2024-01-12 16:46

WASHINGTON, Jan 12 (Reuters) - A U.S. federal government shutdown in coming weeks would likely disrupt the soon-to-start tax filing season for 2023 income, the head of the Internal Revenue Service said on Friday, even as the agency takes some steps to ensure that tax collections continue. "We have experienced shutdowns before. We have not experienced shutdowns in the middle of filing season. So there's some uncertainty there," IRS Commissioner Danny Werfel told reporters. He said the IRS "will do everything in our power" to minimize such disruptions, including by invoking authorities to maintain certain operations if government spending authority lapses later in January and in February. "We'll have a variety of different carve-out elements that will allow us to maintain operations," he said, but a shutdown "will increase the risk that we don't have as smooth a filing season as we intend to have." Werfel did not specify which employees would be furloughed during a shutdown. The agency would face a lapse in appropriated funds if Congress fails to pass a new spending measure by Feb. 2, under a two-tiered continuing resolution. The IRS is under pressure to continue improving taxpayer services, including reducing telephone hold times for people with questions about their tax returns, as congressional Republicans seek to claw back more of the $80 billion in IRS modernization funding that Democrats approved in the 2022 Inflation Reduction Act. A deal that sets top-line spending limits for federal agencies would accelerate a $20 billion reduction in those funds over one year instead of two years as agreed last June. But Werfel said that the shift would still allow the IRS to maintain its investment plans to improve customer service, information technology and tax compliance and enforcement. "It will not impact our efforts until the later years," Werfel said, adding that the agency still has $60 billion from the 2022 Inflation Reduction Act to improve collections and taxpayer service. "Our intent is to spend the money to have maximum impact in helping taxpayers in the areas that we've described," he said. This would allow better access for taxpayers and continue momentum in finding areas where wealthier taxpayers are shielding income and not paying taxes owed, and he hopes that the "positive impact" from these changes will prompt lawmakers in future years to restore those funds. Werfel said that the IRS was continuing to prioritize audits for wealthy individuals who have not filed tax returns or paid recognized tax debts. After an initial success of collecting $38 million from more than 175 high-income taxpayers, Werfel said that the IRS is pursuing 1,600 other wealthy taxpayers. The IRS has assigned over 900 of those cases to revenue officers, with $482 million collected so far. https://www.reuters.com/markets/us/irs-chief-says-government-shutdown-would-likely-disrupt-us-tax-filing-season-2024-01-12/

2024-01-12 16:40

Jan 12 (Reuters) - U.S. lawmakers have urged the Securities and Exchange Commission (SEC) to review its cyber security preparedness after the financial regulator's X account posted market material information earlier in the week due to a hack. Someone briefly accessed its X, formerly called Twitter, account on Tuesday, the agency had confirmed, and posted a fake message saying it had approved exchange traded funds (ETF) for bitcoin. The SEC eventually approved the first U.S.-listed ETFs to track bitcoin on Wednesday, but the unauthorized post a day earlier led to a rise in the price of Bitcoin to around $48,000 before falling to below $45,000 minutes later. In a letter to the agency on Thursday, Ron Wyden, a Democratic senator from Oregon, and Cynthia Lummis, a Republican senator from Wyoming, sought an investigation into the incident, which they deemed as "SEC's apparent failure to follow cybersecurity best practices". X, which is owned by billionaire and Tesla boss Elon Musk, confirmed that hack. It said that an "unidentified individual" obtained control over a phone number associated with the agency's account and that the SEC did not have two-factor authentication enabled at the time. Two-factor authentication (MFA) is a two-pronged privacy tool which allows access to an Internet account only after the user has keyed in the password and a security key sent over on email or on the phone. "We urge you to investigate the agency's practices related to the use of MFA, and in particular, phishing-resistant MFA, to identify any remaining security gaps that must be addressed," Wyden and Lumis said in their letter. The SEC had earlier said it was working with law enforcement to investigate the hack. https://www.reuters.com/technology/us-lawmakers-urge-sec-fix-cybersecurity-after-x-account-hack-2024-01-12/

2024-01-12 16:33

Jan 12 (Reuters) - CoinShares International said on Friday it has exercised an option to acquire Valkyrie Funds, expanding the European digital asset firm's U.S. offerings, after Valkyrie's spot bitcoin exchange-traded fund won the U.S. regulator's approval. The U.S. securities regulator on Wednesday approved eleven U.S.-listed ETFs, including Valkyrie's, that track the spot price of bitcoin , the world's largest cryptocurrency. They saw a combined $4.6 billion worth of shares trade hands as of Thursday as investors jumped into the landmark products. The acquisition will see CoinShares take over Valkyrie's approximately $110 million in assets under management, spread across the Valkyrie Bitcoin and Ether Strategy ETF (BTF.O), the Valkyrie Bitcoin Miners ETF (WGMI.O) and the newly listed Valkyrie Bitcoin Fund (BRRR.O), CoinShares said. CoinShares currently manages $4.5 billion in assets across crypto-focused exchange-traded products. The firm's Stockholm-listed shares were last trading down 3.4%. The acquisition is pending completion of due diligence and final company board approval, CoinShares said. https://www.reuters.com/technology/coinshares-acquire-valkyrie-funds-after-us-spot-bitcoin-etf-approval-2024-01-12/

2024-01-12 16:30

Jan 12 (Reuters) - South Korea's financial regulator on Friday said brokering U.S. spot bitcoin exchange-traded funds (ETFs) may be illegal in local markets, in an official response to the U.S. Securities and Exchange Commission's approval of such ETFs. "For domestic securities firms, any brokering of overseas-listed Bitcoin spot Exchange Traded Funds may violate the existing government stance on virtual assets and the Capital Markets Act," the Financial Services Commission (FSC) said in a statement. Several exchange-traded funds tied to the spot price of bitcoin began trading in the U.S. on Thursday in a landmark moment for the cryptocurrency industry that has been seeking regulatory approval for the financial product for over a decade. South Korea's FSC added that it will continue to review the regulatory landscape around investment of spot bitcoin ETFs. https://www.reuters.com/technology/south-korean-regulator-warns-brokering-us-bitcoin-etfs-locally-may-be-illegal-2024-01-12/

2024-01-12 15:01

BlackRock to pay $3 bln in cash and roughly 12 mln in shares Cohen new chief product officer, GIP's Ogunlesi to join board BlackRock had been on the hunt for big acquisition Quarterly profit $9.66 per share vs forecast $8.84 NEW YORK/LONDON, Jan 12 (Reuters) - BlackRock (BLK.N) said on Friday it would buy Global Infrastructure Partners (GIP) for $12.5 billion in a major bet on alternative assets and announced a shake-up of its top management. The deal, which includes $3 billion in cash and 12 million BlackRock shares, will put the asset management giant at the heart of investing in ports, power, and digital infrastructure projects around the globe. Once the deal closes, the firm will hold approximately $150 billion in infrastructure assets across a portfolio that ranges from the U.S. liquefied natural gas export market to wastewater services in France to airports in England and Australia. Soaring demand for logistics and digital infrastructure, and the trillions of dollars needed for the transition away from high-carbon energy, have made the asset class increasingly popular among institutional investors. “Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy," said chief executive Larry Fink. BlackRock, which manages $10 trillion across all markets, has been on the hunt for what it hopes will be a transformative deal as its revenues stagnated and its environmental, social, and corporate governance business came under political attacks in the United States. "This is [Fink's] chance to put his final fingerprint on the company" and allow it to compete with firms such as BlackStone and Apollo Global Management, said Kyle Sanders, an analyst at Edward Jones, who has a buy rating on the stock. Founded in 2006, GIP manages more than $100 billion in assets and has a portfolio including Britain's Gatwick airport, the Port of Melbourne and major offshore wind projects. MANAGEMENT CHANGES BlackRock also unveiled changes to its senior management structure, at a time when speculation has been growing over who will succeed Fink, who founded BlackRock in 1988. Stephen Cohen becomes chief product officer and will lead a new global product strategy group, while Salim Ramji, global head of iShares and index investments, is leaving, according to a company memo seen by Reuters. BlackRock is also creating a new international business structure under Rachel Lord to lead Europe, the Middle East, India, and Asia Pacific, the memo said. Five of GIP's founding partners will join BlackRock, including GIP Chairman Bayo Ogunlesi, who will also join BlackRock's board of directors following closure of the deal, it added. Ogunlesi will step down from Goldman Sachs' board following his move to BlackRock, Goldman CEO David Solomon said on Friday. The deal adds "new contenders" to the list of candidates to succeed Fink, who at 71 has yet to name his eventual replacement, said Cathy Seifert, an analyst at CFRA. "As alternative assets become an increasingly important part of BlackRock’s business mix, the next leader’s private asset skill set will become more important," she said. PROFIT BEAT BlackRock also reported an 8% rise in quarterly profit, helped by a rebound in markets that boosted its assets under management. Hopes of a soft landing for the U.S. economy - a scenario where inflation eases without a sharp rise in unemployment - have cheered markets in recent months. A dovish tilt from the U.S. Federal Reserve, which has left interest rates unchanged since July, has also boosted sentiment, helping BlackRock end the fourth quarter with $10.01 trillion in assets under management (AUM), up from $8.59 trillion a year earlier. On an adjusted basis, BlackRock earned $1.45 billion, or $9.66 per share, for the three months ended Dec. 31, compared with $1.36 billion, or $8.93 per share, a year earlier. Analysts on average had expected a profit of $8.84 per share, according to LSEG data. Shares of the firm fell 0.4% Friday, while the broad S&P 500 rose approximately 0.3%. https://www.reuters.com/business/finance/blackrock-quarterly-profit-rises-strong-assets-under-management-2024-01-12/

2024-01-12 14:53

Jan 11 (Reuters) - Even as U.S. inflation has eased in the last year, an unusual culprit has emerged in recent months as a surprise force in preventing consumer prices from falling even further: auto insurance. Consumer prices in December overall rose 3.4% from a year earlier, the Labor Department said on Thursday in the release of the monthly Consumer Price Index, more than the 3.2% economists polled by Reuters had expected and up from 3.1% in November. Several familiar categories accounted for much of the overshoot, with stubbornly high shelter costs in particular accounting for close to two-thirds of the increase. But the highest annual increase for car insurance in nearly half a century made a notable upward contribution that may not be fading soon. "The behavior of the MVI (motor vehicle insurance) component of the CPI has truly been remarkable, and I don’t see any evidence of near-term relief," Tom Simons, U.S. economist at Jefferies, said in an email. Motor vehicle insurance premiums skyrocketed by 20.3% in December from a year earlier, the largest increase since the mid-1970s, the government data showed. Premiums have risen persistently all year on a monthly basis, too, climbing 1.5% last month. That is roughly on par with the average monthly increase over the last year, a rate that exceeds all monthly increases prior to the pandemic. What's more, auto insurance - an expense category that has rarely registered as a hefty influence in overall inflation - accounted for 15% of headline price increases over the final quarter of 2023. 'STICKY STUFF' Simons said several factors are adding to the rising premiums, such as increasing costs for the labor and parts to repair damaged vehicles, and the overall rise in vehicle prices over the last several years, which lifts the underlying collateral being insured. Declining demand from reinsurers is also a factor, he said, and "natural disaster risk is probably contributing on the margin." Auto insurance is typically regulated on a state-by-state basis, and costs are subject to major regional differences. "We may have some authorities there as well but those sit with independent agencies," White House National Economic Council Director Lael Brainard said when asked about the outsized jump in insurance costs. There is also a "call to big business to bring down those prices that they increased so much when supply chains were snarled." All of the U.S. government's independent agencies have "a real focus on tackling unfair and deceptive price practices," Brainard said. Still unclear is the degree to which insurance costs alone can impede further progress on inflation and disrupt the outlook for Federal Reserve interest rate cuts later this year. "It’s hard for me to see how this might increase so much more from here that it would have an influence on monetary policy," Simons said. "I don’t think we’re looking at another 10-20% increase from here for the next 12 months, but again, I’m no expert on insurance." "This is a great example of the 'sticky stuff' in the inflation data ... prices for services that are largely non-discretionary and have no substitute." https://www.reuters.com/markets/us/remarkable-surge-auto-insurance-costs-fans-us-inflation-2024-01-11/