August 2, 2017 nº 1,891 - Vol. 14

"Out of clutter, find simplicity. From discord, find harmony. In the middle of difficulty lies opportunity."

Albert Einstein


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  • Top News

Lehman bankruptcy ruling shows risk of deferred compensation

Judge Shelley C. Chapman of the Federal Bankruptcy Court in Manhattan has issued an opinion that provides an important reminder for employees throughout the United States who participate in deferred-compensation plans. The opinion is from the long-running Lehman Brothers bankruptcy, but it applies to employees of all sorts of companies. In short, the tax benefits you get from a deferred-compensation plan are not "free," and by deferring compensation, you are taking on the credit risk of your employer. The deferred-compensation plan which each employee agreed to in 1985 states that: "the obligations of Shearson hereunder with respect to the payment of amounts credited to his deferred-compensation account are and shall be subordinate in right of payment and subject to the prior payment or provision for payment in full of all claims of all other present and future creditors of Shearson whose claims are not similarly subordinated." The wording drives home the point that the employer's obligation to pay the deferred compensation is an unsecured obligation. In this case, a deeply subordinated one. These employees were no better than subordinated bondholders of Lehman Brothers. The employees had several novel arguments for why they should, at least, get out from under the subordination provision in the agreement, but the court rejected them all. The court also rejected the argument that Lehman's alleged breach of the deferred-compensation agreement would remove the employees' obligation to subordinate their claims. The court explained that unlike an ordinary contract dispute, the present case involved the simple question how to treat the employees' claim in bankruptcy. In this case, the employees — in agreeing to the subordination provision — had agreed to be paid after all other general unsecured creditors had been paid in full. Judge Chapman acknowledged that seemed a bit unfair — in her words "expected compensation for years of dedicated service disappeared in an instant in September 2008." Nevertheless, this was the basic trade-off that employees had made decades ago: better tax treatment, in exchange for more risk.

Lawmakers and Internet companies at odds over sex-trafficking bill

A bipartisan group of senators, including Rob Portman, is pushing forward with legislation to end federal legal protection for websites that facilitate sex trafficking, drawing strong opposition from companies who say the measure undermines free-speech protections.

  • Crumbs

1- U.S. eases environment laws for Mexico border wall near San Diego. (Click here)

2- Top military officials call on Trump to reverse transgender ban. (Click here)

3- EU drugs agency cuts workload as prepares for Brexit disruption. (Click here)


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  • MiMIC Journal

Apple defends complying with China over VPNs

Apple boss Tim Cook has defended his company's decision to comply with the Chinese government's demand it remove VPN software from the App Store. Virtual Private Networks are often used to skirt censorship and surveillance in countries with tight restrictions on internet use. The company has been heavily criticized for removing several VPN apps, and was accused of "aiding Chinese censorship efforts". Apple said it disagreed with China's position but had to comply with the country's laws.

Debt-ridden Chinese giant now a shadow of its former size

Dalian Wanda, once one of China's biggest real estate developers, is trying to reinvent itself as a slimmed-down operator of shopping malls.

China's trophy case of deals could become a discount rack

It is unclear how aggressively Beijing will rein in acquisitions. Still, bargain-hunters will benefit from any selling spree by Chinese companies.


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  • Brief News

Nearly 500 people on trial in Turkey over failed coup

Almost 500 people arrested after last year's failed coup in Turkey have appeared in court accused of taking part in the plot. Charges include murder, violating the constitution and attempting to kill the president. They could face life in prison. The cleric Turkey claims is the coup's leader is being tried in absentia. Some of the handcuffed defendants were jeered as they were individually escorted into court by police and armed guards in front of TV cameras. The trial focuses on events at the Akinci airbase which it is alleged was the plotters' headquarters. It is taking place in a purpose-built courtroom outside the capital Ankara. The defendants face charges from attempting to assassinate the president to murder. As some arrived at court they were met by protesters chanting "We want the death penalty!" The trial is the largest yet relating to the coup. Anyone convicted is expected to get life imprisonment. Although Turkey abolished the death penalty in 2004, Erdogan proposed a referendum on the issue in his speech after narrowly winning a vote to expand his powers in April.

France court orders government to provide water to Calais refugees

The French government and the Calais region are to furnish water and sanitation to migrants in the area, France's highest administrative court, the Conseil D'Etat ruled Monday. The county has said that it will also open two new reception centers about an hour from Calais in Bailleul and Troisva. These immigrants are primarily on their way to the UK but face rough conditions that were heavily criticized in the "Jungle" migrant camp in October. France's Interior Minister Gerard Collomb also called for an inquiry by the Human Rights Watch into the accusations that police have routinely used pepper spray on migrants in Calais.

Trump warns Maduro over jailed opponents

The US holds Venezuelan President Nicolás Maduro "personally responsible" for the safety of two seized opposition leaders, Trump has warned. Leopoldo López and Antonio Ledezma, who had been under house arrest, were taken to a military prison on Tuesday. Trump also called for the immediate and unconditional release of all political prisoners. This came after Sunday's controversial vote for a constitutional assembly. At least 10 people were killed, as the opposition boycotted the election. Maduro said the poll was a "vote for the revolution", arguing that the move would create peace and foster dialogue by bringing together different sectors of Venezuela's polarized society. The opposition said late on Tuesday that it had decided to hold a demonstration against the new assembly on Thursday.

NZ opposition leader hits back over baby questions

New Zealand's new opposition leader has said it is unacceptable for women in the workplace to be asked about their motherhood plans, after she was quizzed on TV about whether she wanted a child. Jacinda Ardern, 37, was elected leader of the Labour party on Tuesday after Andrew Little stepped down. She is the youngest person to lead the party and the second woman. The questions have sparked a fierce sexism debate in the country, which is due to hold an election in September. Prime Minister Bill English said the questioning was not acceptable and that while "some degree of personal intrusion" could be expected in politics, Ms Ardern's plans were "her private business". In a second interview on Wednesday morning, Ardern was again pushed on the subject. A host on The AM Show, Mark Richardson, said New Zealanders had the right to know when choosing a prime minister whether that person might take maternity leave.

Rules 'should not be watered down' for Aramco listing

Regulators should not "water down" the rules to allow the world's largest oil company to list in London, the Institute of Directors has said. It follows reports Saudi Aramco plans to list 5% of its shares in London or on another Western stock exchange. UK rules state more than 25% of shares should be listed to stop a single shareholder having too much dominance. But proposals by the Financial Conduct Authority put forward in January could allow for exceptions. The regulator proposed waiving a number of requirements for sovereign-owned companies, including the need to provide independent shareholders with their own separate vote on the appointment of independent directors.

Christopher Wray confirmed as next FBI director

The Senate has easily confirmed Christopher Wray to be the next FBI director, placing him atop the law enforcement agency after the ouster of former Director James Comey in May.

Tony Blair not to be prosecuted over Iraq War

The UK High Courtrejected a "crime of aggression" allegation Monday against former UK Prime Minister Tony Blair by a former Iraq General Abdul Wahed Shannan Al Rabbat. The two justices dismissed the claim as UK law does not recognize a crime of aggression

Three defendants killed in Moscow court

Three defendants have been killed in a court in the Russian capital, Moscow, after they tried to take the arms from officers in an attempt to escape. Five suspected gang members attacked two agents who were escorting them in a lift. The group was handcuffed and it was not immediately clear how they managed to free themselves to attack the guards. The two other suspects and three security officers were wounded. The suspects were accused of being part of a group known as GTA Gang, named after the violent game series Grand Theft Auto.

Homeland Security to waive environmental rules on border wall projects

The agency says it will bypass rules requiring environmental studies before building on public land, hoping partly to ease the construction of prototypes for Trump's proposed border wall in San Diego. (Click here)

Jordan activists celebrate repeal of 'marry the rapist' law

The repeal of a Jordanian law that allowed a rapist to escape prison by marrying his victim was bittersweet news for a Jordanian woman whose daughter was assaulted when she was just 13 years old. Tuesday's vote by parliament's lower house came too late for the hairdresser's daughter who was coerced into an abusive marriage to her attacker as a condition for getting out of "protective" state custody. Her assailant never served a day in jail. "Today I'm very happy that this law was cancelled," said the 49-year-old mother of the teen, “ but at the same time, I'm heart-broken, where is my daughter's justice?" Women's rights activists hailed Tuesday's vote as a major victory after a years-long campaign, but said a long struggle lies ahead. Despite the country's pro-Western political orientation and cosmopolitan urban elites, many areas of Jordan remain socially conservative, with entrenched notions of "family honor." This includes the belief that having a rape victim in the family is shameful, and that such "shame" can be expunged through marriage. (Click here)

HSBC to buy back up to $2 billion in shares

The bank, which reported better-than-expected earnings in the second quarter, has announced $5.5 billion in share repurchases since the second half of 2016 as its prospects have improved. (Click here)

US citizen who was held by ICE for 3 years denied compensation by Appeals Court

Davino Watson was imprisoned as a deportable immigrant for 1,273 days, despite having US citizenship. Now a court says he is not eligible for $82,500 in damages he was awarded.

Uber, Lyft face setback in push to block Seattle Union effort

A federal judge on Tuesday dealt a setback to ride-hailing companies Uber Technologies and Lyft in their battle to block a unionization effort in Seattle for thousands of contract drivers.

Banking regulator to take first step toward changing Volcker rule

The national bank regulator is taking a first step toward changing the Volcker rule trading ban, as regulators continue behind-the-scenes discussions about revamping the much-criticized regulation.


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