Business briefing

The daily business briefing: October 31, 2017

The FBI investigates Puerto Rico's controversial power contract, Netflix prepares to end House of Cards, and more


FBI looks into controversial $300 million Puerto Rico contract

The FBI is investigating a controversial $300 million contract between the Puerto Rico Electric Power Authority and the tiny Montana-based company Whitefish Energy Holdings, The Wall Street Journal reported Monday. Puerto Rico Gov. Ricardo Rosselló announced Sunday that, at his request, PREPA's board will cancel the deal. The power authority hired Whitefish to rebuild power lines on the island following two destructive hurricanes. The deal drew scrutiny because Whitefish only had two full-time employees when it got the contract, and is based in Interior Secretary Ryan Zinke's hometown. Zinke has denied any wrongdoing, and Rosselló said he has not found anything improper about the deal, although it had become "a distraction."


Samsung names new generation of leaders

Samsung said Tuesday that it had promoted three high-ranking executives — Kim Ki-nam, Kim Hyun-suk, and Koh Dong-jin — to be co-CEOs in a shake-up aimed at easing fears of a leadership vacuum after the South Korean company's heir apparent, Jay Y. Lee, was convicted on bribery charges earlier this year. "It's a younger generation of leaders, but the divisional structure has not fundamentally changed," said Park Ju-gun, head of research firm CEO Score. Samsung, the world’s biggest maker of semiconductors, televisions, and smartphones, reported record third-quarter profit on Tuesday and promised to share the wealth with shareholders by paying out $26 billion by 2020. The results provided fresh evidence that Samsung is continuing a strong recovery from its costly recall of its Galaxy Note 7 smartphone.


Fed starts two-day meeting as Trump prepares to name Yellen replacement

Federal Reserve policy makers start a two-day meeting on Tuesday that is expected to be uneventful, although investors will closely examine the central bank's Wednesday statement for sign of the Fed's view on the economy's strength. This Federal Open Market Committee meeting will be one of the last for Fed Chair Janet Yellen. President Trump is expected to name his choice for her replacement on Thursday. Trump is expected to nominate Jerome H. Powell, a Republican with ties to the party establishment and the financial industry who has been a Fed governor since 2012. He has backed Yellen's approach and is not expected to push major changes to Fed policies as the central bank slowly winds down its stimulus efforts as the economy improves.


Tech shares poised to end month with gains

Technology shares gained strength Tuesday, with Nasdaq-100 index futures rising by 0.3 percent as U.S. markets looked to finish October with gains. Dow Jones Industrial Average and S&P 500 futures rose by nearly 0.2 percent. The Dow and the S&P 500 fell by just over 0.3 percent on Monday after a report that the House might back phasing in the GOP's planned corporate tax cut instead of enacting it all at once. Small-cap stocks were the hardest hit, with the Russell 2000 Index taking its biggest dive since August. "Smaller companies are more affected by those taxes than the larger companies and so they're going to be the ones that would benefit the most," said Don Riley, chief investment officer at Pennsylvania-based Wiley Group. "That's why you see they tend to react more over the whole tax thing."


Netflix announces end of House of Cards following Spacey allegations

Netflix on Monday decided to end its hit series House of Cards next year after the surfacing of allegations that star Kevin Spacey made unwanted sexual advances against then-14-year-old actor Anthony Rapp in 1986. The show will run through its upcoming sixth season. Netflix announced the move just over 12 hours after Rapp, known for his role in Star Trek Discovery, went public with his allegations. He said Spacey made sexual advances when they were alone at Spacey's New York City apartment after a party at a time when both were appearing in Broadway plays. Netflix and producers Media Rights Capital said in a joint statement that they were "deeply troubled by last night's news." Spacey said he did not remember the incident but, if it was true, he owed Rapp "the sincerest apology."


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