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Pornhub under criminal investigation

The Federal Bureau of Investigation (FBI) has conducted a criminal investigation into the Montreal-based adult entertainment company MindGeek, revealing evidence of its alleged involvement in illegal financial transactions related to human trafficking for sexual exploitation, according to recently filed court documents in the U.S.

According to documents submitted to the U.S. court, negotiations are underway between the Canadian company (which rebranded as Aylo in August) and U.S. federal prosecutors to potentially avoid a criminal trial. The proposed course of action is a deferred prosecution agreement (DPA), allowing the company to admit wrongdoing, disclose facts, pay a penalty, and sidestep a criminal conviction.

For the initiation of this procedure, the FBI must be satisfied with the evidence supporting potential charges. Additionally, the company must demonstrate a genuine commitment to reforming its practices.

“We are not going to comment on the status of this case at this time,” said Sarah Bain, vice-president responsible for public engagement at Ethical Capital Partners, the Canadian investment fund that acquired MindGeek in March.

You can read more on the matter here.

What’s going on?

• Apple And Its $14 Billion Problem (theDeepDive)

• Honda Boosts U.S. Factory Workers’ Pay by 11% After UAW Wins in Detroit (WSJ)

• Honda Will Give Autoworkers 11% Raise Following UAW’s Big Wins (Bloomberg)

• At SpaceX, worker injuries soar in Elon Musk’s rush to Mars (Reuters)

• Ray Dalio Couldn’t Stand Not Being the Most ‘Believable’ Person at Bridgewater So He Gamed His Own Believability Rating App (theDeepDive)

• October Sees 2.3% Drop in Wholesale Used-Vehicle Prices (theDeepDive)

• US reduces beef exports as cattle herd shrinks, squeezing Tyson Foods (Reuters)

• FDA Approves Wegovy Competitor from Eli Lilly (theDeepDive)

• Wearable 'Ai Pin' launched by Humane, backed by ex-Apple execs and Microsoft (Reuters)

• Is Tumblr About to Go Belly Up? Staff to Be Reassigned to ‘Revenue-Generating’ Divisions (theDeepDive)

What’s the latest?

• Budget Cuts: The Canadian government's plan to cut $500 million in spending will impact different departments and agencies unevenly. While some, like the Canadian Space Agency and Invest in Canada Hub, face over 1% budget freezes, 61 departments and agencies are exempt, including those with budgets exceeding $25 million. The Department of Finance faces the least impact, with only $827,000 cut from its $118 billion budget. In contrast, the Department of National Defence will lose $211.1 million, about 0.76% of its budget.

• Food Banks At Limit: A Brampton food bank, Ste. Louise Outreach Centre of Peel, has stopped serving international students due to overwhelming demand and limited resources. The board President of Ste. Louise, argues that international students should have sufficient funds for their first year in Canada and should not depend on food banks.

• GM Plant Rejects UAW Deal: United Auto Workers union members at General Motors' Flint assembly plant in Michigan have voted against a proposed contract with the automaker, with 51.8% opposing the deal. The rejection at this key plant, which manufactures the Silverado heavy-duty pickup truck, indicates potential challenges for GM in ratifying the agreement across other plants.

• Germany’s Global Tax: The German parliament has passed a law to implement a global minimum corporate tax of 15% for multinational firms, following a 2021 OECD agreement. This measure targets large companies like Google and Amazon to prevent them from shifting profits to low-tax countries. It is expected to generate significant additional revenue for governments globally, with Germany anticipating around 910 million euros in 2026, and decreasing amounts in the following years.

• Trade By USB: Industrial & Commercial Bank of China Ltd.'s US unit was hit by a cyberattack, suspected to be from Lockbit, a group with links to Russia. This attack disrupted the bank's ability to clear US Treasury trades on Thursday, leading to a unique situation where settlement details had to be physically transported across Manhattan on a USB stick.

Navigating small-cap risks

The stock market and stuff

• Investor Mobius to step back from Mobius Capital Partners (Reuters)

• SEC Counters Binance’s Legal Defense: “Lacking Support In The Law” (theDeepDive)

• A bullish bet on Exxon Mobil using options after decline in crude oil prices (CNBC)

In the juniors

• Sphere CFO Abruptly Quits Days Before Earnings Call; Company Reports $98.4 Million Quarterly Loss (theDeepDive)

• Mattress retailer Sleep Country reports Q3 profit down from year ago (BNN)

• CGX Energy Reviewing Strategic Options For Corentyne Block After 35 Metres Of Net Pay Hit In Wei-1 Well (theDeepDive)

• Canopy Sees Q2 Revenue Fall 36% Following BioSteel Bankruptcy (theDeepDive)

FULL DISCLOSURE: First Lithium Minerals is a client of Canacom Group, the parent company of The Deep Dive. Canacom Group is currently long the equity of First Lithium Minerals. The author has been compensated to cover First Lithium Minerals on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. We may buy or sell securities in the company at any time. Always do additional research and consult a professional before purchasing a security.