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IoD in plea to Kwarteng over rising business insurance costs | Business News

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IoD in plea to Kwarteng over rising business insurance costs | Business News

Britain’s bosses’ union has warned that soaring insurance costs are deterring business owners from tendering for public sector contracts, exacerbating the impact of the coronavirus crisis on SMEs.

Sky News has seen a letter from the Institute of Directors (IoD) to Kwasi Kwarteng, the new business secretary, in which it urges an overhaul of “the public sector’s approach to procurement and risk management”, amid suggestions some bodies are requiring disproportionate levels of insurance cover.

In the letter from Jonathan Geldart, the IoD director general, he cites research suggesting nearly half of company directors had seen a rise in the cost of professional indemnity insurance.

For directors’ and officers’ insurance, Mr Geldart said, the picture was similar.

The IoD chief said the impact of the changes was “profound” for smaller businesses, which could be “forced to stop submitting tenders for public sector work altogether”.

“This problem is in some cases being compounded by the procurement policies of public sector bodies, where we have heard instances of demands for multi-million-pound coverage even for very small contracts.

“Cost increases put yet more pressure on businesses and entrepreneurs at a time when, for many, cashflow remains fragile.”

Mr Geldart warned the COVID-19 crisis would mean that “increased risk pervades the economy”.

“However, we would urge the Government to start by considering the public sector’s approach to procurement and risk management.

“While it is crucial that risk is not simply transferred onto the public sector, it is important for decisions regarding insurance coverage requirements to be proportionate to the project at hand.”

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Reddit forum’s role in Gamestop shares frenzy faces regulatory probe | Business News

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Janet Yellen, U.S. President-elect Joe Biden's nominee to be treasury secretary, speaks as Biden announces nominees and appointees to serve on his economic policy team at his transition headquarters in Wilmington, Delaware

US financial market regulators are to review the extraordinary rallies in the shares of struggling gaming retailer Gamestop, part-driven by participants of an investor forum on Reddit.

The Securities and Exchange Commission said it was working with fellow regulators to “assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants”.

The action reflects deep and widespread concern over the functioning of financial markets.

Gamestop shares were up by 1,744% in the year to date – with a market value above $20bn – at the close of trading on Wednesday night.

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The share frenzy has attracted White House scrutiny as treasury secretary Janet Yellen monitors developments

The value boom of the past week has created more than $2bn in personal wealth for its three largest individual shareholders, whose holdings have not increased during the frenzy.

The staggering leap represents a victory for retail investors over hedge fund short-sellers, who are nursing heavy losses, as markets witness a boom in amateur stock trading.

Millions of Americans have taken advantage of zero-commission trading platforms during the coronavirus crisis – often using social media forums to discuss opportunities.

The value surge has not been restricted to Gamestop.

Its shares, and those of other firms including BlackBerry and AMC Entertainment, fell by more than 20% in extended trading when it emerged that Reddit had temporarily closed the Wallstreetbets chat room.

The volatility prompted widespread calls for scrutiny of trading fuelled by anonymous social media posts. Reddit said it had not been contacted by any authorities in relation to users’ behaviour.

A woman wears a mask as she walks past a GameStop store in Des Plaines, Ill., Thursday, Oct. 15, 2020. GameStop is closing more stores than it originally planned, with the struggling retailer warning of more closures next year. (AP Photo/Nam Y. Huh)
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The company’s own announcements have been seen to have played no role in the meteoric rise in its stock

Wider market falls in recent days have been blamed on hedge funds selling positions to pay for losses shorting Gamestop.

Wednesday’s session saw the main indexes on Wall St lose more than 2% and futures indicate further turbulence ahead.

Even the new US treasury secretary, Janet Yellen, said she was “monitoring the situation” while a state regulator has called for Gamestop shares to be suspended for 30 days to allow a cooling off period.

Technology investor Chamath Palihapitiya told Sky’s sister channel CNBC: “We are moving to a world where ordinary folk have the same access as professionals and can come to the same conclusion or maybe the opposite.

“The solution is more transparency on the institutional side, not less access for retail.”

In Gamestop’s case, it has been shuttering stores for years in a tough retail landscape and market analysts have likened the stock interest – driven purely by retail investors – to a pyramid scheme.

Nasdaq chief Adena Friedman said: “If we see a significant rise in the chatter on social media … and we also match that up against unusual trading activity, we will potentially halt that stock to allow ourselves to investigate the situation.”

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EasyJet warns of lockdown drag but sees pent-up demand on horizon

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EasyJet warns of lockdown drag but sees pent-up demand on horizon

EasyJet has warned it expects to fly just 10% of normal services in its current financial quarter as coronavirus crisis restrictions continue to take a toll on travel.

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Tesla posts first profit after stellar year for electric car maker | Business News

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Elon Musk

Tesla has posted its first ever annual profit capping a stellar year in which its surging share price have seen it become the world’s most valuable car maker.

The electric vehicle firm, led by Elon Musk, reported a profit of $721m for 2020 compared to a loss of $862m a year earlier.

However there was disappointment for investors as the company’s fourth quarter earnings fell short of expectations, sending shares 4% lower in after-hours trading.

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Elon Musk is Tesla’s boss

The stock has surged by 700% in the past 12 months, taking the company’s value to more than $800bn and surpassing Toyota.

Tesla’s bottom line for the year was boosted by $1.58bn worth of environmental regulatory credits, which it is able to sell to other less environmentally-friendly car makers – and without these it would have remained in the red.

Still, its delivery of more than 180,000 vehicles during the fourth quarter was a record, though it narrowly missed a target to ship 500,000 for the year as a whole.

Total revenues for the year rose 28% to $31.5bn.

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