U.S. probing Huawei for possible Iran sanctions violations: sources

NEW YORK/LONDON (Reuters) – Federal prosecutors in New York have been investigating since at least last year whether Chinese tech company Huawei Technologies Co Ltd [HWT.UL] violated U.S. sanctions in relation to Iran, according to sources familiar with situation.

FILE PHOTO: The Huawei logo is seen during the Mobile World Congress in Barcelona, Spain, February 26, 2018. REUTERS/Yves Herman/File Photo

The prosecutors have been investigating alleged shipping of U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws, two of the sources said on condition of anonymity.

The probe, first reported by the Wall Street Journal on Wednesday, is being run out of the U.S. Attorney’s office in Brooklyn, the sources said. John Marzulli, a spokesman for the prosecutor’s office, would neither confirm nor deny the existence of the investigation.

The Department of Justice in Washington declined to comment.

Huawei, which makes handsets and telecommunications network equipment, said it complies with “all applicable laws and regulations where it operates, including the applicable export control and sanction laws and regulations of the UN, US and EU.”

News of the Justice Department probe follows a series of U.S. actions aimed at stopping or reducing access by Huawei and Chinese smartphone maker ZTE Corp (000063.SZ) to the U.S. economy amid allegations the companies could be using their technology to spy on Americans.

In February, Senator Richard Burr, the Republican chairman of the U.S. Senate Intelligence Committee, cited concerns about the spread of Chinese technologies in the United States, which he called “counterintelligence and information security risks that come prepackaged with the goods and services of certain overseas vendors.”

Republican Senators Marco Rubio and Tom Cotton have introduced legislation that would block the U.S. government from buying or leasing telecommunications equipment from Huawei or ZTE, citing concern the Chinese companies would use their access to spy on U.S. officials.

U.S. authorities last week banned American companies from selling to ZTE (000063.SZ) for seven years, saying the Chinese company had broken a settlement agreement related to Iran sanctions with repeated false statements – a move that threatens to cut off ZTE’s supply chain.

The ZTE ban was the result of its failure to comply with an agreement with the U.S. Commerce Department reached last year after it pleaded guilty in federal court to conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran.

In 2016, the Commerce Department made documents public that showed ZTE’s misconduct and also revealed how a second company, identified only as F7, had successfully evaded U.S. export controls.

In a 2016 letter to the Commerce Department, 10 U.S. lawmakers said they believed F7 to be Huawei, citing media reports.

In April 2017, lawmakers sent another letter to Commerce Secretary Wilbur Ross asking for F7 to be publicly identified and fully investigated.

Reporting by Arjun Panchadar in Bengaluru, Karen Freifeld in New York, Eric Auchard in London; Editing by Frances Kerry and Paul Simao

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NYSE glitch forces Amazon and Alphabet traders elsewhere

NEW YORK (Reuters) – The New York Stock Exchange said on Wednesday that trading was suspended on its exchange in five stocks, including Amazon and Alphabet, for the rest of the day due to a technical glitch involving trade reporting.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 18, 2018. REUTERS/Brendan McDermid

The exchange, which is owned by Intercontinental Exchange Inc (ICE.N), said the suspension was due to a “price scale code” issue and any open orders in those securities would be canceled.

The securities can still be traded on other exchanges, including those run by Nasdaq Inc (NDAQ.O), where the affected stocks are listed, Cboe Global Markets (CBOE.O) and IEX Group.

Aside from Amazon.com (AMZN.O) and both Alphabet share classes (GOOGL.O)(GOOG.O), affected symbols included Booking Holdings (BKNG.O) and Zion Oil and Gas Equity Warrants ZNWAA.O.

A spokeswoman for the NYSE, Kristen Kaus, said the issue affected a small subset of clients whose trading reports in the affected symbols were being returned in an unexpected format, so the exchange suspended trading in the five securities to minimize customer impact.

There are 13 U.S. stock exchanges, around 40 private trading venues known as dark pools and dozens of single-dealer platforms. The NYSE trading suspension highlights the complexity of the fragmented market, but also its resiliency, given that stocks can trade elsewhere when one exchange has a problem.

The NYSE is one of last U.S. exchanges to have a physical trading floor, and prior to April 9, only securities that were listed on the exchange could be traded there. But following a recent technology upgrade, the NYSE said it would begin trading securities listed on other exchanges as well.

The trading suspension was not likely related to the technology upgrade, Kaus said.

In March, the NYSE and two of its affiliate exchanges were fined $14 million by the U.S. Securities and Exchange Commission, partly in response to a nearly four-hour trading halt in July 2015 that was the result of a flawed software roll out.

Reporting by Chuck Mikolajczak and John McCrank; Editing by Cynthia Osterman