TIME finance

Top Banks Fined $2.5 Billion Over Currency Manipulation

(WASHINGTON) — Four big banks will pay $2.5 billion in fines and plead guilty to criminally manipulating global currency market going back to 2007.

JPMorgan Chase, Citigroup, Barclays and The Royal Bank of Scotland conspired with one another to fix rates on U.S. dollars and euros traded in the huge global market for currencies, according to a settlement announced Wednesday between the banks and U.S. Justice Department. Currency traders allegedly shared customer orders through chat rooms and used that information to profit ahead of their clients.

The criminal behavior took place between December 2007 and January 2013, according to the agreement.

A separate bank, UBS, has agreed to plead guilty to manipulating key interest rates and will pay a separate $203 million criminal penalty.

The broader settlement was long expected. The Commodity Futures Trading Commission had fined those banks a combined $1.4 billion for their involvement in the scheme last year.

Big banks have been fined billions of dollars for their role in the housing bubble and subsequent financial crisis. But even so, the latest penalties are big. Including a separate agreement with the Federal Reserve announced Wednesday, the banks will have paid nearly $9 billion in fines and penalties for their manipulation of the $5.3 trillion foreign exchange market.

Unlike the stock and bond markets, currencies trade nearly 24 hours a day, seven days a week. The market pauses two times a day, a moment known as “the fix.” Traders allegedly shared client orders with rivals ahead of the “fix”, pumping up currency rates to make profits.

Global companies, who do business in multiple currencies, rely on their banks to give them the closest thing to an official exchange rate each day. Banks are supposed to be looking out for their clients instead of using their clients’ needs to profit ahead of them.

It is rare to see a bank plead guilty to any wrongdoing. Even in the aftermath of the financial crisis, most reached what were known as “non-prosecution agreements” or “deferred prosecution agreements” with regulators, agreeing to pay billions in fines but not admit any guilt. If any guilt was found, it was usually one of the bank’s subsidiaries or divisions — not the bank holding company itself.

One of the most notable banks to plead guilty to any criminal wrongdoing was investment bank Drexel Burnham Lambert, which plead guilty to fraud in the 1980s following the implosion of the junk bond bubble.


Gas is Weirdly Expensive in This One Part of the U.S.

US Gas Prices Rise For 35 Consecutive Days
Justin Sullivan—Getty Images Gas prices nearing $6.00 on March 3, 2015 in Sausalito, California.

It could put a damper on your summer road trip.

West Coast drivers might be feeling like they’ve been left out of the cheap gas boom.

Despite sub-$3 gas all over the rest of the country, gas prices on the coast—and especially in California—have been skyrocketing. West Coast drivers are paying a record 88 cents a gallon more than those on the East Coast, Bloomberg reports. And in Los Angeles, prices have actually nosed above $4.

Why the big difference?

It’s partly that California has recently instituted particularly strict laws limiting greenhouse-gas emissions. This forces gasoline companies to spend more on either pollution permits or the production of lower-carbon fuels—costs that get passed on to drivers.

But it’s also bad luck. Several oil refineries in California and Washington have been out of commission in recent weeks because of explosions, breakdowns, power outages, and repairs.

Check out this gas price heat map from GasBuddy.com, or type in your zip code here to see if you are paying fair prices for the area where you live.

TIME Amazon

A Woman Is Doing This Important Amazon Job for the First Time

It's the role of Jeff Bezos's personal "shadow" at the company

Amazon CEO Jeff Bezos recently named Maria Renz to the position of technical adviser to the CEO.

That’s a fancy title for what, according to Re/code, is basically the job of Bezos’s shadow. It’s a coveted, high-ranking role at the e-commerce giant, and one that has never before been filled by a woman.

Re/code reports that Renz is a 15-year veteran of the Seattle company, and was formerly CEO of Quidsi, parent company of Amazon-owned Diapers.com. She replaces Bezos’s previous shadow Jay Marine, who will now lead Amazon Instant Video’s efforts in Europe.

Bezos’s move comes at a time when many companies have been under increasing pressure for lack of diversity in their workforces—especially technology giants. A mere 51 of Fortune 1000 companies have female CEOs. And at the end of last year, when the Sony hack resulted in a slew of leaked documents, one of the biggest storylines to result was that a female studio president was making nearly $1 million less in salary than her male co-president.

TIME Retail

Target’s turnaround is off to a faster start than Walmart’s

The carts are filling up again.

The cheap-chic discount retailer reported strong quarterly results, showing its turnaround efforts are paying off more quickly than those of larger rival Walmart.

Target’s plan to recapture the discount retailer’s old ‘Tar-zhay’ magic with millions of middle-class customers seems to be taking hold, showing results more quickly than Walmart’s parallel efforts to re-invent itself.

Target, the No. 3 U.S. retailer, on Wednesday reported comparable sales rose 2.3% in the three months ended May 2, helped by notable gains in some of the areas that CEO Brian Cornell has said were priorities for the retailer: apparel, children’s products and healthcare products. In contrast, its larger rival Wal-Mart Stores said earlier this week that U.S. comparable sales (which include e-commerce but exclude newly-opened stores) rose 1.1% in the first quarter.

Since taking the helm last August, Cornell has sought to shake up Target’s bureaucratic culture to make it quicker to adapt to change and add more stylishness to its apparel. It’s also in the process of improving the retailer’s food assortment with more focus on natural and organic foods (food underperformed Target’s overall sales numbers, CFO John Mulligan told reporters on a media call). It has added mannequins to 1,000 of its 1,800 stores to better showcase its fashion, and has created dedicated beauty sections at many stores. The efforts resulted in Target getting more shoppers into its stores, a critical win in the age of e-commerce.

Cornell has also pushed Target, a long time laggard in e-commerce, to pick up its digital game. Those efforts paid off, with a 38% jump in e-commerce sales last quarter (compared to 17% growth at Walmart–although, to be fair, it’s easier to grow quickly from a smaller starting base). Target raised its profit outlook for the year as a result of its first-quarter results.

“We’re encouraged to see early progress on our strategic priorities, including strong sales growth in Apparel, Home and Beauty, nearly 40% growth in digital sales, and positive traffic in both our stores and digital channels,” Cornell said in a statement.

During the first quarter, Target reminded everyone how no one can create buzz with designer collaborations like it can: the trendy Lily Pulitzer summer wear line nearly crashed Target’s web site in April. While such collaborations don’t move the needle much in terms of sales, they do help burnish Target’s “cheap chic” image with affluent consumers, and makes it less reliant on less affluent customers.

In contrast, Walmart spoke of consumers pocketing their tax refunds and savings from lower gas prices, rather than spending more. The average Walmart customer has a much lower income than the Target customer, with about 20% of Walmart shoppers reliant on food stamps to buy groceries by some estimates.

Walmart is also looking to re-invent itself, improving the fresh food selection, customer service and rolling out smaller format stores to compete with dollar stores. The world’s largest retailer managed to get more shoppers into its stores for the second quarter in a row, but Walmart’s quarter shows it faces a tougher slog than its smaller rival.

TIME Transportation

Elon Musk’s Craziest Project Is Coming Closer to Reality

2013 Bloomberg

A deal was finalized this week for construction of a test track

A deal has been finalized for the first step in making Elon Musk’s Hyperloop idea a reality.

The Tesla CEO first proposed the Hyperloop—a long system of pressurized tubes that would allow for super-high-speed travel between San Francisco and Los Angeles—two years ago. The concept, laid out in a nearly 60-page public white paper, looked crazy to some, maybe impossible.

But a private company called Hyperloop Transportation Technologies (no affiliation with Musk or Tesla) has picked up the mantle of making the Hyperloop real. The company first announced back in February that it had plans to build a five-mile test track in California. Now it has closed a deal with local landowners in central California to begin construction of it along a stretch of road right near the Interstate 5 freeway between Los Angeles and San Francisco, according to the Navigant Research blog.

Hyperloop Transportation Technologies is operating independently of Musk (though the inventor and entrepreneur has encouraged anyone to apply his idea), and in fact, Musk has his own test track planned for Texas, as he revealed in a tweet in January:

Construction of the California test track is set for 2016, and will cost at least $100 million—a cost that Hyperloop Transportation Technologies aims to cover by going public this year. And the estimated cost of the full Hyperloop, which would have to run 400 miles in length between the two cities? $8 billion.

This article originally appeared on Fortune.com

TIME Google

Why This Woman Is Google’s Worst Nightmare

Margrethe Vestager says the search giant is abusing its market dominance and faces more than $6 billion in fines

Iron Lady. Steely Foe. The Goblin Under Google’s Bed. Since taking office on November 1, Margrethe Vestager has earned her share of epithets. By steadfastedly challenging the practices of companies like Google and Gazprom, the European Union’s competition commissioner has convinced many that she is a ruthless corporate opponent. But they may have gotten that wrong. More than fearsome, Vestager may simply be Danish.

On April 15, Vestager filed a Statement of Objection — the European Commission’s version of charges — against Google, alleging that the company ‘s preferential treatment of its own comparative shopping service constituted an abuse of its dominant position in internet searches. A week later, she struck again, this time alleging that Russian energy giant Gazprom misused its dominance to overcharge clients. Add in other inquiries — including ones into tax evasion by the likes of Apple, Starbucks, and the Luxembourg government — and it’s no wonder that she’s earned a reputation for being a stony avenger.

And yet, after six months on the job — and 24 years in politics — Vestager still seems surprised, and a bit pained, by the depiction. Speaking from the European Union offices in her home city of Copenhagen, where she has returned to spend the weekend with her family (they will move to Brussels after her daughters finish the school year), the 47-year-old objects particularly to the portrayal of her as eagerly attacking corporate giants. “Despite what it says in the headlines, we are not going after Google,” she says. “We don’t have an issue with Google or with any other company. We have an issue with certain conducts.”

That is the kind of fine line that Vestager is skilled at walking. From her experience as the leader of Denmark’s Social Liberal party, which blends a neoliberal, economy-first platform with left-leaning positions on immigration, education, and other social issues, she acquired an unsentimental pragmatism. “She’s practical, not into ideologies,” says Elisabet Svane, political editor for the Danish newspaper Fyens Stiftstidende, and author of White Smoke, Black Tower, a biography of Vestager. “She is not the kind of person who wants to to sit up all night debating how should society be.”

Which is why, perhaps, that after years in parliament, and stints as the minister of education, finance and the interior, she is so well-suited to her new job as anti-trust commissioner. “She’s come to the place where she seems most at home: half politician, half administrator,” says Kasper Fogh Hansen, a former communications director for the city of Copenhagen and advisor to the Social Democrat party. “She believes in the rational practices of bureaucracy and the exertion of economic theory.”

Which is not to say that she can’t be motivated by ideals. Explaining her new role as Europe’s corporate policewoman, she says, “For me, this is a very clear expression of European values: we are created free and equal, we have the same rights, we are worthy of the same respect. As a consumer or as a small business owner, you should know that there is someone who will take a look if things are not as they are supposed to be.”

Few of the European Union’s members take transparency and equality more seriously than Vestager’s native Denmark, which is not only repeatedly ranked as the world’s least corrupt country, but is also a place where even the heir to the throne picks up his kids at school in a cargo bike. Those particularly Danish values lie behind her decision, she says, to file charges against Google and Gazprom, two cases that were begun by her predecessor, Joaquin Almunia, but had stalled in negotiations.

“It is a clear and direct way of handling them,” she explains of her new approach. “Now, both companies in question know what we think. It is much more open, and for me — and maybe this is part of my Danish background — that is important.”

In fact, transparency may be the greatest change that Vestager brings to the commission. Almunia reached settlements with many of the companies, including Google, that he investigated, but because the negotiations were secret, there was little sense of resolution. “If a company settles, you’re not really establishing precedents, ” says Mario Mariniello, a researcher at the Brussels thinktank Bruegel who worked for the competition commission until 2012. “What Vestager is doing differently is bringing all this discussion out into the open, so that companies have help concretely from the commission to understand whether their behavior is right or wrong.”

That’s not the only thing she is doing differently. Unlike her predecessor, who was investigating Google’s general search dominance, Vestager narrowed her inquiry solely to e-commerce. The tighter focus, Mariniello says, makes it easier to prove her case. “She really gripped the part that is easier to show: if consumers are trying to find the cheapest laptop, and because of algorithm they were not seeing laptop options that were cheaper than ones proposed by Google, that’s a real problem. It’s easier than, say, [privileging] a weather page. When they just want information, it’s very hard to argue that an internet user is worse off with their one option.”

She was smart about the timing too. Vestager moved quickly to advance the cases she inherited in part because she was under pressure from colleagues within the European Union to demonstrate progress. But filing the Gazprom charges, precisely one week after the Google ones was a skillful bit of balancing that allowed Vestager to show she wasn’t specifically targeting American companies as some, including President Obama, had claimed. Plus “when people ask why did you bring the Gazprom case when you did,” she says with a wry smile, “I can respond, well, I was busy last week.”

So she has a sense of humor. And she can conjure up fervor of a sort, especially when confronted with notions that contradict her sense of fair play. In the Gazprom case, for example, the political stakes are exceedingly high — Europe has already seen that Gazprom, which as a state-owned company has denied that the European Union has jurisdiction over it, is willing to respond to sanctions by cutting off supplies. Yet Vestager rejects the notion that she needs to tread lightly for political reasons. “I know how tempting the theories of foreign policy and conspiracy are,” she says. “But I think it would be extremely problematic if competition law were taken hostage by political concerns, in both directions, either to do something for political reasons or not do something for political reasons. Because then you would delegitimize the enforcement of the law.”

Which is a somewhat ironic position for so consummate a politician to have. “She’s not afraid of power,” says biographer Svane. “She’s not afraid of taking it and of using it. She’s not sentimental.”

In person, Vestager does indeed come across as extremely controlled, a skill surely honed in her years navigating the always-shifting tides of Danish parliamentary politics. And she is clearly concerned with her image, appearing on the cover of women’s magazines and cancelling reservations at one of the more renowned restaurants in Copenhagen when she realized that it might look unseemly for a public servant to be dining at so expensive a place even though it was on her own dime. After recognizing that she needed to make more of an effort to connect with voters, she began highlighting some of her personal habits — her knitting of stuffed elephants; the baking of cakes decorated with political slogans for colleagues — in interviews and through her Twitter feed, which she updates herself.

That political education did not always come easily. In 2008, Vestager’s party was trounced in the general elections, a loss that the Danish press placed squarely on her shoulders. But after pushing the governing coalition to cut an early retirement program in 2011, and raising the retirement age to 65, she rebounded, leading her party to win 9.5% of the vote later that year. The change in fortune helps explain how Vestager became the inspiration, director Adam Price has said, for prime minister Birgitte Nyborg on his hit show Borgen (and not, as many presume, the current prime minister Helle Thorning-Schmidt). “What I got was the knowledge that I didn’t have to do it, that I could just roll up my rugs, put them under my arm, and leave, ” Vestager says of her time in the wilderness. “I’ve been brought up to never skip the thing, you go on and on and on and the more it hurts the better it is. Because this is Denmark, it’s a Protestant country. But there is profound freedom in not being stuck, in not having to do things that other people have told you to do.”

A freedom to choose that she intends to protect. Google and Gazprom must each respond to the commission’s statements of objection by July; if they are then found to have violated anti-trust law, each faces fines of up to 10% of their revenues. They will not be the only companies against whom Vestager faces off: her commission has also begun investigations into Apple, Fiat, Amazon, Starbucks and General Electric among others, and McDonalds — accused by a workers’ union of tax evasion — may well be next in line.

That kind of vigor — and her willingness to impose massive fines (in Google’s case they could reach $6.6 billion) if an anti-trust violation is found— no doubt contributes to Vestager’s reputation for toughness. But she also wonders if her culture doesn’t also factor into it. “Directness is a Danish trait,” she admits. “We are not always so polite.”

TIME energy

This Chinese Businessman Just Lost $14 Billion in Half an Hour


You might think you’re having a bad day, but Li Hejun will tell you it could be a heckuva lot worse.

The chairman of Hong Kong-listed Hanergy Thin Film Power, a maker of equipment for the solar power industry, just saw $14 billion wiped off the value of his controlling stake in the company in a so-far unexplained end-of-day crash.

Li had become one of China’s richest men on paper after shares in his company nearly tripled in the first four months of the year, giving it a market capitalization of $40 billion at one stage. For comparison, the U.S.’s largest solar company, First Solar Inc. [fortune-stock symbol=”FSLR”], is worth $5.6 billion. But the company’s shares fell over 42% in the last half-hour of trading in Hong Kong Wednesday, before being suspended by the local market regulator.

The boom in Hanergy’s shares has raised eyebrows. Transparency about the company’s business practices is limited by the fact that most of its sales go to a single company–its parent, the privately-held Hanergy Group. That has fostered suspicions–denied by the company–that it may be overstating its financial strength.

The collapse appeared to be triggered by Li’s failure to attend the company’s annual shareholder meeting. In one of the more memorable corporate quotes of recent times, The Financial Times reported a company spokesman as saying that Li “had something to do” instead.

Sentiment towards China’s solar companies had been battered on Tuesday after one of Hanergy’s biggest rivals, New York-listed Yingli Green Energy Holding [fortune-stock symbol=”YGE”] said in its annual report that there was “substantial doubt” as to its ability to continue as a going concern, driving its shares down 37%. The company put out a statement Wednesday saying that the media had blown its comments out of proportion.

TIME Security

Why Using An ATM Is More Dangerous Than Ever

A Bank Of America ATM is pictured in the Manhattan borough of New York
CARLO ALLEGRI—© CARLO ALLEGRI/Reuters/Corbis 21 Aug 2014, New York City, New York State, USA --- A Bank Of America ATM is pictured in the Manhattan borough of New York August 21, 2014. Bank of America Corp has reached a $16.65 billion settlement with U.S. regulators to settle charges that it misled investors into buying troubled mortgage-backed securities. The settlement announced on Thursday by the U.S. Department of Justice calls for the second-largest U.S. bank to pay a $9.65 billion cash penalty, and provide $7 billion of consumer relief to struggling homeowners and communities. REUTERS/Carlo Allegri (UNITED STATES - Tags: CRIME LAW BUSINESS POLITICS) --- Image by © CARLO ALLEGRI/Reuters/Corbis

Breaches have risen dramatically very recently

In a time when major data hacks are on the rise—think Target, Home Depot, Sony—it’s no surprise breaches on individuals are also up. According to FICO, debit-card compromises at ATMs rose 174% from January to April of this year, compared to the same period last year.

And that’s just breaches of ATMs located on official bank property. Successful breaches at non-bank ATMs rose 317% in that period.

In other words, withdrawing money from an ATM is more dangerous than it’s been in a long time—specifically, the worst it has been in two decades, according to the Wall Street Journal, which cites a prediction from consulting firm Tremont Capital Group that criminals will make more than 1.5 million successful ATM cash withdrawals this year,

As Fortune reported earlier this year, a majority of American corporations believe they will be hacked in 2015. The questions they are all dealing with is how to prepare for them and how to deal with them when they happen, because preventing these compromises has become increasingly difficult.

Banking institutions, as well as the payment companies that connect banks to consumers, like Visa and MasterCard, have beefed up their technology more aggressively than ever in order to both innovate and securitize. But for a private consumer who simply wants to take money from an ATM, stats like these are nonetheless sobering.


Why We’re All in Big Trouble If Gas Prices Keep Going Up

A pump at the Pilot Travel Center on East Austin Road in Nevada, Missouri. January 10, 2015.
Barrett Emke for TIME A pump at the Pilot Travel Center on East Austin Road in Nevada, Mo. on Jan. 10, 2015.

Most of us are barely scraping by as it is

The lower gas prices Americans have been enjoying for the past several months were supposed to boost consumer spending and get the ball rolling on more robust economic growth. That didn’t happen, and a new survey has a revealing insight as to why.

According to Bankrate.com, 40% of Americans are using the money they’ve saved from lower gas prices to pay for necessities like groceries and rent payments.

“The overwhelmingly most common response, by more than a two-to-one margin, was using it for necessities,” says Greg McBride,Bankrate’s chief financial analyst. “It was the top answer among every age group and every income group.”

Fewer than 20% of people are banking that extra cash, and fewer than 5% are investing it. Bankrate found that only about one in seven of people are spending that extra money on discretionary purchases like dinner out or a vacation. “Household budgets remain very tight,” McBride says. “People don’t have a lot of extra money to throw around, and that’s why we’ve had this slow growth.”

Millennials are a little more likely to splurge — 17% versus 14% for all respondents — but they’re also more likely to be saving or investing those savings than Americans overall.

“Millennials have gotten the memo,” McBride says. “They’ve got a greater inclination towards savings than we’ve seen in recent generations.” They’re also less likely to be saddled with mortgages and childcare costs, although many of them do have hefty student loans to pay off.

For months, Americans have displayed a reluctance to loosen their purse strings even as gas prices fell. The recent increase in prices at the pump has only confirmed what many people suspected — that those super-low prices weren’t here to stay. More importantly, paying for necessities or socking away those dollars isn’t helping the economy the way economists had hoped. McBride says earlier Bankrate surveys found that when gas prices go up, 60% of people say they cut back on discretionary spending. Compare that to the meager 14% who are increasing their spending now that gas prices have fallen.

“We’ve been waiting for this economic shot in the arm from lower gas prices and it hasn’t materialized,” McBride says. “Now we know why.”

That’s because lower gas prices, no matter how welcome, are no substitute for higher wages, which have been conspicuously absent for much of the recovery. “Until people see more money in the paycheck, they don’t feel the economic recovery has landed at their doorstep,” McBride says. “Until that happens, the economy’s only getting better for other people.”

TIME Gadgets

This is the Ultimate MacBook Accessory

The Voltus as displayed on their Kickstarter page.
Voltus The Voltus as displayed on their Kickstarter Page

A new Kickstarter project is focused on selling a portable battery for Apple's newest MacBook.

Hate lugging your MacBook electrical cord around with you? A portable MacBook charger might be the answer.

Voltus is a palm-sized battery that charges Apple’s new 12-inch MacBook as fast as a wall charger, according to the device’s Kickstarter campaign, which started Tuesday. The device connects to the laptop’s new USB-C port, which allows faster data transfer speeds and charging than the older style USB port.

Voltus says it will power a MacBook for up to 9 hours, while a Voltus Pro will power the computer for up to 13 hours. The mobile power source can also charge two other USB devices simultaneously, from iPhones to cameras to printers.

Voltus is available for pre-orders starting at $149, with the first devices expected to be shipped by August.

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