TheChek News Flow

Ex-Hyundai engineer says his tips led NHTSA to impose a record penalty on auto maker, then he learned the program to pay out whistleblowers wasn’t established

For Kim Gwang-ho, it has been 1,700 days since he first told U.S. regulators that his then-employer, Hyundai Motor Co. , was failing to address a design flaw linked to engines seizing up and at times catching fire.

Mr. Kim, a former safety engineer at the Korean auto maker, said the days he has counted will be worth it if he receives a reward he believes he is entitled to as part of a whistleblower program Congress ordered the National Highway Traffic Safety Administration to create in 2015.

The problem: The agency never set up the program.

After going public with his concerns, Mr. Kim lost his job, was sued by Hyundai for allegedly leaking business secrets and had his house outside Seoul searched by police. Now, Mr. Kim said he is unsure when or if he will be compensated for the role he says he played in an investigation that led to a record settlement NHTSA reached with the auto maker and sister company Kia Corp. last year for up to $210 million.

“I have hope that all these pains and all these hard days will be finally rewarded,” Mr. Kim, 59, said in an interview, through an interpreter.

Mr. Kim’s lawyers said they believe his payout would be at least $13.7 million, based on the formula laid out by the law, and potentially more were the companies to pay deferred penalties.

The delay of the program has frustrated both lawmakers who sponsored the original bill as well as auto-safety advocates, who say the regulatory agency has delayed implementing a powerful tool to protect people from potentially fatal vehicle defects.

A spokeswoman for NHTSA declined to comment on why the agency hasn’t yet established the whistleblower program, inaction that spanned both the Obama and Trump presidencies. She said the new administration has made the program a priority and is working on making rules for it. Meanwhile, the agency can still protect and reward whistleblowers under the 2015 law without the rules in place, she said.

To date, it hasn’t paid out any whistleblower rewards, but it has received tips and claims, she said.

The agency spokeswoman declined to comment on Mr. Kim specifically, including whether he is eligible for a reward.

Last fall, NHTSA, the top U.S. auto safety regulator, said it had found that Hyundai and Kia had delayed recalling vehicles with defective engines and provided investigators with inaccurate information about the problems. The auto makers agreed to pay $81 million in fines and potentially another $73 million and agreed to spend $56 million more on new safety procedures.

Hyundai and Kia, in their settlement with U.S. regulators, said they disagreed with the agency’s assertions and settled to resolve the issue administratively. A company spokeswoman said Hyundai is working with NHTSA and complying with the settlement terms, including implementing new safety processes.

She declined to comment on Mr. Kim’s claims regarding the company’s handling of the engine problems and his accusations that it retaliated against him.

After several high-profile scandals involving car companies’ failures to disclose defects, Congress passed the law ordering NHTSA to create a program to entice company insiders to report auto safety problems. It was meant to emulate one established by the Securities and Exchange Commission in 2011 that has paid approximately $760 million to whistleblowers for reporting securities-law violations.

The law required NHTSA to establish the program’s rules by June 2017. Under both programs, whistleblowers are eligible to receive 10% to 30% of the penalties collected from a successful investigation.

A federal agenda from last fall shows NHTSA had planned to begin the public rule-making process last month. A similar notice has been published twice a year since 2017. NHTSA’s website doesn’t mention the whistleblower program.

“This stalling and stonewalling is absolutely inexcusable,” Sen. Richard Blumenthal (D., Conn.), a co-sponsor of the bill mandating the program, said in an interview.

In March, he and another lawmaker sent a letter to Transportation Secretary Pete Buttigieg asking why rules haven’t been issued. A spokesman for the secretary said the administration has made the program a priority.

Sean McKessy, who oversaw the initial five years of the SEC whistleblower program, said clear guidelines were essential to starting it. “Otherwise, it’s just pages of statutes that can’t really get any legs under it,” said Mr. McKessy, now at whistleblower law firm Phillips & Cohen LLP.

Mr. Kim said he learned about the U.S. whistleblower law through company-provided training at Hyundai and that inspired him to come forward.

According to Mr. Kim, he was part of a team at Hyundai responsible for quality problems. Mr. Kim said his group uncovered design flaws on the company’s Theta II line of engines that he claims made them prone to serious failures.

These engines were in millions of Hyundai and Kia vehicles sold world-wide, according to company filings.

Mr. Kim said the quality division first categorized the engine failures as a high-importance safety matter in 2014. By the following June, NHTSA, which had been receiving complaints through its public database, asked Hyundai executives about the engines, documents submitted to the agency show. Company executives said they didn’t consider the failures to be a safety issue, the documents show.

The following month, Mr. Kim’s team recommended to its superiors the company recall all vehicles with the engines, he said.

Hyundai recalled some vehicles with the engines in question in September 2015. The company blamed the problem on a manufacturing process that had since been changed rather than on a design defect, according to the documents.

Mr. Kim said he felt the action was insufficient and misrepresented the scope of the problem. He said he reported his concerns to internal auditors at Hyundai and agonized over whether to go to NHTSA.

In August 2016, he flew from Seoul to Washington, D.C., and brought his daughter along to translate as he met with NHTSA investigators, he said.

Mr. Kim said he also later shared his concerns with regulators and news organizations in Korea, hoping to protect himself from retaliation.

In late October of that year, he said, Hyundai brought him before a disciplinary committee and accused him of breaching confidentiality agreements, leaking company business secrets and defaming his employer.

On Nov. 2 that year, he was fired.

Hyundai filed a criminal complaint against him weeks later, alleging he leaked business secrets and violated the company’s trust.

The following February, Korean police executed a search warrant on his home in connection with Hyundai’s complaint, he said and police documents show.

The next month, the Korean Anti-Corruption and Civil Rights Commission found Hyundai had wrongly dismissed Mr. Kim for whistleblowing and ordered him reinstated. Hyundai soon settled with Mr. Kim, who left the company with a lump-sum early retirement payment, he said. The criminal complaint against him was dismissed.

Meanwhile, Hyundai’s problems with the Theta II engines were growing costlier.

The auto-making group recalled another 1.2 million vehicles for the issue in 2017, and NHTSA opened an investigation into the company’s handling of the recalls soon after.

Hyundai and Kia settled a class-action lawsuit from owners in 2019, agreeing to cover nearly 4.2 million Theta II engines with lifetime warranties. The companies set aside roughly $760 million for the settlement and related warranty costs, according to company filings. Last October, the car makers set aside another $2.5 billion for the engine problems.

Mr. Kim’s lawyers at Constantine Cannon LLP, a firm specializing in whistleblower cases, said they have asked NHTSA to determine Mr. Kim’s possible reward now that the agency’s penalties have been announced.

They don’t know how or when the request will be evaluated without rules, they said. Says Mr. Kim: “If there’s a beginning, there must be an end.”

Railroad aims to duplicate Northeast Corridor success; critics say $80 billion plan is waste of money

WASHINGTON—The Biden administration’s plan to spend $80 billion rebuilding the nation’s railroad assets could enable Amtrak to pursue the ambitious goal of providing a rail alternative to flying and driving nationwide, as it does now on the Eastern Seaboard.

Amtrak planners have hoped for years to solve a flaw in the national network. Legacy long-distance routes travel through cities and large potential markets where the population is growing, but often at inconvenient times and with major delays caused by conflicts with freight trains, whose tracks they use.

Providing more-frequent daily service could generate gains in ridership, Amtrak contends. Critics say it is a wasteful investment in an antiquated network.

“Just because somebody built a rail line 50 years ago or 100 years ago doesn’t mean we have to pay to maintain them,” said Randal O’Toole, a senior fellow at the libertarian Cato Institute and a foe of government spending on mass transit. “We have newer technologies. They’re called buses.”

Amtrak’s plans largely follow recommendations developed over the years by state governments, and studies by the Federal Railroad Administration under both Republican and Democratic administrations that recommend building out regional rail networks in the Southeast, Southwest and Midwest.

Population growth and congestion in highways and airports should spur improvements in rail connections, the FRA reports said.

“As auto and air travel continue to grow, demands for alternative mobility solutions will likely grow,” the agency wrote in a report on developing a Southeast Regional Network released in 2020.

The same report found the potential of significant demand for improved rail connections between major urban centers in the region, while also recommending increased service on “emerging/feeder” lines to areas that have had little or no passenger rail service.

An FRA model estimated that building out more interconnected rail service in the Southwest, including some of the route upgrades Amtrak has proposed, “could alleviate demand for the highway system, avoiding up to 6 billion vehicle miles traveled per year by 2050.” The FRA’s report on the Midwest is expected to be released later this year.

Amtrak said it analyzed thousands of city pairs, winnowing those to a group of 60 that had the lowest potential operating cost, based on projected ridership and overhead. Those prospective routes were then refined in consultation with state governments, which could help fund operation of new routes, as already occurs on routes around the country.

The railway has said for years that its own analysis of rider demand shows more-frequent service between city pairs would draw millions of new riders onto the rails, especially on routes in mega-regions where the population is growing.

“The demand is clearly there for additional short-corridor service throughout the U.S., which includes both additional frequencies for existing routes and establishing new routes between city pairs,” Amtrak’s then-CEO Richard Anderson told the House Transportation committee in 2019.

The proposed $80 billion for railroads, part of Mr. Biden’s $2.3 trillion infrastructure plan, could represent the biggest infusion of federal capital in Amtrak’s 50-year history, and a chance for the company to prove that it can expand the model of its Northeast Corridor service to new cities and regions across the country.

Amtrak runs frequent regional and express train service on the Northeast Corridor, regularly beating flying and driving on trips of 200-to-300 miles. The railroad says it turns an operating profit—adjusted to exclude federal subsidies and a variety of capital expenses—on the corridor, which had ridership around historic highs before the pandemic.

Mr. Biden’s proposal “essentially gave life to an Amtrak plan to expand passenger rail service that has been brewing for the past five or six years as we restructured the company,” Amtrak Chairman Anthony Coscia said in an interview. “And now you have a White House that really wants to do something.”

Company leaders said the administration’s funding proposal also would help the railroad attack a massive backlog of maintenance and replacement projects on the 453-mile long Northeast Corridor.

Mr. Biden, who famously commuted daily on the railroad between Washington and his home in Wilmington, Del., while in the Senate, has also seized on expanding passenger rail as a way to lower carbon emissions and fight climate change. The transportation sector is the nation’s largest emitter of the pollutants that lead to global warming.

Amtrak’s priorities include a new tunnel linking New Jersey and New York City, and replacing a tunnel under Baltimore that was built shortly after the Civil War. Both are bottlenecks that limit service and contribute to delays along the Northeast Corridor.

Amtrak’s application for federal funding to help build the Hudson River tunnel was held up for years at the behest of President Donald Trump, who believed blocking the funding gave him leverage over Sen. Chuck Schumer of New York, the Senate Democratic leader, The Wall Street Journal has reported.

The Biden administration has rescinded Transportation Department guidance that was used to justify denying funds for the tunnel project. It isn’t clear if funds for the project could come through existing DOT grant programs, or through a stand-alone infrastructure package. The railroad’s leaders have said for years the Hudson River tunnel is the single greatest priority among its capital improvement plans.

Funding for both Amtrak and freight railroads—which own the majority of the tracks on which Amtrak operates outside the Northeast—also could speed up plans to operate more-frequent, shorter train routes between dense and growing cities in other parts of the country, such as Cincinnati to Detroit, or Louisville to Chicago.

Amtrak officials responded to the Biden announcement by publishing a map of the new and enhanced passenger service that they say the administration’s plan would enable.

The new service would include linking the four largest metropolitan areas in Texas, crisscrossing the upper Midwest, and a starburst of new trains emanating from Atlanta to destinations like Charlotte, N.C., Nashville, Tenn., and Montgomery, Ala.

The existing national Amtrak network serves some of those stops, but often via long-distance trains that pass through major cities at inconvenient times once a day or less. And the majority of the network outside the Northeast consists of tracks owned by major freight railroads, with whom Amtrak regularly clashes over schedule conflicts that routinely delay the long-distance passenger service.

Untangling some of those conflicts—for example, by constructing new sidings to allow freights and passenger trains to more readily overtake one another—would be essential to Amtrak’s goal of running more-frequent, shorter round trips among clusters of cities across the country.

“America needs a rail network that offers frequent, reliable, sustainable and equitable train service,” Chief Executive Bill Flynn said in a statement. “Now is our time, let’s make rail the solution.”

The day before Mr. Biden’s announcement, Transportation Secretary Pete Buttigieg joined Amtrak officials and Virginia Gov. Ralph Northam to formalize a $3.7 billion deal aimed at future ridership growth.

Under the deal, the parties will build a $1.9 billion passenger rail bridge over the Potomac River in Washington, D.C., and the state will acquire 386 miles of rail right-of-way from CSX, allowing major increases in Amtrak and commuter-rail service that would effectively stretch the southern end of the Northeast Corridor down to Richmond, Va.

Federal assistance on bringing the railroad into good repair will make more such investments possible, Mr. Coscia said.

“You can’t do that if you have all the state-of-good-repair work that has to get done,” he said.

It would also broaden the constituency for Amtrak in Congress, giving lawmakers from rural and western states reason to support funding the railroad beyond simply preserving the long-distance routes.

“They’ve been very clear they see the need for this to serve a number of different constituencies, including rural Americans,” said Sean Jeans-Gail, vice president of the National Association of Rail Passengers.

More cases expected as fraudsters exploit soaring value of digital currencies such as bitcoin

More prosecutions involving cryptocurrency scams are expected to reach the UK courts as criminals increasingly turn to cyber fraud, the director of the Crown Prosecution Service has said.

Reports of scams relating to cryptocurrency investments rose 57 per cent to 5,581 in the 12 months to December 2020, according to new data from Action Fraud, the national fraud reporting service.

In January, there were 720 cryptocurrency fraud reports, double the number of the same month last year. Victims lost an estimated £113m last year to criminals and cold-callers promoting cryptocurrency investment scams.

Max Hill QC, director of public prosecutions at the CPS, said he expected a rise in the numbers of cases involving cryptocurrency on which the CPS had to make a charging decision.

“Whilst schemes using high investment returns have been used for decades, I think we will see increasing numbers. Cases coming in are in low numbers now but my prediction is they will increase.” Hill said of cryptocurrency-related cases.

The CPS does not investigate crimes but reviews cases referred by police, decides whether suspects should be charged and then prosecutes those cases at court.

In recent years, the value of cryptocurrencies has rocketed — Bitcoin soared 300 per cent last year — attracting a flood of retail investors.

That has led to increasing numbers of criminals seeking to exploit the demand from people who might be more susceptible to get-rich-quick schemes.

In 2018, it emerged that fake websites claiming to offer cryptocurrency investments to the public were fabricating recommendations from prominent people such as Deborah Meaden from the BBC television show Dragons’ Den.

While the CPS has prosecuted a number of cases involving cryptocurrency, the numbers remain small.

Lincolnshire farmer Nigel Wright was convicted in August last year of contaminating baby food jars with metal shards as part of a £1.5m blackmail plot in which he threatened Tesco he would contaminate food unless it paid him £750,000 in bitcoin.

About 86 per cent of reported fraud was now estimated to be cyber-related, the CPS said last week as it launched its first economic crime strategy aimed at combating fraud. An estimated 800,000 people a year are now falling victim to fraud, with the problem made worse by criminals seeking to capitalise on the Covid-19 pandemic as more transactions are conducted online.

UK Finance, the banking industry trade body, said last month that almost £500,000 was lost to bank transfer fraud in 2020, where customers unwittingly transferred money to fraudsters.

As part of its strategy, the CPS, which has prosecuted 10,000 economic crime cases in the past year, plans to make greater use of technology to help review and present complicated information to juries in fraud cases.

It also wants to support a new flagship economic crime court due to open in the City of London in 2026, which will replace three other courts and bring prosecutions of fraud, economic crime and cyber crime under one roof.

Banks were eager to do business with Bill Hwang and his Archegos Capital Management — until he ran out of money.

Until recently, Bill Hwang sat atop one of the biggest — and perhaps least known — fortunes on Wall Street. Then his luck ran out.

Mr. Hwang, a 57-year-old veteran investor, managed $10 billion through his private investment firm, Archegos Capital Management. He borrowed billions of dollars from Wall Street banks to build enormous positions in a few American and Chinese stocks. By mid-March, Mr. Hwang was the financial force behind $20 billion in shares of ViacomCBS, effectively making him the media company’s single largest institutional shareholder. But few knew about his total exposure, since the shares were mostly held through complex financial instruments, called derivatives, created by the banks.

That changed in late March, after shares of ViacomCBS fell precipitously and the lenders demanded their money. When Archegos couldn’t pay, they seized its assets and sold them off, leading to one of the biggest implosions of an investment firm since the 2008 financial crisis.

Almost overnight, Mr. Hwang’s personal wealth shriveled. It’s a tale as old as Wall Street itself, where the right combination of ambition, savvy and timing can generate fantastic profits — only to crumble in an instant when conditions change.

“That whole affair is indicative of the loose regulatory environment over the last several years,” said Charles Geisst, a historian of Wall Street. “Archegos was able to hide its identity from regulators by leveraging through banks in what has to be the best example of shadow trading.”

The meltdown of Mr. Hwang’s firm had ripple effects. Two of his bank lenders have revealed billions of dollars in losses. ViacomCBS saw its share price halved in a week. The Securities and Exchange Commission opened a preliminary inquiry into Archegos, two people familiar with the matter said, and market watchers are calling for tougher oversight of family offices like Mr. Hwang’s — private investment vehicles of the wealthy that are estimated to control several trillion dollars in assets. Others are calling for more transparency in the market for the kind of derivatives sold to Archegos.

Mr. Hwang declined to comment for this article.

His is a proverbial American rags-to-riches story. Born in South Korea, Mr. Hwang moved to Las Vegas in 1982 as a high school student. He spoke little English, and his first job was as a cook at a McDonald’s on the Strip. Within a year, his father, a pastor, had died. He and his mother moved to Los Angeles, where he studied economics at the University of California, Los Angeles, but found himself distracted by the excitement of nearby Santa Monica, Hollywood and Beverly Hills.

“I always blame people who set up U.C.L.A. in such a nice neighborhood,” he told congregants at Promise International Fellowship, a church in Flushing, Queens, in a 2019 speech. “I couldn’t go to school that much, to be honest.”

He graduated — barely, he said — and pursued a master of business administration at Carnegie Mellon University in Pittsburgh. He then worked for about six years at a South Korean financial-services firm in New York, eventually landing a plum job as an investment adviser for Julian Robertson, the respected stock investor whose Tiger Management, founded in 1980, was considered a hedge fund pioneer.

After Mr. Robertson closed the New York fund to outside investors in 2000, he helped seed Mr. Hwang’s own hedge fund, Tiger Asia, which focused on Asian stocks and quickly grew, at one point managing $3 billion for outside investors.

Mr. Hwang was known for swinging big. He made large, concentrated bets on shares in South Korea, Japan, China and elsewhere, using ample amounts of borrowed money — or leverage — that could both supercharge his returns or, in turn, wipe out his positions.

He was more modest in his personal life. The house that he and his wife, Becky, bought in Tenafly N.J., an upscale suburb, is valued at about $3 million — humble by Wall Street standards. A religious man, Mr. Hwang established the Grace and Mercy Foundation, a New York-based nonprofit that sponsors Bible readings and religious book clubs, growing it to $500 million in assets from $70 million in under a decade. The foundation has donated tens of millions of dollars to Christian organizations.

“He’s giving ridiculous amounts,” said John Bai, a co-founder and managing partner of the equity research firm Fundstrat Global Advisors, who has known Mr. Hwang for roughly three decades. “But he’s doing it in a very unassuming, humble, non-boastful way.”

But in his investing approach, he embraced risk and his firm ran afoul of regulators. In 2008, Tiger Asia lost money when the investment bank Lehman Brothers filed for bankruptcy at the peak of the financial crisis. The next year, Hong Kong regulators accused the fund of using confidential information it had received to trade some Chinese stocks.

In 2012, Mr. Hwang reached a civil settlement with U.S. securities regulators in a separate insider trading investigation and was fined $44 million. That same year, Tiger Asia pleaded guilty to federal insider-trading charges in the same investigation and returned money to its investors. Mr. Hwang was barred from managing public money for at least five years. Regulators formally lifted the ban last year.

Shortly after shuttering Tiger Asia, Mr. Hwang opened Archegos, named after the Greek word for leader or prince. The new firm, which also invested in both U.S. and Asian stocks, was similar to a hedge fund, but its assets were made up entirely of Mr. Hwang’s personal wealth and that of certain family members. The arrangement shielded Archegos from regulatory scrutiny because of its lack of public investors.

Goldman Sachs, which had lent to him at Tiger Asia, initially refused to deal with Archegos. JPMorgan Chase, another “prime broker,” or large lender to trading firms, also stayed away. But as the firm grew, eventually reaching more than $10 billion in assets, according to someone familiar with the size of its holdings, its lure became irresistible. Archegos was trading stocks on two continents, and banks could charge sizable fees on the trades they helped arrange.

Goldman later changed course, and in 2020 became a prime broker to the firm alongside Credit Suisse and Morgan Stanley. Nomura also worked with him. JPMorgan refused.

By the beginning of this year, Mr. Hwang had grown fond of a handful of stocks: ViacomCBS, which had pinned high hopes on its nascent streaming service; Discovery, another media company; and Chinese stocks including the e-cigarette company RLX Technologies and the education company GSX Techedu.

Trading at roughly $12 a little over a year ago, ViacomCBS’s stock rose to about $50 by January. Mr. Hwang kept amassing his stake, people familiar with his trading said, through complex positions he arranged with banks called “swaps,” which gave him the economic exposure and returns — but not the actual ownership — of the stock.

By mid-March, as the stock moved toward $100, Mr. Hwang had become the single largest institutional investor in ViacomCBS, according to those people and a New York Times analysis of public filings. The people valued the position at $20 billion. But because Archegos’s stake was bolstered by borrowed money, if ViacomCBS shares unexpectedly reversed he would have to pay the banks to cover the losses or be quickly wiped out.

On Monday, March 22, ViacomCBS announced plans to sell new shares to the public, a deal it hoped would generate $3 billion in new cash to fund its strategic plans. Morgan Stanley was running the deal. As bankers canvassed the investor community, they were counting on Mr. Hwang to be the anchor investor who would buy at least $300 million of the shares, four people involved with the offering said.

But sometime between the deal’s announcement and its completion that Wednesday morning, Mr. Hwang changed plans. The reasons aren’t entirely clear, but RLX, the Chinese e-cigarette company, and GSX, the education company, had both spiraled in Asian markets around the same time. His decision caused the ViacomCBS fund-raising effort to end with $2.65 billion in new capital, significantly short of the original target.

ViacomCBS executives hadn’t known of Mr. Hwang’s enormous influence on the company’s share price, nor that he had canceled plans to invest in the share offering, until after it was completed, two people close to ViacomCBS said. They were frustrated to hear of it, the people said. At the same time, investors who had received larger-than-expected stakes in the new share offering and had seen it fall short, were selling the stock, driving its price down even further. (Morgan Stanley declined to comment.)

By Thursday, March 25, Archegos was in critical condition. ViacomCBS’s plummeting stock price was setting off “margin calls,” or demands for additional cash or assets, from its prime brokers that the firm couldn’t fully meet. Hoping to buy time, Archegos called a meeting with its lenders, asking for patience as it unloaded assets quietly, a person close to the firm said.

Those hopes were dashed. Sensing imminent failure, Goldman began selling Archegos’s assets the next morning, followed by Morgan Stanley, to recoup their money. Other banks soon followed.

As ViacomCBS shares flooded onto the market that Friday because of the banks’ enormous sales, Mr. Hwang’s wealth plummeted. Credit Suisse, which had acted too slowly to stanch the damage, announced the possibility of significant losses; Nomura announced as much as $2 billion in losses. Goldman finished unwinding its position but did not record a loss, a person familiar with the matter said. ViacomCBS shares are down more than 50 percent since hitting their peak on March 22.

Mr. Hwang has laid low, issuing only a short statement calling this a “challenging time” for Archegos.

Don’t count Adam Neumann out.

The disgraced former WeWork CEO may have lost his empire, but an insider told The Post that Neumann, 41, is already plotting his mysterious next business move.

“It involves what happened in the world because of the pandemic,” the insider said. “He’s got big plans and he’s waiting for the right time to announce them.”

Neumann reportedly hasn’t seen the buzzy new Hulu documentary “WeWork: Or the Making and Breaking of a $47 Billion Unicorn” that details his spectacular rise and fall as CEO of the once-hot office space startup.

The entrepreneur is portrayed in the documentary as a charismatic but deluded charlatan who convinced financial movers and shakers — from Chase Bank’s Jamie Dimon to SoftBank CEO Masayoshi Son — to mentor him and give him billions for WeWork before it all went very wrong in August 2019.

Close friends and family members have “described” the film to him but the wunderkind-turned punchline doesn’t watch or read things about himself, an insider told The Post.

Instead, he’s holed up in New York (he has properties in Greenwich Village and the Hamptons) with his wife, Rebekah, and five children, working on the “brand-new” venture.

Advocates say Japanese companies are more focused on profits, and that the country likely will benefit from a global economic recovery

After years of being shunned, Japanese stocks are getting attention from U.S. investors.

The reasons for avoiding the Tokyo stock market, which date to the late 1980s, are no longer applicable, say financial professionals, pointing to an increased focus on profits by Japanese companies and the fact that Japan is well-positioned to benefit from a global economic recovery.

“To compare now with the 1980s really is like apples and oranges,” says John Vail, Tokyo-based chief global strategist at Nikko Asset Management.

In the late 1980s, a speculative bubble pushed up stocks and real-estate prices in Japan. Meanwhile, Japanese corporate culture wouldn’t allow broken companies to fail, and shareholders were given short shrift from management in terms of things like buybacks and dividends, says Mr. Vail.

For most of the time since then, Japan’s stock market has been weak at best. Only in November 2020 did the Nikkei Stock Average, which tracks Japan’s largest traded stocks, surpass the 26489 level, a height it hadn’t reached since March 1991. In comparison, the S&P 500 index was at 390 in March 1991 versus 4019 now.

In recent months, fund investors have been plowing loads of cash into funds focused on Japanese stocks. Inflows totaled $3.1 billion in the six months through January, according to data from Morningstar, compared with net outflows of $22.8 billion in five years from August 2015 through July 2020.

The inflows have coincided with a surging Tokyo stock market. The Nikkei gained 27% over the period Oct. 1 through April 1, far more than the 19% increase in the S&P 500 over the same period, according to data from Bloomberg.

Not a Tokyo bubble?

The good news is that this recent interest in Japanese stocks doesn’t appear to be a replay of the bubble years of the late 1980s.

“I can assure you that there is no resemblance to the 1980s or 1990s in Japan except the level of Nikkei,” Mr. Vail says. For one thing, he says, corporate leaders have started to take their obligations toward shareholders more seriously, pointing to growth in earnings, stock buybacks and dividends.

According to a recent analysis by financial firm Schroders, the metric of corporate profitability known as return on equity (ROE) has started to trend higher in recent years. The company found that far more companies were producing double-digit ROE in 2019 than in 2013. In addition, there has been a general shift from lower to higher ROE, with the most common corporate ROE in 2019 being 6%-7% versus 4%-5% in 2013.

Similarly, 2021 earnings for the companies in the Japan MSCI index are expected to rise 36%, according to a recent report from Yardeni Research

Better Covid management

The renewed focus on profits in Japan isn’t the whole story. Japan’s government also has dealt with the Covid-19 pandemic well, says David Ruff, senior portfolio manager at Advisors Capital Management. Japan’s death toll per million people in the population recently totaled 73 compared with around 1,700 deaths per million in the U.S., according to the Worldometer database.

Japanese companies also are benefiting from surging exports to China, which came out of the pandemic earlier than most other countries, Mr. Ruff says. China is by far Japan’s largest export market, well ahead of the U.S.

The country’s industrial base also is prepared for the changing face of commerce. It has a high-tech sector that supplies vital components for electronic products and materials needed for greener power, says Fabiana Fedeli, global head of fundamental equities at Rotterdam-based investment management company Robeco. “Demand for chips and semiconductors has significantly increased,” she says.

Meanwhile, while some market watchers say the U.S. stock market is in bubble territory, they aren’t saying that about Japan. The Japan MSCI index recently traded at around 18 times next year’s forecast earnings, according to data from Yardeni Research, far lower than the forward-looking price-earnings ratio of 22 for the U.S. MSCI index.

Of course, Japan’s lower P/E is partly justified because Japanese companies don’t perform quite as well as U.S. companies, Mr. Ruff says. “It shouldn’t be as good because the return on equity isn’t as good,” he says.