Finance

The SEC alleged PIMCO failed to give investors essential information about the use of interest rate swaps and the material effect of the swaps on PIMCO Global StocksPLUS & Income Fund’s dividend.
The agency also claims the company failed to waive about $27 million of advisory fees.

PIMCO headquarters building in Newport Beach, California.
Scott Mlyn | CNBC

The U.S. Securities and Exchange Commission said investment adviser Pacific Investment Management Company will pay $9 million to settle two enforcement actions related to disclosure and procedure violations.
“We are pleased to resolve these matters relating to issues which occurred in two funds more than five years ago, and which PIMCO had fully addressed prior to the SEC’s investigations,” a PIMCO spokesperson said.

The SEC alleged in a statement Friday that PIMCO failed to give investors essential information about PIMCO Global StocksPLUS & Income Fund’s (PGP) use of interest rate swaps and the material effect of the swaps on PGP’s dividend between September 2014 and August 2016.
Additionally, the SEC claims the company failed to waive about $27 million of advisory fees, as required by its agreement with the PIMCO All Asset All Authority Fund, between April 2011 and November 2017.
The SEC also alleged PIMCO did not have adequate written policies and procedures concerning its oversight of advisory fee calculations and related fee waivers until at least 2018. More

Virgin Galactic’s space tourism rocket plane SpaceShipTwo returns after a test flight from Mojave Air and Space Port in Mojave, California, December 13, 2018.
Gene Blevins | Reuters

Check out the companies making headlines in midday trading.
Virgin Galactic — Shares of the space company soared 16.5%. On Thursday, the firm set its first commercial space tourism flight for this month. The company, which was founded by billionaire Richard Branson, completed its final test spaceflight in May.

iRobot — The stock surged 21.2% after U.K. regulators approved Amazon’s $1.7 billion acquisition of the Roomba vacuum cleaner maker. Meanwhile, Amazon inched down about 0.5%.
West Pharmaceutical Services — West Pharmaceutical Services gained 0.6% after Bank of America upgraded the life sciences stock to buy from neutral, saying it will benefit from the rise of drugs targeting weight loss.
Cava Group — Cava Group shares dropped 12.9% during trading Friday, giving back some of its gains from its massive debut Thursday on the New York Stock Exchange. At one point, shares more than doubled in value during Cava’s first day of trading.
SoFi Technologies — The financial technology stock dropped nearly 10% after both Bank of America and Piper Sandler downgraded it to neutral from buy, citing SoFi’s recent run higher. Bank of America said the fundamental aspects of the student loan repayment moratorium expiration is now largely priced in.
Adobe — Shares added 0.9%. On Thursday, the company beat expectations and offered positive guidance when reporting for the fiscal second quarter. Adobe posted $3.91 in adjusted earnings per share on $4.82 billion in revenue, while analysts polled by Refinitiv anticipated earnings of $3.79 per share and $4.77 billion in revenue. Adobe said current-quarter and full-year revenue should come in around where Wall Street expects, while it said adjusted earnings per share in those periods would likely be higher than anticipated.

Nvidia — The chipmaker at one point jumped more than 2% to another record high after Morgan Stanley analyst Joseph Moore switched his top pick to Nvidia from Advanced Micro Devices. The analyst said Nvidia has more immediate upside than other artificial intelligence stock plays. It closed up 0.1%.
Micron Technology — Shares dipped 1.7% after Micron Technology said a China chip ban could hurt the company. “We now believe that approximately half of that China HQ customer revenue, which equates to a low-double-digit percentage of Micron’s worldwide revenue, is now at risk of being impacted,” the company said in a Friday filing with the U.S. Securities and Exchange Commission.
Humana — Humana shares declined 3.9%. The company reaffirmed its full-year insurance segment benefit expense ratio guidance, between 86.3% and 87.3%, though it expects it will be at the top end of this outlook. The company cited higher-than-expected “non-inpatient utilization trends,” including emergency room, outpatient surgeries and dental services as a driver of this forecast.
Truist Financial — Shares fell about 1% after Odeon Capital Group downgraded Truist Financial to hold from buy, according to FactSet.
— CNBC’s Michelle Fox, Alex Harring and Yun Li contributed reporting. More

French prosecutors paid a “visit” to the exchange and later alleged they were being investigated for aggravated money laundering and the unauthorized operation of a digital asset exchange.
Prinçay compared the U.S. actions to a “car crash” and dismissed the looming SEC and CFTC charges as the flapping of a butterfly’s wings.
Binance faces over a dozen charges from the SEC.

Changpeng Zhao, founder and CEO of Binance, waves as he arrives on stage for a panel session on the second day at the VivaTech Conference in Paris, June 16, 2022.
Bloomberg | Bloomberg | Getty Images

PARIS — Days before French police visited Binance’s Paris office, the crypto exchange’s top French executive dismissed concerns about U.S. regulatory charges affecting Binance’s other operations, comparing them with the flapping of a butterfly’s wings.
French prosecutors have opened a probe into “aggravated money-laundering” by the crypto exchange, Le Monde reported Friday, adding in a statement that the company was also being probed over operating an unauthorized exchange.

Just days before the raid, CNBC asked Binance France President David Prinçay if he was concerned about charges from the top two U.S. financial regulators against the exchange.
“I don’t care what happened in the U.S.,” Prinçay retorted, speaking at the Proof of Talk summit in Paris. “We are in Europe, with a French regulator, a European regulator.”
Prinçay insisted Binance.US assets were separated from the international exchange, an assertion also made by the exchange’s legal team. The U.S. Securities and Exchange Commission, which charged Binance last week with 13 securities charges, disagrees, arguing that Binance user funds are at “significant risk” of flight due to founder Changpeng Zhao’s alleged ownership of an interlocking set of Binance-related companies.
Binance France’s chief called the U.S. allegations of commingling a “car crash.”
“The only concerns I have right now is that we look too much at the car crash and not drive,” Prinçay said.

Binance’s founder, Zhao, dismissed the police statement and reporting as “FUD,” claiming it was a “surprise on-site” inspection that was “the norm.”
“We will not comment on the specifics of law enforcement or regulatory investigations except to say that information about our users is held securely and only provided to government officials upon receipt of documented appropriate justification,” the exchange said in another statement.
Prinçay did not immediately respond to a request for comment about the police visit.
Binance faces over a dozen charges from the SEC and a similar slate of allegations from the Commodity Futures Trading Commission. A reported Department of Justice probe is also ongoing into the exchange, according to an SEC complaint. More

Aircraft VMS EVE carries spacecraft VSS Unity during a flight test.
Virgin Galactic

Check out the companies making the biggest moves in premarket trading:
Virgin Galactic — Shares soared nearly 45% in premarket trading, a day after the company said its first commercial space tourism flight is set for later in June. Its second commercial flight is expected in early August, with monthly runs after that, the company said.

Adobe — The tech stock rallied nearly 5% following its earnings and revenue beat after the bell Thursday. The company also raised its forecast for the fiscal third quarter and full year. It expects to earn between $15.65 and $15.75 a share, after adjustments, on revenue in the range of $19.25 billion to $19.35 billion in fiscal 2023, which is on the high end of estimates.
iRobot — Shares surged more than 20% after Britain’s regulator, Competition and Markets Authority, approved Amazon’s $1.7 billion acquisition of the Roomba vacuum cleaner. Shares of Amazon were flat.
SoFi Technologies — Shares dropped about 6% after being downgraded by both Bank of America and Piper Sandler to neutral from buy. The Wall Street firms cited the stock’s high valuation, with Piper Sandler calling the financial technology firm a “long-term winner.” Oppenheimer also downgraded the stock Thursday due to its recent appreciation.
Cava Group — The newly debuted restaurant stock rose more than 4% in premarket trading Friday, extending its massive gains from Thursday’s session. Cava closed at $43.78 per share on its first day of trading Thursday, 99% above its IPO price of $22 per share.
Micron Technologies — The chip stock gained almost 3% following a report by Bloomberg that said Micron is close to sealing a $1 billion deal to build a new factory in India.

DraftKings — Shares rose more than 1% after the online betting company made a $195 million offer for PointsBet’s U.S. assets, outbidding Fanatics.
— CNBC’s Jesse Pound contributed reporting. More

Binance said that it can no longer serve Dutch clients, as it has been unable to register as a virtual asset service provider with the Dutch regulator.
Starting Friday, no new Binance users will be accepted onto the platform, and the company will cease allowing users to buy tokens, trade, or make deposits from July 17.
Binance said it remains “committed to working collaboratively with regulators around the world” and is looking to get its business compliant with the incoming EU crypto regulations.

The Binance logo is displayed on a screen in San Anselmo, California, June 6, 2023.
Justin Sullivan | Getty Images

Cryptocurrency exchange Binance said it will leave the Netherlands after the company’s application to register under the Dutch crypto authorization regime was rejected.
Referring to a virtual asset service provider, Binance on Friday said that it could no longer serve Dutch clients “as we have been unable to register as a VASP with the Dutch regulator.”

The company didn’t give a reason for why it was unable to receive a license from regulators.
Starting Friday, no new Binance users will be accepted onto the platform. From July 17, Binance said it will cease allowing users to buy tokens, trade, or make deposits, although its withdrawal function remains active.
Binance recommended that users withdraw their assets from their accounts.
The Dutch central bank, which is responsible for authorizing new virtual asset services providers, was not immediately available for comment.
Under the current regulatory regime, Binance can only get approval to operate in an EU country by registering under its money laundering prevention rules.

The firm has so far received such approvals in France, Italy, Spain, Poland, Sweden and Lithuania. This is set to change once the EU approves its Markets in Crypto Assets (MiCA) regulation.
MiCA aims to harmonize crypto regulation across the bloc and to prevent bad actors from harming consumers, particularly in the wake of the shock bankruptcy of FTX in November.
Once MiCA comes into force, crypto firms with registration in one EU country will be able to then use that to offer their services across other member states.
Binance said it remains “committed to working collaboratively with regulators around the world and are additionally focused on getting our business ready to be fully MiCA compliant.”
“Existing Dutch resident users are being sent an email with comprehensive information about what this means for their accounts and any assets they currently have on the Binance platform, alongside any steps they will need to take,” a Binance spokesperson told CNBC.
“While Binance is disappointed that this has become necessary, it will continue to engage productively and transparently with Dutch regulators.”
The latest blow to the crypto giant follows a tumultuous few months for the broader cryptocurrency industry. Last week, the U.S. Securities and Exchange Commission sued Binance and CEO Changpeng Zhao, alleging that they engaged in the unregistered offer and sale of securities and commingled investor funds with their own.
WATCH: How a $60 billion crypto collapse got regulators worried More

Zopa told CNBC exclusively it has hired Peter Donlon, the former chief technology officer of online card retailer Moonpig, as its CTO.
The firm has also brought in Kate Erb, a qualified chartered accountant, as its chief operations officer.
Donlan’s appointment reflects a push from Zopa to grow in maturity and ramp up user growth in anticipation of an eventual initial public offering.

Jaidev Janardana, CEO of U.K. digital bank Zopa.

LONDON — British digital bank Zopa is beefing up its management team with a couple of senior hires, as the company looks to fuel growth and prepare its business for an eventual public listing.
The SoftBank-backed company, which offers credit cards, personal loans and savings accounts, told CNBC exclusively it has hired Peter Donlon, the former chief technology officer of online card retailer Moonpig, as its CTO.

The firm has also brought in Kate Erb, a qualified chartered accountant from KPMG with over 20 years of experience in financial services, as its chief operating officer.
Erb was most recently an operations director at Leeds Building Society.
Donlon notably saw Moonpig through its public listing in 2021, which valued the company at around £1.2 billion at the time. Moonpig now trades at a price of £151 per share, which gives it a market capitalization of £518 million, reflecting a broad slump in technology shares.
His appointment reflects a push from Zopa to grow in maturity and ramp up user growth in anticipation of an eventual initial public offering (IPO). Zopa had planned to go public last year, however it put this ambition on ice as the stock market took a turn for the worst with rising interest rates clobbering high-growth tech stocks.
CEO Jaidev Janardana insisted the bank has no plans for an IPO in the immediate term, however he suggested a flotation could be on the horizon by mid-next year were sentiment in the public markets to change.

What will need to change for that to happen, he explained, is for the public markets to open back up.
“We haven’t had great IPOs,” he told CNBC in an interview on the sidelines of London Tech Week this week. “I would love to see some successful IPOs actually coming.”
“If you look at kind of banks, and how they’re valued, or tech companies, both of them, public market valuations are not great.”
“The second thing is … liquidity.” he added. “We need to make sure that there is enough liquidity for a public company to be truly public. Shares should be able to be bought and sold reasonably easily.”

Zopa will soon reach 1 million customers, a spokesman for the company told CNBC. It ultimately wants to hit 5 million users in the coming years. The firm competes with large banks as well as fintechs like Monzo, Revolut and Starling.
Janardana suggested the company could look to ramp up growth of its business through mergers and acquisitions, and a move into other areas of finance including small business loans and open banking, which allows for the sharing of data between banks and third-party firms.
Zopa raised £75 million ($95.9 million) from investors earlier this year.
“We are open,” he said. “Where there is opportunity for us to use open banking, infrastructure, data, to be able to provide holistic experiences to customers is something that has been of interest for us.”
“SME (small and medium-sized enterprises) lending is another thing that is of interest for us.”
Zopa reached profitability on a monthly basis in April 2022. Zopa aims to achieve full-year profitability by the end of 2023.
In terms of the products that Janardana isn’t interested in rolling out, crypto tops the list. The financial executive, who has helmed Zopa since 2014, said that crypto “is not great for the retail consumer today.”
“I’m not a big fan of crypto yet, I’m not convinced,” he said. “It’s a complicated product that people don’t understand, which is why we never offered it.” More

Many Middle East investors have talked about deals in the last 12 months with Chinese venture capital funds, according to three Chinese firms with U.S. dollar-denominated funds, which requested for anonymity.
Although the money isn’t completely replacing U.S. investment, it’s expected to account for about 20% of all U.S. dollar funding by Chinese venture capital firms, one of the sources estimated.
The eight largest Middle East sovereign wealth funds had more than $3 trillion in combined total assets as of last year, according to the latest estimates available from Preqin.

Saudi Foreign Minister Faisal bin Farhan al-Saud (C-R) and Vice Chairman of the Chinese People’s Political Consultative Conference (CPPCC) Hu Chunhua attend 10th Arab-China Business Conference in Riyadh, on June 11, 2023.
Fayez Nureldine | Afp | Getty Images

BEIJING — Venture capitalists in China that once relied on U.S. investors are now holding court with Middle Eastern money.
A flurry of China-Middle East conferences and business visits in the last several months represent what’s expected to be a growing trend in international capital flows.

Many Middle East investors have discussed deals with Chinese venture capital funds in the last 12 months, according to sources at three Chinese firms with U.S. dollar-denominated funds. They requested anonymity because they are not permitted to speak publicly about the fundraising talks.
Although the money isn’t completely replacing U.S. investment, it’s expected to account for about 20% of all U.S. dollar funding by Chinese VCs, one of the sources estimated.
Middle East investors are actively looking for China opportunities, then investing at a small scale to test the waters, the source told CNBC this week, noting frontier tech, new consumer trends and biotech were popular industries of interest.

Bolstering the investment trend is a confluence of diplomatic, financial and economic developments.
China’s ties with the Middle East have warmed since Saudi Arabia and Iran restored diplomatic relations earlier this year — through discussions brokered by Beijing.

Meanwhile, U.S.-China tensions have simmered.
Those tensions and increased regulatory scrutiny in both countries prompted many U.S.-based investors to hold off on investments in Chinese venture capital funds. Those funds were typically denominated in U.S. dollars and invested startups would then go on to list on U.S. stock exchanges.
Middle East capital is looking to step in, especially as countries such as Saudi Arabia and Qatar look to diversify from dependence on fossil fuels.
However, many potential investments in Chinese funds are still in discussion, the venture capital funds said.

Trillions in assets

As of February 2022, Middle East investors’ allocation to North American assets were still clearly higher than Asia-Pacific ones, according to Preqin, an alternative assets research firm. Alternative assets include venture capital, but not publicly traded stocks and bonds.
That exposure is growing.
Preqin data showed the share of Middle East sovereign wealth funds’ investment in alternative assets worldwide roughly doubled between 2021 and the first half of 2022.
In all, the eight largest Middle East sovereign wealth funds had more than $3 trillion in combined total assets as of last year, according to the latest estimates available from Preqin.

Saudi Arabia’s ties with China are shifting from being based on trade to a “core investment relationship,” Khalid Al-Falih, Saudi minister of investment, told CNBC’s Dan Murphy this week.
In addition to Saudi investment in oil refining and petrochemicals in China, Al-Falih noted investments in technology by the kingdom’s sovereign wealth fund, the Public Investment Fund, and private sector companies.
PIF has about $700 billion in assets under management, according to its website. The fund did not respond to a request for comment about the share of its China investments.

Investment in car technology

China is a major source of technology, a major source of business. Partnering with China is one of the key drivers of implementing a successful transformation of the UAE.

Massimo Falcioni
Business Council of Dubai

“It was very clear that trucking in China is bigger than anywhere else. If a company is successful in creating safe, autonomous trucking, the chances of it scaling in China is higher than in other places,” said Aysar Tayeb, executive managing director at Prosperity7.
Prosperity7’s investments in about 30 startups are split roughly evenly between U.S.-based and China-based companies, Tayeb said in a phone interview earlier this month.
“We’re beginning to see more activity in China for sure,” he said, noting that China deal flow “was a little bit slower” in the past two years due to the Covid-19 pandemic.
In May, Abu Dhabi hosted conferences targeted specifically at Chinese entrepreneurs.
Local authorities claimed in May they hosted China’s “top 50 unicorns” — a term referring to startups valued at more than $1 billion — and launched the “Arab China Unicorn Investment Conclave,” according to a UAE state-media release.

Read more about China from CNBC Pro

“After the conference it will increase the participation of investors from China,” said Massimo Falcioni, secretary general and vice president of the Business Council of Dubai. He said more investment fund and asset management companies were coming from China to the United Arab Emirates.
“China is a major source of technology, a major source of business,” he said. “Partnering with China is one of the key drivers of implementing a successful transformation of the UAE.”
Whether Saudi Arabia or Dubai, Middle East governments have announced plans in the last several years to spend heavily on reshaping their economies for future growth.
Chinese companies have valuable infrastructure and manufacturing knowhow, said Niol Ma, a Chinese native who says he’s lived in Dubai for about 20 years.
Regional interest in doing business with China has grown so rapidly that Ma claims his firm, Gulf Ferry Management Consultancies, went from no clients in 2021 to meetings with more than 100 prospective customers in the last 12 months. Ma claims his firm has already helped those Chinese clients raise more than $350 million.
For a number of Chinese clients, he said the goal is for them to repackage themselves as local companies in the Arab region ultimately able to list on the Nasdaq.
— CNBC’s Natasha Turak contributed to this report. More

U.S. Secretary of State Antony Blinken is set to visit Beijing in his first trip to China under the Biden administration.
Little is expected to emerge from the talks themselves.
But Blinken’s Beijing visit helps pave the way for additional meetings — including a potential one between U.S. President Joe Biden and Chinese President Xi Jinping later this year.

U.S. Secretary of State Antony Blinken boards his plane for travel to Berlin at Joint Base Andrews, Maryland, June 22, 2021.
Andrew Harnik | Pool | Reuters

BEIJING — U.S. Secretary of State Antony Blinken is set to travel to Beijing this weekend in his first trip to China under the Biden administration.
Delayed by more than four months, Blinken’s trip marks a rare high-level meeting between the U.S. and China in a period of heightened tension.

Little is expected to emerge from the talks themselves. But Blinken’s Beijing visit helps pave the way for additional meetings — including a potential one-to-one between U.S. President Joe Biden and his Chinese counterpart Xi Jinping later this year.
Blinken’s Beijing trip is a “potential important turning point in the relationship,” Scott Kennedy, senior advisor and trustee chair in Chinese business and economics at the Center for Strategic and International Studies, told CNBC.
“Just simply strengthening communication is a reasonable goal,” he said. “If [both sides] announce the talks went well enough they can schedule additional cabinet-level meetings.”

Communication and meetings between the U.S. and China have dried up in the last few years due to the pandemic and political tensions.
The U.S. Department of State said Blinken is set to meet with “senior [People’s Republic of China] officials where he will discuss the importance of maintaining open lines of communication to responsibly manage the U.S.-PRC relationship.”

Blinken “will also raise bilateral issues of concern, global and regional matters, and potential cooperation on shared transnational challenges,” department spokesperson Matthew Miller said in a statement.
China’s Ministry of Foreign Affairs confirmed the visit but did not provide details on specific meetings.
Expectations for a significant recovery in the U.S.-China relationship, especially as a result of Blinken’s upcoming trip, remain low.
“The objective is still to prevent the relationship from deteriorating further, rather than articulating and agreeing to a shared vision for a way ahead,” said Drew Thompson, a former U.S. Defense Department official and current visiting senior research fellow at the Lee Kuan Yew School of Public Policy in Singapore.
“The Biden administration’s rhetoric is we’ll compete, where we can; and cooperate, where we must,” Thompson said. “But China doesn’t see it that way. China sees the political elements of both competition and cooperation, and they’re not willing to cooperate if there’s still an element of competition or the U.S. is challenging it politically.”

“And so I think that the administration’s goals are, at this point unrealistic because of the way Beijing has framed its interest in its strategy.”

Growing tensions

It’s been an intense few months geopolitically while the world waited for Blinken to reschedule his trip to China — and potentially help stabilize the relationship between the two economic powers.
The U.S. in February shot down an alleged Chinese spy balloon flying over U.S. airspace. Its appearance had forced Blinken to indefinitely postpone his Beijing trip at the time. Beijing insisted the balloon was an unnamed weather tracker that blew off course.
Elsewhere, the CEO of TikTok, owned by Chinese tech giant ByteDance, got grilled in U.S. Congress in March over security concerns. China’s Foreign Ministry said at the time that it “has never” and “will never” ask companies to go against local laws and provide data located abroad.
“The US government has provided no evidence or proof that TikTok threatens U.S. national security, yet it has repeatedly suppressed and attacked the company based on the presumption of guilt,” the ministry said, according to a briefing transcript.
And in May, China said U.S. chipmaker Micron had failed a security review and banned operators of critical infrastructure from buying from the company.
“The relationship has not remained in a steady state since February,” Kennedy said. But he added that the mood in Washington, D.C., where he’s based, is “not as dark as it had been” in February and March.

Taiwan tensions

“The U.S. needs to honor its commitment to the ‘One China’ policy,” Jia Qingguo, a professor at Peking University, said Tuesday on the sidelines of the Caixin New Asia Vision conference in Singapore.
“China also does not wish to see any accidents between both militaries,” Jia added.
“It recognizes that even though there is a need to establish military guardrails between both countries, that is not enough. The two countries should also establish similar guardrails for diplomacy and economic relations to avoid confrontation. This will reduce reactive actions and reduce any possibility of accidents.”
Among the many other points where the U.S. and China differ is the Russian war on Ukraine, which Beijing has refused to label an invasion, while calling for peace talks.

Hopes for more U.S.-China meetings

Still, the two sides remain each other’s largest trading partners in terms of goods.
China’s Commerce Minister Wang Wentao met with his U.S. counterpart in Washington in May. And U.S. Treasury Secretary Janet Yellen is expected to visit China at an unspecified date.
Looking ahead, Xi could potentially visit the U.S. during the Asia-Pacific Economic Cooperation Leaders’ Summit — set to be held in San Francisco in November.
Jia said expectations for any outcomes of Blinken’s upcoming meetings with the Chinese should not be too high, but that it was important he was going.
“It’s not usual for two of the world’s great powers to rely on the highest levels of leadership to upkeep ties. It is actually quite risky.” Jia said. “Hence, it is important that both countries have more levels of exchange.”
— CNBC’s Clement Tan contributed to this report. More