In April 2014, in response to its “continuing provocations in Ukraine,” the Obama administration expanded its economic sanctions against Russia, freezing the assets of 17 Russian companies and seven Russians linked to Vladimir Putin, as well as prohibiting U.S. dealings with those parties. Those blacklisted included Vyacheslav Volodin, Putin’s chief of staff; Dmitry Kozak, a deputy prime minister; and a guy named Igor Sechin, the president of state-owned petroleum company Rosneft. Oil giant ExxonMobil, with its legions of lawyers, obviously knew about the sanctions but still chose to sign “eight legal documents related to oil and gas projects in Russia” with Sechin in May of that year. On Thursday, the U.S. Treasury responded by fining Exxon $2 million—the maximum civil penalty—for what it described as an “egregious” violation. All of which is sure to cause a bit of awkwardness at the next White House Cabinet meeting, given that Secretary of State Rex Tillerson was Exxon’s chief executive at the time.

According to the Treasury, Exxon “demonstrated reckless disregard for U.S. sanctions requirements” and “caused significant harm to the Ukraine-related sanctions program objectives.” In a statement, the department also noted that the company’s “senior-most executives,” e.g. Tillerson, “knew of Sechin’s status as an SDN (Specially Designated National) when they dealt in the blocked services of Sechin” and that “ExxonMobil is a sophisticated and experienced oil and gas company that has global operations and routinely deals in goods, services, and technology subject to U.S economic sanctions and U.S. export controls” and therefore should have known better. According to Exxon, however, the multi-billion dollar multi-national didn’t realize the sanctions applied to Sechin’s professional life.

Claiming that they were under the impression that the sanctions only applied to Sechin’s personal life and not his work at Rosneft, Exxon said in a statement Thursday, that it “followed clear guidance from the White House and Treasury Department“ when it entered into the contracts, and that “based on the Enforcement Information published today, O.F.A.C. is trying to retroactively enforce a new interpretation of an executive order that is inconsistent with the explicit and unambiguous guidance from the White House and Treasury issued before the relevant conduct and still publicly available today.” To which the Treasury has replied, nice try:

“The plain language of the Ukraine-Related Sanctions Regulations (which were issued after the Executive branch statements) and E.O. 13661 do not contain a ‘personal’ versus ‘professional’ distinction, and OFAC has neither interpreted its Regulations in that manner nor endorsed such a distinction. The press release statements provided context for the policy rationale surrounding the targeted approach during the early days of the Ukraine crisis, which was to isolate designated individuals who were targeted as a result of the crisis in Ukraine, rather than imposing blocking sanctions on the large companies that they managed. No materials issued by the White House or the Department of the Treasury asserted an exception or carve-out for the professional conduct of designated or blocked persons, nor did any materials suggest that U.S. persons could continue to conduct or engage in business with such individuals.”

Exxon—which made nearly $8 billion in profit last year and could perhaps afford better lawyers—called the action “fundamentally unfair.”

Tillerson, whom Putin personally awarded Russia’s Order of Friendship in 2013, reportedly argued at the time that he was not in favor of sanctions because he believed them to be ineffective, which we imagine is definitely the case if you choose to ignore them.

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Source: Trump tax team is delusional

In the wake of the absolute (and ongoing) train wreck that is the Republican effort to repeal and/or replace Obamacare, the Trump administration really needs to score a legislative win, any legislative win. Now, all the pressure is on National Economic Council director Gary Cohn and Treasury Secretary Steven Mnuchin to get tax reform done, even if it turns out to be a shadow of the plan Trump proposed on the campaign trail and again in April. And at this point, that might be the best the team can hope for, particularly when it comes to Trump’s vow to slash the corporate tax rate from 35 percent to 15 percent. Yesterday, we learned that “political and fiscal realities” suggested the corporate tax rate might not get below the low 20s and today, a new report pegs 25 the lowest it’ll go, given all the remaining questions about how to pay for the thing. Amazingly, though, everyone in the White House working on the bill thinks they’ll be able to get it done as planned, laws of math, time, and space be damned. Per Axios:

A source who recently met with White House tax officials [described] their mood as one of “irrational optimism.” The source said the reality is they’re still having immense problems finding revenues, and figuring out how to eliminate incentives for U.S. companies to park money overseas.

Speaking of taxes. . .

You might have heard that legendary hedge-fund manager Steve Cohen is plotting a $20 billion comeback, set to begin in 2018, when he’ll be allowed to return to the industry. One reason, we imagine, is to stick it to Preet Bharara, the former U.S. Attorney General—currently a distinguished scholar in residence at N.Y.U., after being canned by Trump—who played a large part in seeing that Cohen’s firm pleaded guilty to insider-trading charges in 2013. And, to be clear, that’s undoubtedly part of it. But, as it turns out, it’s just one piece of the equation. The other involves the fact that, come 2018, a host of hedge-fund managers will be forced to write very large checks to the I.R.S., after the government closed a loophole that allowed for the deferral of federal and state taxes on certain kinds of offshore compensation. Per the Wall Street Journal:

Cohen . . . is nearing a launch of a new firm to manage as much as $20 billion, The Wall Street Journal earlier reported. He has set that target, which would exceed the $16 billion managed at peak by SAC, partly because he wants to generate income to help pay the large tax bill, a person close to him said . . . The billionaire founder of SAC Capital Advisors LP amassed deferred offshore income of more than $1 billion likely subject to the taxation, said people familiar with the matter.

Obviously, Cohen and the other managers—who are expected to be paying, collectively, somewhere in the range of $25 billion to $100 billion—have tried to get around doing so, unfortunately to no avail. “These are smart, aggressive people who don’t want to pay more than they have to and writing a huge check can be quite demoralizing,” Caplin & Drysdale’s Jonathan Brenner told the Journal. “Most recognize they’ve had a good run and now have to pay the piper, though not after first asking six different ways if there’s some silver bullet” to reduce or get rid of the taxes.

Naturally, some of you might be wondering, Hey, isn’t Steve Cohen worth $13 billion? Couldn’t he afford to retire, pay the bill, and still have plenty of money left to drive around town re-creating episodes of Diners, Drive-ins, and Dives with Guy Fieri? And the answer is yes, but also, that this is exactly what separates the ultra, mega-rich from everyone else. You see a tax bill that would barely make a dent in your net worth and think, This won’t mess with my plans to retire young and spend my days on a white sandy beach. Steve Cohen, zillionaire, sees the same bill and thinks better get back to work.

Report: presidential brown-nosing does wonders for stocks

Is your board of directors on your case about your company’s stock price? Think you can suck it up and sit through some long, rambling, and not at all coherent stories about how Jeff Sessions is a rat and health care only costs $12 a year? If you answered yes to both of the above, consider taking one for the team and making a trip to the White House. Per the Financial Times:

What do America’s corporate chieftains get out of a visit to the Trump White House? A coincidental $170m bump in their company’s market value, on average, based on one academic analysis. The finance professors who spotted an apparent stock market boost for executives visiting the White House under President Barack Obama say that the same effect appears to have continued into the Trump administration. Jeffrey Brown and Jiekun Huang, whose analysis of Obama-era visitor logs and share prices caused a stir earlier this year, say that companies whose bosses get an audience with Donald Trump also seem to have enjoyed outsized stock market performance in the days around their visits. The suggestion could add a new twist to the debate over how corporate America should interact with the precedent-busting administration.

Elsewhere!

Goldman’s Partners Cash Out (W.S.J.)

A Federal Reserve Committee Executed a Brutal Takedown of Trump’s Budget (Business Insider)

ZTO Sued Over “Untrue Statements” in Biggest U.S. I.P.O. in 2016 (Bloomberg)

May Pledges No Brexit “Cliff Edge” for Business (Financial Times)

Citigroup, Deutsche Bank Beef Up Frankfurt Presence in Brexit Response (Reuters)

Layoffs Begin at Indiana Carrier Plant Where Trump “Saved” Jobs (Axios)

Over 100 Report Being Sickened at Virginia Chipotle (W.S.J., related)

Greenwich Luxury Listings Tumble as Sellers Discount or Drop Out (Bloomberg)

Did Japan’s First Lady Pretend She Doesn’t Speak English So She Wouldn’t Have to Talk to Trump? (New York)