Over two dozen ASX-listed company directors face scrutiny over audit conflicts

Good morning. Here's what happened overnight and what you need to know today.

1.

Too cosy: More than two dozen ASX-listed companies including ProMedicus, JB Hi-Fi, Pilbara Minerals, Lynas, NextDC, and Perpetual are facing scrutiny over potential conflicts for board directors who previously worked for their auditors, as powerful proxy advisors clamp down on the cosy relationships between major corporates and the big four accounting firms. ASX director and ex-PWC partner Anne Loveridge became the latest board member to face a rebuke over the issue after she was hit with a 16.8% protest vote against her re-election at the exchange operator's AGM on Thursday. Loveridge, who joined the board only three months ago, still easily obtained the majority vote required to be elected, but the vote against her was higher than is typically usual. The rebuke came after powerful proxy advisory group Institutional Shareholder Services raised concerns about audit committee members who previously worked for the company's external auditor. (Capital Brief)

2.

Mafia game: More than 30 people, including a high-profile NBA coach and a current player, were arrested in the US over two criminal cases involving illegal betting on basketball games and mafia-backed rigged poker events. “This is the insider trading saga for the NBA,” said FBI director Kash Patel. “We’re talking about tens of millions of dollars in fraud and theft and robbery across a multi-year investigation.” Prosecutors said Chauncey Billups, coach of the Portland Trail Blazers, and former NBA player Damon Jones were among 31 charged in a nationwide poker scheme using hidden cheating technology. The games were allegedly backed by four New York organised crime families, all part of La Cosa Nostra. They were held in person across cities including New York and Las Vegas, with victims unaware they were fixed. In a separate indictment, Miami Heat player Terry Rozier was among six charged with using inside information to profit from bets between 2022 and 2024. Authorities allege he told associates he would leave a March 2023 game early, enabling USD200,000 ($306,910) in successful wagers. The NBA placed Billups and Rozier on leave. Rozier denied wrongdoing. (Capital Brief)(NYT)(CNN)(Bloomberg)

3.

Summit rally: Wall Street bounced back from the previous day’s selloff, as investors weighed a mix of corporate earnings and geopolitical developments. The Dow was 0.42% higher in late afternoon trading, the S&P 500 was 0.67% higher and Nasdaq was also 0.98% higher, with energy and tech stocks leading gains. Markets found support after the White House confirmed President Donald Trump will meet Chinese President Xi Jinping next week in South Korea during the APEC summit. It will be their first face-to-face meeting since 2019 and comes as a trade truce between the two countries is due to expire in November. Oil prices surged more than 5% after the US imposed sanctions on Russian oil companies Rosneft and Lukoil. The energy sector posted the biggest gain among S&P 500 sectors. Quantum computing stocks rose after the The Wall Street Journal reported the Trump administration is in talks to take equity stakes in firms in exchange for federal funding. Meanwhile, the White House released a donor list for Trump’s upwardly revised USD300 million ballroom, naming major tech, crypto, tobacco and defence firms, confirming demolition of the East Wing had begun. (Bloomberg)(Reuters)(WSJ)

4.

Crypto pardons: Donald Trump pardoned Binance founder Changpeng Zhao, who served four months in prison after US authorities said his exchange enabled trading by figures tied to Hamas, Al Qaeda and the Islamic State, and processed over a million illegal transactions. White House spokeswoman Karoline Leavitt said Trump “exercised his constitutional authority” and that Zhao was prosecuted “by the Biden administration in their war on cryptocurrency.” Zhao pleaded guilty in 2023 to failing to implement adequate anti-money laundering controls at Binance, and stepped down as CEO under a plea deal that included a record USD4.3 billion settlement. He retained his controlling stake. The Wall Street Journal first reported the pardon, noting Zhao had lobbied for months and that Binance supported the Trump family’s World Liberty Financial venture, including facilitating a USD2 billion investment in its dollar-pegged token, USD1. The pardon may allow Binance to re-enter the US market and could end the Justice Department’s monitorship early. (Capital Brief)(WSJ)(Bloomberg)

5.

Data theft: Origin Energy confirmed that encrypted data of 700 of its customers was stolen in July after an employee who was terminated emailed himself an encrypted file containing the information. The breach contained customers' debit and credit card details and prompted Origin to compel the former employee to delete the file and sign a statutory declaration to that effect. Origin alerted the Office of the Australian Information Commissioner and said it was in the process of reporting to the Australian Signals Directorate and the Federal Police. Origin has contacted all of the customers to apologise for the breach, offered them credit monitoring services at no charge and is conducting an investigation. The data was encrypted and while Origin found no evidence that the information was accessed since being emailed, the company could not guarantee that it would not be used in future. (Capital Brief)(AFR)(Information Age)

6.

Tech update: OpenAI acquired Software Applications, a small startup founded in 2023 by former Apple employees who helped develop the iPhone’s Shortcuts app, as part of its efforts to improve how ChatGPT can perform tasks on a user’s computer. The company built Sky, an AI assistant unveiled in May (not available to the public) that runs as a floating interface on Mac desktops, understands on-screen content and helps users write, code, plan and manage their day. All 12 employees will join OpenAI. Financial terms were not disclosed. It comes after OpenAI CEO Sam Altman was among Software Applications’ early investors, contributing to its USD6.5 million seed round. Meanwhile, in the UK, Apple was found by the Competition Appeal Tribunal to have abused its dominant position by charging app developers excessive and unfair commissions between 2015 and 2020, with the costs partly passed on to consumers. The tribunal ruled Apple must pay damages, which lawyers estimate could exceed GBP1.5 billion ($3.1 billion). Apple plans to appeal the decision. And, two US judges admitted AI tools were used to prepare rulings that were issued with serious factual errors. (OpenAI)(Reuters)(Bloomberg)

7.

Gas leak: Global Japanese oil and gas company, Inpex, said that it under-calculated the amount of benzene emissions from its gas plant at Bladin Point, just kilometres from Darwin’s CBD, by 13,400%. Benzene emissions jumped from 4.12 tonnes reported in 2023-24, to 556.9 tonnes, more than a 13,400% increase. Last week the NT government launched an investigation into the company after Inpex first admitted the error. Inpex had said that the error had not resulted in an "increased health risk to the community" but did not disclose further details, stoking concerns that the company had been hiding the scale of the issue. In Thursday’s statement and accompanying factsheet, Inpex said that Darwin’s benzene air quality levels are at less than 0.0006 parts per million, at least five times lower than Monitoring Investigation Levels (MIL - 0.003 parts per million). Inpex also admitted to a 36,000 litre oil spill in October, which allegedly washed oil into Darwin Harbour and surrounding mangrove forests. (Inpex statement)(Capital Brief)

8.

Deal flow: Blackstone saw distributable earnings soar 48% in the third quarter, driven by a flurry of investment exits from its private equity unit. The world’s largest asset manager posted its fourth consecutive quarter in which inflows exceeded USD50 billion ($76.76 billion). Distributable earnings rose to USD1.89 billion, or USD1.52 per share, up from USD1.28 billion, or USD1.01 a share, in the same period last year. Blackstone’s quarterly net income reached USD624.9 million, down from USD780.8 million a year earlier, while fee-related earnings also rose to USD1.48 billion. While Blackstone’s revenue fell to USD3.09 billion, assets under management increased 12% to a record USD1.24 trillion. Blackstone took three companies public during the quarter and more than doubled its haul from selling investments compared to the year prior. The series of exits Blackstone executed across its private equity unit indicates that dealmaking, which had been slowed by high financing costs and sluggish valuations, is returning. (Blackstone)(Capital Brief)(Bloomberg)(FT)(WSJ)