Did this VC obtain trade secrets for China?

A new leader at Commerzbank to start: Commerzbank announced its new chief executive would be Bettina Orlopp, who is expected to fight a possible takeover of the German bank by Italy’s UniCredit. But what, if anything, can the German government, regulators and rival banks do to thwart UniCredit’s ambitions?

Another FTX-linked prison sentence: Caroline Ellison, the former boss of the trading firm through which FTX gambled billions of dollars in customer funds, has been sentenced to two years in prison.

And a scoop: Private equity firm BC Partners has entered exclusive talks to buy a minority stake in the EuroLeague basketball competition, edging out rivals including General Atlantic and Saudi Arabia’s SURJ Sports Investment.

In today’s newsletter:

• FBI probes venture firm Hone Capital

• US antitrust regulators go after Visa

• Bernard Arnault’s media outlet ban

Why Hone Capital is being probed by the FBI

In the past few years, billions of dollars from all over the world have sloshed into Silicon Valley through venture capital firms, as investors have scrambled to ride the US tech boom.

But now, the FBI is probing one of those firms, Hone Capital, to determine whether it was used as a conduit for Beijing to obtain tech start-ups’ trade secrets, DD’s Tabby Kinder reports.

Hone launched in 2015 with $115mn of initial capital from Chinese private equity group China Science & Merchants Investment Management Group (CSC).

Soon, the firm became one of the most prolific investors in Silicon Valley, investing in about 360 US tech start-ups in less than three years.

It built stakes in a whole fleet of companies, including self-driving carmaker Cruise, payments group Stripe and aerospace engineer Boom.

Yet the FBI’s looking into whether Hone accessed information about the technology, finances or clients of its start-ups for the benefit of its Beijing-based owner or Chinese authorities, said several people close to the matter.

Legal representatives for CSC said: “Allegations that CSC Group, its chairman, or any of its affiliates, including Hone Capital, have misappropriated trade secrets are completely baseless and grounded in nothing but insinuation and speculation fuelled by anti-Chinese sentiment and self-serving allegations from former executives who are actively in litigation with CSC Group over, among other things, their own self-dealing.”

Tensions between Washington DC and Beijing are already high. While the tech industry for years welcomed Chinese investment, more recently it has been told by US authorities to beware of foreign espionage.

And the FBI probe has engulfed other fixtures of the tech industry that the venture capital firm has dealt with over the years, including AngelList, one of Silicon Valley’s most storied investment platforms.

Between 2015 and 2016, Hone provided AngelList with $80mn in exchange for access to all “syndicate” deals in its system, which allow investors to pool resources to make an investment. AngelList declined to comment.

On top of all that, Hone is also in a bitter legal fight with former executives including Silicon Valley head Veronica Wu and chief financial officer Purvi Gandhi. 

Visa gets hit with US antitrust lawsuit

Visa cards are so ubiquitous in the US, their name has almost become synonymous with credit or debit card payments themselves.

Turns out, the US Department of Justice has also taken notice of that.

Regulators filed an antitrust lawsuit against the card giant on Tuesday, accusing the company of monopolising the market for debit payments and using its dominance to crush potential competitors.

The lawsuit in Manhattan federal court alleged the company “insulates itself from competition” by imposing a “web of exclusionary agreements” on merchants and banks that penalise customers whose charges are routed through different networks.

US attorney-general Merrick Garland said: “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market.”

While its dominance has been threatened by technology companies that have launched payments products — such as Apple, PayPal and Square — the DoJ argues that rather than “competing on the merits” the company does all that it can to keep the competitive crown.

The complaint says Visa’s market share is huge: more than 60 per cent of debit transactions in the US are completed on its debit network, which allows it to charge more than $7bn in processing fees annually.

It’s not Visa’s first foray with regulators. In 2020 the DoJ filed an antitrust complaint to block the group’s acquisition of tech company Plaid, leading to the businesses ultimately abandoning the $5.3bn merger.

This new antitrust suit is just the latest in a string of challenges to powerful businesses since Jonathan Kanter took the helm of the DoJ’s antitrust division a few years ago.

Regulators in the unit have also been going after Google, arguing that the tech giant monopolises digital advertising space. Visa’s just the latest to enter the mix.

Media groups criticise LVMH over internal blacklist

Plenty of chief executives would prefer their underlings not speak to the press.

But LVMH chief executive Bernard Arnault has gone a step further by explicitly banning his employees from speaking to journalists at a handful of specific publications.

In a January memo to senior executives, Arnault directed them to inform their staffs that he was issuing “an absolute ban” on speaking to journalists at seven publications: La Lettre, Puck, Miss Tweed, L’Informé, Médiapart, Le Canard Enchaîné and Glitz.paris.

The message to executives at the time was clear: do not speak to these publications under any circumstances.

“I formally condemn any behaviour consistent with maintaining relationships with unscrupulous journalists and giving them information or comments on the life of the group,” Arnault wrote. “Any breach (and this will inevitably be known) will be considered a serious infraction, with the corresponding consequences attached to it.”

That didn’t sit well with the media. In an open letter published in French national newspaper Le Monde on Tuesday, journalists’ unions expressed their solidarity with the targeted publications.

The open letter reminded Arnault that “the mission of the press is not to relay the official communication of companies and institutions, but to inform, and this constitutes one of the pillars of democracy”.

Unions at more than a dozen major publications in France signed the letter, including Le Monde, Le Figaro, AFP as well as a couple owned by LVMH itself — including Les Echos and Le Parisien.

The French media landscape is filled with billionaire owners, who often use the publications to project their status and influence.

And recently, some of those companies have run into trouble. Conservative billionaire Vincent Bolloré’s TV station C8 was denied a new licence this summer by the country’s broadcast regulator.

Will the public pressure force Arnault to roll back his directive?

Job moves

• The Raine Group has hired Alexander Verbitsky as a managing director focusing on the gaming industry. He previously worked for Tripledot Studios.

• King Street has hired Terry Ing as partner and head of US research. He previously worked as a portfolio manager for KKR.

• Squire Patton Boggs has hired Mark Esper, the former US secretary of defence, as a senior adviser.

Smart reads

Sneaker turnaround Nike, the world’s biggest sportswear maker, got a new boss in Elliott Hill last week, Lex writes. But revamping the business could take a marathon — not a sprint.

Economic slump Xi Jinping has tried to revitalise China’s economy with a sweeping policy package, Bloomberg reports. Economists say it could take much more.

Strange bedfellows In a Brooklyn jail, there’s an unusual pair of cellmates: American rapper Sean Combs and FTX founder Sam Bankman-Fried, The New York Times reports.

News round-up

Thames Water’s accelerating cash burn exacerbates debt woes (FT)

Yevgeny Prigozhin secretly used JPMorgan and HSBC for Wagner payments (FT)

Drax commits $12.5bn for US power plants as group is lured by IRA tax breaks (FT)

Energy-hungry tech groups express interest in US-led carbon credits scheme (FT)

Canadian pension fund CDPQ snaps up stake in UK hydropower company (FT)

Qatar’s Ooredoo wades into Gulf’s AI data centre rivalry (FT)

Rio Tinto steps up campaign to win over public for lithium mine in Serbia (FT)