Jun 13

Wonders & Blunders: Changing the Rules of the Game

 

 
OUR CRITICAL ANALYSIS OF THE WEEK’S NEWS
The FIFA World Cup kicks off on tomorrow in Russia, starting a month of excitement for football/soccer fans around the world.
 
China’s team didn’t qualify for World Cup finals, but a Chinese fintech firm did recently win a championship of sorts … Jack Ma’s Ant Financial reaching the highest valuation for any tech or financial firm in the world.
 
Several rules of the game have changed recently for financial firms. The Fiduciary Rule’s reversal in March may soon come into play, affecting retirement investors.
In other deregulation news, the Dodd-Frank Act stress tests are no longer required for large banks. Will banks’ internal risk teams step up to defend us from another financial crisis?
 
Ant Financial Scores the Highest Valuation
 
Ant Financial’s Series C private funding round totaled $14 billion. The funding round gives Jack Ma’s Chinese fintech company a valuation of $150 billion, making it the most valuable privately-held tech company. It also dwarfs traditional financial firms such as American Express, Goldman Sachs and Morgan Stanley. Ant Financial runs Alibaba’s Alipay platform and the funding will be used for international expansion and technology investments. An IPO could be in the near future for the firm.
Keeping the Fiduciary Rule in Play
Blunder: The ‘Fiduciary Rule’ May Sound Boring, But Its Collapse Threatens Your Retirement – Katherine Chiglinsky in Bloomberg Businessweek.
 
The Fiduciary Rule requires financial advisors to put their clients’ interests first. Consumer advocates considered it one of the most important Obama-era reforms for everyday investors. A federal appeals court struck the rule down in March, which leaves the future unclear for those investing in their retirement. The SEC released an investor protection plan in April but critics say it is too vague, with “best interest” left undefined. Analysts say some industry changes from the Fiduciary Rule may be hard to reverse, after the millions of dollars spent revising training programs, procedures, and documents. Removing the rule could also give financial firms a bad public impression.
The Government Will No Longer Referee Stress Tests for Big Banks
Wonder or Blunder: With easing of stress tests, bank risk teams have to step up – Ed Young in American Banker.
 
Parts of the Dodd-Frank Act will be “significantly scaled back” after last month’s regulatory relief law passed, including eliminating mandated annual stress tests known as the Dodd-Frank Act Stress Test Requirement (DFAST) for banks with less than $250 billion in assets. Experts in favor of DFAST thought mid-sized banks needed the stress tests to understand vulnerabilities, while experts opposed to DFAST believed it to limit lending to individuals and small businesses. Banks should be doing their own stress testing on a regular basis as part of their internal risk management program to avoid another financial crisis. But will they take on that responsibility, once the testing is no longer law?
» IN THE NEWS
Crain’s Chicago Business selected Millennium Trust Company as a member of Crain’s Fast 50 for 2018.
StarTribune speaks with Tennant about the company’s collaboration with Brain Corpturning manually-operated machines into autonomous solutions.
» BOTTOM LINE: Accolades and Accomplishments: The Art of Award Strategy
“Best Places to Work”, “40 Under 40” and “Most Trusted Company” are a few examples of the many awards and recognitions companies seek to capture during the year. Many organizations recognize that winning corporate awards is valuable, but don’t have an effective plan for targeting, winning or leveraging awards.
» FEATURED CASE STUDY: Brain Corp
Brain Corp wanted to be recognized as the company that builds artificial brains for robots and self-driving vehicles, not as a company that builds robots. Brain Corp asked KCD PR to quickly advance that message to key technology and business reporters prior to the company’s announcement of its partnership with a national retailer.
 
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