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The hedge fund that turned Whole Foods into a takeover target for Amazon is walking away with $300 million

Business Insider, 1/1/0001 12:00 AM PST

FILE PHOTO - Barry Rosenstein, founder and managing Partner of JANA Partners LLC., speaks during the Sohn Investment Conference in New York May 4, 2015. REUTERS/Brendan McDermid

Jana Partners is getting paid handsomely for its effort to push Whole Foods into making some changes, a drive that led to the company's sale to Amazon.

The activist hedge fund, which bought a more than 8% stake in Whole Foods in early April, liquidated its stake in organic grocer following Amazon's $13.7 billion offer and will walk away with a $300 million profit, according to documents filed with the Securities and Exchange Commission Wednesday.

Jana, run by billionaire Barry Rosenstein, wasted no time putting the heat on Whole Foods CEO John Mackey and agitating for a management overhaul. Mackey and his team responded by hiring a top defense banker from Evercore, setting in motion the events that would lead only weeks later to a buyout offer from Amazon. 

Jana started unloading shares not long after Amazon and Whole Foods announced their $42-a-share deal on June 16. Whole Foods shares began to creep above the deal price after the announcement as investors wagered that a rival bid would emerge, but Jana's decision to exit is a clear indication the $5 billion fund didn't expect one.

After the weekend, on June 19, Jana began hedging its bets, selling 1 million shares at over $43 a per share, according to a filing with the SEC. The fund continued selling shares above the deal price throughout June, unloading 2.8 million in total for $120.8 million.

By July, it became clear that no rival bidder would emerge. An SEC filing on July 7 revealed that there had been seven companies vying for Whole Foods, including to grocery rivals, but that Amazon had insisted on avoiding a bidding war and demanded secrecy from Whole Foods while the deal was negotiated. 

Shares slipped back down toward the deal price, and Jana began liquidating the rest of its more than 26 million shares. 

Jana, which bought its stake for $794.5 million in April, sold its shares for $1.09 billion, netting $298.1 million — a 38% return.

Not bad for a couple months' work. 

WFMShares

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A hedge fund set up by Steve Cohen's former chief investment officer is crushing it

Business Insider, 1/1/0001 12:00 AM PST

Screen Shot 2017 07 19 at 4.55.18 PM

A hedge fund set up by Aaron Cowen, a former chief investment officer at SAC Capital, is crushing it this year.

Suvretta Capital Management's master fund is up 12.5% after fees for the first six months of the year, according to an investor document seen by Business Insider. The fund has gained an additional 5% or so in the first two weeks of July, a person familiar with the matter told Business Insider. That extends year-to-date gains to about 17%.

Comparatively, the S&P 500 is up about 9.6% over the same period, per Markets Insider data, while the Absolute Return US Equity Index, which tracks long-short stock funds, returned 3.9% through June. 

Cowen founded Suvretta in 2012, and was previously a portfolio manager at Soros Fund Management and chief investment officer at SAC Capital, the hedge fund led by Steve Cohen which later shut amid an insider trading scandal.

Here are the returns from Suvretta's master fund over the past few years, per the investor document:

  • 2016: 3.2%
  • 2015: 7.1%
  • 2014: 13.1%
  • 2013: 26.3%
  • 2012 (September through December): 4.1%

Suvretta focuses on mid-to-large cap stocks and uses a fundamental, bottom-up investment process. The firm managed about $2.7 billion at the start of the year, according to the Hedge Fund Intelligence Billion Dollar Club ranking.

According to the document, dated June, the fund had a 68.8% net exposure, with its largest net exposure was to consumer discretionary, at 32.6%, followed by information technology, at 23.9%. The five top long positions were Adobe Systems, Alibaba, Charter Communciations, Comcast and Constellation Brands.

SEE ALSO: $12 BILLION HEDGE FUND: The stock market has changed, and we're going to have to do things differently

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STOCKS JUMP TO RECORD HIGHS: Here's what you need to know

Business Insider, 1/1/0001 12:00 AM PST

hurdle race jump avoid

Stocks headed higher in trading on Wednesday after strong earnings from some major players.

The Tech-heavy Nasdaq led the way, setting another closing all-time high. The S&P 500 also broke through for a record, while the Dow Jones industrial average came up just short.

We've got all the headlines, but first the scoreboard:

  • Dow: 21,624.96, +50.23, (+0.23%)
  • S&P 500: 2,473.18, +0.51, (+0.51%)
  • Nasdaq: 6,384.14, +39.79, (+0.63%)
  • US 10-year yield: 2.268%, +0.005
  • WTI crude oil: $47.11, +0.71, +1.53%
  1. Morgan Stanley beat on earningsThe bank delivered earnings of $0.87 a share, up from $0.75 in the second quarter of 2016 and ahead of the $0.76 expected by analysts. Institutional securities, which houses sales and trading and investment banking, generated $4.8 billion in revenue, up from $4.6 billion a year ago, driven by a strong performance in investment banking and in equities trading.
  2. United Airlines' earnings came in higher than expected. The airline posted adjusted earnings per share of $2.75, versus analysts' consensus forecast of $2.67. Revenue also came in higher than expected at $10 billion, up 6.4 percent year over year, versus analysts' consensus of $9.97 billion. The company did cite rising labor costs as a pressure point for its profit margins.
  3. Facebook may test out a paywall. The social network has started briefing publishers on the forthcoming subscription service and hopes to start testing it by October, a person familiar with the matter told Business Insider. While details are still being ironed out, Facebook is currently telling publishers they'll be able to show at least 10 free articles per month before the paywall kicks in. 
  4. Snap is launching a news show with NBCStarting Wednesday, NBC News will produce the show, which is called "Stay Tuned," twice a day for Snapchat's 166 million users. Each edition will cover the biggest news stories of the day and be a crisp two to three minutes in length.
  5. Republicans are still trying to save their healthcare bill. The GOP senate conference met at the White House to try and come together on their healthcare bill. Senate Majority Leader Mitch McConnell said he expects to hold a vote next week.

ADDITIONALLY:

US stocks haven't been this unpopular since the financial crisis

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Blue Apron's IPO is a big flop — here's how it compares to other popular startups

Traders betting against Chipotle have been doing it all wrong

GOLDMAN SACHS: Bitcoin is going to test $3,000 and could get as high as $3,700

The US economy is on the verge of breaking 2 records — but only one is good news

Billionaire hedge fund manager Bill Ackman's first tweet is a photo of him at Chipotle

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Goldman Sachs is on a hiring spree to become the Google of Wall Street (GS)

Business Insider, 1/1/0001 12:00 AM PST

Marty Chavez

  • Goldman Sachs is looking to fill over 20 positions for its Marquee platform, which is at the heart of its plan to become the Google of Wall Street. 
  • The Marquee platform offer clients access to Goldman's firmwide risk platform and pricing system SecDB. 

Goldman Sachs wants to become the Google of Wall Street, and now it is staffing up the unit that could help it achieve that goal.

The New York-based financial services giant is hiring for Marquee, a platform that provides clients access to the bank's analytics, data, content and execution capabilities via a browser or an API.

The bank is looking for talent to fill positions in its New York office, spanning from associate developer to vice president.

The bank has posted eight job ads for roles relating to Marquee in New York in the past month or so, and has also recently advertised a further 12 roles in Bengalaru and four in Warsaw. 

One ad posted in mid-July said the bank is "looking for creative and talented engineers to build out our next generation client facing risk and execution platforms."

Another ad said the bank is "pursuing engineers across the stack, from those who are confident working with low latency processes through individuals passionate in implementing responsive user interfaces." 

Agility is a core requirement for a spot on the Marquee team. One junior engineer position, for instance, requires someone who can wear many hats. 

"At times you will be asked to step into the trading floor environment and at others you will be called upon to guide the decisions of leadership," the ad said. 

Tiffany Galvin, a Goldman Sachs spokeswoman, told Business Insider the firm is focused "on attracting top tech talent."

Marty Chavez, the chief financial officer of Goldman Sachs, has been the catalyst for a number of Silicon Valley-like initiatives at the firm, including Marquee.

He served as chief information officer from 2014 until May 2017. He joined Goldman in 1994 as an energy strat after he ended up on a headhunter's list of Silicon Valley entrepreneurs with Stanford PhDs. Recently, he has spearheaded efforts for Goldman Sachs to adopt an approach that is commonplace to business in the Valley.

The new model Chavez is proposing is based on APIs, which are the standard way for computer programs to "talk" to one another without human intervention. When you use your Facebook account to log in to Spotify, that's Spotify talking to the Facebook login API.

This model is based on taking in data, pushing it through analytics engines, then making it available to internal and external clients through the Goldman Sachs digital platform that Chavez has championed.

"Historically, the API has been human beings talking to other human beings over the telephone, and all the tools, the content, the analytics is on the internal platform only," Chavez said. "We are shifting this radically and shifting this fast, and we're packaging everything we do, and actually, we're redesigning the whole company, around APIs."

The idea is that giving clients access to Goldman Sachs data and analytics tools strengthens the bank's relationship with them, leading to additional business. 

"Our digital offerings, under the unified Marquee brand, directly correlate to market share and profitability," one job ad said.  

SEE ALSO: Citigroup is staffing up for a new center that will unleash robotics throughout the bank

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GOLDMAN SACHS: Bitcoin is going to test $3,000 and could get as high as $3,700

Business Insider, 1/1/0001 12:00 AM PST

Bitcoin

Bitcoin has held strong support and has its sights set on a test of the $3,000 level, according to Goldman Sachs.

In a note sent out to clients on Monday, Sheba Jafari, the head of technical strategy at the bank, updated her recent chart work on the cryptocurrency.

The $1,856 to $1,790 area "has the potential to act as strong support," Jafari wrote. "All in all, the balance of signals appear to be shifting to a more positive tone."

Jafari's latest note comes two weeks after she predicted the cryptocurrency was setting up for a big drop.

At the time of her call, bitcoin was trading near $2,550 a coin. She said that bitcoin was "still in a corrective 4th wave" that "shouldn't go much further than 1,857." It fell a bit further, putting in a low somewhere between $1,758 or $1,852 (depending on which data you use).

Jafari, however, always expected the gains would resume after the correction.

And that they have.

Bitcoin has gained more than 20% from its July 17 low, and currently trades near $2,285. As to how far bitcoin can go from here, Jafari expects another run at record highs. "The minimum target for an eventual Vth wave from current levels is 2,988; an extended 5th could reach ~ $3,691."

Bitcoin is up 140% in 2017. It put in a record high of about $,3000 on June 12. 

Bitcoin

 

 

SEE ALSO: Bitcoin and Ethereum are 'cannibalizing' gold

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Billionaire hedge fund manager Bill Ackman's first tweet is a photo of him at Chipotle (CMG)

Business Insider, 1/1/0001 12:00 AM PST

Bill Ackman's first tweet is about Chipotle, a company his hedge fund Pershing Square has taken a big stake in.

It is his first tweet since he launched the Twitter profile late in June. The photo was taken at a Chipotle restaurant on 56th Street in Manhattan.

Chipotle's stock dropped on Tuesday after Business Insider's Hayley Peterson broke the news that a restaurant in Virginia had closed due to food poisoning. The stock closed down 5.51%. 

On Tuesday night, Jeff Gundlach, the founder of DoubleLine Funds, added his voice to the criticism of Chipotle on Twitter.

Gundlach tweeted: "Should CMG expand menu to get customers back?" Raw Egg Breakfast Burrito, anyone? Oh well, bulls have that 0% dividend going for them, anyway!"

Screen Shot 2017 07 19 at 1.44.26 PM

SEE ALSO: A $30 billion hedge fund identified a potential trigger for 'the next financial crisis'

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Supercluster Funding Bid Could Supercharge Blockchain Development in Canada

Bitcoin Magazine, 1/1/0001 12:00 AM PST

Supercluster Funding Bid Could Supercharge Blockchain Technology in Canada

Four organizations in Canada’s blockchain tech sector are going all out this week to submit their application letter to the federal Ministry of Innovation, Science and Economic Development (ISED) before the July 21 deadline to be considered for funding under the government’s new Innovation Superclusters Initiative.

A representative for Innovation, Science and Economic Development Minister Navdeep Bains told Bitcoin Magazine that “the Innovation Superclusters Initiative will invest nearly $1 billion to strengthen up to five of Canada's most promising clusters,”  and confirmed that “federal contributions to selected superclusters will have to be matched with private sector investment for maximum impact.”

The Blockchain Research Institute (BRI), ColliderX, the Blockchain Association of Canada (BAC) and the Information and Communications Technology Council (ICTC) have teamed up to apply for some of the $950 million offered by the Canadian government for the best bids in future technologies that the government says will create “Silicon Valley-style hubs of industry key to future growth and jobs.”

ColliderX aims to accelerate core technical R&D at levels that will support innovation in Canada and position the sector as a tech leader overseas. BRI contributes the business-level use cases, setting the agenda for strategy leaders. BAC is a major advocacy organization, and ICTC is a long-time, established industry player, well known to high-tech businesses in Canada.

Blockchain Association of Canada: Call to Action

Kyle Kemper, Executive Director of the Blockchain Association of Canada, is working on the supercluster application letter of intent and told us the only thing they’re short of is time to get their application in to the ministry.

He pointed out that it is imperative that blockchain companies and organizations express their support for and commitment to the bid before the application deadline.

“This supercluster initiative is an opportunity to take blockchain technology mainstream and for Canada to take a lead role,” Kemper told Bitcoin Magazine. “In the bid process we are receiving unanimous support from public, private, academic, philanthropic and non-profit organizations.”

If the group manages to secure $50 million in funding commitments from these organizations as part of a successful bid, the federal government will match the next $50 million for each supercluster. The commitments and matched funds will be spread over 5 years, according to the proposal.

Blockchain Research Institute: No Room for Complacency

Don Tapscott, Executive Director of the BRI, notes that many of the other bids like AI, machine learning, the Internet of Things and Quantum are all dependent on blockchain technology as a foundation.

“The blockchain supercluster proposal is late to the table in part because this extraordinary technology is just becoming mainstream,” Tapscott told Bitcoin Magazine. “But it’s no less important than any of the others. In fact, it’s foundational to everything else.”

In a report called The Blockchain Corridor: Building an Innovation Economy in the 2nd Era of the Internet, Don and Alex Tapscott lay out a blueprint for a blockchain tech supercluster and Centre of Excellence in the already highly active “corridor” between Toronto and Waterloo, Ontario.

The report says:

“We cannot afford to be complacent, nor is time on our side. Canada’s leading position in the Blockchain Revolution could quickly evaporate as other hotbeds around the world, such as Berlin, Singapore, Shanghai, Tokyo, Sydney, London and New York (to say nothing of Silicon Valley) race ahead. The time to act is now.”

According to the report, the corridor could collectively generate around 170,000 new jobs and around $17 billion in GDP by the year 2025.

Tapscott added:

“Blockchain represents nothing less than the second era of the Internet. The first was based in Silicon Valley. As we show in the Blockchain Corridor Report, the second could be based in Canada.

“I’m convinced that we can find $50 million from the private sector for this initiative. So I sure hope that governments will ensure we have a seat at the table going forward to make our case.”

ColliderX: The Underdog Challenge

Bid partner ColliderX is a new non-profit social enterprise working to promote and develop R&D initiatives in the Canadian blockchain tech sector.

ColliderX founder and CEO Iliana Oris Valiente notes that the four bid partner organizations complement each other to create a dynamic supercluster.

“Being considered by ISED to move on to the next stage of the selection process will be a win for the blockchain industry as it will signal Canada's support of this ecosystem,” Valiente said to Bitcoin Magazine.

“We're certainly the underdog in this scenario but are promoting a truly new industry, rather than continued investments in areas that are already more established.”

Information and Communications Technology Council

ICTC is an established industry player that brings a wealth of experience in economic development activities and will be involved in bridging the gap between the blockchain industry and a wider segment of the business and political community.

Namir Anani, President & CEO of ICTC, believes that competition to win supercluster funding will be tough but notes that small- and medium-sized entreprises (like most blockchain startups) represent the large majority of Canada's competitive businesses.

Anani says they will make the point that blockchain technology is a cross-industry enabler and a key catalyst for heightening small business growth and competitiveness in Canada.

Anani told Bitcoin Magazine:

“The global blockchain market is growing at a staggering CAGR [Compound Annual Growth Rate] of 58.7 percent, according to Transparency Market Research. Capitalizing on this fast growth market is key for Canada's economy and employment potential going forward.

“As Canada continues to expand its trade agreements in an increasingly global market, such as with the newly ratified Canada-European Union Comprehensive Economic and Trade Agreements (CETA), blockchain is a pivotal trade enabler for fast-tracking Canada's place in the global economy.”

Making the Deadline

Valiente is confident that crowdfunding will bring in the needed amounts. To date, she has raised $2 million in pledges on behalf of ColliderX, which will be rolled into the supercluster. 

Anani is also confident the private sector will come forward and is passionate about selling the supercluster bid.

“Blockchain has the potential of reshaping all aspects of the global economy in the next number of years, building Canada’s comparative advantage in this space is paramount going forward. The Blockchain Supercluster is a powerful pan-Canadian collaboration that will unleash cross-industry innovations, new economic opportunities and employment prospects for Canadians.”

Kemper reiterated the need for industry support in order for the initiative to succeed. “I urge all organizations that support Blockchain technology and organizations looking to better understand the potential to go to blockchainsc.ca, fill out a letter of commitment and share this news to rally more people to the cause by 12:00 EST on Friday, July 21.”

Thus far, C4 and the Institute on Governance are among those supporting the bid as sponsors.

The group has until December 31, 2017, to raise the remaining supercluster-specific private-sector funding.

The post Supercluster Funding Bid Could Supercharge Blockchain Development in Canada appeared first on Bitcoin Magazine.

Brexit has caused a surge in applications for Irish passports, with more than half a million already this year

Business Insider, 1/1/0001 12:00 AM PST

Irish passport

Over half a million people have already applied for new Irish passports this year, according to new figures released by the Irish foreign ministry.

More than 500,000 Irish passports were issued between January and June, with about 100,000 going to residents of Britain and Northern Ireland.

That compares to an average of 643,788 applications per year for the years between 2012 and 2015 and the 733,000 issued last year.

The surge in demand, which has caused Irish agencies to recruit more staff, was prompted by the UK's vote to leave the EU, and applications for the month of January rose more than 33% between 2016 and 2017.

Although most new passports are going to existing Irish citizens — who are either renewing their documentation or applying for the first time — in the first half of 2017, 45,000 citizens living in Britain and 53,500 living in Northern Ireland applied for passports.

The busiest day for the Irish passport office in London was reportedly March 28th, the day before Prime Minister Theresa May triggered Article 50, which formally kick-started the process of officially leaving the EU.

Ireland's population is roughly 4.6 million, but anyone with a grandparent born in Ireland may apply for a passport. Those born in Ireland, or whose parents were born in Ireland, are automatically entitled to citizenship.

First few months of the year applications were up 70% compared to 2016, Ireland's ambassador to the UK, Dan Mulhall, told the BBC's Today Programme in May.

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A hedge fund started by a former Steve Cohen exec might be turning itself around

Business Insider, 1/1/0001 12:00 AM PST

  • Screen Shot 2017 07 19 at 10.05.13 AMFolger Hill, a hedge fund launched by billionaire Steve Cohen's former exec, has posted slight gains this year.
  • The fund had faced setbacks last year, suffering deep losses and losing assets.

A hedge fund started by Steve Cohen's former chief operating officer might be turning itself around.

Folger Hill Asset Management, which suffered deep losses after its launch, gained 3.7% after fees in the first half of this year in its flagship US fund.

The bulk of those gains came last month, with the stock-focused fund posting a 2.4% return in June. That's according to an investor document that was reviewed by Business Insider.

A person briefed on Folger Hill said the fund has continued to make money this month, bringing year-to-date returns through mid-July to about 5%. 

Still, the fund lags its benchmark index, the S&P 500, which gained 9.3% over the first half of the year.

Kumin launched his New York-based hedge fund in 2015 to much fanfare.

With global expansion plans, he attracted the backing of big-name Wall Street groups like Leucadia National Corp., which encompasses the investment bank Jefferies Group, and Schonfeld Strategic Advisors, which backed the hedge fund's Asia unit.

Kumin, who had recruited some of Steve Cohen's top traders while working at the billionaire's high-profile fund, SAC Capital, is known for his boisterous personality and salesmanship. SAC Capital later was forced to close amid an insider trading scandal.

But Kumin's fund has faced setbacks. Last year, the flagship fund fell 17.6%, and assets dropped to a low of about $600 million from a peak of $1 billion earlier in 2016.

Folger Hill is looking to raise $300 million to $400 million with a lockup of several years. The search is ongoing, the person briefed on the fund told Business Insider.

Folger Hill manages about $900 million firmwide, with about $650 million in its US fund and $250 million in an Asia fund it launched in November, the person said. The Asia fund is up about 2% this year, and the firm has an additional $200 million that it can draw down, the person added.

SEE ALSO: The man who recruited Steve Cohen's top traders is counting on another big sale

DON'T MISS: A $30 billion hedge fund identified a potential trigger for 'the next financial crisis'

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One airline's $39 tickets are a full-on assault against United, Southwest, and American

Business Insider, 1/1/0001 12:00 AM PST

Frontier Airlines

On Tuesday, Frontier Airlines announced the addition of 85 new routes and 21 new cities to its network.

By next summer, the airline expects to double the number of daily nonstop flights it operates to 314.

To accompany its expansion plans, the Denver-based ultra-low-cost carrier is offering tickets for as low as $39.

"We are proud to announce the nationwide expansion of our unique brand of Low Fares Done Right, which will empower millions more people to afford to fly," Frontier Airlines' president and CEO, Barry Biffle, said in a statement.

"We project this will save our customers over $1 billion annually on their flights. These new flights will allow us to serve even more of America and make flying a truly affordable option."

Frontier's massive expansion represents a major assault on established industry powers like Southwest, United, and American. The bulk of Frontier's expansion will take place in Denver, Miami, and Orlando, Florida, all places where its rivals have significant investment and market share.

Frontier says its new routes will allow the airline to serve 90% of the US population.

The once bankrupt airline has flourished since adopting an ultra-low-cost, no-frills business model a few years ago. Frontier, along with the Florida-based Spirit, has spearheaded the growth of the ULCC in the US — prompting major legacy carriers to adapt with new products such as basic economy fares.

In March, the airline filed paperwork with the Securities and Exchange Commission for an impending initial public offering.

Frontier operates a fleet of 70 new Airbus A320-family narrow-body airliners that is expected to grow to more than 100 planes by 2020.

Click here to see the entire list of Frontier's new routes and cities.

SEE ALSO: Check out Bombardier's next generation $73 million Global 7000 private jet

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Research Finds Design Flaws in Scaling Proposal Bitcoin Unlimited

CoinDesk, 1/1/0001 12:00 AM PST

New research has provided a rare academic lens to the conversation on how to best scale bitcoin's technology for more users.

Source

Morgan Stanley's results establish a worrying trend for Goldman Sachs (MS, GS)

Business Insider, 1/1/0001 12:00 AM PST

Lloyd Blankfein James Gorman

  • Morgan Stanley beat Wall Street estimates for second quarter earnings, with the sales and trading business posting a strong quarter.
  • The US bank's $1.24 billion in fixed income trading revenues topped Goldman Sachs' performance. 
  • That performance is especially impressive, given Morgan Stanley slashed the size of its fixed-income unit in late 2015. The bank has managed to cut costs and staff while boosting revenues.

That makes two quarters in a row.

Morgan Stanley beat Wall Street estimates for second quarter earnings on Wednesday, following the trend set by its peers. Each of the key business lines at the bank posted increased revenues, with revenues more broadly holding remarkably steady. 

In particular, the bank posted only a small drop in fixed income trading revenues, dropping 4% year-on-year to $1.24 billion. Given a sharp decline in fixed income revenues at rival Goldman Sachs, where revenues fell 40% to $1.16 billion, the results mean that Morgan Stanley bested Goldman Sachs in fixed income for the second quarter in a row. 

The bank has delivered $2.95 billion in first half fixed income revenues, up 36% from the same period a year earlier. In contrast, Goldman Sachs delivered $2.8 billion in FICC revenue in the first half, down 19% from the same period last year.

In equities sales and trading meanwhile, Morgan Stanley's $2.2 billion topped Goldman Sach's $1.9 billion in revenues, extending a run that goes back to early 2015. And in equity underwriting, Morgan Stanley's $405 million in fees topped Goldman Sachs' $260 million. 

To be sure, Morgan Stanley's FICC business is small in comparison to the giant units housed at money center banks like Citigroup, JPMorgan and Bank of America Merrill Lynch. Still, the 4% year-on-year decline also compares well against those banks. Here's a breakdown:

  • JPMorgan FICC revenue — $3.2 billion — down 19% year-on-year
  • Citigroup FICC revenue — $3.4 billion — down 6% year-on-year
  • Bank of America Merrill Lynch FICC revenue — $2.1 billion — down 14%

Still, the comparison with Goldman Sachs is striking, and encapsulates two very different trends. 

The business is proving a challenge for Goldman Sachs. On a call with analysts after Goldman Sachs' earnings, CFO Marty Chavez said rates revenue was down significantly, while the commodities business had its worst quarter on record. "It was a difficult quarter on all fronts," Chavez said.

"We didn't navigate the market as well as we aspire to or as well as we have in the past," he added.

Morgan Stanley in contrast slashed the size of its fixed-income unit in late 2015, and has delivered improved revenues with lower costs since then. The second quarter performance in fixed income garnered praise from analysts on the bank's earnings call. 

"Morgan Stanley appears to be on a much stronger footing," Octavio Marenzi, CEO of capital markets management consultancy Opimas, said. 

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Betterment has taken its first step into one of the hottest areas of investing

Business Insider, 1/1/0001 12:00 AM PST

jon stein ceo betterment 3

  • Betterment, the largest independent roboadviser with $9.5 billion worth of assets under management, has taken its first step towards offering a sustainable investment portfolio. 
  • Demand for such sustainable investment solutions has increased in recent years, and Wall Street is responding.

Betterment, the largest roboadviser with $9.5 billion under management, has taken its first step into the world of sustainable investing. 

On Wednesday, the firm said it would start offering iShares DSI, a broad stock market exchange-traded fund that tracks socially responsible companies, as an alternative for the core portfolio’s US large cap exposures.

Alex Benke, vice president of financial advice and investing at Betterment, said the firm had been exploring different options to enter the sustainable investing space for sometime. 

"We were waiting for both the right amount of interest from our clients and the right products," Benke said."Until recently most sustainable products didn't meet our standards." 

The US large cap exposures typically make up a chunk of a total Betterment portfolio, meaning the social responsible investing (SRI) fund will only represent a portion of a user's total investment. Users set a target allocation and then have funds directed to various asset classes, raging from US large caps to emerging market bonds. 

Still, the new offering reflects the firm's dedication to personalization. The firm said it will add new SRI funds as they become available. 

"Our vision is that the service should be built around the customer and it should be very personalized," Betterment's CEO, Jon Stein told Business Insider in a recent interview. "It should be built for their needs."

According to research from Bank of America Merrill Lynch, demand for sustainable investment solutions is increasing and 93% of US millennials show a high preference for impact investing. And with millennials poised to inherit roughly $30 trillion from Baby Boomers, according to a UBS white paper, catering to this investment preference will be integral to future growth for Wall Street firms. 

Wall Street has responded by launching funds, producing more research on sustainable investments, and supporting green capital-markets transactions. The green bond market, for example, passed a milestone earlier this year, with $200 billion in total issuance since the market's inception. Issuers of such bonds, such as governments and companies, promise to put proceeds toward environmentally friendly projects.

UBS has made sustainability one of the cornerstones of its wealth-management business. It recently announced that its wealth-management unit raised $325 million for The Rise Fund, an impact investment fund led by private equity firm TPG Capital. The bank's $325 million commitment is part of a greater goal to raise $5 billion for impact investments designed to advance the UN's Sustainable Development Goals.

When asked if Betterment's desire is to have all of it assets roll over to the new portfolio, Benke said that wasn't the goal. 

"We don't have a goal for how many sustainable assets we want to manage," Benke said.  "Our goal is to have 100% of people who want to be invested in an SRI portfolio to to be invested in one."

SEE ALSO: A $2.7 trillion money manager is backing an investment fund cofounded by Bono

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The founders of a challenger bank are being pursued for alleged debts of £100,000 from their last startup

Business Insider, 1/1/0001 12:00 AM PST

  • Challenger bank IAmBank wants to be "Apple store" of banking;
  • Founders say they sold their last startup for $15 million;
  • Former associates and staff pursuing founder for debts of over £100,000 that they say they are owed.

lee traversThe cofounders of a new challenger bank are being pursued by former associates and staff for what they claim are unpaid debts of tens of thousands of pounds.

Companies and individuals that dealt with WeAreBriqs, an apparently now-defunct banking technology company, claim they are owed over £100,000, according to documents reviewed by Business Insider and conversations with over half a dozen sources.

WeAreBriq's British cofounders, Lee Travers and Sebastian Sutherland, are now understood to be in Chicago working on a digital challenger bank, IAmBank. In a blog post advertising the new venture, Travers says IAmBank will help people with "paying off their debts sooner and building their wealth and savings faster."

Both Travers and Sutherland declined repeated requests to comment through IAmBank's press officer. IAmBank's press officer said the startup had no comment on the story as "Briqs and IAmBank are two separate companies."

The sources spoke to Business Insider on the condition of anonymity, fearing that speaking publically could damage their financial claims against the pair, which are still ongoing. Most of the sources who spoke to BI are owed money and so have an issue with Travers and Sutherland. The pair may well dispute the version of events told to BI.

'The stories got bigger and bigger'

Travers and Sutherland set up WeAreBriqs in early 2015. The startup's aim was to build "white label" products for banks — apps and services that large lenders could stick their logo on and give to their customers. Travers had worked for fintech businesses Monitise and MPayMe (sold to Powa Technologies). Sutherland had worked for T-Mobile and an app building agency.

Contractors, staff, and freelancers initially reported no trouble getting paid. But problems began after a few months of operations. Multiple sources say that people who worked with the pair repeatedly asked both Travers and Sutherland for overdue payments and were repeatedly reassured that money was on the way. Many of those involved continued working on good faith — and the debts owed by the company grew larger, these sources say.

Startups are by their nature high-risk endeavours. It is not usual for them to run into money trouble. But the sources Business Insider spoke to are unhappy with the way the debt was dealt with. All the sources Business Insider spoke to say Travers and Sutherland presented a series of excuses for why they couldn't pay that felt unrelated and fantastical, rather than facing up to the fact that the business was having cash flow issues.

"The stories got bigger and bigger — I’m in hospital, my girlfriend’s broken up with me, someone’s got cancer," says one former business associate.

Two sources also told Business Insider that Travers told them payments were delayed after the UK tax authority froze money he was moving from an offshore account. Business Insider put this specific point to Travers through IAmBank's press officer, but he declined to comment.

WeAreBriqs also ran up debts with coworking space WeWork and press relations agency Lansons, according to sources. The startup was eventually kicked out of WeWork for failure to pay, the sources say.

A staff member at WeWork Moorgate confirmed to Business Insider that WeAreBriqs was a member of the space from June 2015 to February 2016 but couldn't comment on any financial matters. A spokesperson for WeWork said the company doesn't comment on members' finances.

Lansons declined to comment on its work with WeAreBriqs. An email sent to Business Insider in early 2015 shows the agency was working with the startup, pitching its first product Briqs-On-Board as a service that "allows customers to use their smartphone to apply for a financial product and complete their application within five minutes from anywhere in the world, without having to go into a branch or store."

$15 million acquisition?

WeAreBriqs struggled to do any meaningful deals, sources say, despite a string of meetings with banking executives.

Some of those owed money began pursuing court action last year. Despite verdicts ordering Travers' company to pay up, those involved have yet to be re-paid.

But in December 2016, Travers said on his LinkedIn profile that WeAreBriqs had been acquired by an unnamed "large global bank" for $15 million. However, WeAreBriqs' website no longer appears to load due to a server error and its twitter account has not tweeted since December 2015.briqsSeveral parties owed money contacted Travers around the time he announced its acquisition. They say they were once again reassured that payment was on the way.

However, by January, Travers appeared to be in Chicago and was no longer responding, the sources say. He and Sutherland are now working on IAmBank.

Travers has given interviews to The Financial Times' FT Advisor, Digiday, Banking Technology, Finextra, and the online US financial TV channel Cheddar about his new startup. He told Cheddar IAmBank will become the "Apple Store" of banking. Banking Technology reported that the startup bank has secured $3 million in funding and is targeting $20 million by launch.

IAmBank will launch in September 2017 and promises to be "a new kind of bank, a better bank that will challenge all those that have gone before it," according to Travers' LinkedIn. It has offices in San Francisco, Dublin, Chicago, and London, according to its website.

In a LinkedIn blog post from March, Travers discussed "how people's mental health is affected when they receive a debt letter." He said that IAmBank would help solve this problem by "spending behaviors to make their money go further; paying off their debts sooner and building their wealth and savings faster."

Meanwhile, many of those who were pursuing Travers and Sutherland have written off their debts. Several say they said they were alarmed and surprised that the pair were setting up a bank. A former business associate of Travers, who didn't want to be named, said he was "dumbfounded."

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Behind on Bitcoin Drama? A (Short) History of Scaling

CoinDesk, 1/1/0001 12:00 AM PST

Feeling lost in the bitcoin scaling discussion? CoinDesk provides a selection of must-read content to quickly bring you up to speed.

Source

Morgan Stanley beats, trading delivers strong results despite 'subdued environment' (MS)

Business Insider, 1/1/0001 12:00 AM PST

James Gorman

Morgan Stanley beat Wall Street estimates for second quarter earnings, following the trend set by its peers.

The bank delivered earnings per share of $0.87, up from $0.75 in the second quarter of 2016, and ahead of the $0.76 expected by analysts. 

“Our second quarter results demonstrated the resilience of our franchise in a subdued trading environment," CEO and chairman James Gorman said in a statement. 

Each of the key business lines at the bank posted increased revenues, with revenues more broadly holding remarkably steady. 

In particular, the bank posted only a small drop in fixed income trading revenues, in constrast to sharp declines at Goldman Sachs and elsewhere

Here's what you need to know:

  • The bank delivered net revenues of $9.5 billion, up from $8.9 billion a year ago.
  • Net revenues increased in each of the three key business lines: institutional securities, wealth management and investment management. 
  • Institutional securities, which houses sales and trading and investment banking, generated $4.8 billion in revenues, up from $4.6 billion a year ago, driven by a strong performance in investment banking and in equities trading. Net income for the unit fell slightly to $1.4 billion. Equity sales and trading revenues tipped up, while fixed income trading revenues dropped slightly. 
  • Wealth management posted $4.15 billion in revenues, up from $3.8 billion. The unit had a pre-tax margin of 25%, delivering net income of $1.1 billion, up from $859 million.
  • Investment management revenues increased to $665 million, up from $583 million. Net income for the unit increased to $142 million.  

Morgan Stanley's cap a generally strong showing from its peers. Each of the big banks beat estimates, with JPMorgan hauling in record earnings from its commercial banking and asset and wealth management units. On Tuesday, Bank of America Merrill Lynch bested Wall Street estimates, with record quarters in global banking and wealth management, while Goldman Sachs beat estimates despite a sharp drop in trading revenues. 

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Social care charities are facing a £400 million bill that could prove devastating

Business Insider, 1/1/0001 12:00 AM PST

social care

LONDON – Charities that help care for vulnerable and disabled people are facing a funding crisis if a ruling to pay overnight workers the National Minimum Wage is upheld, charity Mencap has warned.

In April the charity lost an appeal against a ruling that it had been wrong to pay a support worker £29.05 for a nine-hour sleep-in shift.

Carers have traditionally been paid a flat rate for overnight shifts, but the judgment ruled that support workers should be paid the hourly minimum wage, with up to six years of back pay.

HMRC says the back pay is due by September, which Mencap says could amount to £400 million across all the organisations effected. It says this would be devastating for a sector that is already chronically underfunded, and is appealing the ruling.

"We all recognise that our social care colleagues do some outstanding work and are some of the lowest paid, but we cannot pay them if we do not have the money and we only receive money from government sources," said Jan Tregelles, chief executive of Mencap. "178,000 of the most vulnerable people in our society need this help and may lose it," she said.

A number of support workers took their employers to tribunals to challenge how they are paid for sleep-in shifts. Carers are generally expected to sleep during these shifts, but are on call if the person they are caring for needs assistance. Mencap's research shows 99.7% of carers slept peacefully over the last three years.

"If sleep-ins have to be paid at the minimum wage the sector is faced with a real and potentially overwhelming funding crisis that will affect the well-being of hundreds of thousands of disabled people who rely on the personal support provided by organisations like Mencap to be able to live a fulfilled and independent life," said Director of Services at Mencap John Cowman in a blog post from April, after the initial judgement.

Earlier this year, Former Health Minister David Mowat described the potential cost of this ruling to care providers as "enormous."

Critics have argued the ruling has caused confusion: the Employment Appeal Tribunal's (EAT) judgement, based on three cases, said the hours during sleep-in shifts can, "in certain circumstances," be taken into account in calculating how much a carer should be paid. But it said this decision needed to be made on a case-by-case basis, and that it "could not provide the 'bright line' clarity" sought by employers.

Mencap is now calling on the government to suspend HMRC's enforcement action immediately, until the law is clarified. It says the government should also give a public undertaking to fund back pay if the Court of Appeal upholds the decision.

Similarly, in March a Commons Select Committee report on Adult Social Care recommended the government take steps to resolve this uncertainty, and find a solution to the payment of back pay for sleep-ins to avoid "severe financial consequences" on care providers.

The National Minimum Wage for those over 25 is now £7.50 per hour, but is set to rise to £9 per hour by 2020. Mencap says it is not trying to avoid paying carers fairly, and that its actions have been in line with the law, which recognises sleep-ins as distinct from conventional work.

Mencap currently employs around 5,500 carers to do overnight shifts. But it says many of the charitable providers and local authorities that provide social care may go bust if they are forced to pay HMRC's enormous bill — meaning that additional care will need to be provided by the NHS.

Statistics released earlier this month show unpaid carers in the UK are providing an estimated £57 billion-worth of social care every year.

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The BBC just published how much its 96 biggest stars get paid — and there's a huge gender pay gap

Business Insider, 1/1/0001 12:00 AM PST

Graham Norton

LONDON — The BBC has just published how much its 96 biggest stars get paid.

The glut of information, made public alongside its 2016/17 annual report, reveals that the BBC's five best-paid TV and radio names are:

  • Chris Evans: £2.2 million-£2.25 million
  • Gary Lineker: £1.75 million-£1.8 million
  • Graham Norton: £850,000-£900,000
  • Jeremy Vine: £700,000-£750,000
  • John Humphrys: £600,000-£650,000

All 96 stars on the list earn more than £150,000 a year, which is the same salary as Prime Minister Theresa May.

Precise pay cheques have not been published. Instead, household names are categorised into £50,000 bands, giving us a pretty good idea of how much they take home, if not the whole picture.

The full list is pictured below, while a more detailed run-down of the BBC's 20 best-paid stars is available here.

pjimage (39) pjimage (40)

The disclosure is not the whole picture. It does not include stars paid through commercial arm BBC Worldwide, such as "Top Gear" host Matt LeBlanc, or those who work for the broadcaster through independent production companies. So, for example, we don't know how much Benedict Cumberbatch makes for playing Sherlock Holmes.

This also means that the full earnings of some stars are not listed. Graham Norton's pay, for example, is likely to be much higher, but because he probably pockets some of the production fee for "The Graham Norton Show" from his production company So Television, this is not captured in the BBC list.

The huge gender pay gap

The disclosure has, however, blown open a damaging subplot for the BBC, exposing a huge gender pay gap. Only a third, or 34, of the BBC's 96 highest earning stars are women.

The broadcaster's best-paid woman is "Strictly Come Dancing" presenter Claudia Winkleman, who collects an annual salary of between £450,000 and £500,000. This is two bands higher than her co-host Tess Daly, who takes home between £350,000 and £400,000, although Winkleman does have a Radio 2 show.

Claudia Winkleman

The second highest paid woman is "The One Show" host Alex Jones, who makes anything from £400,000 to £450,000.

Compare this to the highest earning man, Chris Evans, who takes home around £2.5 million for hosting the Radio 2 breakfast show and "Top Gear" last year.

BBC director general Tony Hall admitted this pay gap is not good enough and said the organisation must get better. "The disclosures highlight the need to go further and faster on issues of gender and diversity," he told staff on Tuesday, according to an internal memo seen by Business Insider.

Overall, the BBC pointed to progress it has made to cut its talent bill.

It paid presenters and actors £194 million in the 12 months to the end of March this year, which was down 2% on £198 million the previous year. Within this, the bill for top talent (those who earn more than £150,000) was down 10% to around £28.6 million year-on-year.

The BBC signed off on around 43,000 talent contracts over the course of its financial year. Less than a quarter of 1% were paid more than £150,000, the broadcaster said.

The BBC says its needs to spend millions on stars

Hall was unapologetic for spending big on stars. "We need to employ the very best," he told staff on Tuesday. "Talented people in front of the camera or microphone are critical for our relationship with audiences."

He added that the BBC does not take its duty to spend public money "lightly," making clear: "We’re not afraid to walk away if money becomes an issue."

tony hall

The BBC is publishing star pay after the government asked it to be more transparent about the way it spends its £3.7 billion income from TV licence fee payers.

The BBC tried to fight off the transparency measures. Director general Hall said it could lead to inflation in star pay and "will not make it easier for the BBC to retain the talent the public love."

But the government prevailed last year as part of negotiations to renew the BBC’s 11-year operating agreement, known as its Royal Charter.

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The gap between the rich and the poor fell 'dramatically' after the 2008 financial crisis

Business Insider, 1/1/0001 12:00 AM PST

Rich poor

LONDON – Inequality in Britain is now less pronounced than it was before the 2008 financial crisis, according to a report by the Institute for Fiscal Studies (IFS).

Income inequality fell during the recession and immediately afterwards, but real earnings also fell, according to the study based on data from two main UK household surveys.

Across the UK, the median household income in 2015-16 was only 3.7% higher than it was prior to the recession (after adjusting for inflation), indicating extremely slow growth, according to the report.

"There are important gaps between the average incomes of different regions, though inequalities within regions are far larger than those between them," said Agnes Norris Kriller, research economist at the IFS and an author of the report.

"While London remains the most unequal part of the country, inequality in the capital has seen a dramatic decline over the last decade," she said.

The gap between the rich and the poor is highest in London, and the capital represents a more pronounced picture of what is happening nationally. Although London's inequality "has fallen dramatically" since the recession, the report says, real earnings have also dropped.

Here's the chart:

Inequality in the UK

Employment in the UK hit a record high earlier this month, but the wage squeeze that has been hitting workers since last year's Brexit vote has worsened.

Across the UK as a whole, median earnings are down 5% since the recession, although the employment rate is up 1.5 percentage points. In comparison, median earnings fell 10.2% in London, but employment was up 5.2 percentage points.

The Midlands have fared particularly badly over the last 40 years: although in the 1970s the median income in the region was slightly above average, it is now substantially below average. The current averages for Wales and the North of England are also now further behind the national average than they were 40 years ago.

Meanwhile, workers in the highest-earning areas (the South East) earn around 25% more than those in the lowest-earning areas (the West Midlands). In London, when housing costs are taken into consideration, average incomes are slightly below the GB average.

Although absolute poverty has remained relatively unchanged since the recession, the report says this is an unhelpful measure, and more reflective of the lack of real income growth.

And here's that chart:

Absolute poverty in the UK

Employment and earnings are key drivers of poverty, hence low income is a more common problem for pensioners than for the rest of the population. This also helps explain why nearly a quarter of all poor children live in the 10% most deprived areas.

"Although the post-recession years have seen modest income growth, with little change in poverty rates and inequality, many people have seen large changes in their incomes," said Robert Joyce, associate director at the IFS and an author of the report.

"Fluctuating incomes mean that many fewer people are classed as persistently poor than have a low income at any point in time," he said.

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There are concerns that someone is leaking sensitive data to the markets ahead of time

Business Insider, 1/1/0001 12:00 AM PST

Leak

LONDON — Questions are being raised once again about the possibility that market sensitive economic data is being leaked from within the Office for National Statistics just weeks after the data office announced tough new measures to crack down on any leaks.

The pound slid quickly on Tuesday in the minutes before the ONS released its monthly inflation data, which showed a substantial fall — from 2.9% to 2.6% — in the headline figure.

Sterling dropped from roughly 1.3120 against the dollar around 45 minutes before the release to around $1.3040 as the inflation number came out, following a similar pattern to the one that aroused suspicion that there may be leaks earlier in the year.

Here is the chart:

Screen Shot 2017 07 19 at 08.23.16

"Given the suspicions that ONS data was being leaked, it is worrying to see another correct move just before the release. The measures taken by the ONS may possibly have been insufficient," David Woolcock, chairman of the committee for professionalism at ACI The Financial Markets Association told Reuters.

Prior to the release, Reuters journalist Andy Bruce speculated on Twitter that a significant move from the pound before the numbers could suggest a surprise:

Concerns about possible leaks first arose in March when the Wall Street Journal reported the findings of an analysis by Alexander Kurov, associate professor of finance at West Virginia University, of price data in the hour before key economic data was released, covering the period April 2011 to December 2016.

Professor Kurov found that bond future prices moved on average by 0.029% in the direction they would continue to move after the data was published, suggesting someone had inside information.

Professor Kurov told the paper: "Based on what I see in the data in this case, it is very unlikely that we are looking at a random pattern."

The Journal's investigation prompted the ONS to stop providing politicians and officials early access to its data releases in attempt to ensure public trust in the authority.

Previously, the ONS gave out data on inflation, unemployment, wages, and retail sales to a handful of Britain's most important decision makers — including the prime minister, the Chancellor of the Exchequer, and the Secretary of State for Business Energy and Industrial Strategy — 21 hours before the data's official release.

While leaks are a possibility, it could simply be the case that market participants are taking a punt on possible outcomes ahead of time.

Speaking to the Times, BNY Mellon's Head of Currency Strategy Simon Derrick noted that Sterling rallied strongly overnight into Tuesday morning, and that traders may simply have been readying themselves for a shock, rather than acting on any actual knowledge.

"Discretion is the better part of valour and in a thin summer market you can get a big move," he said.

Business Insider has contacted the ONS for comment.

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REPORT: Russia hacked UK energy companies on election day

Business Insider, 1/1/0001 12:00 AM PST

Russian President Vladimir Putin and Industry and Trade Minister Denis Manturov watch a display during the MAKS 2017 air show in Zhukovsky, outside Moscow, Russia, July 18, 2017.

LONDON — UK energy companies and other "critical infrastructure" were targeted by hackers believed to have been backed by Russia during last month's general election, according to Motherboard and The Telegraph.

GCHQ's National Cyber Security Centre recently sent a letter to UK energy companies, manufacturers, and water companies that was leaked to Motherboard, Vice's technology website.

The letter warns that the spy agency detected "advanced state-sponsored hostile threat actors, who are known to target the energy and manufacturing sectors," according to Motherboard. The attack began on June 8, the day of the snap election.

The letter does not name the state thought to be behind the attack but the Telegraph reported on Wednesday that it believes Russia to be the country behind the attack.

While there no disruption was caused, the GCHQ letter warns that "a number of Industrial Control System engineering and services organisations are likely to have been compromised." Motherboard said the nature of the attack suggests that hackers may have been trying to harvest usernames and passwords from the target companies.

In a statement released to Motherboard, the NCSC said: "We are aware of reports of malicious cyber activity targeting the energy sector around the globe. We are liaising with our counterparts to better understand the threat and continue to manage any risks to the UK."

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