Cohn chooses charity over Goldman; U.K. banks get OK to resume payouts

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Giving back

Goldman Sachs former president Gary Cohn “agreed to pay millions of dollars to charity rather than returning it to the company as it had requested” as part of the bank’s settlement of its role in the 1MDB scandal, the Financial Times said. In October, “the bank committed to clawing back or withholding as much as $175 million compensation from senior staff, to acknowledge the institutional failures that contributed to the 1MDB corruption scandal.” Cohn “had been holding out against returning any of his pay.”

“We are pleased that Gary has chosen to support charitable organizations that are doing important work and put this matter behind us,” Goldman said. Cohn “plans to give the money to Covid-19 relief and social justice causes, according to people familiar with the arrangement.”

Separately, Goldman’s asset management unit “will pressure U.S. companies to appoint more women and members of under-represented groups to their boards but will stop short of setting specific numerical targets for racial and ethnic diversity as some activists urge,” Reuters reported. “While the bank is not alone on Wall Street in developing such a policy, Goldman carries outsized influence with institutional shareholders as one of the oldest and biggest Wall Street firms. The move also shows the tension between the growing importance of racial justice to investors and the difficulty of effecting social change in the corporate arena.”

“After pushing companies in its investment portfolio to include at least one woman director since 2019, Goldman Sachs next year wants boards to have a second director from an under-represented background. For that second spot, Goldman’s definition of diversity includes gender identity, sexual orientation and under-represented race and ethnic groups, and a board with two white women would meet the standard.”

Green light

The U.K.’s banking regulator “has given lenders the green light to resume dividend payments, nine months after it asked them to suspend shareholder payouts and preserve capital at the height of the coronavirus pandemic.” The Bank of England’s Prudential Regulation Authority said Thursday “that its latest test of banks’ capital positions had found they were resilient to ‘a wide range of economic outcomes.’ As a result, it concluded that there was now scope for banks to recommence distributions to shareholders ‘within an appropriately prudent framework.’”

“As part of the approval, the PRA set out guidelines to determine the size of any payout” and that it would “expect to be satisfied that any distributions would not create excess vulnerabilities to stress for a given bank or impede its ability or willingness to support households and businesses.” Financial Times, Wall Street Journal

Banned

Mastercard and Visa “said they had prohibited the use of their cards on the adult website Pornhub,” after New York Times columnist Nicholas Kristof “reported that the platform included videos of child abuse and rape,” the Times reported.

Mastercard said it “confirmed violations of our standards prohibiting unlawful content on their site.” Visa said it was “instructing the financial institutions who serve MindGeek [Pornhub’s parent] to suspend processing of payments through the Visa network,” pending the completion of its own investigation. Pornhub said the bans were “exceptionally disappointing.”

“Major credit card companies have been under pressure to block payments to adult websites that can’t ensure the legality of their hosted content,” the Washington Post said. “Earlier this year, a host of women’s and child’s rights groups urged payment processors to bar transactions with porn sites. The advocates contend that financial institutions play a supportive role in facilitating the spread of abusive and illegal pornography.”

Wall Street Journal

AML guidance

The Treasury Department’s Financial Crimes Enforcement Network released new anti-money-laundering guidance Thursday instructing financial institutions on how they “can share personally identifiable information about their customers if they believe it is tied to a suspicious transaction. The guidance is meant to help clarify the limits to what officials have called a key tool in identifying potential instances of money laundering and terrorist financing.”

FinCEN director Kenneth Blanco “said he hoped the guidance, released in the form of a fact sheet, would put some of the questions around the private sector partnerships to rest and encourage more banks to participate. Questions have lingered in the private sector on the legal limits to such information-sharing partnerships, causing them to be under-utilized.”

Going digital

Massachusetts Mutual Life Insurance said it “bought $100 million of bitcoin for its general investment account, the latest sign of mainstream acceptance for the upstart digital currency. MassMutual purchased the bitcoin through a New York-based fund management company called NYDIG,” in which MassMutual also said it acquired a $5 million minority equity stake.

The insurance company said the bitcoin investment “gives us measured yet meaningful exposure to a growing economic aspect of our increasingly digital world.”

Financial Times

Inside dope

The head of Germany’s audit watchdog Apas “admitted to buying and selling shares in Wirecard while his own institution was investigating the fraudulent payments company’s auditor. Ralf Bose, a former senior partner at KPMG, who has headed Apas since 2016, told a parliamentary inquiry into the accounting scandal on Thursday evening that he purchased Wirecard shares in April and sold them - at a loss - the following month. At that time, Apas was in confidential talks with Germany’s financial regulator BaFin over Wirecard.”

“Apas has been criticized for not acting earlier over allegations of accounting fraud at Wirecard. Apas is the second German government body facing questions over staff trading in Wirecard shares. BaFin in October banned employees from trading shares and other securities of companies that it oversees.”

Quotable

“This clarification is significant and addresses some uncertainty with sharing incidents involving possible fraud, cybercrime and other serious predicate offenses when financial institutions suspect those offenses may involve terrorist acts or money-laundering activities.” — FinCEN director Kenneth Blanco, announcing new AML guidelines designed to get more banks to participate.