Tag: Business

Don’t Throw Me in That Briar Patch

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Facebook is completely losing its sh%$ because the next version of the iPhone operating system will require that users explicitly opt in to being spied on by advertisers.
They have actually issued an apology of sorts, which is just about as sincere as their apologies for spying on their users:

Facebook has apologized to its users and advertisers for being forced to respect people’s privacy in an upcoming update to Apple’s mobile operating system – and promised it will do its best to invade their privacy on other platforms.

The antisocial network that makes almost all of its revenue from building a vast, constantly updated database of netizens that it then sells access to, is upset that iOS 14, due out next month, will require apps to ask users for permission before Facebook grabs data from their phones.

“This is not a change we want to make, but unfortunately Apple’s updates to iOS14 have forced this decision,” the behemoth bemoans before thinking the unthinkable: that it may have to end its most intrusive analytics engine for iPhone and iPad users.
“We know this may severely impact publishers’ ability to monetize through Audience Network on iOS 14, and, despite our best efforts, may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14 in the future.”

Amazingly, despite Facebook pointing out to Apple that it is tearing away people’s right to have their privacy invaded in order to receive ads for products they might want, Cupertino continues to push ahead anyway.

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Facebook wants advertisers to know however that it has their back. It will continue to suck as much information as possible off every other device and through every other operating system.

………

Facebook closes out by promising that it will do all it can to prevent user privacy from being respected in future. “We believe that industry consultation is critical for changes to platform policies, as these updates have a far-reaching impact on the developer ecosystem,” it said. “We’re encouraged by conversations and efforts already taking place in the industry – including within the World Wide Web Consortium (W3C) and the recently announced Partnership for Responsible Addressable Media (PRAM). We look forward to continuing to engage with these industry groups to get this right for people and small businesses.”

 What can I say but, “F%$# Zuck.”

I’m Surprised That It Took So Long

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@whatchugotforme How to tiktok
♬ original sound – whatchugotforme

The reason Trump wants to shut down TikTok

The video sharing site TikTok has filed a lawsuit against Trump’s executive order shutting it down.

Trump claims that it’s a security risk, because its parent company is Chinese owned, but the reality is that he’s chuffed about how Sarah Cooper has gone viral doing satirical lip syncing of him.

In any case, this court case will almost certainly result in an injunction that will last well beyond election day:

Made-in-China social network TikTok has decided to challenge the Trump administration’s looming ban on its service by taking the matter to the USA’s courts.

On its qq account and in a statement, TikTok owner Byte Dance offered a two-pronged rationale for its actions.

The first disagrees with the Trump administration’s suggestion that TikTok shares data with China’s government and is therefore a threat to national security. ByteDance, the company that owns TikTok, said it has tried to explain itself to the administration and find a solution that would satisfy US authorities its service is safe.

The second strand is an alleged “lack of due process” during those talks. TikTok spokesperson Josh Gartner said the Trump administration “paid no attention to facts and tried to insert itself into negotiations between private businesses”.

………


The ban on TikTok was enacted with an Executive Order that relies on powers designed to let a US president act during a national emergency. The power has not previously been applied to an entity like TikTok so the case may well rest on some gnarly legal issues rather than the nature of TikTok’s activities.

TikTok allows people to share short videos.

The idea that it could be a threat to anything than it’s users’ or Donald Trump’s dignity is simply ludicrous.

This is Worse than I Had Imagined

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I knew that hedge fund fees were excessive, but run the numbers, and it is beyond my wildest imaginings.

Their fees amount to 64% of all returns:

If you already see hedge fund fees as exorbitant, you ain’t seen nothing yet. Over the past two decades, the hedge fund industry has kept 64 cents of every dollar of gross profits that it has generated above the risk-free rate.

You’d be excused for thinking this is a mathematical impossibility. The predominant fee arrangement in the hedge fund industry is the so-called 2-and-20 fee structure, under which a fund charges an annual management fee of 2% of assets under management and a performance incentive fee of 20% of any profits. So how can hedge funds keep more than 20 cents of every dollar of profit, on top of management fees?

The answer is provided in a new study that the National Bureau of Economic Research recently began circulating. Entitled “The Performance of Hedge Fund Performance Fees,” the study was conducted by finance professors Itzhak Ben-David and Justin Birru, both of Ohio State University, and Andrea Rossi of the University of Arizona.

The professors analyzed a comprehensive hedge fund database containing nearly 6,000 funds over the 22 years from 1995 through 2016. Over that period these hedge funds collectively produced total gross profits of $316.8 billion. Of this total, fund managers kept $202 billion ($88.7 billion in management fees and $113.3 billion in performance incentive fees). The remainder—$113.3 billion, or 35.8% of total gross profits — went to investors. (See the chart below.)

That is almost 2/3 of returns, which means that even by hedge funds extravagant claims, they would never exceed the numbers of things like index funds.

Acknowledging Reality

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The CEO of Ford, Jim Hackett, is walking back expectations on self-driving cars, suggesting that they be limited to dedicated roadways.

That has been the opinion of pretty much every expert whose paycheck is not dependent on selling the still distant technology:

Ford CEO Jim Hackett scaled back hopes about the company’s plans for self-driving cars this week, admitting that the first vehicles will have limits. “We overestimated the arrival of autonomous vehicles,” said Hackett, who once headed the company’s autonomous vehicle division, at a Detroit Economic Club event on Tuesday. While Ford still plans on launching its self-driving car fleet in 2021, Hackett added that “its applications will be narrow, what we call geo-fenced, because the problem is so complex.”

Hackett’s announcement comes nearly six months after its CEO of autonomous vehicles, Sherif Markaby, detailed plans for the company’s self-driving car service in a Medium post. The company has invested over $4 billion in the technology’s development through 2023, including over $1 billion in Argo AI, an artificial intelligence company that is creating a virtual driver system. Ford is currently testing its self-driving vehicles in Miami, Washington, D.C. and Detroit.

Driving cars is literally the most difficult things that people do on a routine basis, and it is made all the more complex because it involves incredibly complex interactions with other human beings who do not truly understand the limits of the 1½+ ton death machines.

People who suggest that this is just around the corner are deluded or liars, or both.

Mandy Rice-Davies Applies*

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Of course they are.  They are opposed to anything that would make it harder for them to monetize our privacy:

The trade group representing many of the largest technological security companies is urging regulators not to overreach on facial recognition restrictions even as U.S. lawmakers push to rein in police use of the software.

The Security Industry Association, which represents NEC Corp., France’s Idemia Group, Japan’s Ayonix Corp. and others, will release on Tuesday day a 10-point framework urging policy-makers, companies and governments to embrace the benefits of the technology, while upholding certain ethical principles.

SIA is defending government use of facial recognition at a time when some civil rights advocates, companies, and lawmakers are calling for police departments to stop using the technology. Critics want better guardrails to ensure facial recognition doesn’t promote racial biases in the criminal justice system.

Calls to curb law enforcement’s use of the technology grew louder during widespread public outrage over racial inequities following the death of George Floyd, an unarmed Black man, in Minneapolis police custody in May.

SIA’s policy principles, obtained by Bloomberg News, caution lawmakers not to adopt a “one-size-fits-all legislative framework.”

Here is a quick rule of thumb:  When businesses start proposing regulatory forbearance, or suggesting that, “One Size Fits All,” legislation (mark your bullsh%$ bingo card) would be a bad thing, and that they are proposing, “Policy Principles,” it means that they want business as usual to continue, typically by sucking the marrow out of the public space.

These folks want to make money by being evil, and they don’t care if they sell to corrupt and brutal cops in the USA, or Chinese authorities enforcing a genocide against the Uighurs. 

*Well, he would say that, wouldn’t he? Seriously, know your history.

Of Course They Did

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Securus, a phone company specializing in looting for prisoners and their families by over charging on phone calls, has now been revealed to have, for at least the second time in the past few months, recorded privileged conversations between detainees and their lawyers.

This is so f%$#ing illegal that a cop heard the calls and contacted the state attorney general:

Jail phone telco Securus provided recordings of protected attorney-client conversations to cops and prosecutors, it is claimed, just three months after it settled a near-identical lawsuit.

The corporate giant controls all telecommunications between the outside world and prisoners in American jails that contract with it. It charges far above market rate, often more than 100 times, while doing so.

It has now been sued by three defense lawyers in Maine, who accuse the corporation of recording hundreds of conversations between them and their clients – something that is illegal in the US state. It then supplied those recordings to jail administrators and officers of the law, the attorneys allege.

Though police officers can request copies of convicts’ calls to investigate crimes, the cops aren’t supposed to get attorney-client-privileged conversations. In fact, these chats shouldn’t be recorded in the first place. Yet, it is claimed, Securus not only made and retained copies of these sensitive calls, it handed them to investigators and prosecutors.

“Securus failed to screen out attorney-client privileged calls, and then illegally intercepted these calls and distributed them to jail administrators who are often law enforcers,” the lawsuit [PDF] alleged. “In some cases the recordings have been shared with district attorneys.”

………

The recordings only came to light in May after a detective was listening to copies of recordings he had been provided, and recognized the voice of one of the lawyers, John Tebbetts, talking to his client. The detective alerted Maine’s Attorney General and the AG then informed the lawyers, providing them with copies of hundreds of calls made from jail and asked them to flag up any that were client-attorney protected so that they could be deleted. Tebbetts, plus Jeremy Pratt and Robert Ruffner, are the trio suing Securus this month.

………

Amazingly, this is not the first time Securus has been accused of this same sort of behavior. Just three months ago, in May this year, the company settled a similar class-action lawsuit this time covering jails in California.

That time, two former prisoners and a criminal defense attorney sued Securus after it recorded more than 14,000 legally protected conversations between inmates and their legal eagles. Those recordings only came to light after someone hacked the corp’s network and found some 70 million stored conversations, which were subsequently leaked to journalists.

Securus claimed the recordings were the result of a software glitch, rather than an intentional act, and stuck to that explanation as the case wound its way through the US legal system over four years.

………

Even though that lawsuit was started in 2016, Securus perhaps did not fix its apparent software bug because the recordings in this new lawsuit took place from September 2019 to May this year. As part of its settlement, Securus said it would create a new “private call” option for protected calls with attorneys and physicians and include additional warnings if the call is being recorded.

In a just world, the senior executives at Securus would spending their days in prison being forced to pay 100 times the actual cost of their phone calls.

It’s pretty clear that they simply do not give a sh%$ about the rights of defendants, or about being contemptible greed heads.

They are so evil that I expect them to speak at the Republican National Convention.

Live in Obedient Fear, Citizen

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It appears that multiple entities in the US State Security Apparatus tracked millions of people’s phones without a warrant despite Supreme Court decisions requiring one:

The Secret Service paid for a product that gives the agency access to location data generated by ordinary apps installed on peoples’ smartphones, an internal Secret Service document confirms.

The sale highlights the issue of law enforcement agencies buying information, and in particular location data, that they would ordinarily need a warrant or court order to obtain. This contract relates to the sale of Locate X, a product from a company called Babel Street.

In March, tech publication Protocol reported that multiple government agencies signed millions of dollars worth of deals with Babel Street after the company launched its Locate X product. Multiple sources told the site that Locate X tracks the location of devices anonymously, using data harvested by popular apps installed on peoples’ phones.

Protocol found public records showed that U.S. Customs and Border Protection (CBP) purchased Locate X. One former Babel Street employee told the publication that the Secret Service used the technology. Now, the document obtained by Motherboard corroborates that finding.

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“As part of my investigation into the sale of Americans’ private data, my office has pressed Babel Street for answers about where their data comes from, who they sell it to, and whether they respect mobile device opt-outs. Not only has Babel Street refused to answer questions over email, they won’t even put an employee on the phone,” Senator Ron Wyden told Motherboard in a statement.

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Government agencies are increasingly at the end of that location data chain. In February The Wall Street Journal reported that Immigration and Customs Enforcement (ICE) and other agencies bought an app-based location data product from a different firm called Venntel. Senator Wyden’s office then found the Internal Revenue Service (IRS) was also a Venntel customer.

Law enforcement agencies typically require a warrant or court order to compel a company to provide location data for an investigation. Many agencies have filed so-called reverse location warrants to ask Google to hand over information on what Android devices were in a particular area at a given time, for example. But an agency does not need to seek a warrant when it simply buys the data instead.

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Senator Wyden is planning legislation that would block such purchases.

We should also forbid our intelligence agencies from having allies collect data that they are forbidden to collect, and the reverse for them.

The whole “Five Eyes” thing appears to be a way to allow intelligence agencies to spy on their own citizens by swapping who is looking at any given time.

Google Being Evil

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This is not a surprise. This is what Google does, leveraging its monopoly position on search, and now online advertising, to crush competitors:

As the antitrust drumbeat continues to pound on tech giants, with Reuters reporting comments today from the U.S. Justice Department that it’s moving “full-tilt” on an investigation of platform giants including Google parent Alphabet, startups in Europe’s travel sector are dialing up their allegations of anti-competitive behavior against the search giant.

Google has near complete grip on the search market in Europe, with a regional market share in excess of 90%, according to Statcounter. Unsurprisingly, industry sources say a majority of travel bookings start as a Google search — giving the tech giant huge leverage over the coronavirus-hit sector.

More than half a dozen travel startups in Germany are united in a shared complaint that Google is abusing its search dominance in a number of ways they argue are negatively impacting their businesses.

Complaints we’ve heard from multiple sources in online travel range from Google forcing its own data standards on ad partners to Google unfairly extracting partner data to power its own competing products on the cheap.

Startups are limited in how much detail they can provide on the record about Google’s processes because the company requires advertising partners to sign NDAs to access its ad products. But this week German newspaper Handelsblatt reported on antitrust complaints from a number of local startups — including experience booking platform GetYourGuide and vacation rental search engine HomeToGo — which are accusing the tech giant of stealing content and data.

The group is considering filing a cartel complaint against Google, per its report.

We’ve also heard from multiple sources in the European travel sector that Google has exhibited a pattern of trying to secure the rights to travel partners’ content and data through contracts and service agreements.

One source, who did not wish to be identified for fear of retaliation against their business, told us: “Each travel partner has certain specialities in their business model but overall the strategy of Google has been the same: Grab as much data from your partners and build competing products with that data.”

………

Google defends this type of expansion by saying it’s just making life easier for the user by putting sought for information even closer to their search query. But competitors contend the choices it’s making are far more insidious. Simply put, they’re better for Google’s bottom line — and will ultimately result in less choice and innovation for consumers — is the core argument. The key contention is Google is only able to do this because it wields vast monopoly power in search, which gives it unfair access to travel rivals’ content and data.

It’s certainly notable that Alphabet hasn’t felt the need to shell out to acquire any of the major travel booking platforms since its ITA acquisition. Instead, its market might allow it to repackage and monetize rival travel platforms’ data via an expanding array of its own vertical travel search products.

This is why the internet giants need to be regulated as utilities, and why we should consign Robert Bork’s corrupt and ahistorical antitrust analysis needs to be put in the dust-bin of history.

Hate for Profit, Facebook Edition

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This is no surprise.

Facebook is in the business of eyeballs, and action is taken only when content is so contemptible that it impacts the bottom line:

Facebook’s algorithm “actively promotes” Holocaust denial content according to an analysis that will increase pressure on the social media giant to remove antisemitic content relating to the Nazi genocide.

An investigation by the Institute for Strategic Dialogue (ISD), a UK-based counter-extremist organisation, found that typing “holocaust” in the Facebook search function brought up suggestions for denial pages, which in turn recommended links to publishers which sell revisionist and denial literature, as well as pages dedicated to the notorious British Holocaust denier David Irving.

The findings coincide with mounting international demands from Holocaust survivors to Facebook’s boss, Mark Zuckerberg, to remove such material from the site.

………

The ISD also discovered at least 36 Facebook groups with a combined 366,068 followers which are specifically dedicated to Holocaust denial or which host such content. Researchers found that when they followed public Facebook pages containing Holocaust denial content, Facebook recommended further similar content.

Jacob Davey, ISD’s senior research manager, said: “Facebook’s decision to allow Holocaust denial content to remain on its platform is framed under the guise of protecting legitimate historical debate, but this misses the reason why people engage in Holocaust denial in the first place.

“Denial of the Holocaust is a deliberate tool used to delegitimise the suffering of the Jewish people and perpetuate long-standing antisemitic tropes, and when people explicitly do this it should be seen as an act of hatred,” he added.

Facebook’s basic algorithm is, “If it increases clicks, it makes us money,” which is why we see it supporting genocide against the Rohinga in Myanmar, Muslims in India, etc.

Zuck don’t care, he never has.

This is a Big F%$#ing deal

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Hopefully this is the first of a thousand cuts that Amazon will die by:

Amazon was hit with a legal defeat this week after a California appeals court ruled that the company can be held legally liable for defective products sold on its site by third-party sellers.

In a unanimous decision issued Thursday, Judge Patricia Guerrero of the Fourth District Court of Appeals wrote that “under established principles of strict liability, Amazon should be held liable if a product sold through its website turns out to be defective.”

………

The case concerned a replacement laptop battery that Amazon customer Angela Bolger purchased from a Hong Kong-based company called Lenoge Technology, which went by “E-Life” on Amazon’s online marketplace. Bolger alleged in her lawsuit that “the battery exploded several months later, and she suffered severe burns as a result,” for which she argued Amazon should be held responsible.

Amazon had argued that it wasn’t liable because “it did not distribute, manufacture, or sell the product,” and that Lenoge was the seller.

But the court disagreed, finding that Amazon played such an outsized role in the transaction that it bore the responsibility for the defective battery.

Guerrero wrote that Amazon “placed itself between Lenoge and Bolger in the chain of distribution… accepted possession of the product… stored it in an Amazon warehouse… attracted Bolger to the site… provided her with a product listing… received her payment… shipped the product in Amazon packaging… controlled the conditions of Lenoge’s offer for sale… limited Lenoge’s access to Amazon’s customer information… forced Lenoge to communicate with customers through Amazon… “and demanded indemnification as well as substantial fees on each purchase.”

Jeff Bezos’ monster exerts a tremendous amount of control over its, “3rd party vendors,” and to quote Peter Parker Steve Ditko and Stan Lee, “With great power, comes great responsibility.”*

Doing things like stealing 3rd party data to develop competing products indicates that Amazon is more than just a simple store front.

“Whatever term we use to describe Amazon’s role, be it ‘retailer,’ ‘distributor,’ or merely ‘facilitator,’ it was pivotal in bringing the product here to the consumer,” she concluded.

The court also didn’t buy Amazon’s statement that it should be protected under section 230 of the Communications Decency Act of 1996, which shields internet companies from legal repercussions for content published by third parties on their sites.

It determined that section 230 didn’t apply because Bolger’s claims “depend on Amazon’s own activities, not its status as a speaker or publisher of content provided by Lenoge for its product listing.”

Pending the results of a possible appeal, Thursday’s ruling potentially opens up the online retail giant to significant legal exposure from other customers who could bring similar lawsuits for faulty or damaged products. It could also force Amazon to adjust its policies to more tightly regulate third-party sellers.

It does seem that the whole internet economy thing is increasingly just a mechanism for vendors to cheat people and avoid consequences.

*Peter Parker never said this, it was in the final panel of the first Spider Man comic book.

About That Russian Vaccine

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There has been a lot of talk recently about Russian claims that they have a Covid-19 vaccine in late stage testing.

There has been much mockery of these claims, but the government agency behind these claims has a good record, and the model, that of a government research and development taking medical products from start to finish appears to have more potential than the current western, “Throw money at contemptible greed-heads,” model:

When Russia announced this week that it had granted the world’s first regulatory approval for a Covid-19 vaccine after just two months of human trials, many in the global pharmaceutical community were aghast at how quickly Moscow had deemed it safe to use.

Russia’s drug companies were comparatively small, little was known of the institute credited with the breakthrough and key steps needed to approve a shot for use had not been completed, critics said. But the man behind the vaccine insists instead that the success has been two decades in the making.

“[The speed] is not surprising if you understand the science behind it,” said Alexander Gintsburg, director of the state-run Gamaleya Research Institute of Epidemiology and Microbiology, which says it has worked on adenoviral vaccines like its Covid-19 shot since the 1980s.

“In the absence of global health threats in recent decades, vaccine research has been on the fringes of the global pharmaceutical industry while Russian labs continued their research,” he told the Financial Times. “We are proud of the legacy of Russian science, which allowed us to develop the Covid-19 vaccine very quickly.”

………

Defending the decision to roll out public vaccinations of what is still in effect an experimental drug, the Russian government and other supporters have pointed to the successful Ebola vaccine developed by Mr Gintsburg and his colleagues in 2015, the Gamaleya Institute’s most well-known previous success. Sputnik V is based on the same technology.

………

“The fact that Russian scientists can develop, and the Russian pharmaceutical industry can produce, drugs requiring intensive scientific research has long been no secret,” Mr Bespalov added. “In Russia, there is a background of serious scientific schooling, a plethora of scientists and organisations to back them up and significant historical experience.”

………

“Russia does not have any leading pharma companies. Most of its pharma research takes place in state institutions and less information comes out about it than from western or Chinese researchers,” said Rasmus Bech Hansen, chief executive of Airfinity, a London-based science analytics company.

In contrast to vaccines being developed in the UK and the US, where the government’s role has been to provide financial grants and advance purchase orders to private companies and researchers, Russia’s vaccine development has been wholly state-managed.

The Gamaleya Institute is government-controlled, the vaccine was funded by the sovereign wealth fund and an employee of the ministry of defence is named as an author of the vaccine. Senior government officials were given preapproval injections.

I don’t know if government run vaccine research is a good model for vaccine development, but I do know that relying on the tender mercies of the for profit pharmaceutical industry is a bad model for vaccine development.

The Studios Get the Goose to the Chopping Block

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Pirating films and music was very much a thing from the late 1990s through the middle of the teens.

It has largely died down because paid streaming services delivered a better product at a reasonable price.

However, the media conglomerates have been creating their own streaming services and making their content exclusive in order to get the entire revenue stream.

So, now instead of Netflix and Hule with a large overlap of content and each costing less than a double sawbuck, you now have something north of dozen services, each charging at least $20/month and having narrow catalogues.

It makes everything a major pain in the ass.

Case in point, the Harry Potter films:

The rise of streaming video competitors is indisputably a good thing. Numerous new streaming alternatives have driven competition to an antiquated cable TV sector that has long been plagued by apathy, high rates, and comically-bad customer service. That’s long overdue and a positive thing overall, as streaming customer satisfaction scores suggest.

But as the sector matures, there’s a looming problem it seems oblivious to.

Increasingly, companies are pulling their content off central repositories like Hulu and Netflix, and making them exclusive to their own streaming platforms, forcing consumers to subscribe to more and more streaming services if they want to get all the content they’re looking for.

Want to watch Star Trek: Discovery, you need CBS All Access. Can’t miss Stranger Things? You’ll need Netflix. The Boys? Amazon Prime. The Handmaid’s Tale? Hulu. Friends? AT&T. This week it was Comcast’s turn in announcing that the Harry Potter films would now be exclusive to Comcast’s new streaming service, Peacock. Of course it’s not as simple as all that. The titles will appear and disappear for the next few years, being free for a while… then shifting to a pay per view model for a while:

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No, AT&T and Comcast probably aren’t going to “share” the Harry Potter films, meaning that to watch them you need to embrace the Comcast ecosystem. And while superficially you can easily understand why companies would want to lock down massive droves of exclusive content to drive subscriptions as the streaming wars heat up, there’s a certain myopia going on in terms of the impact. There doesn’t seem to be much of an awareness of that while competition is certainly good, having too many cordoned off exclusivity silos and too many content licenses shifting under the feet of consumers could generate confusion and drive more people to the simplicity of piracy.

So The Office is leaving Netflix in 2021 to go to an NBC streaming service…. pic.twitter.com/TdVgxfvsgk

— Jamie (@Jamie_2455) June 26, 2019


In fact, there’s some early anecdotal evidence this is already happening, and a few studies predicting it will get worse as every broadcaster and their moms jump into the streaming space. A 2019 Deloitte study found that nearly half (47 percent) of US consumers already suffer from “subscription fatigue,” and 56 percent were frustrated by quickly changing licensing deals.

The studios are painting targets on their shoes, and taking careful aim.

In just one example, the cost of YouTube TV has gone from $35 to $65 a month over the past few years.

This is not a good customer experience.

Powerful Bank CEOs Lead to Money Laundering

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A study shows that the more unchecked authority that bank CEOs have, the more likely that the banks will be involved in money laundering and other criminality.

Obviously, correlation does not prove causation, but ultra-powerful CEOs tend to be indistinguishable from sociopaths, so criminality logically follows their imperative to hit “the numbers”.

We have seen again and again how rock-star CEOs lead to unbalanced people running companies for their own personal benefit and twisted egos:

Banks with powerful CEO’s and smaller, less independent, boards are more likely to take risks and be susceptible to money laundering, according to new research led by the University of East Anglia (UEA).

The study tested for a link between bank risk and enforcements issued by US regulators for money laundering in a sample of 960 publicly listed US banks during the period 2004-2015.

The results, published in the International Journal of Finance and Economics, show that money laundering enforcements are associated with an increase in bank risk on several measures of risk. In addition, the impact of money laundering is heightened by the presence of powerful CEOs and only partly mitigated by large and independent executive boards.

It’s not just banks that need to abolish the Cult of the CEO.

You Know that Private Equity is Cooking the Books When

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Even the Pink Paper, aka The Financial Times, calls out the industry for the fictitious returns that the industry reports:

Ever wondered about the extraordinary performance figures that listed private equity firms trumpet in their official stock market filings?

Take, for instance, the latest Form 10-K issued by Apollo, one of the world’s largest buyout groups. This claims that its private equity funds have “consistently produced attractive long-term investment returns . . . generating a 39 per cent gross internal rate of return (IRR) on a compound basis from inception through December 31, 2019”.

Or how about the one from KKR, which says it has “generated a cumulative gross IRR of 25.6 per cent” since the firm’s inception back in 1976?

It’s not just the eye-popping scale of these returns that captures the attention. It’s their amazing “since inception” consistency. Not only do the firms generate stratospheric numbers — far higher than anything produced by the boring old stock market — but they can apparently do it year in, year out, with no decay in returns.

………

Take Apollo, for example. Its long-term IRR has barely moved from the 39 per cent level over the past several decades. True, it did hit 40 per cent in 2008, before dropping back by a full percentage point the following year. But since then it has been like a stuck record. Financial crises? Great recessions? Market fluctuations? It seems that nothing can knock it off that 39 per cent.

It’s a similar story with KKR. The firm’s IRR since inception has fallen by just 0.7 of a percentage point in the years since 2007 and, at 25.6 per cent, remains barely below the 26.1 per cent return generated by its early “legacy” funds between 1976 and 1996.

………

But what’s concerning is the ease with which this mathematical circularity has been allowed to create a distorted impression. The main audience for private equity to date has been large, so-called “sophisticated investors”. The fact that these absurd numbers still get headline exposure makes one wonder whether these investors understand them. That is disturbing.

Even more worrying is the way that policymakers appear to have set these financial pig-iron statistics in stone. The industry standard for reporting — the Global Investment Performance Standards — actually makes it mandatory for private equity to report a since-inception IRR or “money-weighted return”.

………

Realistic numbers matter. The US authorities are thinking of letting the American public loose on private equity with their 401(k) pension plans. Retail investors need to know what they are getting into. It’s time the way private equity reports performance was rethought.

This is conscious fraud, no different in intent, and larger in scale than anything that Bernie Madoff ever imagined.

A Good Start

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I’d like to see them ban the privacy invading ways of the various for profit Edu-Tech firms out there as well:

The New York legislature today passed a moratorium on the use of facial recognition and other forms of biometric identification in schools until 2022. The bill, which has yet to be signed by Governor Andrew Cuomo, comes in response to the launch of facial recognition by the Lockport City School District and appears to be the first in the nation to explicitly regulate or ban use of the technology in schools.

In January, Lockport became one of the only U.S. school districts to adopt facial recognition in all of its K-12 buildings, which serve about 5,000 students. Proponents argued the $1.4 million system made by Canada-based SN Technologies’ Aegis kept students safe by enforcing watchlists and sending alerts when it detected someone dangerous (or otherwise unwanted). It could also detect 10 types of guns and alert select district personnel and law enforcement. But critics said it could be used to surveil students and build a database of sensitive information the school district might struggle to keep secure.

While the Lockport schools’ privacy policy stated that the watchlist wouldn’t include students and the database would only cover non-students deemed a threat, including sex offenders or those banned by court order, district superintendent Michelle Bradley ultimately oversaw which individuals were added to the system. It was reported earlier this month that school board president John Linderman couldn’t guarantee student photos would never be included for disciplinary reasons.

Letting private companies profit from spying on our children is wrong.

AI Scams

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In this case, it is food delivery robots known as Kiwibots, which, in addition to frequently blocking curb cuts in ways that threaten the lives of the disabled, lies about their use of artificial intelligence to navigate.

In reality, it uses remote operators in Columbia who are paid only $2.00/hour:

It seemed inevitable with the era of the autonomous car, ideas like the Kiwibots emerged. Small ostensibly autonomous vehicles that were in charge of food distribution, thus posing an alternative to courier services such as Glovo, Deliveroo or Uber Eats where deliveries are carried out by human messengers through the bike.

Everything seemed fantastic until it has been discovered that these vehicles have little of self-employed: an investigation has discovered that in reality these robots are remotely controlled by operators in Colombia who charge $2 per hour for this work.

………

This startup, called Kiwi Campus, launched small robots that looked like small carts with four wheels and a storage compartment at the top for orders. The robots became a sensation in the surroundings of that university, where the activity of the autonomous vehicles began.

………

The people in charge of the Kiwibots have several videos on their website that show how these messenger robots work: theoretically, the magic is provided by a complex artificial vision system that is able to recognize obstacles and detect when they can cross the street or not.

………

What was not shown to us as indicated in the San Francisco Chronicle is that they are remotely controlled by human operators who use the GPS sensors and cameras of these robots to send orders to the robots every 5 or 10 seconds.

On Kiwi Campus, they have recognized that there is indeed a part of human remote control, but for them, their service is a “parallel autonomy” system. The robots also circulate at a very reduced speed that goes from 1.6 to 2.4 km/h, which makes Kiwi workers have to pick up food orders from restaurants and go to the Kiwibots points of Departure to put the foods in the storage compartments of the robots and then make deliveries.

The model is unique, but it has more secrets than it might seem and much less autonomy than the robots seemed to raise – each of them costs $ 2,500 – initially. The ideal benefits from the low cost of the workforce that controls them: the operators that handle them in Colombia charge $2 per hour, a much lower cost than installing, for example, LIDAR systems – which would be difficult to integrate into these robots.

Seriously, why do we let fraudsters extract private profits from public space based on their lies?

Weep for the Overpaid Executives

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There are claims that Russia is trying to steal coronavirus vaccine research from the US, UK, and Canada.

The hand wringing over this is kind of silly for two reasons:

  • The more people who have access to this research, the more chance there is for a successful vaccine to be developed and manufactured.
  • The only people who could possibly be harmed are big-pharma profiteers.

I’m sorry, but, “Think of the overpaid pharmaceutical executives’ bonuses,” is just not something that inspires me to paroxysms of fear.

Bullsh%$

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The good folks at WeWork are predicting that they will be profitable by 2021.

Given the fact that they no longer have a nearly unlimited access to capital, and that there are already dozens, of companies providing exactly the same service, and they think that somehow or other they are going to be fabulously profitable.

They are just looking for their next bunch of marks to fleece:

WeWork is on track to have positive cash flow in 2021, a year ahead of schedule, after it cut its workforce by more than 8,000 people, renegotiated leases and sold off assets, its executive chairman said.

Marcelo Claure said in an interview that the SoftBank-backed office space provider had seen strong demand for its flexible work spaces since the start of the coronavirus pandemic.

In February, Mr Claure set a target of reaching operating profitability by the end of next year and he said WeWork remains on track to meet it.

The New York-based company, which aborted its hotly anticipated initial public offering last year, has moved aggressively to reduce its cash burn and shed costs. It has slashed its workforce from a high of 14,000 last year to 5,600 people, a figure that has not been previously disclosed.

“Everybody thought WeWork was mission impossible. [That we had] zero chance. And now, a year from now, you are going to see WeWork to basically be a profitable venture with an incredible diversity of assets,” said Mr Claure.

Seriously, why haven’t there been prosecutions over that sh%$?

The Washington Heffalumps?

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The big news out of Washington, DC today is that the Washington Redskins are finally going to change their name.

As a fan, I’ll adjust, and I wholeheartedly endorse the change.

It turns out that Dan Snyder’s (יש”ו) promise to keep the name forever really meant, only until it was not profitable, as Eugene Robinson so pithily noted.

I want them to be called the Hefalumps, but my reader(s) can suggest an alternate name.

When You Know That Twice as Much Time Was Spent on the Subhed as Was Spent on the Story

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OK, you are covering a story about Amazon banning TikTok from work devices

An Email Banning Our Staff from Using Tiktok? Haha, Funny Story about That, We Didn’t Mean It – Amazon, and it sounds like a classic story from The Register, and you see the sub-headline, and it reads, “Shock TikTok block clocked, unblocked as poppycock amid media aftershock.”

You immediately know that whatever the rest of the story is about, most of the effort went into that sub-hed.

I’m actually fine with that, because this is beautiful.