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    Wells Fargo repays clients $40 million for excessive investment advice fees

    Wells Fargo repaid $40 million to almost 11,000 clients overcharged for investment advice, the SEC said Friday.
    Affected accounts, which were opened prior to 2014, were overbilled for many years, through last December, the SEC said.
    Wells Fargo also paid a $35 million civil penalty to the SEC. It neither admitted nor denied wrongdoing.
    High fees can erode savings substantially over the long term.

    Spencer Platt | Getty Images News | Getty Images

    Wells Fargo paid back $40 million to almost 11,000 customers who for years were overcharged on fees for investment advice, the Securities and Exchange Commission said Friday.
    The bank also agreed to pay a $35 million civil penalty to settle SEC charges. Wells Fargo neither admitted nor denied the allegations, the agency said.

    Certain Wells Fargo financial advisors — including those from legacy firms acquired during a merger — agreed to reduce some clients’ standard advisory fees at the time their accounts were opened, according to the SEC.
    However, internal systems failed to account for those reduced advisory fees in some cases, the SEC said. As a result, Wells Fargo overcharged 10,945 accounts — which were opened prior to 2014 — for many years, through the end of last December, the SEC said.
    More from Personal Finance:31% of investors are OK with using artificial intelligence as their advisorThere’s no ‘free lunch’ with high-interest cash optionsHousehold debt is at an all-time high, but 2008 was still worse
    According to the agency, the bank’s $40 million reimbursement to affected customers includes more than $26.8 million in excessive fees plus interest.
    The bank and predecessor firms — AG Edwards and Wachovia — didn’t have written policies and procedures to prevent this overbilling, the SEC said. (AG Edwards and Wachovia merged in 2007; Wells Fargo and Wachovia then did so in 2008.)

    “For years, Wells Fargo and its predecessor firms negotiated reduced advisory fees with thousands of clients, but failed to honor them,” Gurbir Grewal, director of the SEC’s enforcement division, said in a written statement.
    Caroline Szyperski, a spokesperson for Wells Fargo, said the firm is “pleased to resolve this matter.”

    “The process that caused this issue was corrected nearly a decade ago,” Szyperski said. “And, as noted in the settlement documents, Wells Fargo Advisors conducted a thorough review of accounts and has fully reimbursed affected customers.”

    How high fees can erode savings

    Studies have shown that many investors are unaware they pay fees for financial services like investment advice or the mutual and exchange-traded funds they own.
    That’s because the financial ecosystem often charges those fees behind the scenes. Customers typically don’t write a monthly check or get money withdrawn from their bank accounts for such services; instead, firms often collect fees from the financial account, like an individual retirement account or a 401(k) plan. Fees are often assessed as a percentage of total assets in the account.
    Excessive fees can amount to large sums of money over the long-term.
    Consider this example from the SEC, in which an investor makes a $100,000 initial investment that earns 4% a year for 20 years: An investor who pays a 0.25% annual fee versus one paying 1% a year would have roughly $30,000 more after two decades — $208,000, versus $179,000. More

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    Stocks making the biggest moves premarket: Marvell Technology, Affirm, Hawaiian Electric and more

    Marvell Technology Group
    Source: marvell.com

    Check out the companies making headlines before the bell.
    Marvell Technology — Shares fell more than 3% before the bell despite the company topping Wall Street’s expectations for the recent quarter. Marvell posted earnings of 33 cents per share, excluding items, on $1.34 billion in revenue. Analysts surveyed by Refinitiv had forecasted 32 cents per share and $1.33 billion. Revenue and EPS expectations for the current period were roughly in line with expectations.

    Affirm — The online payment firm saw its stock popped nearly 7% before the bell after reporting stronger-than-expected fiscal fourth-quarter results and fiscal first-quarter revenue guidance. For the recent period, Affirm posted a smaller-than-expected loss of 69 cents per share on revenues of $446 million. Analysts polled by Refinitiv had expected a loss of 85 cents per share on $406 million in revenue.
    Hawaiian Electric — Shares tumbled 20% following news late Thursday that Maui County is suing the utility company for damages over the island’s wildfires. The county said Hawaiian Electric left its powerlines energized despite warnings of high winds. Hawaiian Electric told NBC News it was disappointed that Maui County “chose this litigious path while the investigation is still unfolding,”
    Nordstrom — The department store retailer lost 3.6% before the bell. Nordstrom topped Wall Street’s quarterly earnings and revenue expectations but stuck by its previously issued full-year forecast calling for a 4% to 6% revenue decline. The company reported earnings of 84 cents per share on revenues totaling $3.77 billion.
    Workday — Shares of the enterprise software company rose 3% in premarket trading after Workday reported stronger-than-expected results for the second quarter. Workday said it generated $1.43 in adjusted earnings per share on $1.79 billion of revenue during the quarter. Analysts surveyed by Refinitiv were looking for $1.26 per share on $1.77 billion of revenue. The company did say it expected subscription revenue growth to slow in the third quarter but it has a total subscription revenue backlog of nearly $18 billion.
    Intuit — Intuit’s stock fell 1.2% before the bell after the software company topped quarterly expectations but offered a mixed outlook. Fiscal fourth-quarter adjusted earnings came in at $1.65 per share, versus the $1.44 expected by analysts polled by Refinitiv. Intuit posted $2.71 billion in revenue, ahead of the $2.64 billion expected. The company shared stronger-than-expected full-year guidance

    Ulta Beauty — The stock rose nearly 1% after the beauty retailer reported second-quarter results that topped analyst expectations, posting earnings of $6.02 per share on $2.53 billion in revenue. Analysts polled by Refinitiv had anticipated earnings of $5.85 per share on $2.51 billion in revenue, according to Refinitiv. Ulta also reported stronger-than-expected same-store sales growth and raised its full-year forecast.
    Gap — Gap shares gained 1.8% after the retailer posted mixed quarterly results. Adjusted earnings per share came in at 34 cents, ahead of the 9 cents expected by analysts polled by Refinitiv. The retailer reported $3.55 billion in revenue, shy of the $3.57 billion estimated. Sales dropped on a year-over-year basis and Gap said it anticipates a low double-digit decline in net sales for the fiscal third quarter.
    AMC Entertainment — AMC Entertainment shares rose nearly 1% ahead of Friday’s anticipated stock conversion. The company is expected to convert its preferred equity units to common stock at the open.
    Netflix — Netflix rose 0.7% after Loop Capital upgraded the streaming giant to buy from hold. Analyst Alan Gould hiked his price target to imply upside of more than 20%, and said the stock is at an attractive price after a recent pullback amid the ongoing Hollywood strikes.
    — CNBC’s Jesse Pound, Sarah Min and Michelle Fox contributed reporting More

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    CDC expects new Covid vaccines from Pfizer, Moderna and Novavax to be available in mid-September

    The Centers for Disease Control and Prevention expects updated Covid vaccines from Pfizer, Moderna and Novavax to be available to the public in mid-September, an agency official said.
    That amounts to the most specific timeline to date for the new shots, which are designed to target omicron subvariant XBB.1.5.
    Those vaccines still need approvals from the Food and Drug Administration and the CDC, which will form eligibility guidelines.

    A sign advertises COVID-19 (coronavirus) vaccine shots at a Walgreens Pharmacy in Somerville, Massachusetts, August 14, 2023.
    Brian Snyder | Reuters

    The Centers for Disease Control and Prevention expects updated Covid vaccines from Pfizer, Moderna and Novavax to be available to the public in mid-September, an agency official told reporters Thursday. 
    That amounts to the most specific timeline to date. Federal officials have said the new shots could arrive around September. CDC Director Mandy Cohen had previously provided a later timeline, telling NPR that the vaccines could be available by the “early October time frame.”

    Those shots still need approvals from the Food and Drug Administration and the CDC, which will set eligibility guidelines for the jabs. An independent panel of advisors to the CDC is meeting on Sept. 12 to vote on a recommendation for those guidelines. 
    Officials from the CDC and FDA said the agencies will encourage Americans to receive an updated Covid shot and other key vaccines ahead of the fall, when respiratory viruses typically begin to spread more widely. That includes the annual flu shot and recently approved jabs that protect older adults and infants from respiratory syncytial virus.
    “Our goal, our imperative, our task is to make sure we’re using those tools,” the CDC official said. “Vaccination is going to continue to be key this year because immunity wanes and because the Covid-19 virus continues to change.”

    A staff member draws up a syringe with the Comirnaty vaccine from Biontech and Pfizer adapted to the Omicron-BA.1 variant at the Mainz vaccination center.
    Sebastian Christoph Gollnow | dpa | Picture Alliance | Getty Images

    The arrival of updated vaccines offers some reassurance to Americans as the U.S. sees a slight uptick in Covid cases and hospitalizations. But those metrics remain below the summer peak that strained hospitals last year, the CDC official noted. 
    The current surge appears to be fueled by newer strains of the virus like EG.5, or Eris, an omicron subvariant that accounted for 17.3% of all cases as of last week, according to the CDC. 

    Pfizer, Moderna and Novavax designed their updated vaccines to target the omicron subvariant XBB.1.5, which is slowly declining in prevalence nationwide. But initial trial data from all three drugmakers suggest the new shots will still protect against EG.5. 
    “One of the manufacturers have already made it clear that when testing their vaccine against the EG.5 that it looks like the neutralization is robust,” an FDA official told reporters Thursday. 
    But it’s unclear how well the new shots will protect against another new omicron strain of the virus called BA.2.86, which has been identified in a very small number of cases in the U.S., U.K., Denmark and Israel.
    “I think it’s too early to know for sure about BA.2.86 in terms of exact data,” the FDA official said, adding that more information will be available in the coming weeks. 
    However, the official noted that the new vaccines will likely protect against any severe outcomes from catching the Covid virus.
    Last week, the World Health Organization and the CDC said they are tracking BA.2.86 because it has 36 mutations that distinguish it from XBB.1.5. So far, there is no evidence that BA.2.86 spreads faster or causes more serious infections than previous versions.  More

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    China’s EV slowdown drags down Nvidia’s ‘next billion-dollar business’

    China is the world’s largest auto market. In the last few years, the country has become a driver of the global push toward electric cars.
    The automotive segment, which Nvidia has said it expects to become a billion-dollar business, reported its first sequential decline in quarterly revenue in more than a year.
    Other automotive chip companies are also seeing sequential revenue declines in the segment.

    Nvidia automotive segment primarily sells chip systems for assisted driving. CEO Jensen Huang has touted it as the company’s “next billion-dollar business.”
    Alex Wong | Getty Images News | Getty Images

    BEIJING — U.S. chipmaker Nvidia this week soundly beat analysts’ expectations for major revenue lines — except in automotive — as Chinese demand for electric cars moderates.
    The automotive segment primarily sells chip systems for assisted driving. Nvidia CEO Jensen Huang touted it last year as the company’s “next billion-dollar business.”

    But the unit’s growth has slowed this year. Huang didn’t repeat such projections in the latest earnings call.
    In the three months ended July 30, automotive revenue fell by 15% from the prior quarter — the first sequential decline in more than a year.

    The sequential decrease primarily reflects lower overall auto demand, particularly in China.

    Colette Kress
    Nvidia’s Chief Financial Officer

    The $253 million segment revenue was also well below the $309.3 million forecast by a FactSet analyst poll.
    “The sequential decrease primarily reflects lower overall auto demand, particularly in China,” Nvidia’s Chief Financial Officer Colette Kress said in a statement on the quarterly results.
    She said demand for self-driving systems helped automotive revenue grow by 15% from the year-ago period.

    Although still a fraction of the chipmaker’s business, automotive revenue has grown rapidly from just over $100 million a quarter two years ago.

    China is the world’s largest auto market. In the last few years, the country has become a driver of the global push toward electric cars.
    Local EV players such as BYD and Xpeng are creating stiff competition for traditional automakers, partly by playing up technological features.
    Chinese original equipment manufacturers are Nvidia’s primary market, said Brady Wang, associate director at Counterpoint Research.
    He said the sequential automotive revenue decline could be the result of excess inventory among Chinese manufacturers, as well as their downward revisions of sales forecasts for high-end vehicles in the coming two quarters.

    Xpeng exec joins Nvidia

    Nio, which sells premium-priced electric cars, is set to release quarterly results on Tuesday. Earlier this month, Xpeng reported a wider-than-expected loss in the second quarter.
    Xpeng is one of the few local electric car companies to offer driver-assist software in select Chinese cities. Tesla’s “Full Self-Driving” tech for navigating city streets isn’t fully available yet in China.
    On Thursday, Xpeng’s former head of autonomous driving, Xinzhou Wu said he was starting a new job at Nvidia on Friday. That’s according to Wu’s statement on social media, which included a repost of a picture of himself with Xpeng CEO He Xiaopeng and Nvidia’s Huang.

    Nvidia is building out an automotive tech business. Pictured here are its autonomous vehicle test cars at the company’s auto garage in Santa Clara, California, on June 5, 2023.
    Bloomberg | Bloomberg | Getty Images

    Counterpoint’s Wang pointed out that Nvidia’s products are concentrated in the high-end automotive segment. “In the mid-range market, NVIDIA still faces competition from other vendors, such as Horizon Robotics, Mobileye, and some startups,” he said.
    Other automotive chip companies are also seeing sequential revenue declines in the segment.

    Analog Devices on Wednesday reported automotive revenue of $747.6 million for the three months ended July 29, down by 5% from the prior quarter.
    “We think [Analog Devices] may well be a leading indicator of the cresting of the automotive chip cycle,” David Wong, a technology strategy research analyst at Nomura, said in a report Thursday. He pointed out that Mobileye’s and Qualcomm’s automotive chips also saw quarter-on-quarter revenue declines.

    A $10 billion-plus opportunity

    Nvidia jumped into the automotive opportunity relatively recently.
    In an annual report in late February 2022, the company claimed it had $11 billion worth of automotive projects lined up over the next six years.
    A year later, Nvidia said in its annual report that automotive project pipeline was now worth $14 billion over the next six years.

    Stock chart icon

    But in May, Nvidia said quarter-on-quarter automotive revenue growth “moderated as some NEV customers in China are adjusting their production schedules to reflect slower-than expected demand growth.”
    The company said it would “expect this dynamic to linger for the rest of calendar year.”
    In July, retail sales of new energy passenger cars fell by 3.6% from June to 641,000 vehicles, according to the China Passenger Car Association. It said sales for the first seven months of the year are up by about 36% from a year ago.
    The slowdown in the fast-growing segment comes as penetration of new energy vehicles, which include hybrid and battery-powered cars, this year reached about one-third of new passenger cars sold in China, according to trade association data.

    Read more about electric vehicles, batteries and chips from CNBC Pro

    Longer term, car manufacturers are still planning to buy parts for assisted-driving capabilities.
    Hesai, which makes light detection and ranging (LiDAR) units often used for driver-assist systems, this month reported second-quarter revenue of 440.3 million yuan ($60.7 million), beating the company’s earlier guidance.
    The company shipped about 60,000 assisted-driving LiDAR units last year and has already exceeded that in the first half this year. In all, CEO David Li expects the number of units to more than double this year.
    He said the company is shipping with six original equipment manufacturers this year, with 11 planned for next year.
    “It’s not really because of the hardware itself.”
    “It’s about the combined experience the OEMs are providing to the customer as an ADAS function,” he said referring to the advanced driver-assistance system.
    Hesai this month announced further collaboration of its products with Nvidia’s autonomous driving system and simulation platform. More

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    ‘Dune: Part Two’ departs the 2023 movie calendar amid Hollywood strikes

    Warner Bros. Discovery and Legendary Entertainment’s “Dune: Part Two” has moved from its November 3, 2023 release date.
    It is now set to appear in theaters on March 15, 2024.
    The move comes as Hollywood strikes prohibit actors from promoting projects that were made by studios within the Alliance of Motion Picture and Television Producers.

    Timothee Chalamet stars in Warner Bros.’ “Dune.”
    Warner Bros.

    “Dune: Part Two” has departed the 2023 box office slate amid dual Hollywood labor strikes that threaten its ability to market to the public.
    On Thursday, Warner Bros. Discovery and Legendary Entertainment announced the Denis Villeneuve film would move to March 15, 2024, taking the calendar spot from “Godzilla x Kong: The New Empire,” which moves to April 12, 2024.

    The shuffle also displaces the animated film “Lord of the Rings: The War of the Rohirrim” to Dec. 13, 2024.
    Box office analysts have long anticipated that the “Dune” sequel would ditch its 2023 release date amid the Writers Guild of America and Screen Actors Guild strikes. Because of the SAG strike, in particular, actors are not permitted to promote current or even past films that were made by studios within the Alliance of Motion Picture and Television Producers.
    The AMPTP is currently in negotiations with the WGA and it likely won’t enter talks with SAG-AFTRA until that wraps up and a new contract is approved. While the scribes’ guild and the producers are a the table, talks are not moving quickly and therefore unlikely to resolve in enough time for “Dune: Part Two” to have its star-studded ensemble actively promote the film.
    Alongside industry veterans like Christopher Walken, Stellan Skarsgard, Javier Bardem, Josh Brolin, Dave Bautista and Jason Momoa, the film features four of Hollywood’s most popular young stars.
    Zendaya, Timothee Chalamet, Florence Pugh and Austin Butler collectively have more than 200 million followers on Instagram and are trending faces on TikTok, Twitter and other social media platforms.

    While older moviegoers who are fans of the book and saw the first “Dune” will show up to theaters, younger audiences might miss out on the flick without promotion from these stars.
    Postponing “Dune: Part Two” might help bolster its box office gains in 2024, but will bite a chunk out of Warner Bros. Discovery’s 2023 haul.
    After the stunning success of “Barbie,” and with doubts growing about December’s “Aquaman: The Lost Kingdom,” “Dune: Part Two” was an important 2023 release for the studio and expected to perform well with audiences.
    Its predecessor excelled at the box office during the pandemic despite being a day-and-date release on streaming service HBO Max (now just called Max). It racked up 10 Academy Award nominations, taking home six Oscars.
    With pandemic restrictions lifted on movie theaters, expectations are that “Dune: Part Two” would outpace the nearly $400 million the prior film tallied at the global box office in 2021 on a reported budget of $165 million.
    Taking over “Godzilla x Kong: The New Empire,” the “Dune” sequel should maintain access to the majority of premium format screens, like IMAX, and benefit from consumers who have increasingly gravitated toward these unique, and more expensive, theatrical experiences.
    Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is a member of the AMPTP. More

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    GM’s Ultium agrees to increase EV battery worker pay by 25% on average

    Ultium, a joint venture between GM and LG Energy Solution, is key for the automaker to increase its supply of batteries for its growing fleet of electric vehicles.
    The UAW and Ultium have been negotiating a deal for roughly 1,100 workers at the plant since a majority of employees agreed to organize with the union last year.
    This is a separate agreement from the ongoing national negotiations occurring between the UAW and General Motors, Ford Motor and Stellantis covering roughly 150,000 workers.

    General Motors revealed its all-new modular platform and battery system, Ultium, on March 4, 2020 at its Tech Center campus in Warren, Michigan.
    Photo by Steve Fecht for General Motors

    DETROIT — General Motors’ Ultium Cells has agreed to increase worker pay at its battery plant in Ohio by an average of 25%, the company and United Auto Workers union said Thursday.
    Ultium, a joint venture with LG Energy Solution, is key for the automaker to increase its supply of batteries for its growing fleet of electric vehicles. The deal is a major win for the union, as it’s the first major organized battery plant in the country.

    The UAW and Ultium have been in labor talks for roughly 1,100 workers at the plant since a majority of employees agreed to organize with the union last year. The union previously argued the battery workers should make the same wages as their traditional counterparts assembling engines and cars.
    Ultium workers currently make between roughly $20 and $25 an hour for production workers and $25 to $34.60 an hour for maintenance employees. The wage increases will be between $3 and $4 an hour, the union said. With the increases, they’ll still be paid less than the more than $32 an hour of traditional UAW assembly workers with the Detroit automakers.
    The tentative deal, which must be ratified by workers, is not a complete agreement. It addresses worker pay and but does not include other dynamics and processes. If ratified, workers will be retroactively paid backed wages of between $3,000 and $7,000
    “While an entire ‘first’ agreement is being negotiated, the committee is still hard at work in bargaining working conditions, health and safety, seniority rights, addressing other issues raised by the membership and future wage increases throughout the term of this agreement,” Josh Ayers, UAW Local 1112 chairman, said in a statement.
    This is a separate agreement from the ongoing national negotiations occurring between the UAW and GM, Ford Motor and Stellantis covering roughly 150,000 workers.

    The plant for Ultium Cells LLC – a joint venture between GM and LG Energy Solution – started production of battery cells in Warren, Ohio in August 2022.

    The Ultium plant in Ohio, which started production in August, is the first of at least four U.S. battery facilities for joint ventures with GM. The plants are expected to employ thousands of workers in the coming years. Ford, Stellantis and other automakers have announced similar plants, which would each have to be organized separately by the union in addition to the other Ultium plants.
    “This agreement is a significant and meaningful step as we continue to negotiate collaboratively and in good faith with the UAW to reach a comprehensive contract,” Ultium Ohio plant director Kareem Maine said in a statement. “Our team members are at the core of our business, and we’re proud to be able to reach an interim agreement for wage increases that prioritizes our incredible workforce.”
    The UAW’s membership ratification vote is expected to conclude by Aug. 27. If ratified, the interim wage increase will be retroactive, and active current hourly employees will receive back pay for every hour worked since Dec. 23. Any current employee who has worked since then can receive a one-time payment of $3,000 to $7,000, based on hours worked. More

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    Stocks making the biggest moves midday: Nvidia, Boeing, Splunk, Dollar Tree and more

    Nvidia’s A100 GPU, used to train ChatGPT and other generative AI, is shown at the demo center of Nvidia’s headquarters in Santa Clara, California, Feb. 9, 2023.
    Katie Tarasov

    Check out the companies making headlines in midday trading.
    Nvidia — The chipmaker’s stock climbed more than 1% to a record high after the company reported a beat on the top and bottom lines. The strong performance was driven by its data center business, which includes the A100 and H100 AI chips needed to build and run artificial intelligence application. Nvidia also offered strong guidance amid a surge in demand for chips, suggesting sales in the current quarter will grow 170% from the year-earlier period.

    AMD, Marvell Technology — Both semiconductor stocks were lower as Nvidia’s earnings momentum fizzled. Shares of AMD slipped nearly 5%, while Marvell pulled back 4%.
    Boeing — Shares of the aerospace company shed nearly 3% after Boeing said deliveries of the 737 Max will be delayed after it discovered new manufacturing flaws. Fastener holes on the aft pressure bulkhead on some of the planes were improperly drilled, the company said. Spirit AeroSystems, which builds the fuselages, dropped 16.5%.
    Dollar Tree — The discount retailer declined 2% after issuing lower-than-expected third-quarter guidance. The company said it expects between 94 cents per share and $1.04, while analysts polled by Refinitiv had expected $1.27 going forward.
    Discover Financial Services — Shares climbed 2% after an upgrade to outperform from Wolfe, which said the company’s “recent underperformance fueled by internal control and risk management deficiencies” could spur a buying opportunity for investors.
    Splunk — The cloud stock climbed 13.6% after the company beat Wall Street expectations for second-quarter earnings and raised its guidance. Bank of America reiterated its buy and top-pick ratings on the stock following the report.

    Autodesk — Shares added 3.1% after Autodesk reported an earnings beat and higher forward guidance. Autodesk notched an adjusted $1.91 per share and $1.35 billion in revenue, against Refinitiv analyst estimates of $1.73 per share and $1.32 billion in revenue.
    Snowflake — Snowflake dipped more than 5% in midday trading even after reporting an earnings beat. The company reported an adjusted 22 cents per share coupled with $674 million in revenue, while analysts polled by Refinitiv forecast 10 cents and $662 million.
    Guess — The apparel company soared more than 28% after reporting an earnings beat, highlighted by an adjusted 72 cents per share and revenue of $664.5 million.
    — CNBC’s Alex Harring, Yun Li and Michelle Fox contributed reporting.
    Correction: Dollar Tree issued weaker-than-expected third-quarter guidance. A previous version misstated the name. More

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    DOJ sues SpaceX alleging hiring discrimination against refugees and asylum recipients

    The U.S. Department of Justice sued SpaceX on Thursday, alleging Elon Musk’s space company discriminated in its hiring practices against refugees and people granted asylum in the U.S.
    The lawsuit says between 2018 and 2022, SpaceX “wrongly claimed” that export control laws limited its hiring to U.S. citizens and lawful permanent residents.
    The DOJ has been investigating SpaceX since June 2020, when the department’s Immigrant and Employee Rights Section received a complaint of employment discrimination from a non-U.S. citizen.

    A Falcon 9 rocket is displayed outside the Space Exploration Technologies Corp. (SpaceX) headquarters on January 28, 2021 in Hawthorne, California.
    Patrick T. Fallon | AFP | Getty Images

    The U.S. Department of Justice sued SpaceX on Thursday, alleging Elon Musk’s space company discriminated in its hiring practices against refugees and people granted asylum in the U.S.
    The lawsuit says between 2018 and 2022, SpaceX “wrongly claimed” that export control laws limited its hiring to U.S. citizens and lawful permanent residents.

    The DOJ has been investigating SpaceX since June 2020, when the department’s Immigrant and Employee Rights Section received a complaint of employment discrimination from a non-U.S. citizen.
    “Our investigation found that SpaceX failed to fairly consider or hire asylees and refugees because of their citizenship status and imposed what amounted to a ban on their hire regardless of their qualification, in violation of federal law,” Kristen Clarke, assistant attorney general of the DOJ’s Civil Rights Division, said in a statement.
    Clarke added that the DOJ’s investigation found “SpaceX recruiters and high-level officials took actions that actively discouraged asylees and refugees from seeking work opportunities at the company.”
    According to data SpaceX provided, the DOJ said that over a nearly four period and across more than 10,000 hires, the company “hired only one individual who was an asylee and identified as such in his application.”
    That lone hire came about four months after the DOJ notified SpaceX of its investigation.

    SpaceX did not immediately respond to CNBC’s request for comment. The suit was filed in the Executive Office for Immigration Review, a division of the DOJ that adjudicates immigration cases.
    The DOJ lawsuit seeks to win “fair consideration and back pay for asylees and refugees who were deterred or denied employment at SpaceX due to the alleged discrimination,” as well as civil penalties and policy changes from the company.
    In 2021, the DOJ’s Immigrant and Employee Rights Section alleged that SpaceX was stonewalling a subpoena related to its investigation and requested a judge order that SpaceX comply with its request for documents related to how the company hires. SpaceX had filed a petition with a DOJ administrative tribunal to dismiss the subpoena on grounds that it exceeded the scope of IER’s authority, but that petition was denied.
    IER opened its probe after a man named Fabian Hutter complained that SpaceX discriminated against him in March 2020 when he was asked about his citizenship status during a job interview for a technical strategy associate position.
    Hutter is not a U.S. citizen, but according to a document filed by SpaceX in response to a DOJ subpoena in 2021, he is a “lawful permanent [U.S.] resident holding dual citizenship from Austria and Canada.”
    Hutter declined to comment on the suit when contacted by CNBC.
    Read the DOJ’s lawsuit below:

    – CNBC’s Dan Mangan contributed to this report.
    Correction: This story has been updated to correct that the U.S. Department of Justice sued SpaceX, alleging the company discriminated in its hiring practices against refugees and people granted asylum in the U.S. A previous version misstated the nature of the alleged violation. More