Greetings,
America remains in mourning today following deadly shootings at two military buildings in Chattanooga, Tenn., Thursday. Compounding the difficult situation, information about the suspected shooter indicates he might have been influenced by radical Islam, making this the latest case of domestic terrorism being pinned to the barbaric Islamic State. An ISIS-connected Twitter profile published a message apparently referencing the attack. While there was some uncertainty regarding when the tweet was initially posted, many see it as an unmistakable link to Islamic terrorism. Please join the Western Journalism staff in remembering the victims and their families during this difficult time. As the investigation into this mass shooting continues, another has come to an end with a Colorado jury delivering its verdict in the Aurora cinema massacre. The controversial Iranian nuclear deal remains big news days after negotiators reached an agreement. While the Obama administration continues to portray the deal as a net win for the U.S., CBS’s Major Garrett acknowledged he used a deliberately provocative move in order to get the president to acknowledge one particularly unpleasant fact about it. Keep up to date with the latest developments in these stories and all your breaking news by visiting Western Journalism throughout the day.
Until next time,
Chris Agee
WJ Managing Editor
BY AMIE TSANG
SAMSUNG C&T SHAREHOLDERS REJECT ELLIOTT'S ACTIVISM A rare test for shareholder activism in Asia failed on Friday with the Lee family of Samsung securing its future leadership in a face-off with a big New York hedge fund. Shareholders in a Samsung Group subsidiary voted for a merger with another Samsung company, clearing the way for a father-to-son transfer of power in Samsung's largest family-owned conglomerate, Choe Sang-Hun and Neil Gough report in DealBook. The approval delivers a crushing defeat to Elliott Associates, the activist hedge fund, which opposed the merger.
Elliott owns 7.12 percent of Samsung C&T and had campaigned against its all-stock merger with Cheil Industries, another Samsung company. It had argued that Cheil's $8 billion takeover of Samsung C&T cheated the minority shareholders by grossly undervaluing Samsung C&T shares. It said it was an unlawful attempt to help Lee Jae-yong, the song of Samsung's chairman, Lee Kun-hee, inherit the conglomerate. Samsung has pushed back, depicting Elliot as a foreign "vulture" capitalist trying to disrupt an orderly generational change at the crown jewel of the South Korean economy in order to make a quick profit and exit.
The merger carries implications that reach well beyond the Lee family. Samsung, with its 70 subsidiaries ranging from shipbuilding to home appliances, generates a quarter of South Korea's gross domestic product and its influence in the nation is pervasive. Other family-controlled conglomerates, known as chaebol, will have been watching the result carefully as they are also preparing their chairmen's children for succession.
Although the South Korean public is increasingly skeptical of such dynastic transfers of power, people remain wary of foreign investors and activisim like Elliott's is rarely seen in Asia. Publicly traded companies often remain under the control of close-knit family groups of state-backed shareholders, while legal protections for minority investors can be patchy, so many activist hedge funds choose to stay away.
However, all was not lost for Elliot. Cheil and Samsung C&T have promised to bolster corporate governance by increasing dividends and creating a shareholder rights committee after the merger.
GREEK EXIT PROSPECT REMAINS Wolfgang Schäuble, Germany's finance minister, suggested on Thursday that Greece's best shot at getting debt relief would be to leave the euro, Melissa Eddy reports in The New York Times. His comments made Germany's role as champion of European integration look shakier after a week of negotiations, during which Germany's harder, more selfish edge has been on display.
Mr. Schäuble stressed that he was not pushing the Greeks to take a particular course and that he was only talking about a temporary exit from the euro. But with the new bailout up for vote on Friday, his remarks were a stark reminder that there is a greater willingness in Germany to question whether the goal of "ever-closer union" in Europe should be reassessed.
Even as Greece's prospects were clouded by political uncertainty and Mr. Schäuble's comments, European finance officials pledged their support and money, Andrew Higgins and Jack Ewing write in The New York Times. Eurozone finance ministers agreed to "grant in principle" a new bailout package and, along with ministers from the rest of the European Union, agreed to short-term loans of as much as 7 billion euros to meet Greece's immediate needs.
The European Central Bank also offered its support by raising the cap on its emergency loans by €900 million, to nearly €90 billion. This prompted Deputy Finance Minister Dimitris Mardas of Greece to say on television that banks would reopen on Monday.
Despite these positive signals, the process of rescuing Greece remains precarious. The E.C.B. extended its emergency credit for only one week and the eurozone finance ministers said they were supporting the bailout only on the condition that Athens swiftly adopt more measures to overhaul its economy.
ONLINE LENDING INSPECTION The Treasury Department is doing a study of online marketplace lenders, in an effort to determine whether regulations are keeping up with the rapidly growing industry, Michael Corkery reports in DealBook. As traditional banks have retreated from making small loans, a flood of online lenders flush with funding have filled the void.
These marketplace lenders say they are providing valuable credit to important, underserved segments of the economy, often with less trouble and at lower cost. The Treasury said it wanted to examine these claims and "how the financial regulatory framework should evolve to support the safe growth of the industry."
Despite the supportive tone of the Treasury's statements on the exercise, the department is also raising some pointed questions about the loosely regulated industry, Mr. Corkery notes. In its request for information, the Treasury said its questions included how borrowers are assessed for creditworthiness and whether lenders should be required to have "skin in the game," meaning they retain some of the risk in case of default.
ON THE AGENDA At 8.30 a.m. the Labor Department reports on the latest prices for consumers, and the Commerce Department releases data on new residential construction. Stanley Fischer, the Federal Reserve Vice Chairman, discusses the central bank's priorities at the United States Chamber of Commerce Center for Capital Markets Competitiveness in Washington at 10 a.m. Honeywell's earnings for the second quarter will be released before the New York Stock Exchange opens and followed by a conference call for investors at 9:30 a.m.
ELUSIVE CONVICTIONS It seems perverse that Bruno Iksil, known asthe London Whale, faces no charges for his risky bets but his junior aide does, writes James B. Stewart in the Common Sense column. Mr. Iksil's bets on complex derivative contracts earned him his nickname and ended up costing JPMorgan Chase $6.2 billion in losses. But Britain's Financial Conduct Authority has dropped its investigation and decided to take no further action against him - a sign of just how difficult it is to hold someone legally accountable for such risky behavior.
Rather than the rogue trader he was portrayed as in early news coverage, government documents and interviews show Mr. Iksil as a conflicted figure,troubled by conscience and pushed by his bosses to undertake the risky derivatives trading that proved his undoing. He did not conceal his positions and his strategy was discussed repeatedly with higher-ranking executives. He also sounded the alarm - though he did not stop inflated valuations or blow the whistle to senior executives.
The bank agreed to pay $920 million to resolve accusations that it had misstated financial results and lacked sufficient internal controls to prevent its traders from "fraudulently overvaluing investments." Although the investigation is still open, Mr. Iksil's boss, who is Spanish, and his aide, who is French, are unlikely to be extradited from their countries.
"It's so frustrating about these cases," said Brandon L. Garrett, a law professor and author of the book "Too Big to Jail." "It's hard for prosecutors when some of the key figures are resisting extradition and won't talk to you. But you get the sense that they get a few small fish, start working their way up the chain, and then at some point, they just drop it. We want the right people to be held accountable, not some expendable minions."
Magna International to Buy Getrag of Germany for $1.9 Billion The deal for Getrag Group will bolster Magna's powertrain and transmission business and increase its growth potential in the Chinese market.
PartnerRe and Axis Capital Unveil Sweetened Terms for MergerThe move comes as a rival bidder, Exor, continues to press investors to vote against the Axis Capital deal.
888 Holdings Agrees to Buy Online Gambling Company Bwin.Party The Gibraltar-based 888 Holdings triumphed over GVC Holdings in a deal worth about $1.4 billion.
T-Mobile Acquisition Talks Said to Have Stalled Talks for Dish Network to buy T-Mobile US from Deutsche Telekom have stalled over concerns related to valuation and structure, Bloomberg reports, citing people with knowledge of the matter.
Traders Pounce on Doubts About Halliburton-Baker Hughes Deal The possibility that regulators may not approve Halliburton's $35 billion takeover of fellow oilfield services company Baker Hughes this year has given investors with an appetite for risk a high-reward opportunity.
Facebook's Oculus to Buy Gesture-Control Firm Facebook's Oculus VR said Thursday it agreed to pay about $60 million for the Israel-based gesture-control company Pebbles.
How a Monsanto-Syngenta Merger Could Happen In resisting a takeover bid from rival Monsanto, Syngenta has argued that a merger would run afoul of antitrust regulators, but the situation may not be so clear cut.
Germany Said to Blast Deutsche Bank Over Culture German regulators accused a half-dozen current Deutsche Bank executives of failing to stop or tell regulators about years of attempted market manipulation, according to a confidential report reviewed by The Wall Street Journal.
HSBC Investigated by Saudi Regulator HSBC's Saudi Arabia unit is under investigation by regulators in the kingdom for its role in a stock listing that left investors nursing heavy losses.
Hans H. Angermueller, Banker Who Helped Free U.S. Hostages in Iran, Dies at 90 Mr. Angermueller, a Citicorp executive in the 1970s and '80s who was on the short list for the chief position, worked to devise a financial deal that helped free Americans held in Iran.
Global Banks to Steer Clear of Iran Until Sanctions Finally GoInternational banks and most insurers are likely to steer clear of dealing with Iran for some time, fearing they could face more fines from United States regulators despite this week's nuclear deal between world powers and Tehran.
Breakingviews: Bigger Might Have Been Better for Goldman Sachs Comparisons with mega-banks like Citigroup, Bank of America and JPMorgan Chase suggest Goldman's focus isn't always an advantage.
Barclays Deputy Chairman to Stay Until New C.E.O. Is in Place The British bank said Michael Rake would continue to serve and any conflict of interest in respect to his chairmanship of Worldpay would be managed.
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Blackstone's Profit Slumps in Quarter The firm's hedge fund and credit units showed gains, but its private equity and real estate businesses declined.
Asia Hedge Funds' First Loss in 14 Months on China Crash The Eurekahedge Asian Hedge Fund Index slipped 1.3 percent last month, the first loss since April 2014, with 62 percent of the funds having reported.
Reddit Changes Content Rules as Steve Huffman Takes Charge Mr. Huffman, who reappeared as chief executive of Reddit, hopes to pull off a turnaround of the popular online message board.
A Tiny Bank's Surreal Trip Through a Fraud Prosecution Abacus Bank discovered a fraudulent loan scheme in 2009 and reported it to regulators. For its trouble, it found itself a target of prosecutors, writes Gretchen Morgenson in the Fair Game column.
SEC Investigates Deeper Into Fund Firms' Fees United States securities regulators are reported to be examining whether mutual-fund managers are dipping more deeply than allowed into their investors' money to compensate the brokerage firms that distribute their products.
Janet Yellen Open to Easing Small Banks' Burden The central bank chairwoman has indicated she would be open to raising the asset threshold at which banks are subject to tougher supervision.
Trader Not Alarmed by Libor Warning Tom Hayes, the first person to stand trial for rigging benchmark interest rates, said that he did not pay much attention to warnings that he should not make written requests for fixings.
Puerto Rico, Running Short of Cash, Misses a Debt Payment The Public Finance Corporation, which helps the island's government finance its budget deficits, failed to make a $93.7 million debt-servicing payment.
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