Yahoo confirms major breach — and it could be the largest hack of all time

• Kif Leswing
 

• 20h
• 252,612
 
• 58
 

AP Photo

Yahoo on Thursday revealed a massive data breach of its services.

Yahoo "has confirmed that a copy of certain user account information was stolen from the company's network in late 2014 by what it believes is a state-sponsored actor," the company posted on its investor relations page.

The stolen data include names, email addresses, telephone numbers, birthdays, hashed passwords, and some "encrypted or unencrypted security questions and answers." Yahoo says it believes no payment card or bank account information was stolen.

Yahoo said it believes that at least 500 million user account credentials were stolen, which would make it the biggest breach of all time — bigger than the Myspace breach of 360 million user accounts and 427 million passwords.

The breach has turned out to be larger than the 200 million accounts previously expected.

Recode's Kara Swisher reported on Thursday that the breach could have implications for the $4.8 billion sale of Yahoo to Verizon, and that some shareholders may fear that it could change the price of the transaction.

Verizon released this statement:

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Verizon statement this afternoon regarding Yahoo security incident. $VZ

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Yahoo says there is no evidence that the hacker still has access to Yahoo's network or internal services.

Here's the entire message from Yahoo:

"A recent investigation by Yahoo! Inc. has confirmed that a copy of certain user account information was stolen from the company's network in late 2014 by what it believes is a state-sponsored actor. The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. The ongoing investigation suggests that stolen information did not include unprotected passwords, payment card data, or bank account information; payment card data and bank account information are not stored in the system that the investigation has found to be affected. Based on the ongoing investigation, Yahoo believes that information associated with at least 500 million user accounts was stolen and the investigation has found no evidence that the state-sponsored actor is currently in Yahoo's network. Yahoo is working closely with law enforcement on this matter.

"Yahoo is notifying potentially affected users and has taken steps to secure their accounts. These steps include invalidating unencrypted security questions and answers so that they cannot be used to access an account and asking potentially affected users to change their passwords. Yahoo is also recommending that users who haven't changed their passwords since 2014 do so.

"Yahoo encourages users to review their online accounts for suspicious activity and to change their password and security questions and answers for any other accounts on which they use the same or similar information used for their Yahoo account. The company further recommends that users avoid clicking on links or downloading attachments from suspicious emails and that they be cautious of unsolicited communications that ask for personal information. Additionally, Yahoo asks users to consider using Yahoo Account Key, a simple authentication tool that eliminates the need to use a password altogether.

"Online intrusions and thefts by state-sponsored actors have become increasingly common across the technology industry. Yahoo and other companies have launched programs to detect and notify users when a company strongly suspects that a state-sponsored actor has targeted an account. Since the inception of Yahoo's program in December 2015, independent of the recent investigation, approximately 10,000 users have received such a notice.

"Additional information will be available on the Yahoo Security Issue FAQs page, beginning at 11:30 am Pacific Daylight Time (PDT) on September 22, 2016."

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COOPERMAN: 'We're going to win, but basically they've ruined my business'

• Rachael Levy
 

• 16h
• 6,937
 
• 9
 

Leon Cooperman, chairman and CEO of Omega Advisors.Thomson Reuters

Leon Cooperman, the hedge fund manager who was charged Wednesday with insider trading, said the government has become hostile and that he might consider closing his firm if the charges become too much of a distraction.

"We're going to win [the case], but basically they've ruined my business because people have a tendency to fire, aim, ready," he said at the RSM Investment Industry Summit in New York on Thursday afternoon.

Cooperman is the CEO of Omega Advisors, an iconic New York hedge fund.

Here's what else he said about the charges from the Securities and Exchange Commission:

• "It's frivolous, but we live in a very hostile environment. ... If you're 30 years old and this happens, you're out of business. If you're 73 and don't give a sh-- what it costs you and your reputation is important, basically you'll defend yourself to the end."
• "We're going to win, but basically they've ruined my business because people have a tendency to fire, aim, ready, but I can live with it. We're very liquid in our portfolio. We're not leveraged in any way."
• "God has been very good to me. ... If I should retire and get out of the business because of the government, I'll look at that as a positive message. There's nothing wrong about being a family office."
• "The idea of managing your own money — not being responsible to anybody — has a certain romantic ring to it. But I'm too stupid to do it."

Cooperman, the keynote speaker at the event, was scheduled before the charges to present, and he spent most of the hour discussing his market outlook (bullish on stocks) and industry trends.

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Deutsche Bank is losing its place at the top table of investment banking

• Will Martin
 

• 6h
• 2,445
 

Reuters

European investment banks, particularly Deutsche Bank, are in trouble — and for the first time since the tail end of the financial crisis not a single European lender is in the top five global investment banks, according to the latest data from Coalition.

Coalition, which monitors the investment banking industry and produces a league table of the top performers twice per year, says that in its most recent ranking, released on Friday, Deutsche Bank has now dropped to be just the sixth "best" investment bank on the planet.

The ranking is based on a series of factors, including how much revenue banks make from trading on the markets in equities, fixed income, commodities etc, but also looks at traditional IB activities, like advice, deal making, and financing.

All five of the world's top banks are now located in the United States of America, after Morgan Stanley leap-frogged Deutsche Bank in the list. Prior to last year, Germany's biggest bank was a near permanent feature in the top three of Coalition's lists, but since CEO John Cryan began a major restructuring of the bank to protect its struggling overall business, investment banking has taken something of a back seat.

Obviously falling in Coalition's ranking is not in of itself particularly worrying, but it does reflect a broader malaise in the bank, and will add to the heaping pile of worries affecting the lender. Earlier this week for instance, the United States Federal Deposit Insurance Corporation named Deutsche Bank the "riskiest" of all the globally systemically important banks — those banks  whose failure would threaten a financial crisis and economic collapse.

The FDIC noted that the bank has a leverage ratio of 2.68%, lower than any other GSIB. The leverage ratio is a measure of a bank's financial sustainability, and shows how much equity capital a lender has against assets such as loans.

"The Coalition results reflect the strategic decisions we have taken to streamline our products, geographical footprint and client base. These decisions impacted first-half revenues but will make us more efficient and profitable. We remain the leading non-US investment bank globally and a top two player in Emea," Deutsche Bank commented, according to the Financial Times.

It's not just Deutsche Bank feeling the pain

Deutsche Bank may be the clearest example of the woes being felt by European banks, but it certainly is not the only one struggling. Other big firms have been scrambling to find a new business model that more than covers the cost of their capital. Credit Suisse is a good case in point.

The bank's CEO, Tidjane Thiam, has tried to steer away from trading towards providing more services for high-net worth individuals. In May, the bank cut around 100 jobs in its London-based global markets division.

As a result, the Swiss lender has slipped from seventh to eighth in Coalition's ranking for the first half of 2016, swapping places with Barclays, whose IB business has likely received a boost since new CEO Jes Staley — who is an investment banker through and through, having spent 34 years working for JP Morgan's IB arm — took the reins late last year.

Coalition's latest ranking comes at a time when investment banking across the globe is facing serious challenges, with revenues falling for banks across the board. Coalition noted earlier in September that regulation, sluggish economic activity, and political uncertainty have all combined to depress revenues.

Tougher capital and conduct rules, in the wake of the financial crisis and market manipulation scandals, have made it more difficult to make money from trading debt, currencies and commodities.

Revenues for investment banks started falling five years ago, and haven't stopped yet. Investment banking income for the first half of 2016 was lower than that of 2008 – the year that saw the fall of Lehman Brothers and the peak of the financial crisis — Coalition data showed.

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Facebook inflating one of its video-viewing metrics is bad — but not as bad as it seems

• Lara O'Reilly
 

• 5h
• 13,070
 
• 18

Facebook CEO Mark Zuckerberg. Justin Sullivan/Getty Images

Facebook exaggerated a key metric advertisers use to assess the performance of their videos on the platform by potentially as much as 80% for more than two years, The Wall Street Journal reported on Thursday.

It's an embarrassing screwup, and the report suggests one ad buyer, Publicis Media, was "upset" by the error. But while it certainly looks bad, there are a few reasons it probably won't be as bad for Facebook as it seems.

The company acknowledged in a post on its Advertiser Help Center website that its metric for average video viewing time had been inflated because it didn't include video views lasting under three seconds. Facebook added that it was introducing a fix to provide a more accurate metric to include all views: "Average Watch Time."

A Facebook representative told Business Insider: "We recently discovered an error in the way we calculate one of our video metrics. This error has been fixed, it did not impact billing, and we have notified our partners both through our product dashboards and via sales and publisher outreach. We also renamed the metric to make it clearer what we measure. This metric is one of many our partners use to assess their video campaigns."

Why this isn't as bad as it looks

Average video view time is just one metric Facebook offers advertisers to assess the impact of their videos. Many marketers look at total views or the view completion rate to determine whether their videos were a success.

Crucially, average video view time isn't what Facebook calls a "billable event." Facebook doesn't charge for video ads that were viewed for less than three seconds, unless advertisers actively choose to be charged on this basis. You can't bid on "average view time."

So many marketers may have simply assumed — as advertising executives including Anheuser-Busch InBev senior director of digital connections Azania Andrews and Laundry Service CEO Jason Stein have pointed out on Twitter — that people who watched a video for less than three seconds (therefore users they didn't pay to reach) were not included in the average view time metric anyway.

Why it's still pretty bad

Regardless, it's still not a good look for Facebook. It continues the narrative that Facebook is a black box that doesn't expose its inner workings to the people who fund its very existence.

WPP CEO Sir Martin Sorrell. WPA Pool/Getty Images

Sir Martin Sorrell, the CEO of the world's biggest advertising group, WPP, which spent $1 billion of its clients' marketing budgets on Facebook last year, has called Facebook out on this before. He has previously said Facebook's three-second video viewability threshold was "ludicrous" and on several occasions has called for Facebook to offer better independent measurement tools.

He told Business Insider on Thursday: "That's why we invested in comScore and built a media measurement business in over 50 countries around the world. We have also been calling for a long time for media owners like Facebook and Google not to mark their own homework and release data to comScore to enable independent evaluation. The referee and player cannot be the same person."

Keith Weed, the chief marketing officer at the consumer-goods giant Unilever, said in an interview last year that without online media giants offering third-party verification, "It's like letting them mark their own homework."

In its defense, Facebook has formed a partnership with the third-party analytics firm Moat to provide data on how its Facebook video ads are performing — a move that Weed in a Facebook press release said was "very encouraging." The company has since opened up its platform to other video-measurement partners, including Integral Ad Science, Nielsen, and comScore. Marketers can request this data, though it doesn't come as standard.

While some people might argue that, regardless, many agencies may have been using Facebook's average video view data to encourage marketers to spend on Facebook's video ads, it's up to marketers to be savvy and use all the data available to them — particularly independent, third-party data — to determine whether those ads are performing well.

After this article was first published on Friday, Facebook's vice president of advertising and global operations, published this statement in an attempt to clarify the issue:

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2 of the biggest exchange groups in the US are in takeover talks: Bloomberg

• Matt Turner
 

• 16h
• 3,254
 
• 2

Trader Anthony Norman relays a trade in the Euro Dollar pit at the Chicago Mercantile Exchange after the U.S. Federal Reserve Bank slashed interest rates by a half-percentage point, September 18, 2007. REUTERS/John Gress

The Chicago Board Options Exchange, commonly known as the CBOE, is in talks to buy Kansas-based Bats Global Markets, according to Matthew Monks at Bloomberg.

A sale of Bats, which is the second largest equity market in the US, would come less than six months after the company went public. Shares priced at $19 at the IPO, and closed at around $26.53 on Thursday. That gave it a market cap of around $2.6 billion. 

The CBOE is the largest US options exchange, and is valued at around $5.65 billion.

Started in 2005, Bats is known for aggressively competing for market share, going up against establishment names like the New York Stock Exchange and Nasdaq in the US, and the London Stock Exchange in Europe.

In March, it launched a new gauge of stock market volatility with the options specialist T3Index. The index, known as SPYIX, or Spikes, competes with the widely used CBOE volatility index, which is known as the VIX and is often described as the "Fear Index."

According to a news release earlier this month, Bats had a 21.1% market share in US equities, and a 23.4% market share in Europe, in August. 

The exchange group has been especially focused on the burgeoning ETF business, and was the number one US market operator for ETF trading in August, executing 24.1% during the month. It also said it had won 26% of US ETF listings this year to date.  It also has a growing US options business, reporting a  10.7% market share for August.

A deal, if it were to go ahead, would be the latest sign of consolidation in the global exchange business.

The London Stock Exchange and Deutsche Boerse are in the midst of trying to seal a deal to combine forces, while a group of Chinese investors is hoping to buy the Chicago Stock Exchange. 

Going further back, The Intercontinental Exchange acquired the Singapore Mercantile Exchange in 2014, and the New York Stock Exchange in 2013. And the London Metal Exchange was acquired by Hong Kong exchange HKEx in 2012.

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