WeWork’s founder allegedly called maternity leave ‘vacation’

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WeWork’s pregnancy discrimination problem

Adam Neumann, who was ousted as WeWork’s C.E.O. in September, has faced lots of criticism for how he ran the office space company. Now his former chief of staff, Medina Bardhi, has accused him of discrimination, writes David Yaffe-Bellany of the NYT.

• When Ms. Bardhi became pregnant, she was replaced by a man who was paid more than twice as much as her, she says in a complaint filed with the Equal Employment Opportunity Commission in New York.
• When she returned, she was given a role with no clear responsibility.
• “As Mr. Neumann and Ms. Bardhi drove back from the offices of JPMorgan Chase on Sept. 16, the complaint said, Mr. Neumann said to her, ‘I hope you enjoyed your vacation,’ ” Mr. Yaffe-Bellany writes.
• Eventually, Ms. Bardhi got her job back. But when she became pregnant a second time, the cycle repeated, she said, with a male employee again hired to replace her, and she found herself sidelined when she returned to work.

The actions she described run counter to Mr. Neumann’s pledges to elevate women in the workplace. “We like to say that right now we’re bringing in the most talented women in the world at an early stage,” he said in a 2017 interview. “We’re going to grow them all as leaders.”

Ms. Bardhi asked the E.E.O.C. to file a class-action suit against WeWork on behalf of herself and “similarly situated female employees,” Andrew Edgecliffe-Johnson of the FT reports.

A WeWork spokeswoman denied the charges, saying that the company would “vigorously defend itself.”

Juul’s meltdown will cost Altria $4.5 billion

The tobacco giant Altria Group announced yesterday that it would write down its 35 percent stake in the vaping company Juul by $4.5 billion, Katie Robertson of the NYT reports.

Altria invested $12.8 billion in Juul last year, at a $38 billion valuation. It now values the e-cigarette maker at about $24 billion. The tobacco company blamed recent bans on vaping across the U.S. and the “increased likelihood” that the F.D.A. would “remove flavored e-vapor products from the market.”

Juul has come under intense scrutiny amid growing outrage over vaping among teens and a spate of mysterious lung illnesses that have been linked to e-cigarettes. (The C.D.C. said yesterday that there have now been 1,888 illnesses and 37 deaths tied to vaping in the U.S.) The U.S. attorney’s office in San Francisco, the F.D.A. and the F.T.C. are all investigating Juul’s marketing.

Juul replaced its C.E.O., Kevin Burns, last month, with an Altria executive, K.C. Crosthwaite, to contain the damage. But even that move has come under scrutiny: The F.T.C. is investigating if Altria played a role in that decision.

Altria is “committed to Juul’s success,” its chairman and C.E.O., Howard Willard, said yesterday.

Leon Cooperman takes on Elizabeth Warren

Escalating tensions between the billionaire money manager Leon Cooperman and Senator Elizabeth Warren about her pledge to overhaul Wall Street have burst out in a letter that he wrote to her, according to Kate Kelly and Shane Goldmacher of the NYT.

This all started when Mr. Cooperman predicted that stocks would fall 25 percent if Ms. Warren were elected president. (The senator wants to crack down on private equity, break up big banks and tax the wealthy.) Ms. Warren hit back, saying that Mr. Leon should “pitch in a bit more so everyone else has a chance at the American dream, too.”

“Your vilification of the rich is misguided,” Mr. Cooperman wrote in a letter made public yesterday. “For you to suggest that capitalism is a dirty word and that these people, as a group, are ingrates who didn’t earn their riches … and now don’t pull their weight societally indicates that you either are grossly uninformed or are knowingly warping the facts.”

Mr. Cooperman argued that many entrepreneurs, including himself, started off with little and often shared their wealth with needier people. He also questioned the assumptions on which Ms. Warren’s tax policies are based, and suggested she focus on income opportunity, rather than income inequality.

But Ms. Warren has welcomed attacks from Wall Street “as a signal of her populist credibility and as a rallying cry for small donors,” Ms. Kelly and Mr. Goldmacher write.

Big problems at SoftBank’s Vision Fund

As SoftBank confronts a tough challenge in fixing one of its biggest investments, WeWork — see above — it also faces renewed scrutiny of its $100 billion Vision Fund. And that is uncovering a lot of problems, Liz Hoffman and Bradley Hope of the WSJ find.

Much of the responsibility falls on Rajeev Misra, the former Deutsche Bank executive who leads the Vision Fund. A taster of his personality from the WSJ article: “He pads around the Vision Fund’s London headquarters barefoot, often chewing on betel nuts, a mild stimulant. He recently changed the layout of his office after consulting his astrologer.”

The Vision Fund has developed a host of problems under his watch:

• “Investment decisions often are made in minutes, said people familiar with its operations.”
• “A consultant’s report last year quoted employees describing a ‘chaotic’ and ‘personality driven’ firm with few controls, where people are ‘incentivized to gamble to look good’ and build their own personal brands.”
• “On several occasions, separate investment teams discussed investing in the same company on different terms.”
• “All in, the Vision Fund invested $4.4 billion in WeWork — a stake it now expects to write down by $3 billion, according to a person familiar with the plan.”
• Several other investments are underwater, including those in Uber; Wag, an on-demand dog-walking service; and Plenty, an indoor vertical-farming start-up. And Katerra, a home builder that the Vision Fund has backed, has reportedly had to pull out of projects and lay off employees.

Several investors have walked away from SoftBank’s second Vision Fund, the WSJ adds, including funds associated with Singapore, Taiwan and Koch Industries.

Mr. Misra is now being more cautious, the WSJ adds. The Vision Fund won’t make outsized bets on individual companies anymore, and it will slow down its pace of investments.

More: Masa Son, SoftBank’s chief, appeared to briefly fall asleep onstage at Saudi Arabia’s recent investment conference.

Fiat and Peugeot have their work cut out

The two automakers succeeded in announcing a plan to combine yesterday, which analysts welcomed. But there are plenty of hurdles to overcome if the combination is to succeed.

Fiat and Peugeot need to increase sales across the world, especially in China. Fiat is heavily reliant on North America, as its quarterly financial results yesterday showed. And both companies count too much on sales in Europe, whose car market is stagnant.

They must cut manufacturing capacity in Europe. Fiat’s factories in Italy ran at 57 percent capacity last year, according to an analysis cited by the WSJ, while its plants in the U.S. ran at 88 percent. But powerful labor unions in Italy and France may prevent the companies from cutting too many jobs.

And they need to create new best-sellers, particularly on the Fiat side. Fiat’s luxury brands, Alfa Romeo and Maserati, have struggled in recent years, forcing that company to consider dropping slow-selling models and even withdrawing the Alfa brand from some markets.

But analysts think the merger still makes sense. The deal is “great on a spreadsheet, but tricky to execute,” Philippe Houchois, an analyst at Jefferies, wrote in a recent research note. But he still said the logic supporting the transaction was “overwhelming.”

Deutsche Bank flagged its own Russian deal as suspicious

After German officials at the bank decided last year to move ahead with the $72 million sale of a California office complex to the son of a former top Kremlin official, employees in the U.S. took a rare step: They reported the transaction to the U.S. authorities, Charlie Savage and David Enrich of the NYT write.

U.S. bank executives raised objections to the proposed transaction. They warned that, while not illegal, it could further damage Deutsche Bank’s reputation, which had already taken a beating from a federal investigation into the bank’s role in Russian money laundering.

Frankfurt executives went ahead. But shortly after, the U.S executives filed a suspicious activity report about the deal with the Treasury Department’s Financial Crimes Enforcement Network.

Deutsche Bank said it conducted due diligence on the sale and didn’t find any evidence that it would violate laws against money laundering or sanctions. The only issue was one of reputational risk, which a spokesman told the NYT the bank would have faced whether it halted the sale or moved forward with it.

Revolving door

Apple promoted several executives to vice president, including Paul Meade, Jon Andrews, Gary Geaves and Kaiann Drance. It also rehired Bob Borchers, a former iPhone executive who recently worked at Google and Dolby Laboratories.

The speed read

Deals

• The Trump administration plans to scale back Obama-era rules that discourage companies from moving their legal headquarters abroad to reduce their U.S. tax burdens. (NYT)
• Barneys said yesterday that a federal bankruptcy judge approved its sale to Authentic Brands, potentially leading to most of its stores closing. But the retailer’s C.E.O. is holding out slim hope for a rival bid to emerge. (CNBC, Business Insider)
• Several suitors have reportedly expressed interest in buying the Reuters news service from Thomson Reuters, including the German media giant Axel Springer. (FT)
• Amgen agreed to buy a 20 percent stake in BeiGene, a Chinese biotech company, for $2.7 billion. (CNBC)
• The fantasy sports and betting site DraftKings is reportedly in talks to go public by selling itself to an investment firm. (Bloomberg)

Trump impeachment inquiry

• The House voted along party lines to approve guidelines for a public phase of its impeachment inquiry. (NYT)
• A White House aide testified to House investigators that he had been told President Trump wanted Ukraine to investigate Democratic opponents in exchange for military aid. (NYT)

Politics and policy

• The E.P.A. plans to weaken Obama-era rules that limit the leaching of heavy metals from ash produced by coal-fired plants into nearby water. (NYT)
• President Trump, a lifelong New Yorker, switched his residency to Florida. Gov. Andrew Cuomo of New York shot back, saying “Good riddance.” (NYT)
• The Trump administration is reportedly backing away from a plan to freeze car-emissions targets through 2025. (WSJ)
• How Medicare-for-all plans could both raise taxes and lower health care costs. (Upshot)

Brexit

• President Trump publicly praised Prime Minister Boris Johnson of Britain and said that Jeremy Corbyn, the leader of the opposition Labour Party, was “bad” for the country. (FT)
• Campaigns for the December general election kicked off yesterday, on the day Britain had been expected to depart the E.U. (Reuters)
• Britain reportedly won’t name a successor to Mark Carney, the governor of the Bank of England, before the December election. (Reuters)

Trade

• President Trump said that China and the U.S. were trying to choose a new site at which to sign a so-called phase one trade deal. (WSJ)
• Farm bankruptcies have reached their highest levels since 2011 as tariffs hurt the agricultural sector. (Business Insider)
• Britain’s trade deficit has reached its highest level in eight years. (FT)

Tech

• Sheryl Sandberg said that the money Facebook earned from political ads isn’t worth the current controversy. Also: Aaron Sorkin wrote an open letter to Mark Zuckerberg, accusing him of “assaulting truth.” (Business Insider, NYT Op-Ed)
• China switched on its first 5G networks, and is offering customers big discounts to encourage adoption. (Bloomberg)
• Xavier Becerra, California’s attorney general, has been conspicuously absent from meetings about antitrust investigations into Big Tech, leading to speculation about how aggressively he will regulate homegrown companies like Google and Facebook. (NYT)
• Also in Big Tech antitrust: Google wants to limit what information is shared in such investigations. (NYT)
• Alphabet’s plan to overhaul part of Toronto as a futuristic smart city, known as Sidewalk Labs, has been severely curtailed, with development limited to 12 acres rather than 190 acres. (NYT)

Best of the rest

• It will take more than lower mortgage rates to revive the housing market. (NYT)
• Hong Kong is now in recession. (NYT)
• How the sports website Deadspin imploded. (NYT)
• Saudi Arabia is reining in spending, in the hope that its economic reforms are gaining traction. (FT)
• “Sometimes drug prices are too low.” (WSJ op-ed)

Thanks for reading! We’ll see you next week.

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