There are growing concerns about security risks presented by generative A.I., Samsung told staff in an internal memo on Monday, reports Bloomberg.

The company cited instances of an employee leaking data to an A.I. chatbot in its memo, without giving specifics. It continued that using such tools could lead to disciplinary action up to and including termination of employment.

In early April, Korean media reported that Samsung was restricting use of ChatGPT after several employees uploaded sensitive data to the service.

One employee reportedly asked ChatGPT to help fix a faulty database, uploading confidential source code in the process, while another shared an entire meeting in order to ask the chatbot to quickly create meeting minutes.

A.I. developers can use prompts and other submitted information to train their models.

OpenAI, for example, says it can use submissions to services like ChatGPT or image-generating model DALL-E for training. OpenAI thus asks users not to share any sensitive information when using ChatGPT.

Samsung did not immediately respond to Fortunes request to comment.

Other major companies have restricted or banned the use of chatbots like ChatGPT in recent months.

As early as January, firms like Amazon were warning employees not to upload confidential information to such services. 

Even the Italian government briefly banned ChatGPT from the European country, citing concerns about how the program treats personal data. (Rome has since restored access to the chatbot).

Last week, OpenAI said it would introduce an incognito mode for ChatGPT, where users could opt out of having their prompts and other submissions used to train the developers A.I. models.

The developer also said that business subscribers would automatically opt out of having their conversations used for training purposes. 

Samsung accepted that generative A.I. programs could be a significant time-saver for employees, pledging in its memo to create its own tools for translation and document summary, reports Bloomberg. 

The electronics company also reportedly considered switching the default search engine used on its smartphones from Google to Microsofts Bing, following the latters embrace of generative A.I.

In the most recent quarter, Samsungs profit dropped by 95% year-on-year, as the electronics company battles a slump in both semiconductor and consumer electronics spending.

The companys chip divisionnormally the companys largest profit driverswung to a $3.4 billion loss, compared to a $6.3 billion profit a year earlier. The company forecasts demand to recover by the second half of the year.

Were less than six months into 2023, and there have been three regional bank failures.

Silicon Valley Bank and Signature Bank in March, and on Monday, First Republic Bank was shut down by the California Department of Financial Protection and Innovation. Last week, I spoke with an analyst who pointed out that in addition to SVBs bank run causing First Republic trouble, a decades-old business model of offering wealthy borrowers substantial mortgages, usually at low rates, wound up putting the bank in a vulnerable position amid the Feds rate hikes in the past year.

Now, JPMorgan Chasethe largest bank in the U.S.has taken over First Republic, in a deal negotiated by regulators. JPMorgan will acquire the substantial majority of First Republics assets, including $173 billion of loans, $30 billion of securities, and $92 billion of deposits. How did JPMorgan position itself for such an acquisition?

My colleague Shawn Tullys new report, JPMorgan clears the First Republic wreckageand notches a $92 billion coup for investors who love the deal, provides insight. Congress passed a landmark law in 1994 that allowed Americas banks to merge across state lines with few restrictions, Tully explains. The total share of the nations deposits that any one entity could hold was limited to 10%, as well as restricting the percentage within a state to 30%. 

By 2014, the nations three largest players, JPMorgan Chase, Bank of America, and Wells Fargo, had grown quicklyin part via their respective rescues of Washington Mutual, Merrill Lynch, and Wachovia in the Great Financial Crisisto exceed the 10% ceiling. Hence, the rule has essentially blocked the three behemoths from acquiring any rival lenders for a decade, Tully writes. The 1994 act, however, provided a loophole that allowed waivers from the 10% maximum for buyers that stepped up to rescue failing lenders that the FDIC stood poised to shut down.

JPMorgan benefited from this loophole when the banking giant purchased virtually all the assets of First Republic from the FDIC clearing the wreckage from the second largest banking failure in U.S. history, a disaster exceeded in scale only by the 2008 collapse of WaMu, Tully writes. 

So what do JPMorgan shareholders have to gain? JPMorgan achieved what looks like a coup for its shareholders that at the same time stabilized the shaky outlook for regional banks, he writes.

For starters, the deal has already given JPMorgans stock a boost. The bank was able to land First Republics assets in an auction that included a number of rival bidders. Despite the competitive nature of the purchase, CEO Jamie Dimon appears to have secured highly favorable terms. Start with those $92 billion in deposits. Theyre far from the hot money amassed from tech hotshots and super-high-net worth individuals that fled when the bad news started spreading.

He continues, Many of the customers parked their millions at First Republic because it provided them with inexpensive jumbo home loans, a practice that Dimon declared dead on the conference calls where he and CFO Jeremy Barnum explained the transaction. You can read more about what shareholders have to gain and how JPMorgan was already leading in the deposit wars here. 

Sheryl Estrada
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Big deal

Morgan Stanleys E-Trade released data from its monthly sector rotation study. The top three sectors in March and April were materials, consumer discretionary (nonessential goods and services, like cars and entertainment), and industrials. The results are based on the trading platforms customer notional net percentage buy/sell behavior for stocks that comprise the S&P 500 sectors. All three sectors increased between March and April, with materials having the largest increase from 1.1% to 10%, according to the report.

Going deeper

World Economic Forum's new report, "Putting Skills First: A Framework to Action," delves into the skills-first perspective, a new approach to talent management that emphasizes a persons skills and competenciesrather than degrees, job histories, or job titles. An analysis of data from a geographically diverse range of 18 economies estimates that in total, more than 100 million people in these countries could be added to the global talent pool through a skills-first approach. The report also includes a skills-first framework for action.

Leaderboard

Michael Dougherty was named CFO at bioAffinity Technologies, Inc. (Nasdaq: BIAF; BIAFW), a biotechnology company. Dougherty is an experienced C-level executive with more than 20 years in financial management and business strategy. Most recently, he served as CFO of Alexa Business Domains, Amazons Alexa AI and Voice division. Before that, Dougherty was chief financial and operating officer of TINT and CFO at Filestack. He also previously served as CFO for Amazon Pay. Earlier in his career, Dougherty held various finance positions at Russell Investments and Medisystems Corporation.

David Black was named CFO at Proterra Inc. (Nasdaq: PTRA), a commercial vehicle electrification technology company, effective May 16. Karina Padilla, the current CFO, will step down from her role, effective May 15. Padilla will remain with the company as a nonexecutive officer employee through June 2. Black served as a special advisor to the CEO of BWX Technologies, a leading supplier of nuclear components and fuel to the U.S. government. Before that, he served as SVP and CFO of BWX Technologies. Black also served as VP and chief accounting officer and in other roles at The Babcock & Wilcox Company.

Overheard

"It is hard to see how you can prevent the bad actors from using it for bad things."

Geoffrey Hinton, the tech pioneer often referred to as the Godfather of A.I., told the New York Times about the prolific use of A.I. After Google bought his company, he joined the tech giant in 2013. Hinton later said on Twitter that Google has acted responsibly for its part in deploying the tech, Fortune reported. But he left Google in May so that he can speak freely about the dangers of A.I.," he tweeted. 

This is the web version of CFO Daily, a newsletter on the trends and individuals shaping corporate finance. Sign up to get CFO Daily delivered free to your inbox.

As the tech industry adopted remote working and even suggested that the pandemic-induced flexibility was forever, Elon Musk was an earlier outlier. 

The billionaire made it his first order of business to end Twitters work from anywhere policy when he took its helm.

Musk has also taken a similar stance at SpaceX and Tesla where workers are expected to be in the office for at least 40 hours a week.

Why? Because he thinks his workers are more productive in the office.

All the Covid stay-at-home stuff has tricked people into thinking that you dont actually need to work hard, he wrote on Twitter, last year. 

At the time, his approach sparked criticism, but today even the biggest early supporters of remote working are sounding more and more in tune with Musk. 

Just last month, Meta CEO Mark Zuckerberg suggested that new hires work better with three days of in-person work with colleagues each week.

At the same time, Salesforce CEO Marc Benioff said that new hires do better if theyre in the office.

Their sentiments echo a string of CEOs including Morgan Stanleys CEO James Gorman, who say they worry that the price of remote working is productivity.

Workers, on the other hand, disagree and believe their at-home setup leads to better gains.

While 87% of employees reported being productive at work, 85% of leaders said the shift to hybrid work made it difficult to have confidence in workers productivity.

Now, new research suggests this massive difference in opinion could boil down to very different parameters of how people define productivity.

What even is productivity?

Although the Oxford Dictionary defines productivity as the rate at which a worker, a company or a country produces goods, and the amount produced, compared with how much time, work and money is needed to produce them, employees have a far more arbitrary definition of the word. 

The productivity platform, ClickUp surveyed 1,000 U.S. knowledge workers about their attitudes toward productivity and found that more than half of those surveyed leaned on an emotional translation, instead of their output.

According to the data, 56% reported that productivity is the feeling of accomplishment.

Meanwhile, just over a third described it as moving tasks forward efficiently without roadblocks, and 28% said its working very hard for results.

Whats more, only 25% of workers say they currently measure their productivity, which could explain why there is a discrepancy in what employers can see from their business output versus how employees feel. 

Plus, the research also showed that while workers are likely to rate themselves based on how well they feel like they worked, theyre far more literal when judging others.

Despite reportedly using the feeling of accomplishment as the measure of their own productivity, they assess their peers based on how much work they get done, the success of their work, and how they manage their time.

Its why, according to the research, everyone thinks theyre significantly more productive than those working around them.

As such, managers could be experiencing the same bias, when judging how hard their staffers are working from home and re-evaluating remote-working policies accordingly.  

How to actually increase productivity

Its all well and good asking staff to return to the office and culling meetings from calendars to boost efficiency, but employers and workers will forever disagree on when and where they are most productive if they dont see eye-to-eye on what constitutes a day well spent.

In this macro economy, leaders need to go back to basics. Productivity is more than a buzzword; its a tangible measure of success, chimes Jim Bartolomea, Senior Vice President of People, ClickUp. 

As companies attempt to cut costs but increase gains during the global economic slowdown, he believes that employers would be better off asking department managers to clearly communicate what productivity tangibly looks like, than just asking for more productivity from their workforce in a company-wide memo.

Leaders who want to increase productivity within their organizations must first define productivity for their teams and then clarify how they plan to measure it, providing the right tools to enable it, he said. 

Once this framework is established, its critical to establish an incentivization system to maintain motivation, he added.

If leaders follow these steps, not only will business improve, but morale should, too.

Our latest edition is a special 2-for-1 interview with Roger Bayston and Sandy Kaul of Franklin Templeton, who joined me on a video call from Consensus in Austin, Texas, between a few rounds of panel-hopping and swag-schlepping.

Bayston, a 31-year veteran of the firm, now serves as executive vice president and director of quantitative and fintech strategies, while Kaul is a senior vice president focusing on advisory and thought leadership.

Franklin Templeton, which manages about $1.4 billion, just last week announced both a money market fund on Polygon and that its on-chain government-assets-focused fund had surpassed $270 million in AUM.

Deets to follow.

(This interview has been edited for length and clarity.)

Lets begin with each of you just telling meand the readersa bit more about your jobs. Sandy, if you could start?

SK: I have the best job in the world, Justin. I get to think about the future of the investment and wealth management industry, and talk to some of the best people engaged in the industry who are thought leaders all over the world. And then I really synthesize from that: What are the trends that are reshaping things? And then Im able to bring those learnings into Franklin Templeton, where Im helping us shape our strategy for our digital asset unit.

Roger, saying youre a Franklin Templeton veteran would probably be a slight understatement at this point, but what drew you to the digital asset space?

RB: Being an industry veteran, as you point out, and a Franklin Templeton veteran as well, I just understood that the management business is full of records. And so we just approach it as how we might be able to use these new technologies to deliver improved efficiencies and services in our existing lines of business, and also how it might be disruptivewhich means both challenges as well as opportunities.

That leads a bit into my next question: What else can you tell me about the on-chain government money fund, and the $270 million in AUM? Why was it so important to get that on-chain versus using a more traditional financial instrument?

RB: As we began to explore blockchain technologies in our core business, we identified what might be a proof of concept. We thought working with a money fund would be a goodbut difficultchallenge because money funds have historically had a higher level of transaction velocity. Money funds have been used in the transactional economy through debit cards and check writing for a long period of time, and we just thought that if we could [solve] that problem then we could apply our learnings there across the rest of our businesses.

So the plan is to start with that $270 million and go from there?

SK: Yeah, so when you think about the role that money market funds play in the economy, and in the financial ecosystem in particular, there are a number of liquidity use cases that we want to explore. Corporate treasurers use money funds to manage their corporate treasury, investment companies use money funds to hold excess cash and dry powder. People use money market funds in different parts of the world as collateral for trades. So these are all use cases that we want to explore, and we also want to think about how do we create this product to use globallyhow do you expand these use cases to other regions in other parts of the world?

RB: Part of that expansion is what we started in 2021. And, you know, working with our great collaborators at Stellar, and using the Stellar public blockchain as part of this background, we see blockchains as kind ofwhats the word choice you like to use

SK: emerging digital nation states

RB: yeah, its about how we can deliver inside of these emerging digital nation states, and what other sort of utility there is.

OK, so why Polygon? You could have picked a number of ways to go with that, but what was the deciding factor?

SK: So we were deployed on a layer-1, on the Stellar network, and we really wanted to explore these new layer-2s. And we liked that Polygon is EVM compatible, which gets us to experience [the programming language] Solidity that gets us into other chains as well. I think we just thought there was a good fit, and the people at Polygon were a good fit with our team, and they really hit it off.

Were seeing more and more traditional financial institutions exploring this space, so what are some of the things youre maybe doing to stay a step ahead of peersand help be a leader?

RB: I think its all about just having a kind of a cultural sort of R&D activity. Again, we started our [blockchain] journey because we wanted to understand how these new technologies might help us expand our customer service, our client service, and how we can deliver betterweve learned that theres efficiency gains borne out by the users of our products. And as a result of that, that really unfolded other insights about how public blockchains might be used by other industries. It gave us confidence that this emerging opportunitysets of tokens from digital nation statesmight be able to be wrapped inside of customers and clients portfolios as they build the best solutions and outcomes going forward across many asset classes.

SK: We really believe that we can bring our professional investment analysis and advice into this new ecosystem, so were creating institutional-quality research on the coins that we invest inwe are thinking about the suite of products that would allow us to serve our wealth clients, our institutional clients. Were really thinking about this as another part of what an asset management business needs to be able to deliver to build a holistic portfolio for the future.

How much of this R&D is just your desire to invent and build these products, and how much has been customers saying, Hey, Id really like it if you had this? And whats the feedback been like?

SK: This is a dialogue. A lot of our customers rely on asset managers who assess the opportunities available to them and help them interpret them, and weve also listened to them and think about where they are in their journeys. Some people still only want a private vehicle, like a venture capital fund, but others a little further in their journeys want to experiment with something on-chain. The money market fund is a good chance to experiment with something on-chain. We want to meet the client where they are, and then help them become more educated and comfortable with the space.

Same final question for each of you: What does the future of finance mean to you?

SK: For me, one of the most exciting things about the future is I believe that a lot of assets that have never been part of typical investors portfolioslike royalty rights to their favorite artists, like being able to participate in the digital earnings of studios that are putting out great streaming products, being able to identify with their favorite sports teams and favorite sports eventsI think that all of these opportunities become opened up as a result of tokenization and smart contracts. I really believe that as we go forward, the investment portfolio thats going to help me fund my life is also going to become the vehicle that helps me enjoy my life. And that creates a whole new dynamic around how important and central that portfolio is to my day-to-day experience.

RB: Oh, my gosh, how am I going to follow that?

That was a great answer.

RB: [laughs] All I can really say is, if theres one constant in life, its change. And as Sandy points out, were expanding opportunities to improve outcomes for clients. Were singularly focused on clients and putting clients firstand so were just exploring things for their future.