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UK Regulator to Probe Conflicts of Interest in Private Asset Management

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The UK’s Financial Conduct Authority (FCA) has announced an investigation into potential conflicts of interest at firms managing private assets, warning of possible adverse impacts on investors. As money managers shift focus to private markets—such as infrastructure and credit funds—amid declining interest in actively-managed stocks, the regulator aims to ensure that investor interests are not compromised. Unlike publicly-traded assets, private market investments lack liquidity and price transparency, heightening risks for investors.

In a letter to market participants, the FCA highlighted concerns over firms operating in overlapping business lines, which could lead to conflicts of interest. The regulator will evaluate how firms implement their conflict-of-interest frameworks and expects updated procedures to manage these risks as private markets expand. The FCA emphasized that governance bodies must oversee these frameworks effectively to protect investor outcomes.

Additionally, the FCA published a speech by its executive director, Sarah Pritchard, addressing leverage-related risks in private markets. Speaking at an Investment Association roundtable, Pritchard acknowledged that leverage supports well-functioning markets but warned of vulnerabilities when poorly managed. She cautioned that excessive leverage, lack of transparency, or concentrated risks could amplify instability and erode confidence during economic shocks.

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Musicians Protest UK’s AI Copyright Law with Silent Album Release

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More than 1,000 musicians, including Kate Bush and Cat Stevens, have released a silent album titled Is This What We Want? to protest proposed changes to Britain’s copyright laws. The UK government is considering allowing artificial intelligence developers to train their models on any legally accessible material unless creators explicitly opt out, a move that artists argue undermines copyright protections and threatens their livelihoods. The album features recordings of empty studios and performance spaces to symbolize the potential consequences for musicians.

The proposal, part of Prime Minister Keir Starmer’s vision to make Britain an AI superpower, has sparked widespread criticism from the creative community. Opponents, including Annie Lennox, Hans Zimmer, and The Clash, warn that the changes would allow AI companies to use artists’ work for free, making it harder for human creators to compete. Ed Newton-Rex, founder of the nonprofit Fairly Trained, stated that while the UK can lead in AI, it should not come at the expense of its world-renowned creative industries.

A government spokesperson defended the proposal, stating that the current copyright and AI regulations were limiting the potential of creative industries, media, and the AI sector. They emphasized that no final decisions had been made and that extensive consultations with stakeholders would continue. The public consultation on the legal changes closed on Tuesday, with many in the music industry urging the government to reconsider its approach.

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Biden Authorizes Ukraine to Target Certain Sites in Russia Using US Arms

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US President Joe Biden has reportedly authorized Ukraine to utilize American-supplied weaponry to target specific sites within Russia, particularly in the vicinity of the Kharkiv region. This directive aims to enable Ukraine to retaliate against Russian forces attacking or preparing to attack them.

Recent advances by Russian forces in the Kharkiv region, close to the Russian border, have prompted this decision. Despite this, the United States maintains its stance against allowing the use of long-range strikes or the Army Tactical Missile System (ATACMS) within Russian territory.

Regarding the possibility of targeting Russian aircraft, US officials stated that Ukraine has not been prohibited from defending itself against Russian planes flying over Russian soil. While the UK and some European leaders have expressed openness to relaxing restrictions on the use of Western-supplied weapons by Ukraine, the US has previously been hesitant due to concerns about escalation.

However, recent events have prompted a shift in this approach, as indicated by US Secretary of State Antony Blinken during a visit to Moldova. Russian forces have taken advantage of opportunities to advance further into Ukrainian territory, particularly in Kharkiv, amid delays in the arrival of additional Western weapons to Ukraine.

Recent attacks, including the bombing of a supermarket and a residential building, have resulted in civilian casualties and extensive damage, with Ukrainian officials accusing Russian forces of targeting civilian infrastructure.

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Kyiv can use British weapons inside Russia – Cameron

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UK Foreign Secretary Lord Cameron, during his visit to Kyiv, reiterated the UK’s commitment to supporting Ukraine with £3 billion annually for defense purposes. He emphasized Ukraine’s sovereign right to defend itself and acknowledged the necessity of striking back at Russia in response to aggression. However, this stance was met with criticism from Russia, which condemned it as a dangerous escalation that could jeopardize European security. Despite this, Lord Cameron maintained the UK’s position in supporting Ukraine’s defensive actions.

The United States reportedly advised Ukraine against targeting Russian oil refineries out of concern that such actions could provoke further escalation in the conflict. This caution reflects broader international efforts to mitigate tensions and prevent the situation from deteriorating into a full-scale war. The delicate balance of power in the region underscores the importance of diplomatic dialogue and strategic restraint in managing the crisis.

Meanwhile, Russian advancements in eastern Ukraine have heightened fears of an impending summer offensive. Ukrainian intelligence officials warn of potential Russian offensives in the northeastern regions of Kharkiv and Sumy. The Ukrainian military remains vigilant, anticipating further incursions and preparing to defend key strategic positions. Despite these challenges, Ukraine maintains its determination to resist Russian aggression and safeguard its territorial integrity.

In response to Lord Cameron’s statements, Russian officials criticized what they perceive as Western involvement in a “hybrid war” against Moscow. This rhetoric underscores the deep-seated geopolitical tensions between Russia and the West, which continue to shape the dynamics of the conflict in Ukraine. As diplomatic exchanges intensify and military maneuvers unfold, the situation remains fluid, with the risk of escalation ever-present.

Amidst the ongoing conflict, Ukrainian Prime Minister Denis Shmyhal has sought assistance from Lord Cameron to help restore the country’s energy infrastructure, which has been severely damaged by repeated Russian missile strikes. This plea underscores the urgent humanitarian needs of the Ukrainian people and the importance of international support in rebuilding the country’s infrastructure and ensuring its long-term stability.

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Germany denies reports of sausage dog ban

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Recent headlines in the UK have stirred up concerns over the possibility of Germany banning sausage dogs, prompting attention from both domestic and international media. However, the reality behind these sensational headlines is less severe.

The cause of the alarm stems from the German Kennels Association’s objections to a proposed law designed to address breeding practices that cause animals to suffer. While there are worries about the potential impact on specific breeds like dachshunds, the German government has clarified that there are no plans to ban any breeds outright.

Instead, the focus of the proposed law is on preventing breeding practices that lead to health issues in dogs, particularly those that result in skeletal abnormalities or other forms of suffering. The aim is to establish clear guidelines to eliminate what is termed “torture breeding” and ensure the overall welfare of animals.

For instance, dachshunds are known to be susceptible to spinal problems due to their elongated bodies. Responsible breeding practices are being encouraged to mitigate such health issues and promote the well-being of future generations of dogs.

While some animal rights organizations advocate for bans on certain breeds, the government’s emphasis remains on prioritizing animal welfare and addressing concerns related to breeding practices. The proposed law will undergo further legislative processes, with debates expected to reflect broader political tensions and considerations of animal welfare.

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Director Roman Polanski goes on trial for defamation

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In Paris, a defamation lawsuit against the long-standing filmmaker Roman Polanski was scheduled to commence on Tuesday, brought forward by British actress Charlotte Lewis.

The lawsuit stems from Polanski’s remarks to Paris Match magazine in 2019, where he accused Lewis of fabricating a sexual assault allegation against him from four decades ago. Polanski, now 90, had fled the United States in 1978 after admitting to unlawful sexual activity with a thirteen-year-old girl. Despite numerous allegations of abuse from other women, Polanski has consistently denied any wrongdoing.

Polanski, residing in Paris, has opted not to attend the trial personally, with his legal representation handling the proceedings. On the other hand, Lewis, currently living in the UK, was expected to be present.

Lewis initiated the legal action four years ago, expressing her readiness for the trial despite the prolonged and distressing process. In 2010, she had accused Polanski of assaulting her at the age of 16 during a casting trip to Paris in 1983, although she later appeared in one of his films.

Polanski’s defense in the defamation case refers to a 1999 article in a now-defunct British tabloid, where Lewis allegedly expressed admiration for him. However, Lewis maintains that the quotes attributed to her were inaccurate.

The defamation complaint led to automatic charges against Polanski under French law. The filmmaker, celebrated for works like “Chinatown” and “The Pianist,” has remained a controversial figure, evading extradition attempts by US authorities due to his French and Polish citizenship.

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Citigroup plans 20,000 job cuts over two years

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Citigroup plans to cut approximately 20,000 jobs, equivalent to about 10% of its global workforce, within the next two years as part of a broader restructuring initiative led by CEO Jane Fraser. This move is aimed at streamlining operations and reducing layers of bureaucracy within the bank. Fraser, who assumed leadership in 2021, envisions 2024 as a pivotal year for the company.

Citi has already divested some of its overseas operations and initiated the listing of its Mexican unit as a standalone entity. Despite reporting a $1.8 billion loss in the last quarter of 2023, attributed to specific factors such as the devaluation of the Argentine peso and a government fee imposed on US banks, Fraser emphasized the progress made in implementing the bank’s strategic plan.

The restructuring is expected to cost around $1 billion in the current year, in addition to the $800 million incurred in the recent quarter. However, the bank anticipates saving $2.5 billion over the medium term. While specific details about job cuts in the UK and affected units were not disclosed, Citi’s workforce is projected to decrease from about 240,000 at the beginning of 2023 to approximately 180,000 by 2025 or 2026.

Citi, one of the largest banks in the US, has faced investor pressure to improve its performance, with profits trailing behind its peers. The recent quarterly loss was influenced by unique circumstances, and for the full year, revenue increased by 4% to $78.5 billion, while profits declined by 38% to $9.2 billion. In comparison, competitors like Wells Fargo and JP Morgan reported revenue growth of 11% and 23%, respectively, with corresponding profit increases. Following the announcement, Citi’s shares experienced a 1.4% decline.

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Russian gas giant Gazprom makes £39m profit in North Sea

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Russian energy giant Gazprom reportedly earned €45 million from its North Sea Sillimanite gas field in the past year, as revealed in financial accounts. The Sillimanite field, situated in UK and Dutch waters, has been operational since 2020 and is a joint venture between Gazprom and German firm Wintershall. While the arrangement is not deemed illegal, criticism has arisen, particularly from UK Liberal Democrat leader Sir Ed Davey, who deems it “totally unacceptable” that gas from UK territory supports “Putin’s illegal war against Ukraine.” The UK government has pledged to escalate economic pressure on Russia, aligning with international sanctions aimed at restricting Russia’s funding for the conflict in Ukraine.

Gazprom International UK, a Gazprom subsidiary, reported a pre-tax profit of €45 million in 2022, with dividends paid to its immediate owner in the Netherlands. Although Gazprom executives, including CEO Alexei Miller, face UK sanctions, Gazprom itself is not directly sanctioned. The company continues to supply reduced gas volumes to continental Europe. Concerns have been raised about Gazprom’s financial activities, given its association with the Russian state, which is accused of financing militias engaged in the Ukraine conflict.

The UK government’s response to Gazprom’s financial activities in the North Sea has been met with criticism. Global Witness, a campaign group, described it as “an indictment of the UK’s approach to Russian oil and gas.” Despite the UK’s condemnation of the war, Gazprom’s subsidiary continues to operate in the North Sea, enriching Putin’s regime. The government spokesperson reiterated the commitment to denying Russia access to goods or technologies aiding its war efforts, vowing to intensify economic pressure until peace is secured in Ukraine.

Gazprom International UK’s financial disclosures reveal a total tax bill of €29 million, distributed between the UK and Dutch governments. This includes windfall taxes imposed in response to the surge in energy prices following the conflict in Ukraine. The company ceased its gas sale agreement with Wintershall, replacing it with a deal with the Swiss-based trading company Gunvor.

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Olive oil price skyrockets as Spanish drought bites

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Francisco José García de Zúñiga, a farmer in Jaén, Spain, is facing a challenging harvest season due to consecutive years of drought in 2022 and 2023. Jaén is a crucial region for olive oil production, with Spain being the world’s largest producer, contributing to 70% of European Union consumption and 45% globally.

The persistent lack of rain in olive-producing areas like Jaén has led to a significant impact on both the quantity and price of olive oil. Mr García de Zúñiga emphasizes that Spain’s challenges affect global production, adhering to the basic law of supply and demand. As Spain produces less oil, global supply decreases, and if demand remains constant, prices rise.

In Spain, olive oil prices have surged by over 70% this year, following a substantial increase in 2022. Factors contributing to this surge include rising costs of fuel, electricity, and fertilizers over the past two years, but the primary factor is the extended period of drought. The Nuestra Señora del Pilar cooperative, one of the world’s largest olive oil factories, experienced a severely low olive harvest in the 2022-23 season.

Cristóbal Gallego Martínez, the cooperative’s president, highlights the impact of climate change on traditional agricultural assumptions. Dry periods are lasting longer, and the usual cycle of poor and good harvests is disrupted. He calls for government measures, such as investing in irrigation systems, to address the changing climate patterns.

The rise in olive oil prices is not limited to Spain, as it has been observed across Europe. Some neighboring countries have seen a less sharp increase, leading to Spaniards crossing borders to purchase slightly cheaper oil. The UK and Ireland, for instance, have lower prices due to having bought oil at a lower cost several months ago.

Despite the economic considerations, experts warn against opting for cheaper alternatives, as olive oil is a vital component of the Mediterranean diet, known for its health benefits. Lower-cost alternatives, such as sunflower oil, might lead to a loss in nutritional value. Fernando López-Segura, from Córdoba’s Reina Sofía hospital, underscores the cardiovascular benefits of consuming [virgin extra] olive oil, emphasizing the importance of maintaining its place in the Mediterranean diet. However, current consumption trends are influenced not only by health considerations but also by the unpredictable patterns of rainfall.

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Europe to develop commercial space capsule

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The European Space Agency (ESA) is introducing a new competition to develop a robotic capsule for transporting cargo to and from the International Space Station, with the maiden voyage planned for 2028. This marks a significant departure from ESA’s conventional project management approach. The winning company will receive some financial support and technical assistance from ESA but must operate the capsule commercially. It will be responsible for partially funding the development and providing the re-supply service to ESA, which will act as the primary customer.

If successful, the company may be tasked with upgrading the capsule to transport ESA astronauts, and potentially, it could be adapted for missions to other destinations such as the Moon. A dedicated team within ESA has been allocated an initial budget of €75m to initiate the competition.

The concept was well received by ESA member states at a summit in Seville, Spain. This procurement model emulates the successful strategy employed by NASA, which transitioned to outsourcing space vehicle services to private companies, leading to the emergence of SpaceX. ESA hopes to replicate NASA’s access to faster, more innovative, and cost-effective space technologies.

Anna Christmann, a leading aerospace policy figure in the German government, emphasized the shift in ESA’s approach, stating that while public funding initiates such competitions, it attracts private investment. ESA member states have also committed to adopting this approach for long-term rocket procurement, as current European launchers are facing significant challenges.

The Seville summit also highlighted the role of satellites in aiding European nations’ net-zero goals, including using space data to optimize air travel routes and reduce greenhouse gas emissions. Additionally, ESA introduced the Zero Debris Charter to promote responsible practices in space operations. The UK is championing a new regulatory framework to incentivize responsible behavior and create a market for orbital debris removal services.

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