Good Thursday morning. Theranos’s fall is nearly complete. A potential rollback of Dodd-Frank has advanced. And we try to figure out Larry Kudlow’s agenda. Some links require subscriptions.
Theranos and its C.E.O. are accused of fraud by the S.E.C.
The blood-testing start-up was once one of Silicon Valley’s most lauded unicorns. But, the S.E.C. says, it instead deceived investors about what its tech could do and how much business it did. And its founder Elizabeth Holmes — a Stanford dropout who was compared favorably to Steve Jobs — has been stripped of her C.E.O. title and her shares.
More from John Carreyrou of the WSJ, who first reported on issues at Theranos:
Matt Levine of Bloomberg View reminds us about the company’s other victims: patients.
Peter Henning’s take: The S.E.C.’s case shows that it considers privately held companies as capable of defrauding investors as publicly traded ones.
Elsewhere in S.E.C. violations: The agency charged a former Equifax executive with insider trading, saying he sold shares after learning of the company’s data breach before it was publicly reported .
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, Michael J. de la Merced in New Orleans and Chad Bray in London.
The Dodd-Frank rollback takes an onward step
The Senate, in a rare show of bipartisanship, voted 67-31 to relax regulations on small to medium-sized banks. What the bill includes:
• Raising the threshold for “systemically important” banks to $250 billion in assets, up from $50 billion
• Exempting firms with less than $10 billion in assets from the Volcker rule
But the House may want a more aggressive version that would curtail the power of the Consumer Financial Protection Bureau. That could endanger the proposed overhaul, with the analyst Brian Gardner telling the NYT, “If the House overreaches in its effort to amend the Crapo bill, it could slow down the bill’s progress.”
Elsewhere in banking: Why another Bear Stearns-like collapse isn’t likely, but another crisis is. And Wells Fargo paid its C.E.O., Timothy Sloan, $17.4 million last year.
What will be on Larry Kudlow’s agenda?
It’s official: The CNBC commentator will become President Trump’s chief economic adviser, replacing Gary Cohn. But what will Mr. Kudlow — who on TV is an ardent supporter of free trade — push for?
He supports a strong dollar and tariffs that make exceptions for allies like Canada and Mexico. And he’s in favor of permanently extending the Republican tax cuts for individuals.
As for his stance on China, here’s what he told CNBC:
One thing to watch for: whether his past admission of substance abuse would affect his work. “We’ll see how that plays out,” Mr. Kudlow said.
Critics’ corner: Mark Hamrick, Bankrate.com’s senior economic analyst, writes, “It remains to be seen whether Kudlow can step into the role of a virtual moderating influence in this administration.” And Noah Smith of Bloomberg View asserts, “It also seems like there are just so few credible economic thinkers willing to stand up and sign their name to the Trump economic agenda.”
Elsewhere in economic policy: U.S. companies have few ways around the proposed metals tariffs. And U.S. allies might emphasize their toughness against China to win tariff exemptions.
The politics flyaround
• How Steve Schwarzman of Blackstone became a close adviser to President Trump on China — but lost the tariff battle. (WaPo)
• After Rex Tillerson’s firing, Washington is wondering if H.R. McMaster, John Kelly or Jeff Sessions might go next. And allies are hoping that the cabinet reshuffle will clarify American foreign policy.
• Moving from the C suite to Washington is tougher than it looks. (WSJ)
• The Democrat Conor Lamb narrowly won a special House election in southwestern Pennsylvania, an area that Mr. Trump carried handily in 2016. (NYT)
• The administration is considering Randy Quarles, the Fed’s vice chairman for supervision, as the next head of the Financial Stability Board, unnamed sources say. (FT)
• Mr. Trump has discussed including protections for Dreamers in a spending bill. (WSJ)
• A Trump Organization lawyer was involved in an arbitration proceeding involving Stormy Daniels, according to documents. (WSJ)
• Jeff Sessions is considering whether to fire the former F.B.I. deputy director Andrew G. McCabe days before he would retire, unnamed sources say. (NYT)
Toys “R” Us is one of Amazon’s biggest casualties
The 70-year-old company’s plans to close or sell its stores in the U.S. and Britain show how hard life has become for bricks-and-mortar retailers. The collapse could put over 30,000 U.S. jobs at risk.
More on what happened from Michael Corkery of the NYT:
Speaking of Amazon: The company has become shorthand for “disruption” across industries.
Tech companies are growing up (slowly)
The current generation of Silicon Valley giants started out with an ethos of revolution first, fixes afterward. (Remember Facebook’s “move fast and break things” motto?) But Facebook, Google and others are becoming more bureaucratic, according to our columnist Kevin Roose — and that’s a good thing.
Among the latest signs of change in their attitudes:
• Facebook’s taking down accounts related to Britain First, a far-right group accused of inciting anti-Muslim hatred, and talking about the limits on its commitment to being an open platform.
• YouTube plans to put info from Wikipedia alongside conspiracy videos (even if it didn’t tell the Wikimedia Foundation).
The tech flyaround
• Siri made its debut before it was ready, former Apple executives assert, and internal struggles at the iPhone maker have left its voice assistant behind Amazon’s Alexa and the Google Assistant. (The Information)
• As President Trump toughens his trade stance, the European Union is increasing scrutiny of U.S. tech companies. (WSJ)
• Dropbox expects its gross margins to eventually exceed 76 percent, it told potential investors at its I.P.O. roadshow. (CNBC)
• Lyft will work with the auto supplier Magna International on self-driving car systems. (NYT)
• Bitcoin is losing its buzz. (Bloomberg)
• Spotify has struggled to turn a profit: Revenue is up, but so are royalties and other costs. (FT)
• Antitrust regulators in Japan raided Amazon’s offices. (FT)
• The Air Force has split $640 million in satellite-launch contracts between SpaceX and a joint venture of Boeing and Lockheed Martin. (WSJ)
Warby Parker takes yet more steps toward an I.P.O.
The signs that the hip eyewear emporium is heading toward a public market listing (timing T.B.D.):
• It raised $75 million at a valuation of about $1.75 billion in a new round led by T. Rowe Price, which has invested before but is known for putting money in at the pre-I.P.O. stage.
• It has added Prof. Youngme Moon of Harvard Business School as an outside director.
• It expects 2018 to be its first year of profitability.
What Neil Blumenthal, a Warby Parker co-founder, told Michael:
The deals flyaround
• Parachute Health, which makes software for ordering medical equipment, has raised $5.5 million from a group of investors, including Greater New York Hospital Association Ventures and Loeb Holding.
• iHeartMedia finally filed for bankruptcy protection after reaching a deal with creditors to reorganize its $20 billion debt. (WSJ)
• Disney is restructuring to accommodate the assets it expects to acquire from 21st Century Fox. (NYT)
• Airbus said it would be nearly impossible to work with Melrose Industries if it succeeded in a hostile bid for British engineering firm GKN. (FT)
• Atlantia and ACS are buying Abertis of Spain together. (FT)
• SJW Group is reportedly in talks to buy Connecticut Water Service, creating America’s third largest publicly traded water provider. (WSJ)
• First Cobalt of Canada has agreed to combine with U.S. Cobalt; electric car batteries are raising demand for the metal. (FT)
• Nordic Capital is buying the Scandinavian payment firm Trustly, valuing it at about $867 million. (FT)
• Credit Karma is buying Penny, an instant-message bot. (Recode)
• Société Générale’s deputy C.E.O., Didier Valet, has stepped down as the U.S. investigates what role the bank had in Libor manipulation. (FT)
• The investor Josh Elman is joining the stock-trading app Robinhood as chief product officer. He will remain a partner at Greylock. (TechCrunch)
The speed read
• More stock trades are taking place in the last minutes of trading each day than ever before. (WSJ)
• Unilever will make Rotterdam in the Netherlands its sole headquarters; the other one was in London. (NYT)
• How C.E.O.s manage under pressure. (FT)
• Och-Ziff Capital Management Group is closing its European hedge fund. (Bloomberg)
• CNN is moving Chris Cuomo to evening from morning to shore up its prime-time programming. (NYT)
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