TheChek News Flow

Gapping down
In reaction to disappointing earnings/guidance:

M&A news:

Other news:

Analyst comments:

Gapping up
In reaction to strong earnings/guidance:

M&A related:

Micron (MU) peers are trading higher in sympathy:

Other news:

Analyst comments:

Wall Street bank could install monitor as part of deal with Justice Department

Goldman Sachs Group Inc. GS -0.30% is in talks with the U.S. government to pay a multibillion-dollar fine, admit guilt and agree to ongoing oversight of its compliance procedures in order to resolve a criminal investigation into its role in a Malaysian corruption scandal.

Goldman and the Justice Department have largely agreed on a fine of just under $2 billion to settle allegations that the Wall Street firm ignored red flags while billions of dollars were looted from its client, a Malaysian government fund known as 1MDB, people familiar with the matter said.

The bank and U.S. officials have discussed a deal in which a Goldman subsidiary in Asia—not the parent company—would plead guilty to violating U.S. bribery laws, some of the people said. The discussions also involve Goldman installing an independent monitor to oversee and recommend changes to its compliance procedures, the people said.

Talks are ongoing and the outlines of a deal, which could be reached early next year, may change.

The settlement wouldn’t resolve an investigation by authorities in Malaysia, which is seeking billions of dollars from Goldman. It couldn’t be determined whether other U.S. regulators would join the settlement or pursue their own.

“Resolution discussions are ongoing, and it is irresponsible to speculate on an outcome,” a Goldman spokeswoman said.

Last week, Goldman President John Waldron told CNBC: “We don’t control the outcome, obviously. We’re one party. We have a number of people to talk to…we’re working as hard as we can to try to get it resolved sensibly.”

Representatives of the Justice Department declined to comment.

Settling with the Justice Department would clear a matter that has weighed on Goldman’s stock price. But new, tighter oversight would keep the bank under the shadow of a scandal that its chief executive, David Solomon, is eager to move past.

Goldman raised $6.5 billion for 1MDB, the abbreviation for 1Malaysia Development Bhd., much of which U.S. authorities say was stolen by a Malaysian government adviser, Jho Low, and two Goldman bankers. Prosecutors say the bank ignored warning signs about Mr. Low and the fund in pursuit of fees that eventually reached about $600 million.

One of the bankers, Tim Leissner, pleaded guilty to stealing more than $200 million from 1MDB and this week agreed to a lifetime ban from the securities industry. Mr. Leissner is cooperating with investigators, The Wall Street Journal has previously reported, and is scheduled to be sentenced next year.

The other banker, a Malaysian national named Roger Ng, has pleaded not guilty in a New York court and also faces charges in Malaysia.

Mr. Low agreed in October to forfeit more than $700 million in assets to U.S. authorities but hasn’t admitted to wrongdoing and remains a fugitive from the U.S. criminal-justice system.

Goldman has said that Messrs. Leissner and Ng, who are no longer with the bank, were rogue actors who intentionally misled their bosses and siphoned money through personal accounts out of view of the bank.

A third executive, previously reported by the Journal to be a Hong Kong-based banker named Andrea Vella, is alleged by U.S. authorities to have known about the scheme. He hasn’t been charged and remains on administrative leave from Goldman. A lawyer for Mr. Vella couldn’t be reached for comment.

At $2 billion, a 1MDB-related fine would be one of the largest levied by the Justice Department against a bank since the mortgage settlements following the financial crisis. It is money Goldman can ill-afford as it struggles to boost revenue and is spending heavily on growth initiatives. The bank doesn’t disclose its legal reserves.

Bloomberg earlier reported the possibility of a settlement of around $2 billion.

The resolution of the 1MDB matter may also hit compensation for Goldman executives. The bank’s board reserved the right to claw back pay from Mr. Solomon and his predecessor, Lloyd Blankfein, as well as other top officials, pending the outcome of 1MDB investigations.

Independent monitors, often hired from law or consulting firms, are used to ensure that companies comply with settlement terms. They were widely required, for example, in the wake of the subprime-mortgage crisis to track banks’ progress in forgiving loans to struggling homeowners.

Monitors can be expensive— HSBC Holdings PLC hired thousands of staffers to clean up its money-laundering controls after a government settlement in 2012—and could make it harder for Goldman to make acquisitions or other moves that require approval from Washington.

Still unresolved is whether Goldman would receive credit offsetting any penalty paid to the Justice Department if the bank were to pay any fine to Malaysia, the people familiar with the matter said. That country’s prime minister was swept into power on an anticorruption platform after the 1MDB scandal, for which his predecessor faces criminal charges. The former prime minister, Najib Razak, has pleaded not guilty.

Malaysia has filed criminal charges against Goldman itself, plus 17 current and former employees in its Asia offices. A Goldman spokeswoman at the time said the charges were “misdirected.”

Why aromatherapy is not to be sniffed at

Can’t sleep? Can’t concentrate? In the age of anxiety, essential oils have had a modern makeover

In the window of wellness boutique Anatome, in London’s Piccadilly, is a sign that says “Helping London Sleep”. It’s a claim that is proving attractive to stressed financiers and executives who work nearby, who are drawn in out of curiosity. The new brand offers a service where you can choose personalised aromatherapy oils to address sleep issues. Winder Ton, who runs the consultations, tells me he’s seen a pent-up banker in tears (and probably in need of more formal therapy) as he explained the healing properties of frankincense, and an insomniac TV producer declaring the oil a soporific saviour.

The process of choosing an oil is a little strange. You climb to a mezzanine, fill in a questionnaire about sleep quality, then decide “which best describes your mental state?” in response to a selection of cards depicting mazes, tangled strings and mountains (and a rather disconcerting hanging-man graphic). It’s Myers-Briggs meets Tarot reading with added herbal tea. I was recommended Seaweed Essential Sleep oil, with French, English and Himalayan lavender, intended to improve restless sleep — and, to my surprise, I think it works. It could well be the association of the oil with sleep, and the ritual rather than the stuff itself, but that’s good enough for me.

Founded in 2018 by Brendan Murdock, Anatome epitomises the new face of aromatherapy. It taps into the wellness, green, holistic, self-care space we find the beauty industry moving into these days. Once, aromatherapy was decidedly hippyish; now, it’s had a makeover to reflect the preoccupations of 2019 and appeal to men too. And, with the new focus on mental health, it’s being presented as a solution to stressed-out, unfocused, sleepless urban lives. Want a bit of “support and protection”? Or some “energy and strength”? Anatome has an oil for that and it’s available on Mr Porter in a handy roll-on. Compared with the rise of crystals and astrology, both of which are flourishing thanks to demand for quasi-spiritual self-care, aromatherapy seems positively pragmatic.

Murdock says: “The majority of our customers might see aromatherapy as a bit dowdy but I’ve tried to come up with formulas that connect with people and their modern-day challenges.” Anatome runs workshops with Soho House and visits companies near St James to talk about issues affecting sleep, stress and focus.

At Net-a-Porter, global beauty director Newby Hands says: “We have noticed an increase in the popularity of aromatherapy, and sales of aromatherapy-based brands are up around 30 per cent based on the same time last year.” She adds that “our woman is investing more than ever in her self-care rituals. Bath and body is one of our most highly replenished and fastest-growing categories in beauty, and aromatherapy and essential oils account for a large portion of that growth.”

At Neom Organics, its Wellbeing Pod, a diffuser that puffs out essential oil-scented vapour, sold out within weeks of its launch in August 2018, and the company’s customer base is getting younger. Diffusers are becoming as obligatory a home accessory as the criss-cross Berber rug and green velvet sofa. At aromatherapy company Tisserand, sales have risen by 30 per cent since last year and its number of products has increased by 72 per cent. Some of my favourite new discoveries are the Aromatherapy Associates De-Stress muscle bath and shower oil, £47 for 55ml, net-a-porter.com, and the Votary lavender and camomile pillow spray, £35, votary.co.uk.

Arabella Preston, founder of natural beauty company Votary, thinks the image of aromatherapy has changed because “naturals are now seen as luxury”. Preston has opened an “aroma atelier” at the Rosewood Hotel in Hong Kong where you can get a bespoke body oil blended to help with jet lag or sleep. She believes that aromatherapy can have a powerful effect on mood, because our sense of smell is so linked to emotions. She says, “the classic one is lavender, which most people associate with sleep and relaxation”. For Preston, aromatherapy is about tapping into “a sense of control, and controlling your environment, anything you can do to make you feel calm”, and she has just created three roll-on ‘Feelings’ fragrances evoking states of mind. Desire, which smells of wild rose, orange and almond blossom, suggests dawn on a hot summer’s day and because it’s all natural, it’s good for sensitivity.

When a friend went on a daunting work trip, she stocked up on Valium. Conversely, ahead of flying to the whirlwind of Milan Fashion Week, I opted for an emergency set of essential oils from Tisserand, offering “Happy Vibes” and “Real Calm”. Anyone who saw me in action might contest whether they had any effect, but inhaling deeply like a Victorian lady at a seance at least slows down the breathing, which induces calm. Call it the ultimate panic buy.