site and watch the video of the work session and you will hear these comments from board members:  “I never believed our graduation rates were accurate.”  “I can’t speak.  I was lied to.”  “I have been betrayed.”  “We all hate to be blindsided.”  “The public has been left out.”  “We must pay attention to ethics.”  “We’ve put our credibiity on the line.” All of these comments would ring legitimate–if we erased the last six months from this board’s record. Here is what they want us to forget. The deadline for applicants for state superintendent was June 7.  On June 27 Mike Sentance informed ALSDE legal counsel Juliana Dean in writing that he was withdrawing his name from consideration.  According to Sentance, Dean called him shortly thereafter and told him that board members wanted him to reconsider.  Dean works for the entire board.  She did not ask them if she should call Sentance.  He left her a voice mail on June 28 that he still wanted to be considered. Mary Scott Hunter told the Decaur Daily that she expressed her disappointment to Dean that Sentance had withdrawn but could not remember if she asked Dean to call Sentance or not. What no one ever mentions is that another candidate, Dr. Steven Paine, former state superintendent for West Virginia, also applied and withdrew.  Unlike Sentance, who has no training in education and did not meet the “required qualifications” the state board said an applicant had to have, Paine has three degrees in education, is a former teacher, principal, local superintendent and state superintendent and oversaw a $2.4 billion budget.  No one called and asked him to remain a candidate. More:


Morning Money

KUDLOW FOR CEA? — Larry Kudlow told us at our lunch event Tuesday that he would consider serving in Donald Trump’s administration to help push through the tax reform proposal he helped the president-elect put together.

On Thursday, conservative economist Steve Moore (who also helped write the tax plan) at first said that Kudlow was a done deal for Council of Economic Advisers chairman. But then Moore walked it back, telling POLITICO: “They’re deciding between several people right now. But Larry is on the list. I hope he gets it. … It’s not a done deal. What I said is he’s on the short list to be CEA chairman. They’re probably not going to make another decision on this for a while.”

Kudlow for his part isn’t talking about any conversations with the Trump team. He’s old school that way. But if he does get the job, it would put mostly pro-free trade advisers at the two top White House economic posts. Gary Cohn, tapped for NEC chair, comes from the very pro-free trade Goldman Sachs.

And here’s what Kudlow said on Tuesday about Trump’s protectionist instincts: “For me, it’s fraught with peril, how I answer this. So, I’m going to give you my opinion of what I think he may do. That’s the best I can do. I think the general thrust of his trade policy will be negotiation and re-negotiation. The art of the deal. I think there are going to be carrots and sticks here, absolutely.

“I don’t believe — again, this is just me — I don’t believe that he is a major protectionist in its purist form. I don’t expect him to start slapping big tariffs here and there. This is my view; if you disagree, I respect your disagreement, and partly my view is a forecast, and that’s just my view.” Read more.

THE TRUMP WHISPERER — Beth Solomon in the Georgetown Dish: “Drill, baby, drill! fans, Trump administration whisperer Larry Kudlow says you’ll be in luck under the new administration, which he may join, taking, in his words, a ‘second bite at the apple’ after an earlier stint in the Reagan White House.” Read more.

MM 2017 CRYSTAL BALL CONTEST — As this crazy year winds down, we want to get your predictions for the year ahead. Tell us what the BIG STORY will be next year. Where will the Dow end the year? How fast will the economy grow? Send your thoughts to and we will share your prognostications next week.

KING DOLLAR KEEPS RISING — Bloomberg’s Emma O’Brien: “The dollar is cementing its domination of the currency market, trading near an almost 14-year high versus the euro as the Federal Reserve’s more hawkish outlook invigorates its post-election rally. …

“The greenback headed for its best week in a month against major peers after surging to its strongest point since 2003 versus the euro and to a 10-month high against the yen. … The Fed’s pivot toward hawkishness marks a shift away from central-bank policy dominating market sentiment, with the potential for an increase in fiscal stimulus now in focus. … [T]he Fed stands largely alone in actively tightening policy … The Bank of England kept its key rate at a record low Thursday, a week after the European Central Bank extended quantitative easing” Read more.

RECKONING AHEAD — WSJ’s “A dollar surge that began after the U.S. election has accelerated … A sharp increase in the dollar stands to have long-lived economic consequences, potentially hampering a U.S. earnings recovery and making the trillions in dollar-denominated debt around the world more expensive to pay back.

“But the dollar’s renaissance this year already is rippling through global financial markets, sending currencies from Japan and India to Turkey and Brazil tumbling and presenting companies, consumers and governments in those nations with a list of increasingly difficult choices. In China, fears that a rising dollar will destabilize trading in the yuan has swept financial markets, sending the Chinese currency to its lowest against the dollar in over eight years and raising concerns that outflows could increase. Read more.

THE FORCE IS STRONG WITH THIS ONE — POLITICO’s intrepid Andrew Hanna with the “Rogue One: A Star Wars Story” review: “Rogue One is both fan service for long-time Star Wars fans, but also for political nerds. Moviegoers get a glimpse of behind-the-scenes power struggle on both sides of the war, fleshing out the organizations as realistic entities.

“The Empire comes off as a genuinely menacing threat, and seeing Darth Vader feels like watching Star Wars again for the first time. The Rebels are no saints either, a fact that makes the movie feel apt for the turbulent times we live. Go check it out.”

OBAMA PLANS RUSSIA RESPONSE — WP’s Juliet Eilperin: President Obama “said the United States will retaliate against Russia over its malicious cyberactivity during this year’s election, in an interview that will air Friday on National Public Radio. ‘I think there is no doubt that when any foreign government tries to impact the integrity of our elections … we need to take action,’ the president said. ‘And we will — at a time and place of our own choosing. Some of it may be explicit and publicized; some of it may not be.’” Read more.

TRUMP DELAYS USTR CALL — POLITICO’s Doug Palmer: “Trump is unlikely to decide this week on his choice to be the next U.S. trade representative, a source familiar with the selection process told POLITICO. It is not unusual for the USTR slot to be one of the last positions chosen in a new administration. However, the current delay comes amid uncertainty about the relationship between USTR and Commerce in terms of which would have primacy over trade policy.

“Trump has said his pick for Commerce secretary, billionaire investor Wilbur Ross, will shape the trade agenda and become the most influential head of the agency in decades, a source close to the transition told POLITICO. A European Union official said the EU would adapt to whatever the incoming administration decide” Read more.

TLAC HITS HARD — Reuters’ Patrick Rucker: “The largest U.S. banks will have to pay as much as $2 billion more a year to insure against a future market collapse, the U.S. Federal Reserve said on Thursday, as it outlined a new rule designed to further protect the financial system.

“The rule demands Wall Street holds more debt that could be converted to shareholder equity if a bank is pushed to bankruptcy. Investor-owned stock is the main buffer against a bank failure.” Read more.

TLAC REACT — Cowen’s Jaret Seiberg: “Our overall assessment is that TLAC will be another cost for the biggest banks that the regional banks will not have to incur. As a result, we see this rule as supporting our theme that the policy environment continues to treat the regional banks better than the mega banks. We see little chance that the inauguration of … Trump as president will derail this rule. Even if Donald Trump installs a vice chairman for supervision, it would be unusual for the Federal Reserve to reverse course.

“If there is a future tweak, it would center on whether a bank should be able to meet the requirement solely with equity. Even on that front we are dubious as there is some agreement that having long-term debt provides a way to recapitalize a bank without using taxpayer dollars”

THE CLEARING HOUSE’s Greg Baer: “The TLAC requirement is the culmination of a legal and balance sheet revolution that has effectively ended ‘too big to fail.’ As reflected in this week’s living wills announcements, this rule protects taxpayers by requiring U.S. G-SIBs to maintain enough loss-absorbing resources to be recapitalized during a resolution and ensure that any and all losses are borne by creditors and shareholders, and not the taxpayer.”

EURO FALLS — FT’s Eric Platt and Michael Hunter: “The rise in the dollar index pushed the euro to its lowest level in more than a decade and roiled emerging markets, which had been enjoying a strong recovery until Mr. Trump’s election victory.

“Europe’s single currency was among the hardest hit, briefly falling through the $1.04 level to trade at its lowest point since 2003, as the appeal of higher US Treasury yields boosted the allure of the dollar. Emerging market stocks suffered their greatest losses since the immediate aftermath of November’s US election, and half a dozen emerging market currencies dropped more than 1 per cent.” Read more.

COURTS BACK LABOR — POLITICO’s Patrick Temple-West: “A U.S. appeals court today denied a request from businesses to stop the Labor Department’s ‘fiduciary’ rule, which is set to take effect next year.

“The fiduciary rule requires financial brokers to consider only their client’s best interest, and not brokerage fees or commissions, when providing retirement investing advice. The National Association of Fixed Annuities sued to block the rule, alleging that the Labor Department lacked the authority to issue it.” Read more.

YAHOO DEAL ON THIN ICE — Bloomberg’s Scott Moritz and Brian Womack: “Verizon Communications Inc. is exploring a price cut or possible exit from its $4.83 billion pending acquisition of Yahoo! Inc., after the company reported a second major e-mail hack affecting as many as 1 billion user accounts, according to a person familiar with the matter.

“A legal team led by Verizon General Counsel Craig Silliman is assessing the damage from the breaches and is working toward either killing the deal or renegotiating the Yahoo purchase at a lower price, the person said. One of the major objectives for Verizon is negotiating a separation from any future legal fallout from the breaches. Verizon is seeking to have Yahoo assume any lasting responsibility for the hack damage, the person said.” Read more.

AMAZON DELIVERS — Business Insider’s Eugene Kim: “Amazon is building an app that matches truck drivers with shippers, a new service that would deepen its presence in the $800 billion trucking industry, a person with direct knowledge of the matter told Business Insider.

“The app, scheduled to launch in summer 2017, is designed to make it easier for truck drivers to find shippers that need goods moved, much like the way Uber connects drivers with riders. It would also eliminate the need for a third-party broker, which typically charges a commission of about 15 percent for doing the middleman work.” Read more.

BREXIT DIVORCE PLAN — POLITICO’s Tom McTague: “The EU’s chief Brexit negotiator Michel Barnier has won broad agreement from the other 27 countries, plus MEPs, for his three-phase divorce plan, according to senior diplomats and officials. It would consist of withdrawal, transition and then a ‘new relationship.’

“The transition phase would be subject to a number of “sunset clauses” to ensure that Britain doesn’t retain the benefits of membership indefinitely, while the shape of the new relationship would be sketched out by Theresa May in her Article 50 divorce letter due by the end of March.” Read more.

GOLDMAN SHIFTS AWAY FROM NYC — WSJ’s Liz Hoffman: “Goldman Sachs Group Inc. is revamping its network of investment bankers, shifting partners to Dallas, Atlanta and other cities … The firm is expected to detail some of these moves in coming days. The idea is to have bankers better situated to call on companies based far from Wall Street.

“The move will ease Goldman’s reliance on hyper-specialized, industry-focused bankers in New York, who will now in some cases share responsibility for clients with a senior banker in a regional office … An added benefit: The shift could curb spending on banker travel without gutting face time with clients. In fact, the hope is that it will draw those clients tighter into Goldman’s orbit. The risk is that some bankers view such moves as banishment” Read more.

FACEBOOK TAKES ON FAKE NEWS — NYT’s Mike Isaac: “For weeks, Facebook has been questioned about its role in spreading fake news. Now the company has mounted its most concerted effort to combat the problem. Facebook said on Thursday that it had begun a series of experiments to limit misinformation on its site. The tests include making it easier for its 1.8 billion members to report fake news, and creating partnerships with outside fact-checking organizations to help it indicate when articles are false. The company is also changing some advertising practices to stop purveyors of fake news from profiting from it.

“Facebook … is in a tricky position with these tests. It has long regarded itself as a neutral place where people can freely post, read and view content, and it has said it does not want to be an arbiter of truth. But as its reach and influence have grown, it has had to confront questions about its moral obligations and ethical standards regarding what appears on the network” Read more.

RNC BREACH DEFLECTED — WSJ’s Shane Harris, Devlin Barret and Julian E. Barnes: “Russian hackers tried to penetrate the computer networks of the Republican National Committee, using the same techniques that allowed them to infiltrate its Democratic counterpart, according to U.S. officials who have been briefed on the attempted intrusion.

“But the intruders failed to get past security defenses on the RNC’s computer networks, the officials said. And people close to the investigation said it indicated a less aggressive and much less persistent effort by Russian intelligence to hack the Republican group than the Democratic National Committee. Only a single email account linked to a long-departed RNC staffer was targeted.” Read more.

CHINA CEDES CREDITOR STATUS — FT’s Tom Mitchell, Joe Rennison and Eric Platt: “China has ceded its status as America’s largest creditor nation to Japan after spending a large portion of its foreign exchange reserves to defend the renminbi.

“Beijing’s ownership of US Treasuries fell by $41.3bn to $1.12tn in October, according to data from the US Treasury released on Thursday — the sixth straight month of decline. Japan’s holdings fell by $4.5bn to $1.13tn for the same period.” Read more.

POTUS Events

11:00 am || Receives the Presidential Daily Briefing
12:30 pm || Lunch with Biden
2:15 pm || Holds a press conference
5:25 pm || Departs for vacation in Hawaii
10:40 pm HAST || Arrives in Honolulu, Hawaii

All times Eastern except as noted

Floor Action

The Senate will meet in a pro forma session at 10 a.m. The House will meet in a pro forma session at 2 p.m.

About Thomas Krebs

Securities litigation, regulation and compliance attorney.