Citigroup insider trading leak alleged; Square works to reduce receipt snafus

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Start your engines
Federal Reserve vice chairman for financial regulation Randal Quarles urged the financial community to start preparing “in earnest” for the end of Libor and replacing it with another interest rate benchmark. Quarles told a conference “you should take the warnings seriously” that Libor will not survive past 2021. However, “settling on a replacement remains a challenge facing banks, companies and investors.” Wall Street Journal, Financial Times, American Banker

Buffett lunch
Justin Sun, a “blockchain entrepreneur and cryptocurrency promoter,” won a charity auction to have lunch with Warren Buffett, who has variously called bitcoin a “delusion,” a “mirage,” and “rat poison squared.” Sun, who founded a cryptocurrency platform called Tron and is the CEO of BitTorrent, paid a record $4.6 million for the honor.

“Mr. Buffett is 60 years older than me, so he’s got so much more experience and knowledge than many of us in the blockchain community,” Sun said in a statement. “At the same time, when you listen to younger people you hear things that you might not normally hear from your close circle of friends and advisors.” Buffett said he is “delighted with the fact that Justin has won the lunch and [I] am looking forward to meeting him and his friends.” Wall Street Journal, Financial Times

Meanwhile, “some traders in an obscure corner of the cryptocurrency markets are betting” that bitcoin could climb to $50,000, “more than double its record during the bitcoin mania of 2017.” Bitcoin has rallied 130% so far this year after plunging more than 70% last year. But on May 23 “an unidentified trader bought 30 call options that give the owner the right to buy bitcoin at $50,000 between now and June 2020.” The options cost $4,500. “The trader will lose that money if bitcoin fails to reach $50,000 — the so-called strike price of the options — and if he or she holds the contracts until they expire. But in the unprecedented scenario that bitcoin soars past $50,000, the trader could reap hefty profits, earning a far greater return than he or she would have made by simply buying and holding bitcoin.”

Inside job
The U.K.’s Financial Conduct Authority is looking into allegations that a Citigroup employee “leaked insider information about major deals to a stock trader before they became public. The revelation came during a continuing insider trading trial Monday when prosecutors made a special disclosure to the jury about intelligence that came to light in the past few weeks. The alleged involvement of a Citigroup employee indicates that the insider trading network under scrutiny in the trial may be wider than was previously known.” Wall Street Journal, Financial Times

Wall Street Journal

Oops
Square accidentally emailed receipts for “transactions as mundane as a cup of coffee and as sensitive as an obstetrician’s visit to people who were uninvolved in the purchases,” the paper reports. “In some cases, neither the purchaser nor the recipient could say why Square sent receipts to the people it did.” The company says “digital receipts could be received by the wrong person for a variety of reasons, including consumers sharing a credit-card number, accidentally sending the receipt to a recycled phone number or seller or buyer error.”

“While receipts received by the wrong person are incredibly rare," a spokesman for the company told the paper, "even one is a really bad experience.” The company told the paper, “We’ve already made a number of changes to the experience, resulting in a more than 50% decrease in customer issues in one year, and we have more improvements in the works.”

A new low
Deutsche Bank’s stock closed below €6.00 for the first time on Monday. The bank “has been long beset with bad news and concerns over its profitability and strategy, which have worsened this year by the European Central Bank’s signal that interest rates would remain negative for longer than previously thought.”

Quotable

“Clarity on the exact timing and nature of the Libor stop is still to come, but the regulator of Libor has said that it is a matter of how Libor will end rather than if it will end, and it is hard to see how one could be clearer than that. With only two-and-a-half years of further guaranteed stability for Libor, the transition should begin happening in earnest.” — Federal Reserve vice chairman for financial regulation Randal Quarles

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