Good morning. BlackRock went all in on Wall Street’s booming business of private lending last July when it acquired HPS Investment Partners, a firm founded by alumni of Goldman Sachs that was one of the stars of the sector.

But the wipeout of a HPS loan to a telecom entrepreneur points to risks for even the most sophisticated investors in the booming private-credit business. 

• The details: Days after the deal closed, an analyst at HPS’s Midtown Manhattan headquarters spotted a big problem. The company was the lead lender on a more-than $400 million credit agreement with a telecom entrepreneur, Bankim Brahmbhatt, accepting as collateral accounts receivable the executive’s firm had acquired from other businesses. Reviewing those invoices, the analyst noticed that the email address domain on one didn’t match what was on the website of the company it was supposed to be from. HPS dug deeper, and found the same issue again and again. The lender scrambled to get answers from Brahmbhatt, but he had left for India and eventually stopped picking up the phone.
   
• Fraud allegations: Two weeks later, HPS was in court accusing Brahmbhatt of carrying out a “breathtaking” fraud. The emails were fake, the invoices were fake—and the collateral was worthless, they alleged. Brahmbhatt disputes the allegations of fraud, his lawyer said last fall.
   
• Questions raised: The wipeout of HPS’s loan took Wall Street by surprise. How could one of the most sophisticated private-lending firms in the world be so badly duped? Why didn’t anyone spot the issue before BlackRock, the world’s largest asset-management firm, sealed its deal with HPS? Could similar frauds be lurking in the $3 trillion dollar private-lending industry?

OpenAI executive who opposed ‘adult mode’ fired for sexual discrimination.

OpenAI has cut ties with one of its top safety executives, on the grounds of sexual discrimination, after she voiced opposition to the controversial rollout of AI erotica in its ChatGPT product.

The fast-growing artificial intelligence company fired the executive, Ryan Beiermeister, in early January, following a leave of absence, according to people familiar with the matter. OpenAI told her the termination was related to her sexual discrimination against a male colleague.

Big tech companies prepare to skirt Trump’s $100,000 H-1B fee.

The world’s biggest technology companies are looking to skirt President Trump’s $100,000 H-1B visa fee, potentially leaving the brunt of the new policy to hit smaller startups.

Drawing largely on playbooks they have relied on for years, Amazon.com, Microsoft, Alphabet’s Google and others generally plan to find workers in categories that don’t have to pay the fee, including existing H-1B visa holders, students and people on other types of visas, according to people familiar with the companies’ plans.

• A Dutch court ordered an investigation into alleged mismanagement at Chinese-owned semiconductor company Nexperia and upheld the suspension of its chief executive in a move that risks reigniting European tensions with Beijing.
   
• The U.K.’s financial watchdog is moving to bring the fast-growing “buy now, pay later” sector under its regulatory umbrella, adopting rules that will provide more protection to consumers using the financial service, Risk Journal reports.
   
• The European Union abolished a customs exemption on shipments valued under €150, equivalent to $178, to counter the threat it says e-commerce platforms in China and elsewhere pose to businesses in the bloc, Risk Journal reports.
   
• Canada’s anti-money-laundering regulator imposed a penalty of 148,912.50 Canadian dollars, about $110,000, on Century 21 Heritage Group for failing to report a real estate transaction with several indicators for money laundering or terrorist financing, Risk Journal reports.
   
• Estée Lauder has filed a lawsuit against Walmart alleging the retailer sold knockoff versions of some of the cosmetics company’s fragrances and skin-care products.
   
• The Trump administration on Tuesday let U.S. companies supply Venezuela with equipment and technology needed to boost the country’s oil production.

House rejects Speaker Johnson’s effort to block tariff votes.

House lawmakers on Tuesday rejected an attempt by Speaker Mike Johnson (R., La.) to block votes on resolutions disapproving of President Trump’s tariffs—a stinging blow to his leadership that paves the way for lawmakers to potentially rebuke Trump’s signature economic policy.

Meanwhile, senior Bank of Canada policymakers identified the pending U.S.-led review of the existing North American trade treaty as an “important risk” to the economic outlook, according to minutes published Wednesday.

U.S. adds more jobs than expected.

The U.S. economy added 130,000 jobs in January, its strongest growth in over a year, and a sign that the labor market may be shaking off its recent stagnation.

January’s robust gains surprised forecasters, blowing far past consensus expectations, while solidifying expectations the Federal Reserve will keep rates on hold for the foreseeable future. The unemployment rate dipped to 4.3% from 4.4% in December, the Labor Department said Wednesday. And workers’ wages rose.

• What Sweeping Revisions and a Blowout Month Tell Us About the U.S. Job Market
• Job Growth Last Year Was Far Worse Than We Thought. Here’s Why.

• Trump administration officials have discussed whether to seize additional tankers involved in transporting Iranian oil but have held off, concerned about Tehran’s near-certain retaliation and the impact on global oil markets, U.S. officials said.
   
• Attacks on Gaza surged higher in January, as both Israel and Hamas traded accusations of cease-fire violations and progress on President Trump’s peace plan stalled.
   
• The Pentagon has told a second aircraft carrier strike group to prepare to deploy to the Middle East as the U.S. military readies for a potential attack on Iran, according to three U.S. officials.
   
• The U.S. budget deficit will remain roughly flat for the next two years and then widen over the next decade as interest costs consume an increasing share of spending, the Congressional Budget Office said Wednesday in a forecast that highlighted the country’s long-run fiscal challenges.

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• Activist investor Elliott Investment Management has taken a stake in the London Stock Exchange Group, according to people familiar with the matter, and is likely to push for increased stock buybacks and action to lift profit margins.
   
• Activist investor Ancora Holdings has built a roughly $200 million stake in Warner Bros. Discovery and says it opposes Warner’s deal to sell its movie and television studios and HBO Max streaming service to Netflix. 
   
• Casey Wasserman will remain chairman of the committee organizing the 2028 Los Angeles Olympics, its executive committee said Wednesday, after meeting to discuss the future of his involvement.
   
• A grand jury refused to sign off on criminal charges for several Democratic lawmakers who in a November video told military servicemembers they could refuse to obey illegal orders, people familiar with the matter said.

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