SAN FRANCISCO (Reuters) – Elon Musk ignored repeated warnings about the U.S. securities disclosure obligations potentially triggered by his growing stake in Twitter in 2022, according to a Morgan Stanley executive who helped Musk secretly amass shares in the social media firm, a lawsuit says.

The lawsuit claims that Musk and his right-hand man Jared Birchall were aware of and discussed the rule that they have to disclose more than a 5% stake in Twitter, citing testimonies from the two men in an investigation by the U.S. Securities and Exchange Commission (SEC).

The amended lawsuit filed by a Twitter investor on Tuesday in a Manhattan federal court accuses Musk of defrauding investors by delaying disclosure of his Twitter stake to amass shares at lower prices. The Oklahoma firefighters pension fund said Musk saved more than $200 million by adding to his Twitter stake in secret, to the detriment of some investors.

Musk and Birchall enlisted the unidentified managing director at Morgan Stanley to develop a clandestine trading strategy to hide Musk's Twitter stock acquisition and allow him to buy shares at “artificially depressed prices,” the lawsuit said.

Neither Musk nor Birchall were immediately available for comment. Morgan Stanley in a statement said, ‘Morgan Stanley is not a defendant in this lawsuit.”

The Morgan Stanley executive repeatedly told Birchall to seek legal advice regarding the 5% disclosure requirements, the lawsuit said. Birchall told the executive that lawyers had been consulted, when that was not the case until he had amassed over a 9% stake in Twitter on April 1, 2022, according to the lawsuit.

Musk eventually bought Twitter for $44 billion in October 2022 and changed the company's name to X.

“They knew the answer, they had to disclose but did not want to, in part because it would make Musk's purchases drastically more expensive and public, so Birchall and Musk disregarded repeated warnings,” from the Morgan Stanley executive “about the need to get legal advice,” the lawsuit said.

Musk's lawyers previously argued that their client was “one of the busiest people on the planet,” and that any disclosure failure was “inadvertent.”

The violation “is the latest episode in Musk's history of disregard for the federal securities laws and contempt for the SEC and its rules and regulations,” the lawsuit said.

Musk and the top U.S. markets regulator have been in a years-long feud, dating back to 2018, when he tweeted that he had “funding secured” to take electric carmaker Tesla private.

(Reporting by Hyunjoo Jin; Editing by Bill Berkrot)

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Taiwan, which China claims as its own territory, has been stepping up efforts to stop what it views as underhand and illegal activities by Chinese firms to steal know-how and poach talent.

Taiwan's Ministry of Justice Investigation Bureau late on Thursday named Luxshare Precision Industry as one of eight Chinese companies “that came to Taiwan to illegally engage in the poaching our high-tech talents”. It did not give details.

Luxshare did not immediately respond to a request for comment.

The investigation bureau named video surveillance equipment maker Zhejiang Dahua Technology, which the United States added to a blacklist in 2019 over Beijing's treatment of Muslim minorities in the far western Chinese region of Xinjiang.

Zhejiang Dahua set up “two private locations” in Taiwan and tried to circumvent investigation by listing its employees as working for another company, the bureau said, also without giving details.

Zhejiang Dahua did not immediately respond to a request for comment.

Taiwan, home to chipmaker giant TSMC and accounting for the majority of the world's most advanced semiconductor manufacturing capacity, sees China's efforts as a threat to its chip expertise.

“The facilitators of relevant mainland China companies in Taiwan should not be under any illusions and challenge the determination to enforce the law,” the bureau said, adding it would “resolutely crack down on illegal business operations and the poaching of talent”.

Thursday's announcement was the result of a sweep this month of suspected illegal operations by Chinese tech companies.

In 2022, Taiwanese prosecutors accused Luxshare of stealing commercial secrets from a Taiwanese competitor, Catcher Technology, and poaching its workforce to win orders from Apple, saying it had charged 14 people.

(Reporting by Ben Blanchard; Additional reporting by Casey Hall in Shanghai; Editing by William Mallard)

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(Reuters) -Singapore-based Terraform Labs and its founder Do Kwon have reached a tentative settlement with the U.S. Securities and Exchange Commission which sued them for allegedly misleading cryptocurrency investors before the 2022 collapse of the stablecoin TerraUSD.

The deal but not its terms was disclosed on a court website on Thursday. A jury found Kwon and Terraform Labs liable on civil fraud charges at trial in April.

The SEC had accused the company and Kwon of misleading investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain a value of $1. The regulator also accused them of falsely claiming Terraform's blockchain was used in a popular Korean mobile payment app.

U.S. District Judge Jed Rakoff in Manhattan asked the SEC and the defendants to file papers supporting the settlement by June 12.

An SEC spokesperson and attorneys for the defendants declined to comment.

The collapse of TerraUSD and Luna, a more traditional token that fluctuated in value but was closely linked to TerraUSD, roiled cryptocurrency markets in May 2022.

The SEC has estimated that investors in the two cryptocurrencies lost more than $40 billion combined when the TerraUSD peg to the dollar could not be maintained.

The regulator had asked Rakoff in court filings to make Kwon and Terraform Labs relinquish $5.3 billion in what it called ill-gotten gains from sales of the stablecoin.

The SEC also sought a $420 million fine on the company and a $100 million fine for Kwon, and for both to be banned from dealing in “crypto asset securities.”

The cryptocurrency entrepreneur and his company had argued that the maximum fines allowed were $3.5 million on Terraform Labs and less than $1 million for Kwon.

Kwon faces related criminal charges in the U.S. and his native South Korea. He has denied wrongdoing.

Since his arrest in March 2023, he has been awaiting extradition from Montenegro, where authorities have gone back and forth on where he should be sent.

(Reporting by Jody Godoy in New York; Editing by Richard Chang)

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OpenAI's board members in an article published in the Economist said the review into the events found the previous board's decision did not arise out of concerns over the pace of AI development or statements made to the startup's investors, customers or business partners, among others.

“In six months of nearly daily contact with the company, we have found Altman highly forthcoming on all relevant issues and consistently collegial with his management team,” it said.

Helen Toner and Tasha McCauley, who had left the board in November when Altman returned as CEO, had told the Economist in an invitation piece on Sunday that they stood by the decision to dismiss Altman, given the board's duty to “provide independent oversight and protect the company's public-interest mission.”

They also said that developments since their departure bode ill for OpenAI's experiment in self-governance, pointing to Altman's return to the Microsoft-backed startup's board, as well as the departure of senior safety-focused talent.

OpenAI's board, chaired by former Salesforce co-CEO Bret Taylor, said it agreed with Toner and McCauley's view that AI requires effective regulation and added that the ChatGPT maker has held talks with government officials on various issues surrounding generative AI.

OpenAI said on Tuesday it formed a safety and security committee that will be led by board members as it begins training its next AI model.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Maju Samuel)

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The artificial intelligence firm said the threat actors used its AI models to generate short comments, longer articles in a range of languages, made up names and bios for social media accounts over the last three months.

These campaigns, which included threat actors from Russia, China, Iran and Israel, also focused on issues including Russia's invasion of Ukraine, the conflict in Gaza, the Indian elections, politics in Europe and the United States, among others.

The deceptive operations were an “attempt to manipulate public opinion or influence political outcomes,” OpenAI said in a statement.

The San Francisco-based firm's report is the latest to stir safety concerns about the potential misuse of the gen AI technology, which can quickly and easily produce human-like text, imagery and audio.

Microsoft-backed OpenAI said on Tuesday it formed a Safety and Security Committee that would be led by board members, including CEO Sam Altman, as it begins training its next AI model.

The deceptive campaigns have not benefited from increased audience engagement or reach due to the AI firm's services, OpenAI said in the statement.

OpenAI said these operations did not solely use AI-generated material but included manually written texts or memes copied from across the internet.

Separately, Meta Platforms, in its quarterly security report on Wednesday, said it had found “likely AI-generated” content used deceptively on its Facebook and Instagram platforms, including comments praising Israel's handling of the war in Gaza published below posts from global news organizations and U.S. lawmakers.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Alan Barona)

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Unveiled in 2020, the council consisted of experienced users, online safety experts and anti-bullying advocates to help improve safety on the site.

The company did not immediately respond to a Reuters request for comment.

In January, Bloomberg News had reported that Twitch was set to cut about 35% of its staff.

(Reporting by Niket Nishant in Bengaluru; Editing by Arun Koyyur)

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A surge in demand for high-performance computing and large-scale data centers to support growing adoption of generative AI has spurred investments in AI-capable products, triggering demand for servers offered by companies such as Dell.

The results come days after Dell unveiled a range of AI-enabled PCs powered by Qualcomm processors and said that a new server, which supports Nvidia's latest chips, will be available from the second half of 2024.

Shipments of the company's AI-optimized servers more than doubled to $1.7 billion, and the backlog grew more than 30% to $3.8 billion, Chief Operating Officer Jeff Clarke said in a statement.

The availability of AI PCs is expected to boost demand for PC makers, helping the market rebound from a lull in orders after the pandemic-driven buying spree.

Fueled by optimism about demand for its AI-optimized servers, Dell's stock has more than doubled this year and hit a record high earlier this week.

Peer HP Inc beat estimates for second-quarter revenue on Wednesday, signaling a recovery in the PC market.

Dell's revenue for the first quarter ended May 3 rose about 6% to $22.24 billion, beating analysts' average estimate of $21.64 billion, according to LSEG data.

Excluding items, its first-quarter adjusted profit came in at $1.27 per share, compared with estimate of $1.26 per share.

The company's revenue for infrastructure solutions group – which includes its storage, software and server offerings – rose 22% to $9.23 billion, while that of the client solutions group – home to PCs, was flat at $11.97 billion.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Alan Barona)

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(Reuters) -TikTok is working on a clone of its recommendation algorithm for its 170 million U.S. users that may result in a version that operates independently of its Chinese parent and be more palatable to American lawmakers who want to ban it, according to sources with direct knowledge of the efforts.

The work on splitting the source code ordered by TikTok's Chinese parent ByteDance late last year predated a bill to force a sale of TikTok's U.S. operations that began gaining steam in Congress this year. The bill was signed into law in April.

The sources, who were granted anonymity because they are not authorized to speak publicly about the short-form video sharing app, said that once the code is split, it could lay the groundwork for a divestiture of the U.S. assets, although there are no current plans to do so.

The company has previously said it had no plans to sell the U.S. assets and such a move would be impossible.

TikTok initially declined to comment. After publication of this story, TikTok in a posting on X said “The Reuters story published today is misleading and factually inaccurate,” without specifying what was inaccurate.

TikTok also posted a passage from its federal lawsuit: “the ‘qualified divestiture' demanded by the Act to allow TikTok to continue operating in the United States is simply not possible: not commercially, not technologically, not legally. And certainly not on the 270-day timeline required by the Act.”

“We stand by our reporting,” a Reuters spokesperson said.

TikTok and its Chinese parent company ByteDance sued in U.S. federal court in May, seeking to block the law forcing a sale or ban of the app by Jan. 19. A U.S. appeals court on Tuesday set a fast-track schedule to consider the legal challenges to the new law.

MILLIONS OF LINES OF CODE

In the past few months, hundreds of ByteDance and TikTok engineers in both the U.S. and China were ordered to begin separating millions of lines of code, sifting through the company's algorithm that pairs users with videos to their liking. The engineers' mission is to create a separate code base that is independent of systems used by ByteDance's Chinese version of TikTok, Douyin, while eliminating any information linking to Chinese users, two sources with direct knowledge of the project told Reuters.

The previously unreported plan provides a rare look into what a technical separation of TikTok's U.S. operations could be like, and shows to what lengths TikTok will go to address the bipartisan political risk it faces. U.S. President Biden and other supporters of the law argue TikTok gives Beijing far too much access to reams of data, information that could be used to spy on or influence TikTok's U.S. users.

Reuters previously reported that a sale of the app with algorithms is highly unlikely. The Chinese government in 2020 added content recommendation algorithms to its export-control list, requiring a divestiture or sale of TikTok's algorithm to go through its administrative licensing procedures.

The source code for TikTok's recommendation engine was originally developed by ByteDance engineers in China, and customized for operations in TikTok's various global markets, including the U.S., according to a legal filing.

ByteDance has attributed TikTok's popularity to the effectiveness of its recommendation engine, which bases each user's content feeds on how they interact with the content they watch.

‘OPEN SOURCE'

The complexity of the task that the sources described to Reuters as tedious ‘dirty work' underscores the difficulty of splitting the underlying code that binds TikTok's U.S. operations to its Chinese parent. The work is expected to take over a year to complete, these sources said.

TikTok and ByteDance have vowed to battle the U.S. law in court on First Amendment grounds. Nevertheless, engineers continue to operate under orders to disentangle TikTok's U.S. recommendation engine from ByteDance's broader network, the sources said.

An earlier plan to silo off U.S. user data, called Project Texas, failed to appease U.S. regulators and lawmakers. Now the company is seeking to escalate its efforts to show its U.S. operations are independent of its Chinese owner.

At one point, TikTok executives considered open sourcing some of TikTok's algorithm, or making it available to others to access and modify, to demonstrate technological transparency, the sources said.

Executives have communicated plans and provided updates on the code-splitting project during a team all-hands, in internal planning documents and on its internal communications system, called Lark, according to one of the sources who attended the meeting and another source who has viewed the messages.

Reuters could not independently verify internal messages.

Compliance and legal issues involved with determining what parts of the code can be carried over to TikTok are complicating the work, according to one source. Each line of code has to be reviewed to determine if it can go into the separate code base, the sources added.

The goal is to create a new source code repository for a recommendation algorithm serving only TikTok U.S. Once completed, TikTok U.S. will run and maintain its recommendation algorithm independent of TikTok apps in other regions and its Chinese version Douyin. That move would cut it off from the massive engineering development power of its parent company in Beijing, the sources said.

If TikTok completes the work to split the recommendation engine from its Chinese counterpart, TikTok management is aware of the risk that TikTok U.S. may not be able to deliver the same level of performance as the existing TikTok because it is heavily reliant on ByteDance's engineers in China to update and maintain the code base to maximize user engagement, sources added.

(Reporting by Krystal Hu in New York and Sheila Dang in Austin, additional reporting by Dawn Chmielewski in Los Angeles; editing by Kenneth Li and Anna Driver)

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NEW YORK (Reuters) – Alphabet's Google and augmented reality startup Magic Leap are forming a strategic technology partnership and working on building immersive experiences that blend the physical and digital worlds.

Magic Leap said in a blog post on Thursday that the two companies have agreed to a partnership. A Google spokesperson confirmed the agreement.

While short on details, the announcement adds to signals that Google may be plotting a return to the market for augmented and virtual reality (AR/VR) technologies that it so far has largely yielded to rivals Meta and Apple.

The partnership would combine Florida-based Magic Leap's expertise in optics and device manufacturing with Google's technology platforms, Magic Leap said.

“We've shipped a couple of different versions of augmented reality devices so far, so we're out there delivering things, and Google has a long history of platforms thinking,” Magic Leap's Chief Technology Officer Julie Larson-Green told Reuters in an interview ahead of the announcement.

“So we're thinking, putting our expertise and their expertise together, there's lots of things we could end up doing,” she said.

Google is an investor in Magic Leap, which is majority owned by Saudi Arabia's Public Investment Fund. The startup was an early darling in the AR headset space, but struggled to find a consumer niche and more recently started exploring arrangements to license its technology or produce components for others.

Magic Leap and Google both declined to say whether the partnership was expected to yield a consumer AR device. Google also has been collaborating with Samsung Electronics since early last year to develop mixed reality technologies, which the Google spokesman said was unchanged by the deal with Magic Leap.

Larson-Green said she was especially eager to work with some of the “cool AI tie-ins” with augmented reality that Google announced at its annual developer conference earlier this month.

In a video at that event, Google showed off an AI agent called Project Astra by having someone don a glasses prototype and ask the agent questions about what that person was seeing. The agent gave answers in both audio form and as digital text overlaid on the lenses.

That functionality is similar to what Meta is planning for its Ray-Ban Meta Smart Glasses, which added an AI assistant last year and in April received a software update enabling the agent to identify objects seen by the wearer in audio form.

FIRST MOVER

If Google were to jump back into making AR glasses, it would be yet another dramatic twist in the company's on-again, off-again relationship with the technology.

Google was a first mover in what it pitched as an AR revolution more than a decade ago, when it introduced its Google Glass smart glasses. Its enthusiasm then was so great that it unveiled the device in an elaborate 2012 demo involving skydivers using the glasses to live stream a jump on to a San Francisco building.

However, consumers recoiled at the product's clunky design and privacy concerns, to the point that those who wore it were sometimes called “glassholes.” Google retreated from the consumer market in 2015 and later abandoned the enterprise market as well.

Two years ago, though, the company came back with a preview of a new set of glasses that it said would display real-time translations of conversations in English, Mandarin, Spanish and American Sign Language.

The future of that project was thrown into doubt in January, when Google laid off hundreds of employees in its hardware units, including the majority of its AR team.

(Reporting by Katie Paul; Editing by Kenneth Li and Muralikumar Anantharaman)

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SEOUL (Reuters) -Entertainment group HYBE, home to K-pop group BTS, has asked a U.S. court to compel social media platform X to reveal the identity of a user it accuses of defamation and harassment, according to a court filing reviewed by Reuters.

The application for a court order is to assist a criminal complaint filed by HYBE against anonymous X user with the handle “@guiltyarchive” with the Seoul Yongsan Police Station on May 2, it showed.

The case follows calls by BTS fans to better protect the group against malicious rumours amid an ongoing internal dispute with a sub-label.

Some of the fans, known as ARMYs, sent flowers and trucks bearing supportive messages to HYBE's headquarters in Seoul this month and called on the firm to take legal action.

HYBE said it had no comment to add. X Korea did not respond to request for comment, while X Corp and HYBE's lawyer Eugene Kim were not immediately available for comment.

The operator of the account said to Reuters in a direct message on X that the posts mentioned in the court filing were “not defamatory against certain artists” and that they had been deleted.

In South Korea, those who make sensationalist social media content, often targeting celebrities, are dubbed “cyber wreckers” and have been blamed for encouraging cyberbullying.

In a rare move, K-pop singer Jang Won-young and her agency Starship Entertainment identified an individual behind a YouTube channel with the help of Google while seeking lawsuits over defamation charges against the individual.

“It's a process of gathering evidence about a dispute in a foreign court so when you judge freedom of expression, you don't judge it from the standpoint of U.S. law,” Kyongsok Chong at LIWU Law Group, who is representing Jang and her agency, told Reuters.

HYBE's lawyer said in the legal document that “false” and “defamatory” statements from the X account, which has over 100,000 followers, had caused irreparable harm to the firm's business and shareholders.

The X posts cited in the filing mention K-pop groups managed by HYBE and its subsidiaries including BTS and girl group Le Sserafim.

The subpoena request was made at the San Francisco Division of the United States District Court for the Northern District of California, where X's headquarters are located.

(Reporting by Hyunsu Yim; Editing by Jan Harvey and Alison Williams)

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