The daily business briefing: April 5, 2023
Johnson & Johnson agrees to $8.9 billion talc settlement, the Justice Department charges founder of college-aid firm Frank with fraud, and more
1. J&J proposes $8.9 billion talc settlement
Johnson & Johnson said Tuesday it had agreed to pay $8.9 billion over the next 25 years to settle tens of thousands of lawsuits over claims its iconic Baby Powder and other talc products caused cancer. The company originally offered $2 billion. The settlement came after an appeals court in January invalidated J&J's attempt to dump its talc liability onto a new subsidiary that promptly filed for bankruptcy protection, a move known as a "Texas two-step" bankruptcy. The subsidiary, LTL Management, filed for bankruptcy protection again on Tuesday with a reorganization plan that included the proposed settlement. The company said about 60,000 talc claimants had signed off on the proposal.
2. DOJ charges Frank founder Charlie Javice with defrauding JPMorgan
The Justice Department on Tuesday charged Charlie Javice, founder of defunct college financial aid company Frank, with lying to JPMorgan Chase & Co. to get the bank to buy her startup for $175 million in 2021. Javice, 31, is accused of falsely claiming Frank had 4.3 million student customers when her data indicated it really had just 300,000. Manhattan prosecutors say that Javice paid a data science professor $18,000 to make up customers when JPMorgan asked for a list of Frank's users. JPMorgan says it discovered the fraud when it sent marketing materials to people on the client list and only 28 percent of the emails were delivered and 1.1 percent were opened. JPMorgan closed Frank in January.
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3. GM surpasses Ford to become No. 2 EV maker
General Motors sold 20,670 electric vehicles in the first quarter, enough to vault past Ford to second place in EV deliveries but still far behind industry leader Tesla's more than 161,000 sales from January to March, according to Moterintelligence.com estimates. Ford sold just 10,866 EVs in the quarter, hampered by its need to halt production of its top-selling Mustang Mach-E electric SUV while it retools a factory in Mexico. Ford also had to pause F-150 Lightning electric pickup production after a battery fire during a quality check. GM's gains came thanks to the popularity of its Chevrolet Bolt.
4. WSJ: Signature insiders sold $100 million in shares
Signature Bank insiders sold shares worth more than $100 million over the past three years, after the collapsed bank's shift to attract cryptocurrency companies boosted its stock, The Wall Street Journal reported Tuesday. The newspaper's analysis found that about half the sale amounts were tied to the bank's chair, its former CEO, and his successor. New York regulators put Signature into receivership in March, citing "a crisis of confidence in the management team" during a run on deposits following the collapse of Silicon Valley Bank. The failures of SVB and Signature were the second- and third-largest such collapses in U.S. history, respectively, after Washington Mutual, according to the Journal.
5. Stock futures slip after Dow, S&P 500 snap 4-day winning streak
U.S. stock futures edged lower early Wednesday after the Dow Jones Industrial Average and the S&P 500 snapped a four-day winning streak on Tuesday. Futures linked to the Dow, the S&P 500, and the Nasdaq were down 0.1 percent at 7 a.m. ET. Hawkish comments from New Zealand and Australian central banks revived fears that a prolonged period of high interest rates to fight inflation will drag down the global economy. The Dow and the S&P 500 fell 0.6 percent on Tuesday and the tech-heavy Nasdaq dropped 0.5 percent after reports on job openings and factory orders came in weaker than expected, increasing fears that the Federal Reserve's aggressive rate hikes were cooling the labor market as intended.
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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.
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