For Uber, Lyft, Others, Government Shutdown Slows IPOs

The partial government shutdown is slowing plans by some companies to issue stock to the public and potentially cutting off a key source of capital for the financial markets.

The shutdown, now in its fourth week, has all but darkened the Securities and Exchange Commission, the government agency that oversees the markets. Most of the SEC’s 4,400-person staff is furloughed, including lawyers and other staffers who must approve corporate paperwork for initial public offerings. This process typically takes two to three months.

Companies that have been moving toward issuing initial public offerings of stock in the coming months include such high-profile names as the ride hailing firms Uber and Lyft and the image-sharing platform Pinterest. Among the others are biotech and health sciences companies that depend on funding from the public markets that finance IPOs.

Billions of dollars are at stake for the companies as well as millions in fees for the Wall Street firms that facilitate the deals.

Brian Lane, a securities lawyer at Gibson, Dunn & Crutcher who led the SEC’s corporation finance division in the late 1990s, said some IPOs planned for spring could be delayed until fall if the shutdown persists. For larger companies with ample cash reserves, the problem is manageable, Lane said. But smaller companies that lack deep sources of funding from the private credit markets or from venture capitalists could be hurt.

James Cox, a professor of securities law at Duke University, suggested that some IPOs eyed for the spring could end up being delayed as long as into 2020.

More than 800,000 federal employees, over half of them still on the job, missed their first paycheck Friday as the closure became the longest government shutdown of any kind in U.S. history. President Donald Trump has rejected suggestions that he agree to temporarily reopen the government while negotiating with Democrats on the wall along the Mexican border that he has demanded.

Here’s a closer look at how the shutdown is hampering the SEC’s work:

Agency staffing

Only a small SEC staff deemed essential is in place to monitor the markets and, in the agency’s words, “respond to emergency situations” involving market integrity and investor protection, including law enforcement. The SEC’s online financial reporting service for companies, known as Edgar and widely used by investors, continues to operate normally.

About 285 agency employees are still working, including around 110 in law enforcement, according to the SEC’s shutdown plan.

“Our staff continues to monitor the asset management space, track market activity, and watch for systems issues or other events that could disrupt the fair and orderly operation of the securities markets,” the SEC said in a statement.

Before the shutdown took effect late last month, the SEC had urged companies to request that paperwork for public stock offerings already in the pipeline be expedited. The agency said it approved roughly a dozen such registration statements.

Smaller companies hurt?

For the largest companies that were planning public stock offerings, “it’s not the end of the world,” said Alan Denenberg, a corporate lawyer who heads David Polk’s office in tech-centric Northern California. Companies with deep pockets, like Uber, Lyft and Pinterest, can ride out the delay, he said. That’s in contrast to perhaps dozens of smaller biotech and health sciences companies that hoped to launch IPOs within a few months. Their viability depends on access to the public capital markets.

“You’re suddenly thrown into a tailspin,” Denenberg said.

The consequences of these companies’ delayed access to capital can affect ordinary households, he noted. There may be clinical trials for drugs or devices that the companies won’t be able to help finance, a delay that would slow the public’s access to potential breakthroughs.

Open season for fraud?

With many SEC enforcement attorneys and staffers idled, some see warning lights flashing involving white-collar crime.

The shutdown is “essentially providing fraudsters and schemers with a free pass to swindle investors and small businesses,” said Rep. Maxine Waters, the California Democrat who now chairs the U.S. House Financial Services Committee, which oversees the securities industry.

With its depleted staff, the SEC can’t monitor the activities of the 26,000 investment firms, brokerages and stock exchanges that are registered with the agency, Waters said on the House floor recently. “Worse, the SEC is unable to hold bad actors accountable through most enforcement actions, preventing harmed investors from obtaining relief.”

Cox, the Duke University professor, doesn’t regard the problem as urgent — at least not yet.

“It’s smoldering, but it’s not flaming,” he said. A notable exception could be enforcement cases for which the statute of limitations will soon run out, thereby preventing the SEC staff from pursuing those cases, Cox noted.

In a case Tuesday, the SEC announced civil charges against a Ukrainian man and eight other individuals and companies in a scheme to profit by hacking into the Edgar computer system to steal companies’ earnings reports before their public release. They are accused of reaping $4.1 million from the scheme.

Shareholder proposals

The shutdown is preventing the SEC staff from processing or ruling on the hundreds of shareholder proposals that are challenged by companies each year. With the spring annual-meeting season a few months away, this means the agency can’t determine whether such proposals can be placed on the proxy ballots that companies issue to shareholders.

Investors typically try to place proposals on proxy ballots, for consideration in a vote at annual shareholder meetings, on issues ranging from executive pay to political spending to gender discrimination.

This year, for example, an activist shareholder wants to pre-emptively block the nation’s two largest private detention companies from housing immigrant children who have been separated from their parents. The companies, CoreCivic and GEO Group, want to bar the proposal from a vote. They say they have no intention of housing separated immigrant children or their parents, but they are fighting the activist’s attempt to require them to adopt explicit policies to that effect.

The companies have asked the SEC for permission to exclude the resolution by Alex Friedmann, associate director of the Human Rights Defense Center, from the ballots.

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Новообрана президент Грузії про вітання українців із томосом: «не можу ускладнювати ситуацію»

«Це було б просто особисто привітати українців із незалежністю їхньої церкви, згадуючи наше власне минуле…» – Саломе Зурабішвілі

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Colorado Woman, Among 1st WWII Female Pilots, Dies At 96

A Colorado Springs woman who was among the first women to fly for the U.S. military during World War II has died at age 96.

Bill Young told The Gazette that his mother Millicent Young died Saturday of complications related to chronic obstructive pulmonary disease.

She was a member of the Women’s Airforce Service Pilots, known as WASPs.

They flew bombers and other warplanes in the U.S. to free up male pilots for combat service overseas.

In 2010, they were awarded the Congressional Gold Medal, among the nation’s highest civilian honors.

Young was born near Lodgepole, Nebraska, and took flying lessons with money she earned growing wheat.

Her family says she mainly flew an AT-6 Texan single-engine plane, towing a target so male pilots could train for in-air combat.

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Two Charged With Hacking SEC Computers in Trading Scheme

Two Ukrainian men have been charged with hacking into computers of the Securities and Exchange Commission to steal quarterly and annual reports of publicly traded companies before their public release.

An indictment released Tuesday alleges Artem Radchenko and Oleksandr Ieremenko allegedly operated the scheme in 2016 and 2017, selling the information and using it to make stock trades.

They allegedly sent bogus emails to SEC employees purporting to be from other employees to get inside the federal agency’s network.

The technique allegedly enabled them to steal thousands of filings.

The two men face multiple computer fraud, wire fraud and conspiracy counts. The court docket didn’t list an attorney for either suspect Tuesday.

Ieremenko is also a defendant in a similar 2015 case in which hackers allegedly infiltrated newswire services.

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Spain Arrests 17 in Ongoing Catalonia Anti-Terror Operation

Authorities in the northeastern Spanish region of Catalonia said 17 people, including five alleged members of an extremist Islamist cell, were arrested Tuesday as part of an ongoing anti-terror operation.

As well as having terror links, the suspects also allegedly participated in theft, drug trafficking and other crimes, according to the Mossos d’Esquadra regional police.

More than 100 agents took part in the operation, which was ongoing as of mid-afternoon, a spokeswoman said.

The spokeswoman said six venues had been searched in and near Barcelona. She declined to be identified by name in line with the police force’s standard practices.

Catalan regional minister of security, Miquel Buch, told reporters most of the arrests took place in a central neighborhood of the regional capital, but some were made in the nearby town of Igualada.

The five suspected of being part of an extremist cell were originally from Algeria, Buch told reporters.

“They were determined about carrying out an attack, but they didn’t have the capacity for it,” he said.

Investigating magistrate Manuel Garcia-Castellon of the National Court, which normally handles terror-related probes in Spain, ordered the arrests and will be interrogating those who remain in custody later this week, a court spokesman told The Associated Press, following customary rules of anonymity.

Also Tuesday, authorities in southern Spain’s Malaga arrested a 27-year-old Moroccan national who police said they suspect could be linked to the Islamic State group. The man allegedly used several social network profiles to express violent views and allegiance to the extremist group.

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Число загиблих від вибуху в російському місті Шахти виросло до чотирьох

Неизвестна судьба ещё одного человека

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Moscow Court Extends Arrest for Ukrainian Seamen

A Moscow court has extended the detention of eight Ukrainian seamen who were among 24 captured by Russian coast guards in the Black Sea.

Three Ukrainian vessels and their crews were fired at and seized by the Russians in November. Russia insists the men should be put on trial for violating its border. Ukraine calls them prisoners of war who were illegally captured.

A Moscow district court on Tuesday ruled that eight of the 24 Ukrainian sailors, including the captain of one of the vessels, should be kept in custody until late April.

 

The confrontation on the Black Sea triggered a showdown between Russia and Ukraine in the simmering conflict over Russia’s 2014 annexation of the Crimean peninsula. Russia seized Crimea in a move that Ukraine and most of the world views as illegal.

In the Ukrainian city of Odessa, about 50 demonstrators protesting the sailors’ detention gathered outside the Russian Consulate. Some tried to throw paint at the building. Police detained two demonstrators.

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Іранський супутник не долетів до орбіти

Іранська влада повідомляє, що запустила супутник, але ракета не змогла досягнути орбіти.

Запуск відбувся 15 січня попри застереження Сполучених Штатів про те, що випробування ракет Тегераном порушують резолюції США.

Міністр телекомунікацій Мухаммад Джавад Азарі Джахромі заявив у ефірі державного телебачення, що ракета-носій супутника «Пайям» (в перекладі з фарсі – «повідомлення») не змогла «набрати потрібну швидкість» на третьому етапі запуску.

Він не уточнив, що саме спричинило невдачу запуску, але пообіцяв, що науковці продовжать свої дослідження.

Читайте також: В Ірані поінформували про наслідки авіакатастрофи транспортного літака​

Прем’єр-міністр Ізраїлю Беньямін Нетаньягу засудив цю спробу Ірану запустити ракету, заявивши, що «невинний супутник» насправді є «першою стадією запуску міжконтинентальної ракети», яку Іран нібито розробляє, порушуючи міжнародні домовленості.

За словами Азарі-Джахромі, ще один супутник, «Дусті» (з фарсі – «дружба») чекає на запуск. Про це міністр телекомунікацій Ірану написав у своєму Twitter.

«Ми не можемо зазнати поразки чи зупинитися. Це саме ті обставини, в яких ми, іранці, демонструємо відмінність від решти людей силою духу і сміливістю», – заявив він.

Обидва супутники, «Пайям» і «Дусті», за планами, мають збирати інформацію про зміни навколишнього середовища в Ірані, заявив раніше цього тижня президент цієї країни Хасан Роугані.

Роугані також обіцяв, що Іран готовий запустити супутники попри застереження Сполучених Штатів.

На початку січня Сполучені Штати закликали Іран не продовжувати «провокативні» плани запуску трьох космічних апаратів, стверджуючи, що вони «практично ідентичні» ядерним балістичним ракетам і порушують резолюцію ООН.

Читайте також: Іран підтвердив арешт ветерана Військово-морських сил США​

Державний секретар США Майк Помпео наголосив, що ці іранські наміри порушують резолюцію Ради безпеки ООН 2231, ухвалену в 2015 році. У цій резолюції міститься заклик до Тегерана «не здійснювати жодної діяльності, пов’язаної з балістичними ракетами, призначеними для доставки ядерної зброї».

Резолюція була наслідком ядерної угоди 2015 року, підписаної Іраном з шістьма світовими державами – США, Францією, Німеччиною, Великою Британією, Китаєм і Росією. Вона надала Тегерану полегшення санкцій в обмін на обмеження його ядерної програми.

Президент США Дональд Трамп у травні 2018 року вийшов з угоди, укладеної його попередником Бараком Обамою, і почав відновлювати санкції, що стало тяжким ударом по іранській економіці та валюті.

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France’s Macron Launches ‘Grand Debate’ Following Protests

French President Emmanuel Macron is formally launching a “grand debate” to try to appease the yellow vest movement following weeks of anti-government protests.

Macron heads Tuesday to Grand Bourgtheroulde, a small town in Normandy, where he is to meet about 600 mayors and local officials.

 

Despite a high security presence, a ban on traffic and restricted access to the town, dozens of yellow vests protesters gathered outside the town to express their discontent.

 

“We are being prevented from accessing the village,” said protester Florence Clement. “I was crossing the road with my yellow vest but I was asked to remove it because it’s forbidden.”

 

Macron started his journey with a stop in the small town of Gasny to attend a local officials’ meeting, where some expressed their concerns over the loss of purchasing power of retirees and civil servants.

Macron addressed this week a “letter to the French” to encourage people to express their views on a series of economic and political matters during a three-month “grand debate.”

 

The consultation will take place through local meetings and on the internet. The debate will focus on taxes, public services, climate change and democracy.

 

The French leader, whose popularity ratings hit record lows at the end of last year, hopes the process will help quell anger over his economic policies.

About 84,000 people turned out last weekend for the ninth round of anti-government demonstrations across France, according to the French Interior Ministry.

 

The yellow vest movement, prompted in November by a tax hike on diesel fuel, has expanded to encompass demands for wider changes to France’s economy to help struggling workers. Protesters have denounced Macron’s pro-business policies as favoring the rich.

 

The movement is named for the fluorescent garments French motorists are required to keep in vehicles.

 

 

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Texas Couple, Convicted of Enslaving Guinean Girl, Await Sentencing 

A U.S. federal court has convicted the son of a former Guinean president, along with his wife, for enslaving a young, undocumented girl from the West African country and forcing her to work unpaid in their north Texas home for 16 years.

Mohamed Toure and Denise Cros-Toure, both 57, were convicted of forced labor, harboring an alien and conspiring to harbor an alien. The couple, who live in the Dallas suburb of Southlake, were acquitted of another charge, conspiracy to commit forced labor. 

“The defendants preyed on a young and extremely vulnerable girl. Their despicable actions included cruelly abusing her, forcing her to work in their home, hidden in plain sight, for years without pay, and robbing her of her childhood,” Eric Dreiband, assistant attorney in the U.S. Justice Department’s civil rights division, said in a statement Friday announcing the verdict. 

Sentencing has not yet been scheduled for Toure and Cros-Toure. They face up to 20 years in prison, according to the statement, which also said restitution was mandatory. 

Toure and Cros-Toure were taken into custody by U.S. Marshals after the verdict was announced Thursday evening, according to the Fort Worth Star-Telegram newspaper. The couple had been on home arrest since shortly after their arrest last April. 

Attorneys for Toure and Cros-Toure said they would appeal the convictions.

“A family has been destroyed,” said Toure’s lawyer, Brady T. Wyatt III of Dallas, according to the Star-Telegram. “The government told a story and we contradicted it.”

Djena Diallo, the young woman at the center of the case, was present during the four-day trial but did not testify.

Federal court documents indicate the victim came from a village in Guinea and was brought to the United States as a child, perhaps as young as 5. Her age is unclear. Toure and Cros-Tore “required her to cook, clean and take care of their [five] biological children,” the court statement said, “… without pay for the next 16 years.”

Diallo also was seen painting the house, mowing the lawn and tending gardens, neighbors said. She was not permitted to attend school, and she was beaten with belts and electrical cords and choked, she told authorities. 

Call for help

The girl escaped in August 2016 with the aid of a former neighbor she’d telephoned for help.

Bridget Abujo, the ex-neighbor and prosecution witness, testified that she had sent her daughter to pick up Diallo and bring her to safety, first at the Abujos’ home and then a YWCA, The Dallas Morning News reported. 

According to The News account, Abujo said in court that she had arranged for tutoring for Diallo. She also said Diallo’s immigration status was in “limbo.” VOA could not reach federal officials to confirm.

Toure is the son of the late Ahmed Sekou Toure, the first president of Guinea after the country gained independence from France in 1958. He held office until suffering a fatal heart attack in 1984. 

Consequences  

Toure and Cros-Toure have been permanent U.S. residents since 2005, the Star-Telegram reported, citing court documents. It said that, according to Texas Workforce Commission records, Toure has never been employed in the United States but worked for a government party in Guinea. His wife worked for Delta Air Lines from 2005 to 2006 and as a substitute teacher starting in 2016.

Jurors decided the Toures’ property should be forfeited. The Dallas Morning News reported that would include the family’s house, appraised last year at $584,000. 

Scott H. Palmer, a defense attorney for Cros-Toure, told The News that a juror called him the day after the verdict to say that jurors were reluctant to convict the couple because Diallo had been free to leave the house and was active on social media. They probably would have acquitted the couple had they enrolled the girl in school, Palmer said the juror explained. 

But Ann Johnson, a former Texas state prosecutor and expert in human trafficking, told The News that just because there were no signs of physical confinement didn’t mean there wasn’t mental or emotional bondage. 

“And that’s why a lot of people may not even see themselves as a trafficking victim,” Johnson was quoted as saying. “A big part of it is the manipulation. … These are very tough cases to make.” 

VOA’s French to Africa Service contributed to this report.

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