BJ’s Wholesale Club, died unexpectedly on Thursday of “presumed natural causes,” according to a statement released Friday by the company. He was 49.
“We are shocked and profoundly saddened by the passing of Lee Delaney,” said Christopher J. Baldwin, the company’s executive chairman, said in a statement. “Lee was a brilliant and humble leader who cared deeply for his colleagues, his family and his community.”
Mr. Delaney joined BJ’s in 2016 as executive vice president and chief growth officer. He was promoted to president in 2019 and became chief executive last year. Before joining BJ’s, he was a partner in the Boston office of Bain & Company from 1996 to 2016. Mr. Delaney earned a master’s in business administration from Carnegie Mellon University, and attended the University of Massachusetts, where he pursued a double major in computer science and mathematics.
Mr. Delaney led the company through the unexpected changes in consumer demand spurred by the pandemic, with many customers stockpiling wholesale goods as they hunkered down at home. “2020 was a remarkable, transformative and challenging year that structurally changed our business for the better,” Mr. Delaney said in the company’s last quarterly earnings report.
The BJ’s board appointed Bob Eddy, the chief administrative and financial officer, to serve as the company’s interim chief executive. Mr. Eddy joined the company in 2007 and became the chief financial officer in 2011, adding the job of chief administrative officer in 2018.
“Bob partnered closely with Lee and has played an integral role in transforming and growing BJ’s Wholesale Club,” Mr. Baldwin said. He said that the company would announce decisions about its permanent executive leadership in a “reasonably short timeframe.”
BJ’s, based in Westborough, Mass., operates 221 clubs and 151 BJ’s Gas locations in 17 states.
Before the pandemic, companies used to lure top talent with lavish perks like subsidized massages, Pilates classes and free gourmet meals. Now, the hottest enticement is permission to work not just from home, but from anywhere — even, say, from the French Alps or a Caribbean island.
Revolut, a banking start-up based in London, said Thursday that it would allow its more than 2,000 employees to work abroad for up to two months a year in response to requests to visit overseas family for longer periods.
“Our employees asked for flexibility, and that’s what we’re giving them as part of our ongoing focus on employee experience and choice,” said Jim MacDougall, Revolut’s vice president of human resources.
Georgia Pacquette-Bramble, a communications manager for Revolut, said she was planning to trade the winter in London for Spain or somewhere in the Caribbean. Other colleagues have talked about spending time with family abroad.
Revolut has been valued at $5.5 billion, making it one of Europe’s most valuable financial technology firms. It joins a number of companies that will allow more flexible working arrangements to continue after the pandemic ends. JPMorgan Chase, Salesforce, Ford Motor and Target have said they are giving up office space as they expect workers to spend less time in the office, and Spotify has told employees they can work from anywhere.
Not all companies, however, are shifting away from the office. Tech companies, including Amazon, Facebook, Google and Apple, have added office space in New York over the last year. Amazon told employees it would “return to an office-centric culture as our baseline.”
Dr. Dan Wang, an associate professor at Columbia Business School, said he did not expect office-centric companies to lose top talent to companies that allow flexible working, in part because many employees prefer to work from the office.
Furthermore, when employees are not in the same space, there are fewer spontaneous interactions, and spontaneity is critical for developing ideas and collaborating, Dr. Wang said.
“There is a cost,” he said. “Yes, we can interact via email, via Slack, via Zoom — we’ve all gotten used to that. But part of it is that we’ve lowered our expectations for what social interaction actually entails.”
Revolut said it studied tax laws and regulations before introducing its policy, and that each request to work from abroad was subject to an internal review and approval process. But for some companies looking to put a similar policy in place, a hefty tax bill, or at least a complicated tax return, could be a drawback.
After weeks of wading into the debate over how to regulate SPACS, the popular blank-check deals that provide companies a back door to public markets, the Securities and Exchange Commission is sending its first shot across the bow.
John Coates, the acting director of the corporate finance division at the S.E.C., issued a lengthy statement on Thursday about how securities laws apply to blank-check firms, the DealBook newsletter reports.
“With the unprecedented surge has come unprecedented scrutiny,” Mr. Coates wrote of the recent boom in blank-check deals.
In particular, he is interested in a crucial (and controversial) difference between SPACs and traditional initial public offerings: blank-check firms are allowed to publish often-rosy financial forecasts when merging with an acquisition target, while companies going public in an I.P.O. are not. Regulators consider such forecasts too risky for firms as yet untested by the public markets.
Investors raise money for SPACs via an I.P.O. of a shell company, and those funds are used within two years to merge with an unspecified company, which then also becomes a publicly traded company. Because the deal is technically a merger, it’s given the same “safe harbor” legal protections for its financial forecasts as a typical M.& A. deal. And that’s why there are flying-taxi companies with little revenue going public via a SPAC while promising billions in sales far in the future.
The S.E.C. thinks allowing financial forecasts for these deals might be a problem. They can be “untested, speculative, misleading or even fraudulent,” Mr. Coates wrote. And he concludes his statement by suggesting a major rethink of how the “full panoply” of securities laws applies to SPACs, which could upend the blank-check business model.
If the S.E.C. does not treat SPAC deals as the I.P.Os they effectively are, he writes, “potentially problematic forward-looking information may be disseminated without appropriate safeguards.”
The letter serves as a warning, but perhaps not much else — yet. Unless the S.E.C. issues new rules (as it did for penny stocks) or Congress passes legislation, SPAC projections will continue. But this strongly worded statement could moderate or even mute them.
“The S.E.C. has now put them on notice,” Lynn Turner, a former chief accountant of the agency, said.
Amazon Warehouse Unionization Votes
Either side needed 1,521 votes to win.
A total of 505 ballots were challenged; 76 were void.·Source: National Labor Relations Board
Amazon beat back the unionization drive at its warehouse in Bessemer, Ala., the counting of ballots in the closely watched effort showed on Friday.
A total of 738 workers voted “Yes” to unionize and 1,798 voted “No.” There were 76 ballots marked as void and 505 votes were challenged, according to the National Labor Relations Board. The union leading the drive to organize, the Retail, Wholesale and Department Store Union, said most of the challenges were from Amazon.
About 50 percent of the 5,805 eligible voters at the warehouse cast ballots in the election. Either side needed to receive more than 50 percent of all cast ballots to prevail.
The ballots were counted in random order in the National Labor Relations Board’s office in Birmingham, Ala., and the process was broadcast via Zoom to more than 200 journalists, lawyers and other observers.
The voting was conducted by mail from early February until the end of last month. A handful of workers from the labor board called out the results of each vote — “Yes” for a union or “No” — for nearly four hours on Thursday.
Sophia June and Miles McKinley contributed to this report.
Online stores offering counterfeit or stolen vaccine cards have mushroomed in recent weeks, according to Saoud Khalifah, the founder of FakeSpot, which offers tools to detect fake listings and reviews online.
The efforts are far from hidden, with Facebook pages named “vax-cards” and eBay listings with “blank vaccine cards” openly hawking the items, Sheera Frenkel reports for The New York Times.
Last week, 45 state attorneys general banded together to call on Twitter, Shopify and eBay to stop the sale of false and stolen vaccine cards.
Facebook, Twitter, eBay, Shopify and Etsy said that the sale of fake vaccine cards violated their rules and that they were removing posts that advertised the items.
The Centers for Disease Control and Prevention introduced the vaccination cards in December, describing them as the “simplest” way to keep track of Covid-19 shots. By January, sales of false vaccine cards started picking up, Mr. Khalifah said. Many people found the cards were easy to forge from samples available online. Authentic cards were also stolen by pharmacists from their workplaces and put up for sale, he said.
Many people who bought the cards were opposed to the Covid-19 vaccines, Mr. Khalifah said. In some anti-vaccine groups on Facebook, people have publicly boasted about getting the cards.
Other buyers want to use the cards to trick pharmacists into giving them a vaccine, Mr. Khalifah said. Because some of the vaccines are two-shot regimens, people can enter a false date for a first inoculation on the card, which makes it appear as if they need a second dose soon. Some pharmacies and state vaccination sites have prioritized people due for their second shots.
In only a year, the market value of office towers in Manhattan has plummeted 25 percent, according to city projections released on Wednesday.
Across the country, the vacancy rate for office buildings in city centers has steadily climbed over the past year to reach 16.4 percent, according to Cushman & Wakefield, the highest in about a decade. That number could climb further if companies keep giving up office space because of hybrid or fully remote work, Peter Eavis and Matthew Haag report for The New York Times.
So far, landlords like Boston Properties and SL Green have not suffered huge financial losses, having survived the past year by collecting rent from tenants locked into long leases — the average contract for office space runs about seven years.
But as leases come up for renewal, property owners could be left with scores of empty floors. At the same time, many new office buildings are under construction — 124 million square feet nationwide, or enough for roughly 700,000 workers. Those changes could drive down rents, which were touching new highs before the pandemic. And rents help determine assessments that are the basis for property tax bills.
Many big employers have already given notice to the owners of some prestigious buildings that they are leaving when their leases end. JPMorgan Chase, Ford Motor, Salesforce, Target and more are giving up expensive office space and others are considering doing so.
The stock prices of the big landlords, which are often structured as real estate investment trusts that pass almost all of their profit to investors, trade well below their previous highs. Shares of Boston Properties, one of the largest office landlords, are down 29 percent from the prepandemic high. SL Green, a major New York landlord, is 26 percent lower.
President Biden proposed a vast expansion of federal spending on Friday, calling for a 16 percent increase in domestic programs as he tries to harness the government’s power to reverse what officials called a decade of underinvestment in the nation’s most pressing issues.
The proposed $1.52 trillion in spending on discretionary programs would significantly bolster education, health research and fighting climate change. It comes on top of Mr. Biden’s $1.9 trillion stimulus package and a separate plan to spend $2.3 trillion on the nation’s infrastructure.
Mr. Biden’s first spending request to Congress showcases his belief that expanding, not shrinking, the federal government is crucial to economic growth and prosperity. It would direct billions of dollars toward reducing inequities in housing and education, as well as making sure every government agency puts climate change at the front of its agenda.
It does not include tax proposals, economic projections or so-called mandatory programs like Social Security, which will all be included in a formal budget request the White House will release this spring.
Among its major new spending initiatives, the plan would dedicate an additional $20 billion to help schools that serve low-income children and provide more money to students who have experienced racial or economic barriers to higher education. It would create a multi-billion-dollar program for researching diseases like cancer and add $14 billion to fight and adapt to the damages of climate change.
It would also seek to lift the economies of Central American countries, where rampant poverty, corruption and devastating hurricanes have fueled migration toward the southwestern border and a variety of initiatives to address homelessness and housing affordability, including on tribal lands. And it asks for an increase of about 2 percent in spending on national defense.
The request represents a sharp break with the policies of President Donald J. Trump, whose budget proposals prioritized military spending and border security, while seeking to cut funding in areas like environmental protection.
All told, the proposal calls for a $118 billion increase in discretionary spending in the 2022 fiscal year, when compared with the base spending allocations this year. It seeks to capitalize on the expiration of a decade of caps on spending growth, which lawmakers agreed to in 2010 but frequently breached in subsequent years.
Administration officials would not specify on Friday whether that increase would result in higher federal deficits in their coming budget proposal, but promised its full budget would “address the overlapping challenges we face in a fiscally and economically responsible way.”
As part of that effort, the request seeks $1 billion in new funding for the Internal Revenue Service to enforce tax laws, including “increased oversight of high-income and corporate tax returns.” That is clearly aimed at raising tax receipts by cracking down on tax avoidance by companies and the wealthy.
Officials said the proposals did not reflect the spending called for in Mr. Biden’s infrastructure plan, which he introduced last week, or for a second plan he has yet to roll out, which will focus on what officials call “human infrastructure” like education and child care.
Congress, which is responsible for approving government spending, is under no requirement to adhere to White House requests. In recent years, lawmakers rejected many of the Trump administration’s efforts to gut domestic programs.
But Mr. Biden’s plan, while incomplete as a budget, could provide a blueprint for Democrats who narrowly control the House and Senate and are anxious to reassert their spending priorities after four years of a Republican White House.
Stocks on Wall Street climbed further into record territory on Friday: The S&P 500 index rose 0.8 percent, bringing its gain for the week to 2.7 percent.
Shares of Amazon rose 2.2 percent after the company prevailed against a unionization drive at a warehouse in Alabama.
The relatively steady gains in the stock market have sent the VIX index, a measure of volatility, to its lowest level since February 2020. The index was below 17 points on Friday. In mid-March, as the pandemic shut down parts of the global economy, the VIX had spiked above 80.
The yield on 10-year Treasury notes jumped 4 basis points, or 0.04 percentage point, to 1.66 percent. The yield on 10-year government bonds rose across Europe, too.
On Thursday, Federal Reserve chair, Jerome Powell, reiterated his intention to keep supporting the economic recovery The rollout of vaccinations meant the United States economy could probably reopen soon, but the recovery was still “uneven and incomplete,” Mr. Powell said at the International Monetary Fund annual conference.
European stock indexes were mixed on Friday, though the Stoxx Europe 600 notched its sixth straight week of gains. The DAX index in Germany rose 0.2 percent after data showed an unexpected drop in industrial production. The FTSE 100 in London fell 0.4 percent.
Oil prices fell slightly with futures of West Texas Intermediate, the U.S. crude benchmark, 0.4 percent lower to $59.38 a barrel.
Just months after returning to the skies, Boeing’s troubled 737 Max jet is facing another setback. Boeing said Friday that it had notified 16 airlines and other customers of a potential electrical problem with the Max and recommended that they temporarily stop flying some planes. The company refused to say how many planes were affected, but four U.S. airlines said they would stop using nearly 70 Max jets. Boeing would not say how long the planes would be sidelined. The statement comes just months after companies resumed flying the jet, which had been grounded for nearly two years because of a pair of accidents that killed nearly 350 people.
Saudi Aramco, the national oil company of Saudi Arabia, has reached a deal to raise $12.4 billion from the sale of a 49 percent stake in a pipeline-rights company.
The money will come from a consortium led by EIG Global Energy Partners, a Washington-based investor in pipelines and other energy infrastructure.
Under the arrangement announced on Friday, the investor group will buy 49 percent of a new company called Aramco Oil Pipelines, which will have the rights to 25 years of payments from Aramco for transporting oil through Saudi Arabia’s pipeline networks.
Aramco is under pressure from its main owner, the Saudi government, to generate cash to finance state operations as well as investments like new cities to diversify the economy away from oil.
The company has pledged to pay $75 billion in annual dividends, nearly all to the government, as well as other taxes.
Last year, the dividends came to well in excess of the company’s net income of $49 billion. Recently, Aramco was tapped by Crown Prince Mohammed bin Salman, the kingdom’s main policymaker, to lead a new domestic investment drive to build up the Saudi economy.
The pipeline sale “reinforces Aramco’s role as a catalyst for attracting significant foreign investment into the Kingdom,” Aramco said in a statement.
From Saudi Arabia’s perspective, the deal has the virtue of raising money up front without giving up control. Aramco will own a 51 percent majority share in the pipeline company and “retain full ownership and operational control” of the pipes the company said.
Aramco said Saudi Arabia would retain control over how much oil the company produces.
Abu Dhabi, Saudi Arabia’s oil-rich neighbor, has struck similar oil and gas deals with outside investors.
The 2017 film “Bitter Harvest” would not, by many definitions, be considered a success.
“It’s a bad sign when even the prayers in this movie are crappy,” observed one reviewer, who contributed to the film’s 15 percent critic rating on Rotten Tomatoes.
It pulled in less than $600,000 in the United States. But that did not mean it did not still have moneymaking potential abroad. All investors needed to do was help buy the rights to distribute it and a number of other films in Latin America, Africa and New Zealand. Major distribution deals with HBO and Netflix were on the cusp of being formalized, they were told. Once those fell into place, the investors would get returns of at least 35 percent.
That is the essence of what the Securities and Exchange Commission and federal prosecutors are calling a Ponzi scheme run by Zachary J. Horwitz, a not particularly famous actor with a rather extravagant home. Mr. Horwitz, who went by the stage name Zach Avery, was arrested on Tuesday on wire fraud charges. He is accused of defrauding investors of at least $227 million and fabricating his company’s business relationship with HBO and Netflix.
“We allege that Horwitz promised extremely high returns and made them seem plausible by invoking the names of two well-known entertainment companies and fabricating documents,” Michele Wein Layne, director of the S.E.C.’s Los Angeles regional office, said in a news release on Tuesday.
most recent film, the horror movie “The Devil Below” (Rotten Tomatoes critic score: 0 percent). Mr. Horwitz did not star in any of the 50 or so films he promised could make investors millions, according to Thom Mrozek, a spokesman for the U.S. Attorney’s Office in Los Angeles.
Mr. Horwitz was in jail on Wednesday, Mr. Mrozek said. Attempts to reach other employees of One in a Million Productions, whose website features the tag line “When Odds Are One in a Million. Be That One,” were unsuccessful. (Later Wednesday afternoon, the site had been taken down.)
Mr. Horwitz’s lawyer, Anthony Pacheco, did not respond to a request for comment.
The Ponzi scheme began to unravel when an investor wanted money refunded in 2019 and could not get it, Mr. Mrozek said.
For several years, 1inMM — as the company styles its name — found ways to pay investors, according to the S.E.C. Court documents do not list all of the films investors thought they had helped buy rights to, but the complaint features an image from 1inMM’s “library”; the 1989 Jean-Claude Van Damme movie “The Kickboxer” and the 2013 romantic comedy “The Spectacular Now” are included.
The way that money can be made in the movie distribution world is to say, “I’ll give you $100,000 for Latin America rights,” for example, Mr. Mrozek said, adding, “I go to HBO or whomever and say, ‘Give me $200,000 to show the movie.’”
according to the S.E.C.
Since December 2019, 1inMM has defaulted on more than 160 payments, according to court documents. One investor in Chicago, who was owed more than $160 million in principal and $59 million in profits, wanted his returns and could not get them, Mr. Mrozek said. That investor contacted the authorities.
The age of electric planes may still be years away, but the fight for that market is already heating up.
Wisk Aero, a start-up developing an electric aircraft that takes off like a helicopter and flies like a plane, on Tuesday sued another start-up, Archer Aviation, accusing it of stealing trade secrets and infringing on Wisk’s patents.
The lawsuit brings into public view a dispute between two little-known companies in a business that has become a playground for billionaires. It also entangles giants of aviation and technology. Wisk is a joint venture of Boeing and Kitty Hawk, which is financed by Larry Page, who co-founded Google. Archer’s investors include United Airlines, which is a major Boeing customer and plans to buy up to 200 aircraft from the start-up.
The niche market for electric vehicles and planes has become frenzied in recent months as so-called blank check companies, which have little more than a stock market listing and a pot of cash, have snapped up fledgling businesses with little or no revenue, let alone profits. Investors in the blank-check firms — formally known as special purpose acquisition companies, or SPACs — are hoping to acquire businesses that they believe could follow Tesla’s recent trajectory on the stock market. To entice those investors, start-ups like Archer promise top-notch technology and optimistic business plans.
the lawsuit accuses two engineers of downloading thousands of files containing confidential designs and data before leaving Wisk to join Archer. Wisk accused a third engineer of wiping history of his activities from his computer before leaving for Archer.
“Wisk brings this lawsuit to stop a brazen theft of its intellectual property and confidential information and protect the substantial investment of resources and years of hard work and effort of its employees and their vision of the future in urban air transportation,” the lawsuit says.
Archer denied wrongdoing.
“It’s regrettable that Wisk would engage in litigation in an attempt to deflect from the business issues that have caused several of its employees to depart,” Archer said in a statement. “The plaintiff raised these matters over a year ago, and after looking into them thoroughly, we have no reason to believe any proprietary Wisk technology ever made its way to Archer. We intend to defend ourselves vigorously.”
Archer also said it had placed an employee accused in the suit on paid leave “in connection with a government investigation and a search warrant issued to the employee, which we believe are focused on conduct prior to the employee joining the company.” Archer said it and three employees who had worked with the individual had been subpoenaed in that investigation and were cooperating with the authorities.
accused one of its former employees and Uber of stealing trade secrets to gain an advantage in the race to develop autonomous cars. The companies settled the case in 2018, and the former Waymo employee, Anthony Levandowski, a onetime confidant of Mr. Page’s, was sentenced in 2020 to 18 months in prison. Former President Donald J. Trump pardoned Mr. Levandowski in January.
Archer announced its merger in February with a SPAC, Atlas Crest Investment, in a deal that valued the company at $3.8 billion. Wisk said its suspicions were confirmed at that time when Archer released a presentation that contained designs similar to those in a Wisk patent filing.
when announcing the transaction.
“We had 35, 40 people on this — and we attacked this like venture growth would or anybody else,” Mr. Moelis said. “And we did it fast, too.”
A spokeswoman for Moelis declined to comment.
Other companies trying to make electric aircraft include Joby Aviation, which announced a $6.6 billion deal with a SPAC led by the LinkedIn co-founder Reid Hoffman in February, and the German start-up Lilium, which went public last month by merging with a SPAC led by a former General Motors executive, Barry Engle.
according to SPAC Research — more than in all of 2020.
But regulators and some investors say more scrutiny is needed. The Securities and Exchange Commission published two notices last month warning companies considering merging with SPACs to ensure that they are ready for all the legal and regulatory requirements being a public company entails. Many investors known as short sellers, who specialize in betting that share prices of companies are bound to fall, have targeted SPACs like Atlas Crest, which is among the 20 most-shorted SPACs.
The market for electric aircraft is in its infancy but holds huge promise. The prospect of “Jetsons”-like flying vehicles has inched closer to reality in recent years thanks to advances in battery and aircraft design. A high-stakes race to build the first viable electric plane is underway, and some airlines are betting that such vehicles can help them reach their goals of eliminating or offsetting their greenhouse gas emissions.
Scott Kirby, the chief executive of United, said the Archer aircraft were unlikely to be used for commercial flights but were ideal for short trips to and from an airport.
“They’re not only more environmentally friendly, they’re far quieter than a helicopter,” Mr. Kirby said Tuesday during an event hosted by the Council on Foreign Relations. “And, because they have 12 rotors, they’re, I believe, going to ultimately be safer.”
Still, widespread use of electric air taxis is likely years away. Such aircraft may never become more than a luxury used by very rich people because businesses and governments may come up with far cheaper ways to transport people without emissions.
Until recently, Bill Hwang sat atop one of the biggest — and perhaps least known — fortunes on Wall Street. Then his luck ran out.
Mr. Hwang, a 57-year-old veteran investor, managed $10 billion through his private investment firm, Archegos Capital Management. He borrowed billions of dollars from Wall Street banks to build enormous positions in a few American and Chinese stocks. By mid-March, Mr. Hwang was the financial force behind $20 billion in shares of ViacomCBS, effectively making him the media company’s single largest institutional shareholder. But few knew about his total exposure, since the shares were mostly held through complex financial instruments, called derivatives, created by the banks.
That changed in late March, after shares of ViacomCBS fell precipitously and the lenders demanded their money. When Archegos couldn’t pay, they seized its assets and sold them off, leading to one of the biggest implosions of an investment firm since the 2008 financial crisis.
Almost overnight, Mr. Hwang’s personal wealth shriveled. It’s a tale as old as Wall Street itself, where the right combination of ambition, savvy and timing can generate fantastic profits — only to crumble in an instant when conditions change.
in a 2019 speech. “I couldn’t go to school that much, to be honest.”
Grace and Mercy Foundation, a New York-based nonprofit that sponsors Bible readings and religious book clubs, growing it to $500 million in assets from $70 million in under a decade. The foundation has donated tens of millions of dollars to Christian organizations.
“He’s giving ridiculous amounts,” said John Bai, a co-founder and managing partner of the equity research firm Fundstrat Global Advisors, who has known Mr. Hwang for roughly three decades. “But he’s doing it in a very unassuming, humble, non-boastful way.”
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But in his investing approach, he embraced risk and his firm ran afoul of regulators. In 2008, Tiger Asia lost money when the investment bank Lehman Brothers filed for bankruptcy at the peak of the financial crisis. The next year, Hong Kong regulators accused the fund of using confidential information it had received to trade some Chinese stocks.
In 2012, Mr. Hwang reached a civil settlement with U.S. securities regulators in a separate insider trading investigation and was fined $44 million. That same year, Tiger Asia pleaded guilty to federal insider-trading charges in the same investigation and returned money to its investors. Mr. Hwang was barred from managing public money for at least five years. Regulators formally lifted the ban last year.
ViacomCBS announced plans to sell new shares to the public, a deal it hoped would generate $3 billion in new cash to fund its strategic plans. Morgan Stanley was running the deal. As bankers canvassed the investor community, they were counting on Mr. Hwang to be the anchor investor who would buy at least $300 million of the shares, four people involved with the offering said.
But sometime between the deal’s announcement and its completion that Wednesday morning, Mr. Hwang changed plans. The reasons aren’t entirely clear, but RLX, the Chinese e-cigarette company, and GSX, the education company, had both spiraled in Asian markets around the same time. His decision caused the ViacomCBS fund-raising effort to end with $2.65 billion in new capital, significantly short of the original target.
ViacomCBS executives hadn’t known of Mr. Hwang’s enormous influence on the company’s share price, nor that he had canceled plans to invest in the share offering, until after it was completed, two people close to ViacomCBS said. They were frustrated to hear of it, the people said. At the same time, investors who had received larger-than-expected stakes in the new share offering and had seen it fall short, were selling the stock, driving its price down even further. (Morgan Stanley declined to comment.)
By Thursday, March 25, Archegos was in critical condition. ViacomCBS’s plummeting stock price was setting off “margin calls,” or demands for additional cash or assets, from its prime brokers that the firm couldn’t fully meet. Hoping to buy time, Archegos called a meeting with its lenders, asking for patience as it unloaded assets quietly, a person close to the firm said.
Those hopes were dashed. Sensing imminent failure, Goldman began selling Archegos’s assets the next morning, followed by Morgan Stanley, to recoup their money. Other banks soon followed.
As ViacomCBS shares flooded onto the market that Friday because of the banks’ enormous sales, Mr. Hwang’s wealth plummeted. Credit Suisse, which had acted too slowly to stanch the damage, announced the possibility of significant losses; Nomura announced as much as $2 billion in losses. Goldman finished unwinding its position but did not record a loss, a person familiar with the matter said. ViacomCBS shares are down more than 50 percent since hitting their peak on March 22.
Mr. Hwang has laid low, issuing only a short statement calling this a “challenging time” for Archegos.
After the implosion of a little-known investment firm saddled banks around the world with billions of dollars in losses last week, one big question is being asked all over Wall Street: How did they let this happen?
The answer may stem from the way the firm, Archegos Capital Management, with ample assistance from at least half a dozen banks, made bets on stocks without actually owning them.
Archegos used esoteric financial instruments known as swaps, which get their name from the way they exchange one stream of income for another. In this case, Wall Street banks bought certain stocks Archegos wanted to bet on, and Archegos paid the banks a fee. Then, the banks paid Archegos the stocks’ returns.
These swaps magnified the fund’s buying power, but they also created a two-pronged problem. Archegos was able to build up much more influence over the share prices of a few companies, including ViacomCBS and Discovery, than it could afford on its own. And because there are few regulations about these types of trades, it was under no disclosure obligations.
was embroiled in an insider-trading case under his leadership. But it used leverage — essentially, trading with borrowed money to amplify its buying power — perhaps as much as eight times its own capital, some Wall Street analysts calculated.
In this case, leverage showed up in the form of swap contracts. In return for a fee, the bank agrees to pay the investor what the investor would have gotten from actually owning a share over a certain period. If a stock rises in price, the bank pays the investor. If it falls, the investor pays the bank.
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Archegos focused its bets on the share prices of a relatively small number of companies. They included ViacomCBS, the corporate parent of the country’s most-watched network; the media company Discovery; and a handful of Chinese technology firms. The banks it used to buy swaps held millions of shares in ViacomCBS alone.
Normally, big institutional investors are required by the S.E.C. to publicly disclose their holdings of stock at the end of each quarter. That means investors, lenders and regulators will know when a single entity holds a big ownership stake in a company.
But S.E.C. disclosure rules don’t usually cover swaps, so Archegos didn’t have to report its large holdings. And none of the banks — at least seven that are known to have had relationships with Archegos — saw the full picture of the risk the fund was taking, analysts say.
the most recent data available, according to the Bank for International Settlements, an international consortium of central banks.
Mitsubishi UFJ Securities Holdings Company, a unit of the Japanese financial conglomerate, reported a potential loss of around $270 million.
Analysts say the damage was relatively contained, and while the losses have been large for some players, they’re not big enough to pose a threat to the broader financial system.
But the episode will most likely reinvigorate a push to expand the regulation of derivatives, which have been associated with many prominent financial blowups. During the 2008 crisis, the insurance giant AIG nearly collapsed under the weight of unregulated swaps contracts it wrote.
The cascade of problems that began with Archegos was only the latest example of derivatives’ ability to increase unseen risk.
“During the financial crisis of 2008, one of the biggest problems was that many of the banks didn’t know who owed what to whom,” said Tyler Gellasch, a former S.E.C. lawyer who heads the Healthy Markets Association, a group that pushes for market reforms. “And it seems that happened again here.”
Lynn E. Turner, a former chief accountant for the Securities and Exchange Commission, called the proposed fix “an excellent idea.” Because sponsors are the ones advertising “here’s what we’re going to do in this time period,” he said, “they should be locked into that.”
Mr. Palihapitiya was less enthusiastic.
“This isn’t a very good idea,” he told me. “Why would a sponsor agree to a five-year lockup when management wouldn’t, nor would other investors including PIPE investors?” (At the time of the deal, institutional investors are often invited to buy shares with favorable terms through what’s called a private investment in public equity, or PIPE.)
That is true. Management can typically sell shares after a short restricted period. But, as Mr. Turner pointed out, isn’t it the sponsor that is selling the deal to the public?
“What if management lied?” Mr. Palihapitiya argued. “Should the sponsor now be on the hook for bad behavior of management?” He said there were “too many corner cases where this fails.”
Mr. Palihapitiya said he had a better idea: “Make a sponsor invest at least as much as 10 percent of the deal size,” which is far more than most sponsors do. “The more they invest, the more they would need to scrutinize the projections,” he said. “This has always been the only meaningful way to align sponsors, management and investors.”
In some ways, the market is already forcing some sponsors to agree to longer lockups. Michael Klein, a former banker who has become a serial SPAC deal-maker, recently agreed to keep his stake in Lucid Motors, a high-flying electric vehicle maker, for at least 18 months as a way to seal the deal.
And with more and more SPACs losing their shine — most SPACs that went public in recent weeks are now trading below their offering price — investors may demand more from sponsors, perhaps even before regulators do.
But, in the end, investors shouldn’t have to ask sponsors to commit to their own deals.
Bloomberg identified it as Archegos Capital Management, a New York-based family office that manages the wealth of Bill Hwang, a former hedge fund manager at Tiger Asia Management who was found guilty of wire fraud in 2012.
Investment banks that provided services to Archegos, such as Goldman Sachs and Morgan Stanley, dumped huge quantities of stocks including ViacomCBS and Chinese tech companies on Friday.
Archegos was forced into the stock sales, worth about $20 billion, after bets the fund made moved the wrong way, Bloomberg reported. Shares in ViacomCBS, one of Archegos’s positions, dropped 23 percent on Wednesday last week. On Friday, the share price plummeted a further 27 percent as the investment banks liquidated positions. ViacomCBS shares fell about 3 percent in early trading on Monday.
Shares in Goldman Sachs and Morgan Stanley opened about 2-3 percent lower on Monday. Shares in Deutsche Bank fell more than 3 percent, after it was said to also have some exposure to Archegos.
Credit Suisse has already been roiled this month by the collapse of Greensill Capital, a London-based financial firm it sold funds for, and to whom it extended loans of $140 million. The Swiss bank told investors it would probably report some losses on the loan.
“A significant U.S.-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks,” the Swiss bank said on Monday. It did not yet know the exact size of the loss from exiting its positions but “it could be highly significant and material to our first quarter results,” the statement said.
Elsewhere in markets
Oil prices bounced around on Monday following news about the fate of the container ship that had been blocking the Suez Canal for nearly week. The ship was finally freed on Monday, raising the prospect that trade flows would be restored, but authorities said more work was needed before maritime traffic could restart.
Yields on 10-year Treasury notes fell 2 basis points, or 0.02 percentage point, to 1.65 percent.
The fallout from risky investments made by Archegos Capital Management continued to spread through the global markets on Monday, and it could spur more attention from regulators on the murky world of swaps and investor borrowing, the DealBook newsletter reports.
But how did one firm’s bad bets cascade to become a multibillion-dollar fire sale of stocks by banks around the world? Here’s what we know so far:
Archegos manages the personal fortune of the former hedge fund mogul Bill Hwang, who won Wall Street’s business despite having pleaded guilty to insider trading years ago. It amassed huge positions in media giants like ViacomCBS and in several Chinese tech companies — largely with borrowed money.
The Archegos strategy included using swaps, contracts that gave Mr. Hwang financial exposure to companies’ shares while hiding both his identity and how big his positions really were. (It is also becoming increasingly apparent that several Wall Street banks lent Archegos money without knowing that others were doing the same thing for the same trades.)
Trouble for Mr. Hwang, and his banks, arose when the prices of those stocks started to fall. That prompted some of his lenders to demand cash to cover his bets. When they began to question his ability to do so, some of them, including Goldman Sachs and Morgan Stanley, seized some of his holdings and kicked off the sale $20 billion worth in huge block trades.
That forced selling led to even bigger drops in the prices of those stocks, starting a vicious circle.
Goldman Sachs has told investors that its potential losses are “immaterial,” having covered its exposure, but other investment banks faced a reckoning:
Credit Suisse told investors that a “U.S.-based hedge fund” had defaulted on its margin calls, which could lead to losses that were “highly significant and material to our first-quarter results.”
Nomura said that one of its U.S. arms could suffer “a significant loss” because of the forced sales.
One person who is surely paying attention is Gary Gensler: President Biden’s pick to lead the S.E.C. has been an advocate for market transparency, having argued that unregulated dark pools could cause a broader risk to the U.S. economy.
Southwest Airlines is doubling down on Boeing’s troubled 737 Max jet, adding 100 new orders for the plane just months after regulators began allowing it to fly again.
The airline, already the largest customer of the Max, said on Monday that it had ordered a total of 349 Max jets over the next decade. Southwest, which resumed flights aboard the Max this month, also said it had more than doubled the number of planes it had options to buy, to 270.
“Southwest Airlines has been operating the Boeing 737 series for nearly 50 years, and the aircraft has made significant contributions to our unparalleled success,” Gary Kelly, Southwest’s chief executive, said in a statement. “Today’s commitment to the 737 Max solidifies our continued appreciation for the aircraft.”
Regulators around the world grounded the Max, which is quieter and more fuel-efficient than its predecessors, in March 2019 following fatal crashes in Ethiopia and Indonesia that killed 346 people. The Federal Aviation Administration lifted its ban on the plane in November, requiring various changes and upgrades. It was soon followed by other aviation regulators and the plane has been used on thousands of flights since.
The expanded Southwest order comes as more passengers start flying again. More than 1.5 million people were screened at airport security checkpoints on Sunday, according to the Transportation Security Administration, the most since the coronavirus pandemic began. Still, that was about 37 percent fewer people than the agency had screened on the same day in 2019.
Southwest did not say how much it will pay for its new Max order. The airline is spending more than $10 billion in new and existing airplane orders. The airline expects to receive 28 Max planes this year and at least 30 each year after through 2025.
HarperCollins, one of the five largest publishing companies in the United States, has made a deal to acquire Houghton Mifflin Harcourt Books and Media, the trade publishing division of Houghton Mifflin Harcourt, for $349 million.
The acquisition will help HarperCollins expand its catalog of backlist titles at a moment of growing consolidation in the book business. Houghton Mifflin publishes perennial sellers by well-known authors such as J.R.R. Tolkien, George Orwell, Philip Roth and Lois Lowry, as well as children’s classics and best-selling cookbooks and lifestyle guides.
News of the sale was reported earlier by The Wall Street Journal.
By acquiring Houghton Mifflin, HarperCollins, which is owned by Rupert Murdoch’s News Corp, will be better able to compete as publishing has come to be dominated by the biggest players.
The book business has been transformed by consolidation in the past decade, with the merger of Penguin and Random House in 2013, News Corp’s purchase of the romance publisher Harlequin, and Hachette Book Group’s acquisition of Perseus Books. Last fall, ViacomCBS agreed to sell Simon & Schuster to Penguin Random House for more than $2 billion, in a deal that has drawn scrutiny from antitrust regulators and has raised concerns among booksellers, authors and agents.
Book sales across the industry have remained strong during the pandemic, but Houghton Mifflin saw its revenue fall sharply last year because of a steep drop in sales in its education division. Its revenue fell by more than 46 percent in the nine months that ended on Sept. 30 of last year, compared with the same period in 2019. The company put its trade publishing division up for sale last fall, as it aims to focus on its core business of K-12 educational publishing, and to pay down its debt.
“There is incredible demand for our expertise as schools across the country plan for post-pandemic learning and recovery,” Houghton Mifflin’s president and chief executive, Jack Lynch, said in a news release. “This is an inflection moment for K-12 education in our country and for HMH as a trusted partner to schools and teachers in advancing learning for every student.”
Oil prices fell on Monday as word spread that the giant cargo ship blocking the Suez Canal had been set free, raising hopes that hundreds of vessels, many carrying oil and petroleum products, could soon proceed through the critical waterway.
Oil prices had swirled earlier in the day, as prospects of an end to the logjam brightened, and then dimmed. But following the announcement that the containership Ever Given had been freed, the price of Brent crude, the international benchmark, fell about 2.5 percent, to $63.90 a barrel.
Since the vessel got stuck early last week, tankers havebeen lining up at the entrances to the canal waiting to deliver their cargoes to Europe and Asia.
The Suez Canal is a crucial choke point for oil shipping, but so far the impact on the oil market of this major interruption of trade flows has been relatively muted. Though prices jumped after shipping on the canal was halted, oil prices still remain below their nearly two-year highs of about $70 a barrel reached earlier this month.
Traders are now expected to focus on broader threats to the oil market, including whether the imposition of new lockdowns in Europe may hold back the recovery of oil demand from the pandemic.
From a global perspective, oil supplies are considered adequate, and the Organization of the Petroleum Exporting Countries, Russia and other producers, the group known as OPEC Plus, are withholding an estimated eight million barrels a day, or about 9 percent of current consumption, from the market. Officials from OPEC Plus are expected to meet by video conference on Thursday to discuss whether to ease output cuts.
The Supreme Court will hear arguments on Monday from Goldman Sachs and pension funds over a claim that the Wall Street giant misled investors about its work selling complex debt investments in the prelude to the 2008 financial crisis.
In its latest brief, Goldman makes an interesting argument, the DealBook newsletter reports: Investors shouldn’t rely on statements such as “honesty is at the heart of our business” or “our clients’ interests always come first” that appear in Securities and Exchange Commission filings and annual reports.
The case is a test of shareholders’ ability to sue over claims of investment fraud. The pension funds sought to sue as a class over Goldman’s statements, saying they belied those statements of honesty, and lower courts agreed to let them proceed. Goldman has argued that the investors are engaged in “guerrilla warfare” and aren’t providing “serious legal arguments,” relying on support from the federal government instead.
However, the Biden administration isn’t taking sides, technically. It will argue as a “friend of the court” on Monday that “meritorious private securities-fraud suits” are “an essential complement” to enforcing securities laws.
“I expect the court to be troubled by the claim that companies cannot be held accountable for saying that clients come first and then acting otherwise,” Robert Jackson Jr., who served on the S.E.C. from 2018 to 2020 and is now an N.Y.U. law professor, told DealBook.
The justices probably won’t agree with the claim that making a company “mean what it says” will lead to a tsunami of meritless lawsuits,” he added. Regardless, Goldman is right that the stakes are high, because the case is likely to decide whether shareholders can “hold corporate insiders accountable when they tell investors one thing and do another,” Mr. Jackson said.
The Facebook page of Venezuela’s president, Nicolás Maduro, was frozen for “repeated” violations of its misinformation policies, including a post about an unproven remedy for Covid-19, the company said on Sunday, the latest example of the social media giant cracking down on political figures who violate its content policies.
Mr. Maduro’s Facebook page will be frozen for 30 days in a “read-only” mode, the company said, “due to repeated violations of our rules.”
“We removed a video posted to President Nicolas Maduro’s Page for violating our policies against misinformation about Covid-19 that is likely to put people at risk for harm,” a Facebook spokesman said. “We follow guidance from the W.H.O. that says there is currently no medication to cure the virus.” The spokesman was referring to the World Health Organization.
Facebook’s move came after Mr. Maduro posted a video on his page that promoted Carvativir, a drug derived from thyme. He said in January that the medicine was a “miracle,” but did not provide evidence of its effectiveness — and declined to release the name of the “brilliant Venezuelan mind” that created the drug. In the video, Mr. Maduro falsely claimed that Carvativir can be used preventively and therapeutically against the coronavirus.
In the past, Facebook has been criticized for its inaction against political figures who test the boundaries of the company’s content policies by spreading misinformation. Mark Zuckerberg, the founder and chief executive of Facebook, has said he does not want to be the “arbiter of truth” in public discourse.
But in recent months, Facebook has cracked down on certain types of misinformation across the network. The company has banned posts containing false or misleading information regarding the coronavirus, and has shown willingness to take action against some political figures. And in the past, it has removed at least one post by Jair Bolsonaro, the president of Brazil, for false coronavirus remedy claims regarding the malaria drug hydroxychloroquine.
In January, after insurgents stormed the United States Capitol, President Donald J. Trump’s account was banned indefinitely for inciting his supporters to violent action using the social network.
In response to his account restriction, Mr. Maduro has said Facebook is practicing a form of “digital totalitarianism,” according to Reuters, which first reported Mr. Maduro’s suspension.
Mr. Maduro said on Twitter on Sunday that he would continue to broadcast his regular coronavirus briefing from his other digital accounts, including Instagram, YouTube and Twitter. And to circumvent his suspension, he said he would use the Facebook account belonging to his wife, Cilia Flores, to broadcast Covid-19 information. Facebook would not comment on whether it would suspend Ms. Flores’s account.
One of the most closely watched union elections in recent history is wrapping up on Monday, one that could alter the shape of the labor movement and one of America’s largest employers.
Almost 6,000 workers at an Amazon warehouse near Birmingham, Ala., one of the company’s largest, are eligible to vote in this election. After years of fierce resistance from the company, they could form the first union at an Amazon operation in the United States.
The outcome of the vote may not be known for days, but the union drive has already succeeded in roiling the world’s biggest e-commerce company and spotlighting complaints about its labor practices, The New York Times’s Karen Weise and Michael Corkery write. If the Retail, Wholesale and Department Store Union succeeds, it would be a huge victory for the labor movement, whose membership has declined for decades. A victory would also give it a foothold inside one of the country’s largest private employers. The company now has 950,000 workers in the United States, after adding more than 400,000 in the last year alone.
If the union loses, particularly by a large margin, Amazon will have turned the tide on a unionization drive that seemed to have many winds at its back. A loss could force labor organizers to rethink their overall strategy and give Amazon confidence that its approach is working.
A Swiss billionaire who has donated hundreds of millions to environmental causes is a surprise new player in the bidding for Tribune Publishing, the major newspaper chain that until recently seemed destined to end up in the hands of a New York hedge fund.
Hansjörg Wyss (pronounced Hans-yorg Vees), the former chief executive of the medical device manufacturer Synthes, said he had agreed to join with the Maryland hotelier Stewart W. Bainum Jr. in a bid for Tribune, an offer that could upend Alden Global Capital’s plan to take full ownership of the company, Marc Tracy of The New York Times writes.
Mr. Wyss, who has given away some of his fortune to help preserve wildlife habitats in Wyoming, Montana and Maine, said he was motivated to join the Tribune bid by his belief in the need for a robust press. “I have an opportunity to do 500 times more than what I’m doing now,” he said.
Alden, which already owns roughly 32 percent of Tribune Publishing shares, is known for drastically cutting costs at the newspapers it controls through its MediaNews Group subsidiary. Last month, the hedge fund reached an agreement with Tribune, whose papers include The Daily News, The Baltimore Sun and The Chicago Tribune, to buy the rest of the company’s shares.
The sale of Tribune, which the newspaper company hopes to conclude by July, requires regulatory approval and yes votes from company shareholders representing two-thirds of the non-Alden stock.
Thousands of financial technology start-ups are riding an investor frenzy driven by a growing realization that the industry is ripe for a tech makeover, writes Erin Griffith of The New York Times.
When the pandemic forced businesses to speed up their usage of digital tools, including e-commerce and online banking, the demand for what is known as fintech exploded.
Now start-ups with names like Blend, Brex and Dave that provide decidedly unglamorous banking, lending and payment processing offerings are hot tickets. That was punctuated this month when Stripe, a payments company, raised $600 million in a financing that valued it at $95 billion, the highest ever for a private start-up in the United States.
Financial technology companies are also making a splash on the stock market. On Tuesday, Robinhood, a stock trading app popular with young adults, filed for an initial public offering. And Coinbase, a cryptocurrency start-up, is scheduled to go public in the next few weeks in what could be a $100 billion listing.
In total, venture capital investors poured $44.4 billion into financial technology start-ups last year, up from $1.1 billion in 2009, according to PitchBook, which tracks private financing. Many investors are now making bold predictions that these start-ups will upend big banks, established credit card providers — and in some cases, the entire financial system.
The Federal Reserve’s independence from partisan politics is essential and must be protected, Christopher Waller, a member of Fed’s Board of Governors, said in his first speech as a top central bank official.
Mr. Waller, who previously worked in research at the Federal Reserve Bank of St. Louis, was nominated to the Fed by President Donald J. Trump and confirmed to the job late last year.
He used his first extensive public remarks to push back on the idea that the Federal Open Market Committee, which sets interest rates, might keep them steady just to make interest costs on the government’s huge debt pile low in the wake of the economic downturn caused by the pandemic.
“Going forward, the monetary policy choices of the F.O.M.C. will continue to be guided solely by our mandate to promote maximum employment and stable prices,” Mr. Waller said. “Partisan policy preferences or the debt-financing needs of the Treasury will play no role in that decision.”
Mr. Waller noted that the government’s pandemic response spending packages — which totaled more than $5 trillion — have pushed the U.S. debt to a level last seen in World War II, relative to the nation’s output.
At the same time, the Fed has been keeping short-term policy interest rates near zero while buying up huge amounts of government debt to make financing of all kinds cheaper, helping to stoke demand and fuel an economic recovery.
That has contributed to a narrative that “the Federal Reserve will succumb to pressures” to keep rates low and continue buying bonds, Mr. Waller said, policies that would make it easier for the government to borrow and spend.
“It is simply wrong,” he said. “Monetary policy has not and will not be conducted for these purposes.”
Instead, the Fed will focus on fostering maximum employment and price stability — its two Congress-given goals. The Fed is politically independent, and although it has traditionally cooperated with the Treasury Department during times of crisis, elected officials and those with close ties to the presidential administration do not have a say in how it sets monetary policy to achieve its targets.
Mr. Waller’s remarks do not mean interest rates are poised to rise soon, though. The Fed has signaled that it will leave them near rock-bottom until inflation has moved higher and looks poised to stay there, and until the economy has returned to what they see as full employment.
LONDON — The courthouse should have already been closed for the day.
At a hearing that began at 5 p.m. on March 1, lawyers for Greensill Capital desperately argued before a judge in Sydney, Australia, that the firm’s insurers should be ordered to extend policies set to expire at midnight. Greensill Capital needed the insurance to back $4.6 billion it was owed by businesses around the world, and without it 50,000 jobs would be in jeopardy, they said.
The judge said no; the company had waited too long to bring the matter to court. A week later, Greensill Capital — valued at $3.5 billion less than two years ago — filed for bankruptcy in London. An international firm with 16 offices around the world, from Singapore to London to Bogotá, was insolvent.
Greensill’s dazzlingly fast failure is one of the most spectacular collapses of a global finance firm in over a decade. It has entangled SoftBank and Credit Suisse and threatens the business empire of the British steel tycoon, Sanjeev Gupta, who employs 35,000 workers throughout the world. Greensill’s problems extend to the United States, where the governor of West Virginia and his coal mining company have sued Greensill Capital for “a continuous and profitable fraud” over $850 million in loans.
At the center of it is Lex Greensill, an Australian farmer-turned-banker, who in 2011 founded his company in London as a solution to a problem: Companies want to wait as long as possible before paying for their supplies, while the companies making the supplies need their cash as soon as possible.
The Australian newspaper that he did the same for President Barack Obama in the United States.
Eventually, Mr. Cameron would become an adviser to Greensill. Julie Bishop, Australia’s former foreign minister, also joined the company as an adviser.
Greensill Capital’s defining year was 2019, when SoftBank’s Vision Fund, the $100 billion investment vehicle built to make huge bets on disruptive technology companies, invested $1.5 billion. On the day the first of two SoftBank investments was announced, Mr. Greensill told Bloomberg TV that his company would have “multiple opportunities” to work with SoftBank and the other companies in their portfolio.
Mr. Greensill had become a billionaire.
Carillion in 2018 and the Spanish renewable energy company Abengoa, which filed for insolvency in February. Abengoa, an early customer of Greensill, narrowly escaped bankruptcy in 2015 when its huge debt load — billions of euros — was revealed.
Regulators, auditors and ratings agencies have grown concerned about the lack of transparency that can make company balance sheets look stronger than they are. In June, the Securities and Exchange Commission asked Coca-Cola to provide more details about whether it was using supply chain finance after noticing an increase in its account payables of $1.1 billion.
After pleas from accounting companies, the rules might be tightened in the United States. In October, the U.S. Financial Accounting Standards Board said it would start developing stronger disclosure requirements, though two months later, an international accounting board decided not to do the same.
For Greensill Capital, signs of trouble began appearing in 2018, the year before SoftBank made its big investments.
GAM, the Swiss asset manager, rocked the London financial community when it suspended one of its top fund managers, Tim Haywood. He later lost his job for “gross misconduct,” Bloomberg reported, after an internal investigation raised questions about investments he made in companies tied to Mr. Gupta, who was fast-becoming a steel and metals tycoon. The middleman in the deals, Bloomberg said, was Mr. Greensill.
The next year, Mr. Greensill’s debt funds were attracting unusual interest from SoftBank. Even as the Vision Fund was investing in Greensill, a different arm of SoftBank poured hundreds of millions into the Credit Suisse funds, according to people with knowledge of the transactions. That arrangement put SoftBank in a complex position: One division was Greensill’s largest shareholder and another was a lender to Greensill, via the Credit Suisse funds.
BaFin said it had uncovered evidence that assets linked to Mr. Gupta listed on the bank’s balance sheet did not exist.
insolvency proceedings for Greensill Bank.
an 18 million euro state-backed loan in December from Greensill Bank. But two days later, the bank abruptly pulled back the funds, said Jean-Philippe Juin, a member of the Confédération Générale du Travail labor union representing the factory, where 600 people work.
While GFG said it had “strong cash flows” across the group, the workers at the Poitou plant were warned last week that there might not be enough money to pay their salaries for March, Mr. Juin said.
“Mr. Gupta presented himself to us as a savior, with hopeful words and many promises,” Mr. Juin said. “In the end, he turned out to be an empty shell.”
Michael J. de la Merced, Stanley Reed, Matthew Goldstein and Raphael Minder contributed reporting.
He and his partner in Slam Corp, the hedge fund manager Himanshu Gulati, are looking to acquire a business in the sports, media, or health and wellness industry — but not a sports team, he said. (Mr. Rodriguez was also an investor in the telehealth company Hims and Hers, which went public in a SPAC transaction valuing the firm at $1.6 billion last year.)
Rich Kleiman, manager and business adviser to Kevin Durant, the All-Star forward for the Brooklyn Nets, said having an athlete on an advisory board of a SPAC might help get a meeting with a company. Mr. Durant, he said, had been approached about such an arrangement but decided against it because he would have little control over the company’s direction.
While Mr. Durant, who with Mr. Kleiman runs a growing media and investment company, Thirty Five Ventures, has fielded suitors, other athletes are reaching out on their own.
Forest Road, an investment firm, was the entry point for Mr. O’Neal, who was already an investor there when he contacted its chief executive, Zachary Tarica, about getting involved in its growing SPAC business. Mr. O’Neal was an adviser on its first SPAC, which last month announced plans to buy Beachbody, a digital fitness company, at a $2.9 billion valuation. He’s now an adviser on a second Forest SPAC.
Kevin Mayer, a former Walt Disney and TikTok executive who advised the first SPAC and is helping lead the second, described Mr. O’Neal as “a real businessman,” although he cautioned against investing in a particular venture just because a famous person was involved.
“If anyone were to ask me, I say you should definitely not invest in this SPAC because there’s a sports star or any single person,” he said. “They should look at the totality of the investment.”
Securities regulators have taken notice of the celebrity-endorsement trend, which has also attracted nonathletes ranging from Sammy Hagar to Jay-Z. The Securities and Exchange Commission put out an investor alert on March 10 cautioning retail investors not to buy shares of a SPAC simply because some boldface names are attached to it.
HOUSTON–(BUSINESS WIRE)–Stewart Information Services Corporation (NYSE: STC) today provided an update on its current credit facility.
On March 23, 2021, Stewart increased and extended the terms of its current line of credit. Under the terms of the amendment, the maximum amount of the line of credit was increased to $350 million from $200 million, while maintaining the $50 million accordion feature. The length of the agreement was extended five years to March 2026 and added three new banks to the syndicate while retaining all existing banks. Stewart also updated financial covenant provisions, including increasing the unsecured indebtedness basket and restricted payment limitations to align with its current financial position and performance.
“Over the past year we have used our improved capital base to make strategic acquisitions that align with our overall growth strategy. I am grateful for the support our bank syndicate has shown us, as the increased credit line will provide us with even greater capacity and flexibility as we position our company to succeed and grow over the long-term,” said Stewart Chief Executive Officer Fred Eppinger.
Stewart (NYSE-STC) is a global real estate services company, offering products and services through our direct operations, network of Stewart Trusted Providers™ and family of companies. From residential and commercial title insurance and closing and settlement services to specialized offerings for the mortgage industry, we offer the comprehensive service, deep expertise and solutions our customers need for any real estate transaction. At Stewart, we are dedicated to becoming the premier title services company and we are committed to doing so by partnering with our customers to create mutual success. Learn more at stewart.com.
Forward-looking statements. Certain statements in this news release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to future, not past, events and often address our expected future business and financial performance. These statements are based on management’s current expectations or beliefs, and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements included herein due to changes in economic, business, competitive, technological, strategic and/or regulatory factors and other factors affecting the operation of our businesses. More detailed information about these factors may be found in our documents filed with the Securities and Exchange Commission, including in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2020, as updated by our subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. All forward-looking statements included in this news release are expressly qualified in their entirety by such cautionary statements. We expressly disclaim any obligation to update, amend or clarify any forward-looking statements contained in this news release to reflect events or circumstances that may arise after the date hereof, except as may be required by applicable law.