© 2019 Dow Jones & Company. All Rights Reserved. ** THE WALL STREET JOURNAL. Wednesday, October 2, 2019 |B1

TECHNOLOGY: WIDESPREAD DRONE DELIVERIES FROM UPS CLEARED BY FAA B4

BUSINESS&FINANCE

weak demand could herald a

broad economic slowdown that

would offset some of those

benefits.

The recent slide is the latest

setback for global energy com-

panies, many of which are try-

ing to limit output to support

the price of crude and their

flagging shares.

The Institute for Supply

Management on Tuesday said

its U.S. manufacturing index

fell to its lowest level in more

than a decade in September—

the latest downbeat gauge of

factory activity. Fears that the

weakness could spread to other

sectors pushed down stocks

and sent investors to the safety

of bonds and gold, pushing the

yield on the benchmark 10-year

U.S. Treasury note down to

1.651% from 1.723% earlier in

the day. Yields fall as prices

rise.

Oil edged lower Tuesday, ex-

tending declines after tumbling

to start the week on oversupply

worries.

Brent crude, the global

gauge of prices, surged 15% in

its biggest one-day gain ever

following Sept. 14 attacks on

Saudi Arabian oil facilities. It

has since dropped back below

$60 a barrel—well below the

levels analysts say are needed

for the kingdom and other

large producers to support

their economies. U.S. crude has

Please turn to page B13

Mr. Khan. He said surveillance

isn’t a standard practice for

Credit Suisse and can’t be con-

doned. Another board member

who oversaw the review, John

Tiner, called the surveillance a

“highly unusual and irregular

act.”

Mr. Rohner rejected the no-

tion, posed by a journalist,

that the recent events showed

deeper problems at Credit

Suisse.

“I do not believe that we

have a problem with our com-

pany culture,” Mr. Rohner

said, adding that Mr. Thiam

maintains the full support of

the board.

The scandal took a dark

turn Monday, when a lawyer in

Switzerland said that an un-

identified security consultant

who helped the bank hire in-

vestigators to trail Mr. Khan

died last week in an apparent

suicide.

Mr. Rohner on Tuesday

confirmed the person’s death

and expressed the bank’s con-

dolences.

A lawyer from Swiss law

firm Homburger who super-

vised the investigation, Flavio

Romerio, told reporters Tues-

Please turn to page B5

A probe ordered by Credit

Suisse Group AG cleared Chief

Executive Tidjane Thiam of in-

volvement in a spy scandal

that has enveloped the bank,

and laid primary blame for the

affair on a close deputy, who

resigned.

The bank said Chief Operat-

ing Officer Pierre-Olivier

Bouée, who was part of Mr.

Thiam’s inner circle, resigned

after the probe found he or-

dered the surveillance of the

bank’s former wealth-manage-

ment chief, Iqbal Khan, with-

out discussing it with Mr.

Thiam or other senior bank of-

ficials.

Credit Suisse also said it

found no evidence Mr. Khan

made any attempt to poach

employees or clients, contrary

to suspicions that people close

to the bank had described as

underpinning the surveillance.

He started work at rival UBS

Group AG on Tuesday.

Credit Suisse Chairman Urs

Rohner told reporters Tuesday

that there was “zero evidence”

that Mr. Thiam had been in-

volved in the operation to tail

BYJENNYSTRASBURG

ANDMARGOTPATRICK

Credit Suisse Says

Operating Chief Alone

Ordered Surveillance

slated to begin this month in

federal court in Cleveland. The

trial is considered a bell-

wether for thousands of opi-

oid-related lawsuits that mu-

nicipalities and states have

filed against drugmakers.

The company said Tuesday

the settlement allows it “to

avoid the resource demands

and uncertainty of a trial as it

continues to seek meaningful

progress in addressing the na-

tion’s opioid crisis.”

The deal, which includes no

admission of liability, still

leaves J&J facing hundreds of

other opioid lawsuits.

The two Ohio counties be-

hind the lawsuit, Cuyahoga

and Summit, are home to cit-

Please turn to page B2

Johnson & Johnson said it

has agreed to a $20.4 million

deal to avoid a trial accusing

the company of helping spark

an opioid-addiction crisis in

two Ohio counties.

The settlement makes J&J

the fourth drugmaker to reach

such a deal ahead of the trial,

BYSARARANDAZZO

J&J Settles Ohio Opioid Suits

Seen as Bellwether for Others

S&P 2940.25g1.23% S&PFIN g2.08% S&PIT g0.85% DJTRANS g2.35% WSJ$IDX g0.05% LIBOR3M 2.089 NIKKEI (Midday) 21742.70g0.65% See more at WSJ.com/Markets

tomers—rattled online brokers

that have been squeezed by in-

vestors’ expectation that fees

for financial services should be

low or even nonexistent. Shares

of larger banks and brokerages

also declined as the Dow Jones

Industrial Average dropped

1.3% on concerns about a wors-

ening U.S. economic outlook.

Digital upstarts such as Rob-

inhood Markets Inc. helped

popularize the zero-commis-

sion model in the online-bro-

kerage business. But the race to

zero is also happening in other

areas of finance, like asset

management, where Vanguard

Group and Fidelity Invest-

ments recently eliminated fees

for many funds offered on their

platforms, and financial advice,

which some digital advisers are

offering free of management

fees.

“There are certain parts of

finance that have become com-

moditized,” said Devin Ryan, an

analyst at JMP Securities LLC.

“Trading is one of them.”

Shares of TD Ameritrade

Holding Corp. plummeted 26%

in their biggest one-day per-

centage decrease since 1999.

E*Trade Financial Corp.

dropped 16%, and Schwab fell

9.7%. The three firms’ declines

wiped out more than $13 billion

in aggregate market value.

Another rival, Interactive

Brokers Group Inc.—which set

the stage for Schwab’s price

move last week when it an-

nounced plans to launch a zero-

commission stock-trading ser-

vice—fell 9.4%.

After the close of trading

Tuesday, TD Ameritrade said it,

too, would cut online trading

commissions to zero. TD Amer-

itrade said it expects the loss of

commissions to wipe out $220

million to $240 million in quar-

terly revenue, or 15% to 16% of

its top line.

Eliminating trading commis-

sions is the latest step in a long

road for Schwab, founded by

Charles Schwab to bring invest-

ing to the masses. When regu-

lators in 1975 abolished fixed

trading commissions—blowing

up a decadesold system—he

launched one of the first dis-

count brokerages and took on

Wall Street with ever-declining

fees.

This year, e-brokers and

Wall Street trading desks have

been hurting because of falling

stock-trading volumes, as con-

cerns over slowing economic

growth have made investors

more cautious. Interest-rate

cuts by the Federal Reserve

have dealt another blow, by

cutting into e-brokers’ ability to

collect interest on clients’ cash.

Analysts warned other on-

line brokers would be forced to

follow Schwab’s lead. “There is

no way to sugar coat this devel-

opment,” analysts at Wells

Fargo said in a research note.

“We were hoping the challeng-

ing macro environment (i.e. de-

clining interest rates) would

prevent the industry from com-

peting on price like this, but

that is clearly not what is hap-

pening.”

Schwab may be better posi-

tioned to weather the storm.

Compared with its rivals, it is

more reliant on its banking arm

and less dependent on commis-

Please turn to page B5

Charles Schwab Corp. said
it would eliminate commissions
on online stock trades, one of
most dramatic moves yet in a
broad-based price war that is
crimping profitability across
the financial sector.
The move by Schwab—the
largest publicly traded e-broker,
with 12 million brokerage cus-

BYALEXANDEROSIPOVICH
ANDLISABEILFUSS

Schwab Strikes Blow in Broker Price War

Company rattles

industry by cutting

fees for online stock

trades to zero

 Heard on Street: Free trades

won’t kill online brokers.... B14

BUSINESS

Bayer bows

to investors

with new board

appointment B5

FINANCE

Wisconsin is famous

for its lakes,

cheese and lately...

risky bonds B12

Oil has erased all of the rally
that followed recent disrup-
tions to Saudi Arabian output,
indicating how a darkening
outlook for global growth con-
tinues to tamp down fuel
prices.
While lower costs at the
pump and a drop in heating
bills could benefit consumers
around the world, analysts say

BYAMRITHRAMKUMAR
ANDSARAHTOY

INSIDE

Oil Loses Gains Since Saudi Attack

Monthly estimates for global oil-demand growth in 2019

1.4

1.0

1.1

1.2

1.3

million barrels a day

Jan. Sept.

IEA

OPEC

Recentcutstoprojectionsfortheworld’s

consumptionofoilamidtradetensions

continuetoweighontheenergysector.

Hedgefundsandother

speculativeinvestorslowered

netbetsonhigheroilprices.

Weekly net bullish bets on U.S. crude

300,000

0

100,000

200,000

contracts

Jan. Sept.

Front-month futures

Sources: International Energy Agency and Organization of the Petroleum Exporting Countries (demand); FactSet (index performance, price); Commodity Futures Trading Commission (bets)

Sharesofenergycompanies
havelongtrailedthemarket.

40

–40

–20

0

20

%

2017 ’18 ’19

Energy sector S&P 500

Oilpricesarewellbelowtheir

recentpeaks.

U.S. crude performance

$80

40

50

60

70

a barrel

2017 ’18 ’19

WeWork Set to Call Retreat in China Expansion

PULLBACK: The shared-workspace company has struggled to make money in the country. B6

JACKAL PAN/VISUAL CHINA GROUP/GETTY IMAGES

a network of financial partners

that could help transfer cur-

rencies into Libra and global

retailers to accept it as a form

of payment, Libra’s reach

would be limited.

When it unveiled the proj-

ect in June, Facebook said Li-

bra could change the entire fi-

nancial system, giving

consumers a new way to move

money across borders. The

project’s backers saw the pay-

ments-network effort as a

long-shot way to profit on

Facebook’s 2.4 billion monthly

active users.

After watching popular so-

cial-media company Tencent

Holdings Ltd. come to domi-

nate the market for Chinese

digital payments with WeChat

Pay, some payments compa-

nies agreed to take part in Li-

bra to avoid missing out on

the next big thing.

Facebook, which worked in

secret for more than a year to

develop Libra, has broad ambi-

tions for the project as part of

a shift away from its nearly

complete reliance on targeted

advertising. Facebook Chief

Executive Mark Zuckerberg is

steering the social-media com-

pany to more private and en-

crypted communications, and

Please turn to page B4

Cracks are forming in the

coalition Facebook Inc. assem-

bled to build a global crypto-

currency-based payments net-

work.

Visa Inc., Mastercard Inc.

and other financial partners

that signed on to help build

and maintain the Libra pay-

ments network are reconsider-

ing their involvement follow-

ing a backlash from U.S. and

European government offi-

cials, according to people fa-

miliar with the matter.

Wary of attracting regula-

tory scrutiny, executives of

some of Libra’s backers have

declined Facebook’s requests

to publicly support the project,

the people said.

Their reluctance has Face-

book scrambling to keep Libra

on track. Policy executives

from Libra’s more than two

dozen backers—a group called

the Libra Association—have

been summoned to a meeting

in Washington, D.C., on Thurs-

day, according to people famil-

iar with the matter.

On Oct. 14, representatives

from the companies are slated

to meet in Geneva to review a

charter for the Libra Associa-

tion and appoint a board of di-

rectors, according to a memo

reviewed by The Wall Street

Journal.

Major defections could im-

peril Libra, Facebook’s attempt

to persuade consumers to

swap their national currencies

for a digital coin that could be

used to pay for goods and ser-

vices on the internet. Without

BYANNAMARIAANDRIOTIS

ANDPETERRUDEGEAIR

Facebook’s Backers

Of Libra Reconsider

Their Involvement

Executives of some

partners declined

requests to publicly

support the project.