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Office of Inspector General to review whether Fed officials’ trading activity broke ethics rules or the law

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Federal Reserve Chairman Jerome Powell attends the House Financial Services Committee hearing on Capitol Hill in Washington, U.S., September 30, 2021.

Al Drago | Reuters

The Federal Reserve said it is working with the Office of Inspector General in its review of 2020 trading activity by a handful of central bank officials to determine if those transactions met ethics standards and did not break any laws.

The addition of the Inspector General’s office adds weight to a growing controversy at the Fed after a series of financial disclosures showed that Vice Chair Richard Clarida, Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren all made significant financial transactions in 2020.

Those trades, some of which totaled millions of dollars, drew ire from Capitol Hill and concern that central bank officials could have traded based on nonpublic information as the Fed embarked on emergency measures to help save the U.S. economy from the Covid-19 recession.

“As part of our comprehensive review, we began discussions last week with the Office of Inspector General for the Federal Reserve Board (OIG) to initiate an independent review of whether trading activity by certain senior officials was in compliance with both the relevant ethics rules and the law,” a Fed spokesman told CNBC. “We welcome this review and will accept and take appropriate actions based on its findings.”

Renewed scrutiny of Fed trading led Sen. Elizabeth Warren, D-Mass., to on Monday urge the Securities and Exchange Commission to open an insider trading probe into Clarida, Kaplan and Rosengren.

Public disclosure forms released in May showed Clarida shifted between $1 million and $5 million from a broad-based bond fund into broad-based equity funds in February 2020, just before markets plunged in March as the U.S. introduced widespread lockdowns to slow the spread of Covid-19.

Similar disclosure forms released in recent weeks document that Kaplan, the Dallas Fed president, traded millions of dollars in individual stocks last year. The forms also showed that Rosengren, the Boston Fed president, traded in real estate while he and other Fed members worked to buy up mortgage-backed securities.

Both resigned last week amid the public uproar, though Rosengren cited health issues for his early exit.

This is breaking news. Please check back for updates.

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N26 triples valuation to $9 billion, now worth more than Commerzbank

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N26’s logo seen displayed on a smartphone.

Rafael Henrique | SOPA Images | LightRocket via Getty Images

LONDON — German digital bank N26 said on Tuesday it has raised $900 million in a new funding round that values the firm at $9 billion.

That’s nearly three times N26’s valuation in its last private fundraising round and means it’s now worth slightly more than Commerzbank, Germany’s second-largest lender. Frankfurt-listed Commerzbank has a market cap of 7.6 billion euros ($8.8 billion).

N26, which counts billionaires Peter Thiel and Li Ka-Shing as investors, raised the fresh cash from Third Point, the hedge fund led by U.S. billionaire investor Dan Loeb, and Coatue, while Dragoneer also invested.

Founded in 2013, N26 is one of several start-ups in Europe seeking to challenge established banks with app-based checking accounts and little to no fees. Competitors include Revolut, which was recently valued at $33 billion, and Monzo.

Maximilian Tayenthal, N26’s founder and co-CEO, said the company plans to spend the extra cash on hiring 1,000 people globally and on launching new features like cryptocurrency trading.

“We want to bring in more people with a focus on product, technology and security,” Tayenthal told CNBC in an interview.

IPO ambitions

N26 now has 7 million customers across Europe and the U.S. and is on track to process $90 billion in transactions this year. The company recently acquired a banking license in Brazil, with a team of 40 employees already on the ground in São Paulo. N26 expects to roll out its app publicly in the country within the next year, Tayenthal said.

N26 now has enough “financial leeway” to prepare for an initial public offering, Tayenthal said, adding that he expects the firm to be “structurally IPO-ready” within the next 12 to 18 months.

“We have no hurry to go public,” Tayenthal said. “With increasing profitability, the kind of money we are raising right now, it really takes away any time pressure.”

With plenty of money available in private equity markets, many tech companies are opting to stay private for longer. Stripe, for example, raised funds at a $95 billion valuation earlier this year, making it one of the most valuable start-ups in the U.S.

Several European fintechs have managed to reach multibillion-dollar valuations amid surging investment activity. Revolut was recently valued at $33 billion in a funding round led by SoftBank, for example.

However, some investors have expressed concern about their ability to make a profit.

N26 is still loss-making, racking up losses of 216.9 million euros in 2019. Its European business lost 110 million euros in 2020, down from 165 million a year earlier. Tayenthal said N26 isn’t under pressure from investors to make a profit anytime soon.

Growing pains

Like other fintech companies, N26 has dealt with growing pains lately. The firm faced outcry from staff at its Berlin office last year, who at the time said that trust in management was at an “all-time low.”

Meanwhile, N26 was fined $5 million by BaFin, Germany’s financial services regulator, for being late to submit suspicious activity reports that are used by authorities to investigate money laundering.

On Tuesday, the bank said it had reached an agreement with BaFin to limit how many customers it onboards each month to a maximum of 50,000 to 70,000. The watchdog is expected to publish the decision in an upcoming order, N26 said.

Tayenthal warned the move is likely to slow N26’s growth significantly in the short term.

“For a couple of months, it will be material to the business,” he said.

As for work culture, Tayenthal says the firm has worked to improve employee representation at the company over the past year. The company has also begun to foster a shift toward flexible work during the Covid-19 pandemic, he added.

“We were actually very strong believers in having everyone in the office as much as possible. We are moving away from that,” Tayenthal said.

“There [are] obviously certain roles where you need to be in the office more regularly. And we also believe in bringing people together occasionally, but we are going to move to a more flexible model.”

N26 isn’t the only fintech embracing remote work. Revolut has said it will allow employees to work overseas for up to 60 days a year. Such moves are in contrast with major Wall Street banks like JPMorgan and Goldman Sachs, which are encouraging workers to return to the office. Some big European lenders are taking a more flexible approach.

N26 said it would expand its staff equity ownership scheme to cover all employees. Germany last year unveiled plans to reform its rules on employee stock options, a typical perk at many tech start-ups.

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Vestas to install prototype of ‘most powerful wind turbine’

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The shadow of a turbine from a wind farm is seen on a field in Brandenburg, Germany. As technology develops, the size of wind turbines is increasing.

Patrick Pleul | picture alliance | Getty Images

Vestas has announced plans to install a prototype of its 15 megawatt offshore wind turbine at a facility in Denmark.

In a statement, the company said the prototype, known as V236-15 MW, would be installed in the second half of 2022 at a test center in Western Jutland, Denmark. It is expected to start generating electricity in the fourth quarter of 2022.

The scale of the V236-15 MW is considerable. According to Vestas, it will stand 280-meters tall, with prototype blades measuring 115.5 meters in length. The prototype will be installed onshore in order to make access easier when it comes to testing.

Read more about clean energy from CNBC Pro

The turbine’s production output is expected to be 80 gigawatt hours a year. Vestas said this would be able to power roughly 20,000 European households, displacing over 38,000 metric tons of carbon dioxide in the process.

While Vestas claims its prototype “will be the tallest and most powerful wind turbine in the world once installed,” other companies are also developing their own massive turbines.

In August, MingYang Smart Energy released details of a huge new offshore wind turbine. Dubbed the MySE 16.0-242, MingYang’s turbine will have a height of 264 meters, a rotor diameter of 242 meters and a blade length of 118 meters. Its capacity will be 16 MW.

The Chinese company is aiming to install a prototype in 2023 before starting commercial production the year after.

Meanwhile, at the beginning of October, GE Renewable Energy said its Haliade-X prototype, which has been installed in the Dutch city of Rotterdam, had started to operate at 14 MW.

“The ability to produce more power from a single turbine means fewer turbines need to be installed at each wind farm,” the company said at the time. “In addition to less capital expenditure, this also simplifies operations and maintenance.”

The development of huge wind turbines has generated excitement in some quarters, but there are undoubtedly challenges too.

According to a recent report from industry body WindEurope, European ports will require new infrastructure and significant investment over the next few years to cope with the growth of the region’s offshore wind sector and its turbines.

In its report, published in May, the Brussels-based organization said Europe’s ports would have to invest 6.5 billion euros (around $7.54 billion) by 2030 in order to support the expansion of offshore wind.

Among other things, the report addressed the new reality of bigger turbines and the effect it could have in relation to ports and infrastructure.

“Upgraded or entirely new facilities are needed to host larger turbines and a larger market,” it said.

“They will need to cater for operating and maintaining of a larger fleet (including training facilities), for upcoming decommissioning projects and to host new manufacturing centres for bottom-fixed and floating offshore wind.”

Further to this, ports would need to “expand their land, reinforce quays, enhance their deep-sea harbours and carry out other civil works.”

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Ford to convert British factory into electric vehicle plant

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A general view of the Halewood Ford transmission assembly plant after Ford announced a 230 GBP investment on October 18, 2021 in Halewood, England.

Christopher Furlong | Getty Images

LONDON – Ford announced Monday that it intends to spend $315 million (£230 million) transforming a factory in northwest England into a site that will make components for electric vehicles.

The vehicle transmission facility in Halewood, Merseyside, will be turned into an electric power unit production plant, the U.S. motor giant said.

Ford stressed that the investment is subject to and includes U.K. government support, which reportedly amounts to £30 million.

“This is an important step, marking Ford’s first in-house investment in all-electric vehicle component manufacturing in Europe,” said Stuart Rowley, president of Ford Europe, in a statement.

“It strengthens further our ability to deliver 100% of Ford passenger vehicles in Europe being all-electric and two-thirds of our commercial vehicle sales being all-electric or plug-in hybrid by 2030,” he added.

Ford said it will start making the electric power units at Halewood in mid-2024, adding that it plans to produce around 250,000 of them at the site each year.

Last year, the U.K. government created a £500 million pot to try to persuade electric vehicle manufacturers and battery makers to expand their operations in the U.K. It wants sales of new petrol and diesel cars to end in the U.K. by 2030.

Elsewhere this year, Nissan and Stellantis, the world’s fourth biggest car maker, have also announced electric vehicle investments at their U.K. plants. BMW already makes the electric Mini at a site in Oxford.

U.K. Business Minister Kwasi Kwarteng said in a statement: “Ford’s decision to build its first electric vehicle components in Europe at its Halewood site is further proof that the UK remains one of the best locations in the world for high-quality automotive manufacturing.”

Ford said 500 jobs at the factory will be safeguarded as a result of the investment.

 

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