9to5: Tech regulation is coming, says vice-chair of Senate Intelligence Committe

Tech regulation is coming, says vice-chair of Senate Intelligence Committee - http://bit.ly/2wP5xjn

The vice-chairman of the Senate Intelligence Committee has suggested that regulation of the tech industry is now inevitable.

Sen. Mark Warner’s remarks were made during and after the testimony of Facebook COO Sheryl Sandberg and Twitter CEO Jack Dorsey to the committee regarding their failure to prevent state-sponsored interference in the 2016 presidential election and their planned countermeasures in the run-up to the midterms …

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CNET reports that while Warner didn’t explicitly threaten legislation during the hearing, he has proposed at least two forms of regulation.

“The era of the wild west in social media is coming to an end,” said he said during testimony Wednesday. “Where we go from here is an open question” […]

Warner, for his part, has offered several policy prescriptions, such as forcing companies to make it easier for users to download and bring their data from one social network to another. He’s also pitching The Honest Ads Act, which would require tech companies to disclose who pays for political ads, just like radio and television stations already have to.

Warner also said that Google ‘made a huge mistake’ when Alphabet CEO Larry Page refused to attend the hearing.

All that will do is simply raise questions about certain areas beyond even Russian interference, that people want to ask questions on.

Warner acknowledged First Amendment problems in seeking to control what can and can’t be posted on social media platforms, but said that problems do have to be tackled.

That’s a healthy debate. We have First Amendment rights in our country, but you can’t scream fire in a crowded theater. So, I think even the most zealous advocates of free speech, would realize there has to be some guard rails so you don’t scream fire, you don’t put up a sign that says go kill your neighbor if he or she’s a Muslim.

Further up the food chain, do you allow a site to go out and say that Sandy Hook was all a hoax and I’m going to go ahead and print the parents’ addresses so that they are all harassed and threaten violence and many of these families have had to move and change their identity?

He said that companies needed to act, the government also has a responsibility.

I don’t think we can completely rely upon simply the goodwill of the corporate shareholders or the management of these companies.

Former Facebook security chief Alex Stamos repeated comments that the US response to interference in the 2016 election has been inadequate and opened the door to more interference in November’s midterms.

The security of campaigns and elections hasn’t improved over the last two years, which could spell trouble for the 2018 midterm elections and beyond.

“In most cases, actually throwing an election one way or another is going to be very difficult for a foreign adversary,” he said. “Throwing any election into chaos is totally doable right now.”

The CIA, FBI and NSA have all concluded that Russia influenced the 2016 presidential election.

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance
:

  • OKTA +14.9%, FIVE +11.2%, MRVL +9.7%, MCFT +9%, PANW +6.6%, FNSR +5.5%
  • AVGO +5.1% (also upgraded to Buy from Neutral at BofA/Merrill)
  • PSDO +5.1% (also announces negotiated share repurchase and quarterly dividend)
  • NX +4.6% (also doubles quarterly dividend to $0.08/sh; authorizes a $60 mln share repurchase plan), DOMO +2.2%, GCO +1.1%
  • COST +0.8% (reports Aug comps of +9.2%, core +8% vs +7.3%/core +2% year ago and +8.3%/core +6.4% last month), FAST +0.5% (light volume)

Cybersecurity names are higher following Palo Alto Networks (PANW) earnings:

  • HACK +1.2%, CYBR +1%, FTNT +0.6%, FEYE +0.5%, .

Semiconductor names are modestly rebounding in early trade (ETFs SMH +0.4%, SOXX +0.1%):

  • MU +1.2% (closed nearly 10% lower on the day Thursday), NXPI +0.8%, CY +0.6%, SWKS +0.2%

Other news:

  • ZEAL +11.6% (ticking higher; sells royalty streams and milestones for USD 205 million to Royalty Pharma)
  • PRQR +5.9% (prices underwritten public offering of 5.75 mln ordinary shares at $15.75 per share)
  • NUE +2.7% (approved the repurchase of up to $2 bln of common stock)
  • MAT +2.6% (announces creation of Mattel Films, a new theatrical film division)
  • DRNA +2.5% (prices underwritten registered public offering of 7,680,492 shares of its common stock at $13.02 per share)
  • CGC +2% (ongoing volatility; Cramer suggested buying the pullback on Thursday's Mad Money)
  • CPB +1.6% (WSJ reporting that Third Point may launch proxy battle to overthrow board)
  • AAOI +0.5% (following FNSR results)
  • DK +0.4% (expects to complete $100 mln repurchase plan in Q3)

Analyst comments:

  • OCUL +4.6% (initiated with Overweight at Piper Jaffray)
  • ARWR +3.2% (upgraded to Buy at B. Riley FBR)
  • MNLO +2.9% (initiated with Overweight rating and $25 price target at Cantor)
  • ZGNX +1.4% (initiated with a Buy at B. Riley FBR)
  • TRTN +0.9% (coverage transferred and upgraded to Outperform from Mkt Perform at Keefe Bruyette)
  • BIDU +0.3% (initiated with Positive rating and $325 tgt at Susquehanna),

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up: OKTA +14.9%, ZEAL +12.5%, FIVE +11.2%, MRVL +9.7%, MCFT +9%, PANW +6.6%, FNSR +5.5%, AVGO +5.1%, PSDO +5.1%, OCUL +4.6%, NX +4.6%, ARWR +3.2%, NUE +2.7%, MAT +2.6%, DOMO +2.2%, DRNA +1.9%, CGC +1.8%, MU +1.7%, CPB +1.6%, ZGNX +1.4%, HACK +1.2%, GCO +1.1%
  • Gapping down: EGAN -19.4%, GME -5.2%, DB -2.9%, LASR -2.4%, HOME -1.6%, TSLA -1.6%, FB -0.9%

FT : Opioid billionaire granted patent for addiction treatment

Opioid billionaire granted patent for addiction treatment
Purdue owner Richard Sackler listed as inventor of drug to wean addicts off painkillers

A billionaire pharmaceuticals executive who has been blamed for spurring the US opioid crisis stands to profit from the epidemic after he patented a new treatment for drug addicts.

Richard Sackler, whose family owns Purdue Pharma, the company behind the notorious painkiller OxyContin, was granted a patent earlier this year for a reformulation of a drug used to wean addicts off opioids.

The invention is a novel form of buprenorphine, a mild opiate that controls drug cravings, which is often given as a substitute to people hooked on heroin or opioid painkillers such as OxyContin.

The new formulation as described in Dr Sackler’s patent could end up proving very lucrative thanks to a steady increase in the number of addicts being treated with buprenorphine, which is seen as a better alternative to other opioid substitutes such as methadone.

Last year, the leading version of buprenorphine, which is sold under the brand name Suboxone, generated $877m in US sales for Indivior, the British pharmaceuticals group that makes it.

Dr Sackler’s patent, which was granted by the US Patent and Trademark Office in January, acknowledges the existence of the opioid crisis, which claimed more than 42,000 lives in 2016.

“While opioids have always been known to be useful in pain treatment, they also display an addictive potential,” the patent states. “Thus, if opioids are taken by healthy human subjects with a drug-seeking behaviour they may lead to psychological as well as physical dependence.”

It adds: “The constant pressures upon addicts to procure money for buying drugs and the concomitant criminal activities have been increasingly recognised as a major factor that counteracts efficient and long-lasting withdrawal and abstinence from drugs.”

However, the patent makes no mention of the fact that Purdue Pharma has been hit with more than a thousand lawsuits for allegedly fuelling the epidemic — allegations the company and the Sackler family deny.

“It’s reprehensible what Purdue Pharma has done to our public health,” said Luke Nasta, director of Camelot, an addiction treatment centre in Staten Island, New York. He said the Sackler family “shouldn’t be allowed to peddle any more synthetic opiates — and that includes opioid substitutes”.

Buprenorphine is already prescribed to opioid addicts in tablets or thin film strips that dissolve under the tongue in less than seven minutes. These “sublingual” formulations are used to stop drug abusers from hoarding a stockpile of pills they can sell or use to get high at a later date.

The patent describes a new, improved form of buprenorphine that would come in a wafer that disintegrated more quickly than existing versions — perhaps in just a few seconds.

The original application was made by Purdue Pharma and Dr Sackler is listed as one of the inventors alongside five others, some of whom work or have worked for the Sackler’s group of drugmaking companies.

“Drug addicts sometimes still try to divert these sublingual buprenorphine tablets by removing them from the mouth,” the patent application stated. “There remains a need for other . . . abuse-resistant dosage forms.”

In June, the Massachusetts attorney-general filed a lawsuit against Dr Sackler and seven other members of the Sackler family, which accused them of engaging in a “deadly, deceptive scheme to sell opioids”.

Purdue and the family deny the allegations. The company points out that OxyContin was, and still is, approved by the US Food and Drug Administration.

“We believe it is inappropriate for [Massachusetts] to substitute its judgment for the judgment of the regulatory, scientific and medical experts at FDA,” it said in a recent statement to the Financial Times.

Andrew Kolodny, a professor from Brandeis University who has been a vocal advocate for greater use of buprenorphine to battle the opioid crisis, said the idea Dr Sackler “could get richer” from the patent was “very disturbing”. He added: “Perhaps the profits off this patent should be used to pay any judgment or settlement down the line.”

Earlier this week, Purdue donated $3.4m to boost access to naloxone, an antidote given to people who have just overdosed on opioids.

The company has not yet filed a motion to dismiss the Massachusetts lawsuit, although it has until the end of Friday to do so.

WSJ : Danske Bank Money-Laundering Probe Involves $150 Billion of Transactions

Danske Bank Money-Laundering Probe Involves $150 Billion of Transactions
Transactions uncovered at the bank’s Estonian branch highlight the growing concern about illicit money flows from the former Soviet Union

Investigators at Denmark’s largest bank are studying around $150 billion of transactions that flowed through its Estonian outpost between 2007 and 2015 as part of an internal money-laundering probe, according to people familiar with the matter.

Much of that figure, which dwarfs Estonia’s total deposits, came from companies with ties to Russia and the former Soviet Union.

Danske Bank DNKEY 1.87% has been criticized by its regulator for lax oversight of illicit money flows. The bank’s investigators haven’t determined if all $150 billion handled by non-Estonian entities should be deemed suspicious. But such a large flow of money suggests that roughly $8 billion of suspected money-laundering transactions previously reported by a Danish newspaper could grow higher.

The $150 billion figure, which has been presented to the bank’s board of directors, is a substantial sum considering Estonia’s entire banking system reports total deposits of €17 billion ($19 billion). Even in the context of Russia, the suspected source of some of the funds, the figure would represent more than a year’s worth of the country’s corporate profits. The flows would have stayed in the branch for only a short time before leaving Estonia, according to a person familiar with the investigation, so wouldn’t fully show up in official statistics.

“Any conclusions should be drawn on the basis of verified facts and not fragmented pieces of information taken out of context,” Danske Bank Chairman Ole Andersen said in a statement. “As we have previously communicated, it is clear that the issues related to the portfolio were bigger than we had previously anticipated.” The bank says the results of its probe are being finalized.

Danske’s Estonian branch is the subject of criminal investigations in Denmark and Estonia, prosecutors in the countries said. The Danish Financial Supervisory Authority reprimanded the bank for weak controls in May and ordered Danske to hold about $800 million more in capital, but didn’t issue a fine.

The problems at Danske highlight the growing concern among authorities about how illicit money flows—especially from Russia—are channeled through European-regulated banks to the West.

Shell companies, including many registered in the U.K., controlled most of the accounts in question, and many of the accounts had links to people in Russia and former Soviet Union countries, people familiar with the matter said. The U.K.’s Financial Conduct Authority isn’t probing the bank, according to a person familiar with the matter.

Estonia, a former Soviet Republic of 1.3 million people, became a European Union member in 2004 and joined the euro in 2011. Like its Baltic neighbor Latvia, it quickly became a way station for funds from other former Soviet states.

The U.S. Treasury has expressed frustration with European authorities over money laundering. In February, the Treasury declared Latvia’s ABLV bank an “institutionalized money laundering” operation where weapons dealers and corrupt politicians from former Soviet Union countries sent their money into Europe. ABLV denied knowingly laundering money and later collapsed.

At Danske, clients would typically move funds among several companies with accounts at its Estonia branch before transferring the money to accounts in banks in Turkey, Hong Kong, Latvia, the U.K. and other countries, one of the people familiar with the investigation said.

Danske’s management dragged its feet dealing with the issue, according to a report filed by Danish regulators this year, ignoring complaints from correspondent banks and internal whistleblowers. Estonian regulators complained to Danish counterparts as early as 2012 and compiled a 200 page report in 2014 detailing the local branch’s extensive failures to obtain even basic information about the source of its clients’ income.

“There were many red flags,” said Kilvar Kessler, chairman of the management board of the Estonia’s banking supervisor, the Finantsinspektsioon.

It was only after another bank refused to deal with Danske’s Estonian unit that the bank shut down “non resident” Estonian accounts in 2015.

Danske Chief Executive Thomas Borgen was in charge of international banking—including in Estonia—during part of the period under investigation. He was promoted to run the bank in 2013. He declined to comment.

Denmark’s Berlingske newspaper earlier reported around $8 billion of illicit money went through the Estonian branch. The Financial Times reported this month that some $30 billion flowed through the Estonian branch in the year 2013.

Danske’s investigation is overseen by the bank’s legal counsel and assisted by forensic accountants at PricewaterhouseCoopers LLP and consultants at Ernst & Young LLP. Both firms didn’t immediately respond to requests for comment. Promontory Financial Group, a unit of International Business Machine Corp. , and Palantir Technologies Inc., also helping in the probe, declined to comment.

Such large sums were able to slip by European regulators’ watch for years largely because of a series of design flaws in the Continent’s anti-money-laundering systems, said James Oates, the founder of Cicero Capital, a financial adviser in the Estonian capital of Tallinn.

“Everybody was looking the other way because they thought they were covered, and it turns out they weren’t,” said Mr. Oates.

Danske Bank’s Estonia branch isn't directly supervised by the European Central Bank, which in any case lacks the authority to investigate money-laundering cases. Estonian authorities, meanwhile, say that because Danske operated as a branch—and not a subsidiary with a legal entity based in Estonia—they had limited authority and incomplete information.

Parent bank Danske said in a September 2017 statement that the Estonia branch “operated very much as an independent unit, with its own systems, procedures and culture regarding anti-money-laundering measures.”

FT : Why Dana Lixenberg’s portraits of Tupac and Biggie live on

Why Dana Lixenberg’s portraits of Tupac and Biggie live on
Ekow Eshun talks to the Dutch photographer about her stripped-down approach to celebrity


Not long after the rapper Tupac Shakur was murdered in 1996, a spray-painted mural appeared in tribute to the star on a wall in Manhattan’s Lower East Side. The memorial featured a portrait of Shakur, who had been gunned down in a drive-by shooting, looking wearied but noble, a victim of gun violence but still unbroken — still a hero to the anonymous artist behind the painting.

The mural was based on an image of Shakur by the Dutch photographer Dana Lixenberg, who says she felt “very proud” when she first came across the painting. “I was glad they’d used it and that the image resonated with his fans.”

Lixenberg had photographed the rapper in 1993 at a pivotal point in his life. Aged 22, Shakur was one of America’s most high-profile young stars. He’d scored a platinum album and made a hit movie with Janet Jackson already that year. But he’d also racked up a number of arrests centred on disturbingly violent incidents, including taking a swing at another rapper with a baseball bat, beating up a film director and allegedly shooting two off-duty police officers during a traffic dispute (they survived and the charges were later dropped). In 1994, he was convicted of sexual assault. Despite all this, Shakur was adored by his fans as an artist of rare sensitivity. His music was angry and pugnacious. But it also reflected the pain and uncertainty of life for those born young, black and poor in America.

Lixenberg’s portrait captures him solitary and pensive. A jewelled cross hangs from his neck and with his sharp cheekbones and thick eyelashes, he has a captivating, almost feminine beauty and a vulnerability that feels all the more poignant in light of his untimely death.

That the image should become the inspiration for the mural in Manhattan after his killing struck Lixenberg as fitting. “There’s a kind of mood in it that’s especially moving because he’s no longer alive,” she says. Still, the photographer assumed its use would be a one-off, as the grief of his fans faded with time.
For a long period, that’s how it stayed. But about three years ago, Lixenberg began to notice an increasing number of drawings, paintings and screen prints of Shakur by fans circulating online that used the photo as their source material. There were murals in Madrid, Melbourne, Cardiff and Kunming, China. There were even devotees who showed off biceps emblazoned with tattoos based on her picture.

Shakur hadn’t vanished from memory after his death. Quite the opposite. More than two decades on, the rapper remains highly visible in pop culture. In large part, that’s to do with the deluge of posthumous recordings released by his estate, not to mention a recent Hollywood biopic and a Broadway musical about his life. But it’s also intriguing to wonder whether the way he is remembered — as a doomed, romantic poet — has been shaped by Lixenberg’s portrait. The photographer says she has watched with “fascination at the different ways so many people have embraced the image”. She is less sanguine, however, about attempts to exploit the picture for profit. In 2015, Lixenberg began legal proceedings for copyright infringement against some of America’s biggest retailers, including Macy’s, Urban Outfitters, Target and Forever 21, after she discovered they were selling T-shirts and other goods bearing the portrait, produced by a merchandising company called Bioworld. When challenged, they questioned her ownership of the image. And then argued that even if the picture was hers, it was not a defining feature in the overall design of their clothes, but only an incidental element. The case continued back and forth for a gruelling two years before the companies finally reached an amicable resolution with Lixenberg.

Next week, a new exhibition of the photographer’s work goes on show in Amsterdam. The Shakur image will be displayed for the first time in a gallery. Its presence offers Lixenberg a chance to reassert the photo’s value as an artwork rather than a piece of fan iconography. The exhibition itself is also a reminder of Lixenberg’s abilities as a portraitist.

Born in 1964 in Amsterdam, Lixenberg trained as a photographer in the Netherlands and London and moved to New York in 1990. The works in the show are mainly drawn from editorial commissions for US magazines in the 1990s and 2000s. Her subjects are contemporary greats such as Brian Wilson, Al Green, Iggy Pop, Puff Daddy, Leonard Cohen, Mary J Blige and Elmore Leonard. Such figures, with years of maintaining their public personas, make tricky subject matter for a photographer searching for depth instead of surface. Lixenberg shoots them in studiedly neutral settings, such as bland hotel rooms, where there is no escaping the candid scrutiny of her lens. Shorn of the trappings of fame, her portraits acquire a thrilling intimacy.

Here’s Allen Ginsberg in the tiny, beat-up kitchen of his East Village apartment, a portrait of Walt Whitman staring down over his shoulder; Jay-Z wearing a royal blue bathrobe, clutching a TV remote control and delivering a mighty yawn; Bobby Brown passed out asleep on a couch. It’s as if she has tiptoed in on her subjects and caught them involved in nothing more than the private business of being. “I’m less interested in the image people like to present of themselves than finding what’s going on with someone that’s not so tangible,” says Lixenberg.

The only star in her firmament that looks ill at ease is Donald Trump, who is photographed in 1998, in the rococo lobby of Trump Tower, coiffured, suited and standing stiffly to attention, as if warding off the peril of revealing a glimpse of his off-duty self.

Lixenberg first developed her aesthetic approach, which she describes as “stripped down and de-sensationalised”, in 1992. A Dutch magazine had sent her to Los Angeles to photograph the city after the Rodney King riots. She returned with a series of portraits taken in Imperial Courts, a housing project in Watts, whose low-income African-American residents were the kind of people often stereotyped in the press as criminals or as welfare-dependent.

Lixenberg spent weeks getting to know them. Rather than render the residents as ciphers of a social problem, she sought “to expose the charismatic power” of the people she met, in the process crafting photos of extraordinary nuance and empathy. “I was very aware of how the media was representing this community. I felt compelled to look behind that and to make images that captured a kind of beauty I saw there.”

Lixenberg has returned to Imperial Courts many times since then to continue taking pictures of the residents. Last year, she won the prestigious Deutsche Börse Photography Prize for a project that now spans almost a quarter of a century.

Her new show is dedicated to the late George Pitts, founding photo editor of Vibe, a music and lifestyle magazine created in the early 1990s by Quincy Jones, the legendary music producer. Vibe was a stylish, sophisticated title — a Vanity Fair for the hip-hop generation — that helped establish stars such as Puff Daddy, Snoop Dogg, Dr Dre, Lauryn Hill, Missy Elliott and Will Smith as dominant cultural forces in a modern, demographically diverse America. Pitts was an astute and talented editor.

Catching sight of the early Imperial Courts photos, he ran a portfolio from the series in one of the first issues of the magazine. Commissions followed for her to shoot on-the-rise artists such as Jay-Z, Lil’ Kim and Aaliyah. Pitts wanted her approach to inform the whole of Vibe. Her work, he noted, “helped the magazine develop its visual tone, and influenced the way countless magazines visually approached urban experience”.


It was Pitts who sent Lixenberg to photograph Shakur for a Vibe feature. He also commissioned what became another indelible hip-hop image that is featured in the exhibition — a portrait that Lixenberg took of the rapper Notorious BIG, also known as Biggie Smalls.

Biggie conjured richly imagistic, mordantly funny rhymes about his rise from corpulent teenage drug dealer on the streets of Brooklyn to wealth, fame and unlikely status as a sex symbol. In Lixenberg’s portrait, we see him in Versace shades and a luridly patterned jumper thumbing through a thick wad of $50 bills. The photo is simultaneously a celebration and satire of the rapper’s image as a money-hungry hustler with an appetite for designer labels.

As with her photo of Shakur, the picture has acquired a vigorous afterlife. Its unauthorised appearance on T-shirts formed part of Lixenberg’s copyright infringement case. And there are scores of often comic fan artworks and memes putting famous figures in the sweater and shades, from Papa Smurf and Bart Simpson to Marilyn Monroe and Donald Trump.

Biggie was shot dead less than a year after Shakur, at the height of a toxic rivalry between their respective East and West Coast hip-hop camps. For Lixenberg, their photos form the heart of her exhibition, reuniting two figures whose loss is still keenly felt by fans. And offering a reminder too that for an image to become ubiquitous, it first has to be unique. “In all the copies you see on the T-shirts, you don’t get the detail of the photo,” says Lixenberg. “But when you get close to the print, it’s quite spectacular. There’s a level of depth and detail and richness that you see. It’s not like anything else.”

Dana Lixenberg’s ‘American Images’ exhibition runs at Grimm Frans Halsstraat, Amsterdam, from September 15 to October 27; grimmgallery.com

Her book “Tupac/Biggie” is published this month; romapublications.org

WWD : Rimowa Reveals First Campaign, Signs Roger Federer as Ambassador

Rimowa Reveals First Campaign, Signs Roger Federer as Ambassador
Rimowa is the first LVMH brand to take a "non-paid print policy" in its advertising activities.


Rimowa will unveil today its first global advertising campaign in its 120-year history.

The German brand, purchased by LVMH Louis Vuitton Moët Hennessy in 2016, has signed tennis legend Roger Federer for the campaign. It marks the start of Rimowa’s two-year contract with Federer, who will also participate in various activations for the company. Rimowa declined to disclose the terms of the Federer deal.

Joining the world number-two player in the campaign are designer Virgil Albloh, model Adwoa Aboah, jewelry designer Yoon Ahn and chef Nobu Matsuhisa.

Titled “No One Builds a Legacy by Standing Still,” the campaign sees its protagonists on various journeys, exploring how travel can enable success, knowledge and savoir faire.

In mulling how to tackle its first advertising concept, Rimowa has taken a “non-paid print policy,” becoming the first LVMH subsidiary to do so.

“We want to be a forward-thinking brand and explore different types of media. Our chief executive officer [Alexandre Arnault] believes in the strength of digital and we feel the digital landscape is a better way to tell a story,” said Rimowa chief brand officer Hector Muelas.

The company will not advertise in magazines, and only took a one-off placement in an undisclosed newspaper to mark its campaign launch. Instead, ads — taking the form of still images as well as produced films — will appear on social media, on billboards, in cinemas, on Hulu and YouTube and on traditional media companies’ web sites. The company will also stage night projections in New York and Los Angeles.

Rimowa chose its 120th year to release its first campaign, partially because of the LVMH acquisition and also due to the global rise of experiential travel.

“There is an increase in the number of travelers, which is resulting in a changing of our behavior. As a consequence, luggage is changing, too. It used to be seen as a functional object and now more people want their suitcases to convey something. Suitcases are now part of the system of communication for a traveler,” said Muelas.

In a June interview with WWD, Arnault said of the brand, which clocked 440 million euros in annual sales at the time of its acquisition: “My vision is to achieve very good profitability within three years. That profitability will allow us to reach the target of 1 billion euros in revenues. So I don’t expect to see a very strong rise in sales, but we will have an increase in profitability, together with a healthy increase in sales through our own stores and e-commerce sales, rather than wholesale.”

A U.S. e-commerce platform web site is expected to launch in October.

WWD : Pinault Family’s Artemis Eyes a Stake in Farfetch

Pinault Family’s Artemis Eyes a Stake in Farfetch
Artemis is the Pinault family investment arm, which controls Kering.

Global online luxury marketplace Farfetch has set a price range for its shares of $15 to $17, but more interestingly, it said in a regulatory filing Wednesday evening that Artemis, the investment arm of France’s Pinault family, has indicated an interest in purchasing a stake in the company through its sale of shares.

Artemis controls luxury conglomerate Kering. The French investment firm has only expressed an indication of interest, and has not signed any binding agreement or commitment to purchase shares. Consequently, Artemis could decide to purchase “more, less or no Class A ordinary shares in this offering,” the filing with the U.S. Securities and Exchange Commission said, adding that the underwriters could “determine to sell more, less or no shares to Artemis.”

The Pinault company expressed an interest in buying up to $50 million in Class A ordinary shares. At the midpoint of the pricing range, that would represent 3.1 million shares. The initial public offering prospectus said Farfetch is selling 37.5 million Class A shares. The Class B ordinary shares are not being sold in the IPO, and the company’s founder and chief executive officer José Neves is the beneficial owner of those shares. Through his Class B holdings, Neves would control 78 percent of the voting power of the firm’s outstanding shares following completion of the IPO. The rights of the holders of Class A and Class B shares are identical, except for voting and conversion rights.

In Wednesday’s filing, Farfetch said it plans for trading in its shares to begin on the Big Board on Sept. 21. Using the midpoint of the pricing range, the global luxury marketplace firm would raise $600 million and have a market value of between $4.2 billion to $4.9 billion.

The London-based firm made its intentions to go public known in a regulatory filing with the Securities and Exchange Commission on Aug. 20. The shares will trade under the symbol FTCH. The net proceeds from the IPO will be used to “fund growth and other general corporate purposes, including possible acquisitions,” Farfetch said. The company in May 2015 acquired British fashion and luxury goods boutique Browns.

In its prospectus, the company said that as of June 30, the platform “connected over 2.3 million marketplace consumers in 190 countries to over 980 luxury sellers.” The company said the average order value for the six months ended June 30 was $622.10. Further, the platform provides consumers with access to more than 3,200 different brands. Retailers represent about two-thirds of the sellers, with brands comprising the remaining one-third.

The filing also said 98 percent of the retailers that sell on the site have “entered into an exclusive relationship with us.” Farfetch has been spearheading partnerships with major luxury brands that include Burberry and Chanel. The marketplace platform is helping Burberry expand its distribution, and with Chanel it is helping the brand incorporate digital features in its physical stores. Both are utilizing Farfetch’s Store of the Future concept to link online and off-line retailing.

The company relies on a revenue-share model, taking a commission on sales and related income from those transactions. For the six months ended June 30, the loss widened to $68.4 million, or $1.42 a diluted share, from a net loss of $29.3 million, or 75 cents a year ago. Revenues increased 55 percent to $267.5 million from $172.6 million. For the year ended Dec. 31, 2017, the company posted a loss of $112.3 million, or $2.62 a diluted share, on revenues that rose 59.4 percent to $386 million.

Neves founded the company in 2008. Farfetch scored a $397 million investment from JD.com and has been making a big push into the Chinese market. Last year, it introduced 90-minute delivery services in Shanghai, Beijing and Hong Kong. Farfetch also has a strategic relationship with Chalhoub Group for the Middle East.

The prospectus noted that Kadi Group Holding Ltd., an existing shareholder and affiliate of JD.com, also indicated plans to purchase — under certain conditions — additional Class A shares from the offering in an amount that would give it one-third of the Class A representation to maintain its current ownership percentage.

WSJ : Emerging-Market Stocks Enter Bear Territory

Emerging-Market Stocks Enter Bear Territory
A rising dollar and higher U.S. interest rates are pressuring stocks, bonds and currencies in developing economies

Emerging markets tipped into bear territory on Thursday, marking investors’ retreat from risky assets amid growing concerns about the outlook for the global economy.

The MSCI Emerging Markets Index’s 0.3% decline Thursday, led by selloffs in Russia and the Philippines, pushed that gauge of stocks in poorer countries 20% below its recent peak, the common definition of a bear market. The drop deepened a swoon that began last month with sharp falls in the shares and currencies of Turkey and Argentina, both of which are facing domestic economic and political crises.

The emerging-markets decline underscores the changing dynamics evident across financial markets, which have benefited from years of central bank stimulus and recently from a period of synchronized global growth but are now facing challenging conditions.

Tightening monetary policy, along with an upsurge of nationalism that has hampered global trade, is exacerbating the stresses in many developing countries, prompting investors to scramble to distinguish economies able to weather the storm from those too feeble to cope.

While U.S. stocks remain near records and signs of contagion are few, investors are closely watching the rout in emerging markets for signs that it is spilling over into the assets of developed countries.

“My fear of contagion is that right now the sentiment towards the whole emerging-market spectrum is very fragile,” said Mario Castro, a Latin America currency strategist at Nomura.

Threading these economies together is their use of the dollar to borrow funds. When the U.S. economy looks to be in much better health than the rest of the world and the Federal Reserve lifts interest rates, pushing the greenback higher, upheaval often follows in the developing world.


Emerging markets have also been hit hard by concerns that tariffs applied by the U.S. and China on each others’ goods could prompt further protectionist moves and upset global trade.

The Shanghai Composite Index has fallen 24% from its peak in January, while the yuan is down nearly 7% since June.

The recent bout of selling was partly triggered last month by sharp declines in the Turkish lira, which is down by more than 42% this year, and later the Argentine peso, which has fallen by around 50%. Elsewhere, the Indian rupee reached its weakest-ever levels this week, and the Indonesian rupiah is trading around two-decade lows.

This is neither a string of unrelated blowups nor a meltdown in which contagion spreads by panic selling moving from nation to nation. It is somewhere in the middle, creating both dangers and opportunities for investors.

Many markets face similar issues: While U.S. manufacturing output probably grew at its fastest in 14 years in August, according to Institute for Supply Management surveys, a poll of purchasing managers in manufacturing firms around the world, published by JPMorgan and IHS Markit , showed the slowest output growth in nearly two years.

Raw-materials prices have also faltered, with the Bloomberg Commodity Index falling nearly 10% since its peak in May. That puts pressure on major exporters of commodities other than oil, such as Brazil, Chile and Indonesia.

Moreover, many investors buy emerging-market assets in broad funds, rather than country by country. So when they reduce exposure, developing markets can be hit all at once.

“There are a lot of people out there who are distressed sellers or forced sellers,” said Mark Tinker, head of the Framlington Equities Asia business at AXA Investment Managers.

The links extend into developed markets such as Western Europe, given the region’s lending ties to countries including Russia and Turkey and its trading ties with China.

Mr. Castro said much was riding on a presidential vote this year in Brazil that will decide whether the country enacts changes to keep its economy healthy and debt in check. “There is a lot at play in the elections, and Brazil is systemically important for emerging markets,” he said.

Money managers also say it is possible to distinguish clearly between different kinds of developing nations.


“There is a debt crisis in emerging markets. They’ve just racked up way too much debt, and those chickens are coming home to roost. But we need to differentiate clearly when we talk about these concerns,” said Bryan Carter, head of emerging-market debt at BNP Paribas Asset Management.

“You can separate almost all countries into one or two camps: the countries with central banks that have decided to keep up with the Fed and hike rates, and those that have consciously decided not to,” he added.

Argentina, Mr. Carter said, was in the first camp. The country’s bonds were his largest single overweight position, he said, based in part on the country’s orthodox economic governance. In contrast, Brazil and South Africa have allowed their currencies to take the strain rather than raise interest rates.

Others note that China has successfully taken yet another path, amping up spending and loosening monetary policy rather than following the Fed. As a consequence, while shares have fallen sharply this year, prices of Chinese government debt have risen, sending yields lower, in contrast to other emerging markets.

“My view is that China has already become less EM-like than it was in 2016,” said Karthik Sankaran, director of global strategy at Eurasia Group. A previous growth scare gripped Chinese markets in 2015-16.

Even in more vulnerable countries, some fund managers are snapping up securities issued by companies that are stronger than their domestic economies. “You have companies in Indonesia that are very export oriented, with no foreign debt. That’s an absolute winner,” said Leon Goldfeld, a multiasset portfolio manager at J.P. Morgan Asset Management.

FT : Luxury watch brands give ground to grey market

Luxury watch brands give ground to grey market
But the battle for control of secondary sales continues

Not so long ago the so-called grey market in watches represented little more than a shadow trade that caused mild irritation to the manufacturers who unwittingly supplied it.

It is comprised of genuine pieces that arrive on the open market having been sold by unscrupulous official retailers at a discount to either end consumers or other dealers.

Over the past five years, however, it has grown into a multibillion-dollar industry that has compounded the woes of brands battling the headwinds of sales slumps in big markets, currency fluctuations and consumers’ more cautious attitude to spending.

Top brands are now testing a range of responses to the grey market’s threat to brand value, such as reducing stock volumes, establishing in-house resale services and, in the case of luxury goods group Richemont’s recent purchase of Watchfinder, even buying up outright those platforms that sell pre-owned pieces.

The Swiss franc’s unpegging from the euro in 2015 provided a fillip for the decades-old grey market. The franc’s value jumped by about a quarter against the euro, raising the cost of Swiss-made products just as the once booming Asian market was beginning to falter, partly as a result of the Chinese government’s crackdown on giving watches as bribes.

Brands’ conviction that strong growth in Asia would continue indefinitely had resulted in substantial oversupply of stock. Struggling retailers in Hong Kong — by far the world’s largest importer of Swiss watches in 2010-2015, according to Swiss watch federation data — had to offload watches at reduced prices.


This predicament led to Richemont — which owns Cartier, IWC, Jaeger-LeCoultre and Panerai — buying back watches from retailers to stop them being sold on the grey market. It cost the group €203m in the year to March 2018 and €278m the previous year.

Many watch brands decry the grey market for several reasons, including that unauthorised sellers are less likely to supply a warranty or dealer stamp for consumers. But the bigger problem is that oversupply and discounting undermine the value of both product and brand.

The industry’s leading players are weeding out retailers found to have been supplying discounted watches to either end users or grey market websites in order to prevent stock “leakage”.

At Longines, its chief executive of 30 years, Walter von Känel, is using a team of private operators employed by its parent Swatch Group to track down retailers supplying the grey market.

“The parallel business is a problem and we are attacking it by buying back our watches through ecommerce sites and finding out which retailers supplied them,” says Mr von Känel, presenting several bulging files containing images of watches and the details of the official outlets to which they were originally shipped.

“We then go to them, take back any remaining Longines stock and permanently remove them from our list of official retailers.”

While such a no-nonsense attitude might prove instantly effective, others believe big brands could ultimately profit from the pre-owned and grey markets — as demonstrated by Richemont’s surprise announcement in early June that it had acquired UK-based second-hand watch portal Watchfinder.

Phil Edmondson-Jones of investment company Beringea, which exited its £3m investment in Watchfinder in July following Richemont’s move, says the website’s data pool will be of particular use to the group. “The secondary market is clearly important to the retail pricing of new product, and the purchase of Watchfinder will ultimately enable Richemont to exert a little more control on the full life cycle of some of its watches,” he says.

Philipp Man, co-founder of Cologne-based Chronext, which sells new and pre-owned watches online globally, shares this view.

“Every watch we sell comes to us to be authenticated before being shipped to the buyer,” he says. “Ultimately, what we do will give the brands a better understanding of their markets . . . to the point that they will not have leakage any more and they will not have to buy back inventory.”

Some watchmakers are joining forces with online platforms in other ways. Last month, US-based pre-owned watch site TrueFacet launched a “brand certified” category in which seven partners — including Zenith, Fabergé and Frederique Constant — will refurbish pieces and provide customers with a manufacturer’s warranty.

Among the longest-established grey market etailers is Chrono24, which launched in 2003. It sells new and used watches and takes a listing fee plus 1.5-2.5 per cent of the sale price from dealers and up to 6.5 per cent from private sellers for each transaction.

Chrono24’s co-chief Tim Stracke believes the fact that leading players appear to be streamlining inventory could be good for everyone as it will help to stabilise prices. “What most people prefer is to know that the value of the watch they buy will either rise or remain stable,” he says.

Perhaps ironically, etailers such as Chronext and Chrono24 could themselves face serious competition from some of the individual brands that they have become well known for selling.

Tudor and Omega already work with official vintage outlets. Vacheron Constantin has recently started dealing in pre-owned through its Les Collectionneurs service, while independent brands MB & F and Linde Werdelin also offer used-watch brokerage services.