Why Businesses Are Selling Their Tariff Refund Claims to Wall Street

0:00Krystal Hur:Access to affordable credit helps me pay my employees, but I don't really need it. Inflation is killing me. But who cares? Big retailers are making record profits. That's why we support the Durban Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they?

0:25Caitlin McCabe:Tell Congress, stop the Durban Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.

0:34Caitlin McCabe:Four people on a U.S.-registered speedboat are shot and killed after being intercepted in Cuban waters. Plus, while businesses wait to see if they get tariff refunds, Wall Street is buying up those claims now. Companies that paid millions and millions of dollars in tariffs are facing this crucial decision right now. Do they want to potentially wait years for this refund process to play out? Or do they want to strike a deal with an investment firm that's willing to give them a fraction of their money today? And prediction market platform Kalshi has fined two users for breaking its rules. It's Wednesday, February 25th.

1:12Caitlin McCabe:I'm Alex Oselev for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:26Caitlin McCabe:This just in, four people were shot and killed, and six others were injured this morning on a U.S.-registered speedboat after being intercepted in Cuban waters. That's according to Cuba's Interior Ministry, which also said that the vessel, which was registered in Florida, opened fire on the island's Border Patrol when they approached the boat on Cuba's north-central coast. As of this afternoon, the identities or nationalities of the individuals on the boat weren't disclosed. The U.S. State Department didn't immediately return a request for comment. while Cuba's Interior Ministry said that authorities are investigating the incident.

1:57Caitlin McCabe:The deadly clash comes as the Trump administration has sought to choke off fuel shipments to Cuba in recent weeks. In fact, today the Trump administration announced that it is loosening some restrictions on fuel shipments to the country amid a growing humanitarian crisis. The U.S. Treasury today said that it would allow the resale of Venezuelan oil to private companies in Cuba, though sales to the government in Havana are still illegal. It also said that some shipments of American fuel would be allowed for a handful of U.S. companies.

2:29Caitlin McCabe:As we reported earlier this week, the chaos over President Trump's tariffs is sending business leaders scrambling to sort out what may come next. But some on Wall Street are seeing an opportunity. Investment firms are buying companies' rights to any refunds they might be due. I'm joined now by WSJ Markets reporter Caitlin McCabe. Caitlin, let's start with the basics here. Why would a company sell its right to tariff refunds? So what we're seeing is sort of the latest iteration of this kind of fun and esoteric corner of finance where essentially investment firms will buy the rights to money that another party is owed.

3:05Caitlin McCabe:Companies that paid millions and millions of dollars in tariffs are facing this crucial decision right now. Do they want to potentially wait years for this refund process to play out after the Supreme Court decision that we got last week? Or do they want to strike a deal with an investment firm that's willing to give them a fraction of their money today? Okay, that makes sense from a company perspective. But how do investment firms stand to make money here? So basically, what they're doing is they're paying pennies on the dollar today in hopes that they will make a full dollar, if not more, down the line.

3:43Caitlin McCabe:And I think that's the big question right now is, how will this process play out? In its ruling, the Supreme Court didn't weigh in on whether the government would have to pay refunds on the tariffs, but essentially they're betting, we think that this is going to happen. We think that companies will get refunds. And so we'll just pay a fraction of that today in hopes of a bigger payout down the line. And so even months ago, we saw investment firms buying up these claims. They were trading in the teens, got as highs around 20 to 22 cents based on what I was hearing. And then when the Supreme Court decision came out last Friday, that nearly doubled from what I'm hearing in the market.

4:22Caitlin McCabe:Now these claims are trading around 40, 40-ish cents on the dollar. And effectively, that means that investment firms have to pay a whole lot more because there's a little bit more certainty here. That's what they're wagering. Again, none of this is guaranteed, but they're thinking, you know, if this market continues to go in this direction, better to lock in 40 cents rather than 50 or 60 or even higher. There's also a chance some companies are speculating that they might be paid interest on the tariffs that they paid. So there is a world where potentially investment firms could make that dollar back, plus any interest on top of it.

4:58Caitlin McCabe:That was WSJ Markets reporter Caitlin McCabe. Thanks, Caitlin. Thanks for having me.

5:09Caitlin McCabe:And we're exclusively reporting that the Trump administration told Congress it won't share the classified intelligence that led to a whistleblower complaint against U.S. spy chief Tulsi Gabbard. In an email to Democratic congressional staffers sent earlier this month, Gabbard's office said it was unable to provide the unredacted intelligence that underpinned the complaint because of presidential claims of executive privilege. Yesterday, two top Democrats on the congressional intelligence committees sent a letter to Gabbard asking who asserted privilege over the intelligence report and on what basis.

5:39Caitlin McCabe:The Journal has reported that the intelligence relates to a conversation two foreign nationals had about Donald Trump's son-in-law, Jared Kushner. Coming up, what's got investors feeling chipper? That's after the break.

6:09Krystal Hur:That's why Realtor.com has Real Commute, so you can search by drive time. Download the Realtor.com app today, because you're nearly home. Make it real with Realtor.com.

6:22Caitlin McCabe:Pro's number one most trusted app based on August 2025 proprietary survey.

6:31Caitlin McCabe:Circle, the issuer of the world's second largest stablecoin, said today its fourth quarter profit jumped as crypto investors continued to flock to its stablecoin. Its total revenue also surged 77 % to$770 million, in spite of the meltdown in crypto prices at the end of last year. Vicky Guhuan covers cryptocurrency for the journal and is here to break it down. Vicky, why are the biggest stablecoins doing well when other cryptocurrencies like Bitcoin have tanked?

6:57Krystal Hur:So when the crypto market gets really volatile and Bitcoin prices and major token prices are tanking or going up and down, it's actually somewhat positive for stablecoins because that's when investors sell their cryptocurrencies and park them in stablecoins. But this doesn't extend to every single player in the stablecoin space. Usually it's the largest players like Circle and Tether that have already established their foothold in the market that sort of weathered these storms somewhat unharmed.

7:31Caitlin McCabe:Circle went public in June last year, and it had this big stock market debut. But since then, shares have fallen almost 70 percent. Today, though, its stock rose 35 percent. Is this a sign of a turnaround potentially for its stock price?

7:46Krystal Hur:So Circle went public last year and their IPO was really a blockbuster debut. And the stock soon reached a peak after the president signing to law the first stablecoin bill, which really helped establish a regulatory framework for the stablecoin space. However, stablecoins, even though they are stable and pegged to the dollar, they are still mainly used by crypto traders to trade in crypto. So they are numbed together with a broader crypto space. Circle's performance today, it may be because the company said how they're trying to expand beyond just using stablecoin as a trading tool, but also for cross-border payments and e-commerce.

8:33Krystal Hur:They're also trying to diversify into FX business or launching their own blockchain or setting up their own payments network. Their performance sort of decoupled from the broader crypto market, and they could be on the path to a turnaround if they're able to diversify their revenue streams and broaden their business beyond relying on interest income that comes from the reserves that back their stablecoin.

9:01Caitlin McCabe:That was WSJ reporter Vicky Guhuan. Thanks, Vicky.

9:04Krystal Hur:Thank you for having me.

9:06Caitlin McCabe:U.S. stocks rose today. AI-related names and software stocks continued to bounce back from Monday's sell-off. NVIDIA stock gained 1.4 percent ahead of its earnings after the close, which helped push the Nasdaq 1.3 percent higher on the day. The S &P 500 and the Dow were up less than 1 percent. And reporting after the bell, NVIDIA reported record sales and income in the January quarter, helping ease concerns over a possible artificial intelligence bubble that have rippled through markets in recent months. The chip giant reported fourth-quarter net income of$43 billion, up 35 percent from the year earlier quarter, on sales of$68.1 billion, up 20 percent from a year earlier, easily beating analyst estimates.

9:51Caitlin McCabe:Paramount's streaming revenue grew in the fourth quarter, but the company reported weakness in its TV media segment. The company reported revenue of$8.15 billion for its fourth quarter, in line with analyst estimates. And Salesforce expects revenue to grow in the current fiscal year at about the same rate as it did the year before, as investors worry about AI's threat to software. Revenue in its most recent quarter rose 12 percent to$11.2 billion, in line with analyst expectations. For more on these results, visit WSJ.com. Prediction market platform CalShe said today that it's fined two users for violating its rules.

10:29Caitlin McCabe:One person who ran for governor in California was fined more than$2 ,000, which includes the amount related to his trades and penalties, while another was asked to pay more than$20 ,000. Cal Xi said this was the first time it's publicly disclosed disciplinary actions against users and comes as the proliferation of prediction markets has raised concerns about users making trades using inside information and manipulating markets. For more, I'm joined now by journal reporter Crystal Herr. Crystal, how did Cal Xi catch these two users?

10:59Krystal Hur:So for the case of the trader who bet on his own victory in the race for the California governor, he actually posted a video that seemingly showed him making that bet on X. So it sounds like the surveillance department saw that video, froze his account and investigated and then found that his trades violated Kelshi's rules. And then the second case with the video editor who worked for Mr. Beast, it looks like the data show that he was getting some pretty successful trades on a market where that is pretty difficult. And that not only raised the concerns of people at Kelshi who work on that same team, but also of CalShe users who flagged it to CalShe.

11:39Krystal Hur:So in both cases, it was the work of the surveillance department and in the second case of the CalShe users as well.

11:45Caitlin McCabe:What rules did the users violate exactly?

11:48Krystal Hur:Yeah, so in the case of the political wagers, CalShe prohibits candidates in a political race from making bets in markets related to their own elections, as well as those employed by political action committees. And if you look at the LinkedIn page of Kyle Langford, who is the trader who was faced with these fines, it says that he is the president of a California-based PAC. And for the second user, he was privy to information that is not public to other people. And so he should not have any trading on markets related to Mr. Beast, according to Kelshi's rules.

12:25Caitlin McCabe:And we should note that a spokesperson for the company that oversees Mr. Beast's business ventures said the firm prohibits its employees from making prediction market wagers using proprietary company information, and it declined to comment on whether the employee still works there. Crystal, as I mentioned, this is the first time that CalShe has publicly made it known that it's taken disciplinary action against users. Should we expect to see more of this?

12:46Krystal Hur:It seems like that is likely that it will happen. These prediction markets are only becoming more popular, and there's a lot of concerns about insider trading and market manipulation, especially because these markets are geared towards everyday Americans. and Cal, she did announce just a couple of weeks ago, a lot of hires they'd made to crack down on this sort of activity.

13:06Caitlin McCabe:That was Journal reporter Crystal Herr. Thanks, Crystal.

13:08Krystal Hur:Thanks.

13:10Caitlin McCabe:And that's what's news for this Wednesday afternoon. Today's show is produced by Pierre Bien-Aimé with supervising producer Jana Heron. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

13:33Caitlin McCabe:But what I wanted to tell you, my daughter is studying, a semester, a laptop, a software, a computer, a computer, a computer, a computer, a computer, so a master is really cheap.

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13:54Krystal Hur:Save. Visa Steuer.