FTX Implosion Prompts Call by DOJ Arm for Independent Probe

Dec 2, 2022

First Read

Hits & Takes
John Lothian & JLN Staff

The economist and New York Times columnist Paul Krugman has a piece titled “Blockchains, What Are They Good For?” It may be the obituary for blockchain, as Krugman outlines all the firms that have abandoned blockchain initiatives, including ASX, Maersk and Amazon Web Services.

We are nearing the year’s end, this being the last month of 2022, so that means we will begin to see year-end lists. This is not one, but it is a list from the New York Times of “11 New Books We Recommend This Week.” If you are looking for a holiday gift, here is a good place to start. Everyone loves books.

Speaking of books, here is a story that will make one-time author Gary Gensler, now SEC chairman, smile broadly. The story is from the New York Times and is titled “Mutual Funds That Consistently Beat the Market? Not One of 2,132.” The subheadline is: “No actively managed stock or bond funds outperformed the market convincingly and regularly over the last five years. Index funds have generally been better.”

Gensler is the author of the book “The Great Mutual Fund Trap: An Investment Recovery Plan.” In the book, Gensler shows that “the average mutual fund consistently underperforms the market, and that strategies for picking above-average funds — everything from past performance to expert rankings — are useless.”

Evidently CNBC personality Jim Cramer did not like the apology tour of Sam Bankman-Fried based on this New York Post story titled “CNBC’s Jim Cramer eviscerates FTX’s Sam Bankman-Fried: ‘Total con artist.’ And believe you me, Jim Cramer knows a con artist when he sees one.

The Bank of England signed up for BMLL’s order book data. We interviewed Dr. Elliot Banks of BMLL about the BMLL Vantage product back in October.

Trading Technologies is looking for an account executive in Chicago for a full-time position.

Vinson & Elkins Partner Tom Leatherbury joined Jill Malandrino on the Nasdaq TradeTalks video podcast series to discuss “how legislation could potentially evolve as it relates to digital and online content.”

Christine Reder is starting a new position as associate principal, model risk project management at OCC.

Qontigo is looking for an associate principal, marketing and communications in London.

Nicolas Nonnenmacher is starting a new position as managing director and head of communication Private Bank at Deutsche Bank. Nonnenmacher was previously head of community development for Deutsche Boerse, among other positions.

Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL


FIA and SIFMA AMG will hold their Asset Management Derivatives Forum from February 8-10, 2023 at The Ritz-Carlton Laguna Niguel in Dana Point, California. The forum will explore the latest developments impacting the use of derivatives by asset managers. Key session topics at the 2023 Forum include: Trends in Asset Management Activity; Global Regulatory Developments; SEC & CFTC Derivatives Initiatives; Clearing Capacity and Trends; Pre-trade & Post-trade Operations Issues. You can check out the full schedule, learn more about the sessions, and register here. Register by December 16 for the best rates.~SR


MWE SHORT: JB Mackenzie – Building a Foundation

In this video from MarketsWiki Education’s World of Opportunity event in Chicago, JB Mackenzie, director of futures and forex at TD Ameritrade, talks about the importance of understanding every detail about the technology influencing your industry of choice and how it can be a useful springboard for a successful career.

Watch the video »


Want to Help Others? Philanthropy Experts Share Their Most Personal Advice
Mark Ellwood – Bloomberg
The world’s greatest philanthropists weren’t always so sure they’d end up changing the world. In fact, they started out like most every other teenager on Earth: unsure, unknown and oblivious to the challenging paths ahead. How did they get from there to here? What did they learn along the way? What lessons would they share? As fortunes are made and lost in the blink of an eye, and buzzwords like “effective altruism” blaze across the headlines, we wanted to know.

***** Give until it hurts, then give some more.~JJL


FTX’s Sam Bankman-Fried Wants You to Believe He’s Just an Idiot Boy Genius; SBF’s interview with Andrew Ross Sorkin didn’t provide much clarity on FTX’s $32 billion collapse.
Matt Novak – Gizmodo
Sam Bankman-Fried, the founder of FTX and former CEO, spoke with New York Times and CNBC host Andrew Ross Sorkin in a highly anticipated interview on Wednesday that had been booked before FTX imploded. And it was a master class in spin. Bankman-Fried, more commonly known as SBF, joined virtually from the Bahamas and spent the interview repeatedly adopting the posture and cadence of a 15-year-old kid caught with a baggie of weed in his sock drawer. But SBF wasn’t caught smoking weed by his parents and he’s not a teenager.

***** I did not like this posture when he was being interviewed. It did not give a positive vibe.~JJL


Sam Bankman-Fried Quietly Stammers, Moves Lips When Asked if He Knew FTX Funds Were Being Illegally Moved to Alameda (Video)
Harper Lambert – The Wrap
Sam Bankman-Fried, the former CEO and founder of failed cryptocurrency exchange FTX, flailed on “Good Morning America” when asked if he knew that funds were illegally transferred to his trading firm Alameda Research. During a two-hour sitdown interview that aired on “Good Morning America” Thursday, George Stephanopoulos asked Bankman-Fried the question multiple times. When called out for dodging the question, he repeatedly licked his lips, muttered under his breath and looked up at the ceiling before saying, “I don’t know.”

****** Your body language will give you away.~JJL


Sam Bankman-Fried ‘Wasn’t Even Trying’ to Manage Risk at FTX, He Says; Founder of crypto exchange discusses his oversight failings in two on-camera appearances in as many days
Richard Vanderford The Wall Street Journal
FTX founder Sam Bankman-Fried said he made no effort to manage risk at the digital-asset exchange that filed for bankruptcy in November, part of a blitz of public statements about major oversight failures at the company. “I wasn’t even trying, like, I wasn’t spending any time or effort trying to manage risk on FTX,” Mr. Bankman-Fried said in an interview with George Stephanopoulos of ABC News that was broadcast Thursday on “Good Morning America.”

****** He said he was great at managing risk, but he was too full of hubris to do so.~JJL


Inside Sam Bankman-Fried’s Bahamian Penthouse After FTX’s Fall; Billions of dollars of customer money is missing, investigators are circling, and the 30-year-old ex-CEO admits his company broke its own rules.
Zeke Faux – Bloomberg
Sam Bankman-Fried’s $30 million Bahamas penthouse looks like a dorm after the students have left for winter break. The dishwasher is full. Towels are piled in the laundry room. Bat streamers from a Halloween party are still hanging from a doorway. Two boxes of Legos sit on the floor of one bedroom. And then there are the shoes-dozens of sneakers and heels piled in the foyer, left behind by employees who fled the island of New Providence last month when his cryptocurrency exchange FTX imploded.

****** “What I’m focusing on is what I can do, right now, to try and make things as right as possible,” Bankman-Fried says. “I can’t do that if I’m just focused on covering my ass.”
****** Will this behavior give him less legal exposure or more? Stay tuned.~JJL


Thursday’s Top Three
Our top story Thursday was the Transcript of Sam Bankman-Fried’s Interview at the DealBook Summit, the notorious discussion with Andrew Ross Sorkin of The New York Times. Our number two story was The Sam Bankman-Fried roadshow rolls on: 10 crazy things the FTX founder has just said, from MarketWatch. Number three was Big traders flock to US equity options with fleeting lifespans, from the Financial Times.


MarketsWiki Stats
27,090 pages; 241,895 edits
MarketsWiki Statistics


Lead Stories

FTX Implosion Prompts Call by DOJ Arm for Independent Probe; Justice Department arm seeks examiner in FTX bankruptcy; Neutral party would investigate alleged fraud, mismanagement
Jeremy Hill – Bloomberg
The US Justice Department’s bankruptcy watchdog is calling for an independent probe into the collapse of FTX Group, saying a neutral party should investigate the cryptocurrency empire’s downfall. The US Trustee, part of the Justice Department that oversees bankruptcy court, has asked FTX’s bankruptcy judge to appoint an examiner in the company’s insolvency proceedings. The examiner would publish a public report on FTX’s implosion and look into allegations of wrongdoing.

Crypto meltdown a boon for bankruptcy lawyers
Andrew Goudsward – Reuters
Turmoil in the cryptocurrency industry has rattled major exchanges and sent the value of digital assets tumbling, but at least one group stands to gain: bankruptcy lawyers. High-profile bankruptcies involving crypto exchange FTX, hedge fund Three Arrows Capital and crypto lenders BlockFi, Celsius Network and Voyager Digital Ltd are generating new opportunities – and big fees – for law firms that counsel troubled companies.

IBM and Australian Stock Market’s Blockchain Projects Failed, a Blow to Private Ledgers
Ian Allison – CoinDesk
The turbulence in the overall cryptocurrency sector following FTX’s collapse this month is well known. What’s gotten less attention, however, is the failure of projects that attempted to use the underlying crypto ledger technology in private, corporate settings, the once-hyped ecosystem known collectively as enterprise blockchain. This week, TradeLens, a blockchain system built by software firm IBM and closely linked to shipping giant Maersk, announced it was shutting down, citing a lack of commercial traction. Some two weeks ago, the Australian Securities Exchange (ASX) said it was scrapping a much-delayed blockchain announced in 2016 that was meant to replace the clearing and settlement system that powers that equities market.

FTX Collapse Draws Senate Scrutiny as Lawmakers Push for Crypto Oversight; CFTC Chairman Rostin Behnam says his agency needs authority to write rules, oversee trading
Dave Michaels – The Wall Street Journal
Lawmakers should pass legislation that would impose strict rules on cryptocurrency exchanges, including rules to limit or prohibit the conflicts of interest that contributed to FTX’s collapse, Commodity Futures Trading Commission Chairman Rostin Behnam said Thursday. Speaking to members of the Senate Agriculture Committee, Mr. Behnam said he still supported a bill that would give his small agency authority to police trading in bitcoin, ether and other digital assets classified as commodities. FTX and its founder Sam Bankman-Fried also lobbied in support of the legislation before the firm’s collapse last month.

Silicon Valley startup beaming electricity wirelessly raises $30 million
Jane Lanhee Lee – Reuters
Reach Power Inc, a Silicon Valley startup that beams electricity wirelessly, said on Friday it had raised $30 million in a funding round that will help it commercialize its products. While big-dish antennas with high-power sources have been used to demonstrate similar technology in the past, Chris Davlantes, Reach founder and CEO said the recent development of high-power antennas that can precisely focus beams of energy, and software improvements for control have made it possible to create effective wireless power transmission systems.

FTX Met CFTC 10 Times. Congress Reflects on if Rules Would Have Prevented Crisis.
Jack Denton – Barron’s
The chairman of the Commodity Futures Trading Commission urged Congress to swiftly adopt comprehensive regulation of cryptocurrency markets as lawmakers begin to scrutinize the collapse of crypto exchange FTX. CFTC Chairman Rostin Behnam said Thursday that FTX’s failure and its knock-on effects “embody in the most regrettable way the perilous state of the digital asset market.” The CFTC oversees some aspects of regulated U.S. crypto markets, chiefly the trade in futures contracts for Bitcoin BTCUSD +0.01% and other tokens.

Crypto exchange AAX’s freeze on withdrawals sparks desperate search for funds; Users are looking for exchange’s senior executives in an effort to recover their investment
Primrose Riordan and Chan Ho-him – Financial Times
Cryptocurrency investors in AAX are searching for senior executives of the exchange after its decision last month to halt withdrawals triggered a backlash among users. Hong Kong-headquartered AAX, which once boasted 2mn users, announced with great fanfare in 2019 that it was the first digital asset exchange to use the London Stock Exchange’s trading technology.

City minister insists Brexit will benefit financial services; Andrew Griffith says reform of EU-era insurance sector regulation will boost UK economy
Daniel Thomas and Ian Smith – Financial Times
The City of London minister has insisted Brexit is bringing benefits for UK financial services, saying a government overhaul of EU-era regulation of the insurance industry would unlock investment in the British economy. Andrew Griffith highlighted how the insurance sector had said the government’s planned changes to the Solvency II regulation could result in the industry investing £100bn in the economy, including in infrastructure. “What we are doing here is unlocking a big opportunity,” he said.

Goldman Sachs Issues Bonus Warning for Traders
Sridhar Natarajan – Bloomberg
Goldman Sachs Group Inc.’s traders, on the way to posting their biggest revenue haul in more than a decade, are in for a surprise as cost pressures force the firm’s leadership to cut their year-end bonuses. Executives in the firm’s global markets division were warned this week that its compensation pool will be slashed by a low double-digit percentage, according to people with knowledge of the discussions. That diverges with industrywide projections and the unit’s own outperformance. Goldman’s annual trading revenue is on track to top $25 billion, with analysts estimating it will eclipse last year’s mark by 15%.

Gary Gensler Says Crypto Investors Should Embrace SEC Regulation; The Securities and Exchange Commission chair describes his philosophy of markets and regulation-and why he loves climbing mountains.
Lydia Beyoud – Bloomberg
Gary Gensler has positioned himself as one of the most consequential policymakers in American finance. He didn’t start off as a regulator. The Baltimore native and self-­described “markets person” spent 18 years at Goldman Sachs Group Inc., where he became a partner at 30 and led divisions including fixed income and currency trading in Asia. Gensler left to serve in senior roles in the US Department of the Treasury under President Bill Clinton, where he helped to pass a law that kept over-the-counter derivatives unregulated.

Sam Bankman-Fried’s hedge fund took big hit to prop up FTX exchange; Alameda Research sustained up to $1bn loss last year when client’s trade on obscure token went sour
Joshua Oliver and Kadhim Shubber – Financial Times
Hedge fund Alameda Research stepped in to shelter FTX from a loss of up to $1bn after a customer trade on the crypto platform blew up last year, highlighting the deep and longstanding links between Sam Bankman-Fried’s digital asset companies. Alameda in early 2021 shouldered FTX’s burden when a client’s leveraged bet on an obscure token tore through buffers designed to shield the exchange from sustaining losses when a trade goes bad, according to people with knowledge of the matter.

Cryptofinance: Bitcoin meets mainstream rejection; Plus, updates on one embarrassed FTX bull
Scott Chipolina – Financial Times
Crypto is living through a golden age for kickings. It’s been a tough year for crypto advocates as their brave new world manifesto has been repeatedly undermined by tumbling coin prices and failures like the TerraUSD stablecoin, hedge fund Three Arrows Capital and lenders Voyager, BlockFi and Celsius.

Cancer drug company accuses US market makers of stock spoofing; Northwest Biotherapeutics claims Citadel Securities, Virtu and others drove down its share price
Joe Miller and Brooke Masters – Financial Times
A cancer-focused biotechnology company has sued eight of the US’s largest market-making traders including Citadel Securities, Susquehanna and Virtu, alleging that they deliberately drove down its share price by placing sell orders they had no intention of executing. The complaint, filed by Northwest Biotherapeutics in a federal court in New York on Thursday, claimed that the traders “deliberately engaged in repeated spoofing that interfered with the natural forces of supply and demand” by placing tens of millions of fake orders between December 2017 and August of this year.

Musk’s experiment in chaos management at Twitter 2.0; Headline-grabbing run at the social media company tests approach of ripping things up to rebuild
Richard Waters – Financial Times
When Elon Musk decided to pick a public fight this week with Apple chief executive Tim Cook, it looked like another questionable decision from the wilful Twitter owner. Alienating a company that is a big advertiser on the network seemed pointlessly self-destructive. In an effort to whip up anti-Apple sentiment, Musk lashed out at what he claimed had been a threat to remove Twitter from the Apple App Store – the latest examples, he claimed, of the company’s unwarranted censorship. He also attacked the fees charged to app developers.

FTX’s Rapid Demise Stokes US Fight Over Who Will Regulate Crypto Exchanges; CFTC chief doubles down on legislation that would tap agency; Critics urge go-slow approach to bill backed by Bankman-Fried
Lydia Beyoud and Allyson Versprille – Bloomberg
If one of the chief US financial watchdogs has his way, the collapse of Sam Bankman-Fried’s FTX will shift into high gear a push to make his agency the main Bitcoin regulator and give it oversight of crypto exchanges. On Thursday, Rostin Behnam, chairman of the Commodity Futures Trading Commission, testified at the first congressional oversight hearing on the spectacular implosion of crypto platform FTX. He told members of the Senate Agriculture committee about the need to move forward with legislation to bring more of the industry onto his agency’s turf.

FTX’s Sam Bankman-Fried on crypto giant’s collapse: ‘A lot of people got hurt. And that’s on me’; The embattled former CEO spoke to ABC News for his first network interview.
Mark Guarino – ABC News
Sam Bankman-Fried, the embattled former CEO of cryptocurrency giant FTX and trading firm Alameda Research, told ABC News he was ultimately responsible for the downfall of both companies, but denied that he knew “that there was any improper use of customer funds.” “I really, deeply wish that I had taken a lot more responsibility for understanding what the details were of what was going on,” Bankman-Fried said. “I should have been on top of this, and I feel really, really bad and regretful that I wasn’t. A lot of people got hurt. And that’s on me.”

India’s digital rupee fails to excite interest, bankers say
Nupur Anand and Swati Bhat – Reuters
A month into India’s pilot project for using an official digital rupee for inter-bank and institutional transactions, stakeholders are seeing no benefits, several bankers said. Seven bankers told Reuters that using the e-rupee of the Reserve Bank of India (RBI) was much the same as internet-based banking that users were already satisfied with.

Mutual Funds That Consistently Beat the Market? Not One of 2,132; No actively managed stock or bond funds outperformed the market convincingly and regularly over the last five years. Index funds have generally been better.
Jeff Sommer – The New York Times
It’s very hard to beat the stock or bond markets with any regularity. Each year, some investors manage to do it, of course, but can they do it consistently? A new study of actively managed mutual funds by S&P Dow Jones Indices asked that question and came up with a startling result. It found that not a single mutual fund – not one – managed to beat its benchmark in either the U.S. stock or bond markets regularly and convincingly over the last five years. These results are even worse than those of 2014 and 2015, when I last examined this subject closely.

Law firm job cuts: Wall Street slump now comes for legal profession; Big pay packages helped win war for talent but the glory days appear to be over
Financial Times
Major American law firms have embraced not just the business of Wall Street but its ethos, for better and worse. On Thursday, Cooley, a large American group with $2bn of annual revenue and a significant presence in dealmaking and in Silicon Valley, said it was firing more than 100 staff including lawyers and support workers. Cuts elsewhere loom. Job cuts do happen in the legal industry. But this downturn comes at a unique moment.

The Smallest US Businesses Are Laying Off the Most Workers
Alexandre Tanzi – Bloomberg
Layoffs and discharges are starting to pile up at America’s smallest firms. Some 305,000 workers lost their jobs in October at businesses with less than 10 employees, according to data released Wednesday by the Bureau of Labor Statistics. That’s up by 137,000 from the previous month. It was the biggest change in any of the firm-size categories broken out by the BLS.

Ukraine Invasion

China’s yuan now accounts for nearly half of Moscow’s currency market as Russian central bank calls for balanced transition to the redback
Brian Evans – Business Insider
The yuan now accounts for nearly half of Moscow’s currency market, and the Russian central bank has called for a balanced transition to China’s currency. The yuan’s share of the currency market is now 40%-45%, up from less than 1% at the start of the year, the Moscow Exchange told Reuters.

Cargill Starts Shipping 2022 Harvest From War-Torn Ukraine; “We are getting new crop out,” CEO MacLennan says in interview; Trader no longer controls two of its Ukraine sunflower plants
Tarso Veloso Ribeiro – Bloomberg
Cargill Inc., the world’s top agricultural commodities trader, has started to export crops from this year’s harvest in war-torn Ukraine, a move that could help further ease global food prices. Shipments are flowing since Russia agreed to renew an agreement to keep export corridors open, Chief Executive Officer David MacLennan said in an interview. The additional shipments are helping push down world food costs, which jumped to a record in March after Russia’s invasion of Ukraine choked off supplies from a key producer.

Military briefing: Ukraine war exposes ‘hard reality’ of west’s weapons capacity; Nations have been slow to sign contracts companies need to boost supply to Kyiv
John Paul Rathbone and Sylvia Pfeifer and Steff Chávez – Financial Times
Nearly 10 months into Russia’s full-scale invasion of Ukraine, the allies that have backed Kyiv’s war effort are increasingly concerned by the struggle to increase ammunition production as the conflict chews through their stockpiles. At stake is not only the west’s ability to continue supplying Ukraine with the weapons it needs but also allies’ capacity to show adversaries such as China that they have an industrial base that can produce sufficient weaponry to mount a credible defence against possible attack.

Exchanges, OTC and Clearing

OCC November 2022 Total Volume Surpasses 922M Contracts, Third Highest Month on Record OCC
OCC, the world’s largest equity derivatives clearing organization, announced today that year-to-date average daily volume through November 2022 was 41.3 million contracts, up 4.7 percent compared to year-to-date average daily volume through November 2021. Total volume was 922.4 million contracts, down 2.8 percent compared to November 2021 while ranking as the third highest month in OCC’s history.

Australian Stock Exchange Fires 200 Contractors Working on Canceled Blockchain Project
Will McCurdy – Decrypt
The Australian Securities Exchange (ASX) is set to axe almost 200 contractors who were working on incorporating blockchain technology into its CHESS clearing and settlement system. The news comes after ASX announced the demise of its seven-year-long project earlier this month, with the company writing down a $170 million pre-tax loss as a result. The ASX CHESS (Clearing House Electronic Subregister System) has been operating for around 25 years and manages the settlement of share transactions and records shareholdings across the roughly $3.19 billion of daily trading volume it handles.

CME Group Reports November 2022 Monthly Market Statistics; CME Group Highest-ever November ADV; Record SOFR options volume and OI
CME Group, the world’s leading derivatives marketplace, today reported its November 2022 market statistics, showing average daily volume (ADV) increased 1% to 23.5 million contracts during the month, representing the company’s highest November volume on record. Market statistics are available in greater detail.

CME Group Teaming With CF Benchmarks for 3 New DeFi Rates and Indices
Helene Braun – CoinDesk
Derivatives marketplace Chicago Mercantile Exchange (CME) and cryptocurrency index provider CF Benchmarks this month will introduce reference rates and real-time indices for aave (AAVE), curve (CRV) and aynthetix (SNX), the two said in Thursday. The new rates will be calculated and published starting Dec. 19 and are currently not tradable futures products. “These three new benchmarks, together with Uniswap launched earlier this year, will capture more than 40% of the total value locked in [decentralize finance] protocols on the Ethereum blockchain,” said CME Group’s head of cryptocurrency products, Giovanni Vicioso.

CME Group and CF Benchmarks to Launch Three New DeFi Reference Rates and Real-Time Indices on December 19
CME Group
CME Group, the world’s leading derivatives marketplace, and CF Benchmarks, the leading provider of cryptocurrency benchmark indices, today announced plans to launch three new DeFi reference rates and real-time indices, which will be calculated and published daily by CF Benchmarks, beginning December 19.

Cash market sales statistics for November
Deutsche Boerse
A trading volume of €115.10 billion was achieved on Deutsche Boerse’s cash markets in November (previous year: €160.64 billion / previous month: €98.16 billion).

Euronext completes the acquisition of the technology businesses from Nexi’s capital markets activities
Euronext Group (“Euronext”) and Nexi S.p.A. (“Nexi”) announce the completion of the purchase and sale of the technology businesses currently powering MTS, Euronext’s leading fixed-income trading platform, and Euronext Securities Milan (formerly called Monte Titoli) by Nexi to Euronext (the “Transaction”), following receipt of approvals from the competent authorities and completion of the union consultation procedure. As a reminder, Euronext and Nexi announced the signing of the Transaction on 14 June 2022.

HKEX Hosts Inaugural Impact Summit, Championing Purpose-Driven Responsible Business
Over 300 representatives from business and not-for-profit and social sectors attend HKEX’s Inaugural Impact Summit; Corporate philanthropy, stakeholder capitalism and collaboration models among key themes of discussion; HKEX announced 28 projects will be funded by the HKEX Charity Partnership Programme and the HKEX Impact Funding Scheme in 2022. Hong Kong Exchanges and Clearing Limited (HKEX) today (Friday) was pleased to host its inaugural HKEX Impact Summit, providing a unique platform for corporate change-makers and social innovators to connect and share their insights on promoting corporate philanthropy, as well as fostering stronger bonds between businesses and society.

Announcement on the Release of Revised Copper Futures Option Contract Specifications of the Shanghai Futures Exchange
After being approved by the board of directors of Shanghai Futures Exchange (SHFE) and reported to China Securities Regulatory Commission, SHFE hereby releases the revised versions of its Copper Futures Option Contract Specifications of the Shanghai Futures Exchange, which will come into effect as of the date of December 12, 2022 (i.e., during continuous trading on the evening of December 9).


A bombproof courtroom and a CEO in the dock: what to expect from the Wirecard trial; A panel of Munich judges will from Thursday begin dissecting one of the biggest frauds in German history
Olaf Storbeck – Financial Times
From Thursday, two and half years after one of Europe’s most spectacular accounting scandals unravelled, a criminal court in Munich will start dissecting the collapse of Wirecard. Three former senior managers of the disgraced German payments company, including chief executive Markus Braun, will be facing charges of fraud, embezzlement, and accounting and market manipulation in a trial that is expected to continue into at least 2024. Wirecard, once worth €24bn and hailed as one of Europe’s most successful tech start-ups, collapsed in June 2020 after disclosing that half of its €2bn in annual revenue and €1.9bn in corporate cash were a sham. The implosion sent shockwaves through Germany’s financial and political establishment.

Binance Exec Says Firm’s ‘Centralized Exchange’ May Not Be Around in 10 Years
Fran Velasquez – CoinDesk
Patrick Hillman, chief strategy officer of Binance, said the company’s centralized exchange may not exist in 10 years because the crypto market it is moving toward decentralized finance (DeFi). For now, the exchange is trying to keep customers’ trust after the collapse of rival exchange FTX by implementing “proof of reserves,” which is a way to show customers that their assets are fully backed. But the process has been slow, Hillman said Thursday on CoinDesk’s “First Mover” program.

Elon Musk Has Reached the Limit of Things He Can Do Without Consequences; The limit’s name is Apple.
Alex Kirshner – Slate Magazine
You are Elon Musk. You possess the not-wholly-unjustified sense that you can beat anyone in business combat. Being the richest guy in the world confers a certain steamrolling feeling that is hard to shake. Some of that vibe is even grounded in reality. For example, you can more or less use securities law as toilet paper while building up shares in Twitter and not lose a wink of sleep over it. You can hire excellent lawyers and deploy them for limitless hours against your critics and enemies. The worst day of your life is still a day in which you have more wealth than anybody else.

Coinbase says Apple blocked its last app release on NFTs in wallet
Coinbase Global Inc said on Thursday customers using Apple Inc’s iOS will not be able to send non-fungible tokens (NFTs) on the cryptocurrency exchange’s wallet anymore. “Apple’s claim is that the gas fees required to send NFTs need to be paid through their In-App Purchase system, so that they can collect 30% of the gas fee,” Coinbase Wallet added in a tweet.

Fintech Firms Oversaw Billions in Fraudulent Covid Aid Loans, Report Says; Congressional report blames the companies for high volume of fraud in the Paycheck Protection Program
Stephanie Armour – The Wall Street Journal
Financial technology companies oversaw a disproportionately high rate of fraudulent loans through the Paycheck Protection Program authorized by Congress to provide small business loans during the Covid-19 pandemic, a new congressional report says. The report by the House Select Committee on the Coronavirus Crisis says “at least tens of billions of dollars” from the federal loan program overseen by financial technology firms were likely given to applicants who were fraudulent or ineligible.

Bank of England taps BMLL for order book data; The central bank intends to use the granular Level 3 Data for research and analysis.
Annabel Smith – The Trade
The Bank of England has today announced that it will use granular order book data provided by BMLL for its research and analysis. The Level 3 Data provided by BMLL offers full transparency of the order book, derived from insert, modify, execute or delete order messages across venues. Clients – including BofE – can use it to examine order behaviour, fill probability, resting time and queue dynamics.

Blockchains, What Are They Good For?
Paul Krugman – The New York Times
A year ago Bitcoin and other cryptocurrencies were selling at record prices, with a combined market value of around $3 trillion; glossy ads featuring celebrities – most infamously Matt Damon’s “Fortune Favors the Brave” – filled the airwaves. Politicians, including, alas, the mayor of New York, raced to align themselves with what seemed to be the coming thing. Skeptics like yours truly were told that we just didn’t get it.


Crowdstrike Holdings warning sparks selloff in cybersecurity stocks
A warning from Crowdstrike Holdings Inc (CRWD.O) that clients were cutting back on spending and delaying purchases due to an economic slowdown slammed cybersecurity stocks on Wednesday, inflicting fresh pain on the battered sector. Crowdstrike’s shares sank nearly 19% in morning trading after the company forecast current-quarter revenue on Tuesday that fell short of analysts’ estimates, while peers Zscaler Inc (ZS.O), SentinelOne Inc (S.N) and Palo Alto Networks Inc (PANW.O) fell between 2% and 11%.

Crypto Scammer in ‘Geniuses’ Hack Gets 18 Months in Prison; Nicholas Truglia sentenced over SIM attack on crypto adviser; Hackers got hold of high-security codes to steal $22 million
Ava Benny-Morrison – Bloomberg
By day Nicholas Truglia led a lonely life from his luxury Manhattan apartment, playing video games and working out. By night he went clubbing and boasted of having more money than anyone else in the room, according to court filings. Now Truglia, 25, is to serve 18 months in prison after a federal judge on Thursday sentenced him for his role in a scheme to hack a blockchain consultant’s phone and stealing $22 million in cryptocurrency. Truglia has already served 12 months of the term. He was facing 51 to 63 months under sentencing guidelines.

How the EU’s new directive aims to strengthen cybersecurity
Spencer Feingold and Filipe Beato – World Economic Forum
The European Union is set to make major upgrades to its bloc-wide cybersecurity framework for the first time in years. In November, the EU Parliament and European Council approved the implementation of a new policy known as the Network and Information Security Directive 2 (NIS 2.0). The framework will replace the original NIS Directive, which was introduced in 2016 as the first EU-wide cybersecurity legislation.

Burnout And Staffing Shortages: Looming Cybersecurity Crises That Need More Attention
Nick Espinosa – Forbes
Both IT and cybersecurity, in my opinion, may be recession-proof. The engine of the world’s economy is technology. Without the infrastructure, servers, communication systems, cloud and more, the planet grinds to a halt. Payments stop flowing, collaboration is hindered, production ceases. Gone are the days of bespoke mass production all performed manually. The robots and automation are taking over and helping to keep production up for a population that is now over 8 billion and growing.

How Cloud Computing Giant Microsoft Is Changing The Cybersecurity Market
Reinhardt Krause – Investor’s Business Daily
Cloud computing giants are changing the cybersecurity market with their own offerings, acquisitions and software marketing deals, but Microsoft (MSFT) poses the biggest threat to incumbents in the sector as it sells multiple products to companies in discounted deals.

Clearing the fog: Identifying blind spots in cybersecurity budgeting
Sikkandar Mazdhan – Security Magazine
With cyberattacks getting more frequent, persistent and precarious, companies cannot exclude them from their IT budget. A single cyberattack can cause severe (and sometimes irreparable) damage to the company. Accordingly, companies must have an elaborate yet relevant and comprehensive cybersecurity budget. But no matter how much an organization spends, cyber executives must be sure their cyber budget adequately accounts for security blind spots.


Binance has frozen withdrawals of a crypto linked to its own token that looks like it’s been hacked, CEO ‘CZ’ says
George Glover – Business Insider
Binance said Friday that it will freeze withdrawals of a cryptocurrency that derives part of its value from a link to the exchange’s own native Binance Coin token. Chief executive Changpeng Zhao said withdrawals of Ankr’s Reward Bearing Staked BNB coin would be paused while Binance probed a potential attack by hackers.

Broker-Dealer INX Digital Bids to Purchase Voyager Assets
Jamie Crawley – CoinDesk
Broker-dealer and crypto trading platform INX Digital has entered the bidding contest for the assets of bankrupt cryptocurrency lender Voyager Digital, announcing a nonbinding letter of intent Wednesday. The firm joins other suitors, including crypto exchange Binance, which CoinDesk reported earlier this month was preparing to bid for the lending platform. CEO Changpeng Zhao subsequently confirmed the story.

Sam Bankman-Fried says he ‘misaccounted’ $8 billion after FTX customers wired money to hedge fund Alameda and the cash was counted twice
Pete Syme – Business Insider
Sam Bankman-Fried says he “misaccounted” $8 billion after some FTX customer funds were mistakenly counted twice, Bloomberg reported. The news outlet interviewed Bankman-Fried at his $30 million Bahamas penthouse after the collapse of FTX.

Crypto Exchange Zipmex Secures Creditor Protection Extension as Takeover Deal Nears
Oliver Knight – CoinDesk
Zipmex, the South Asian crypto exchange that froze withdrawals because of a lack of liquidity earlier this year, has secured creditor protection for all its entities until April next year, according to an update on the company’s website. The extension was granted by Singapore’s High Court alongside a directive that states applications for superpriority will be fixed for hearing on Dec. 21. Superpriority gives some claims a greater weight for repayment.

FCA-Regulated Crypto Custodian Digivault Is Up for Sale Following Eqonex Liquidation: Source
Oliver Knight – CoinDesk
Digivault, a cryptocurrency custodian that was one of the first to secure a license from the U.K. Financial Conduct Authority (FCA), has put itself up for sale after its parent company, Eqonex, was put under judicial management in Singapore last week, according to a person familiar with the matter. Nasdaq-listed holding company Eqonex (EQOS) entered into voluntary liquidation after a takeover deal by Bitfinity, a payments firm owned by crypto exchange Binance, fell through at the final hurdle.

FTX’s Bankman-Fried Said Things Were “Fine” Knowing It Wasn’t True; The founder of the cryptocurrency exchange was seeing alarming signs but told the outside world otherwise.
Luc Olinga – The Street
Sam Bankman-Fried, 30, the founder of cryptocurrency exchange FTX, has spoken out in an interview for the first time since the collapse of his crypto empire. In this interview of more than an hour, intended to give his version of what happened, Bankman-Fried tried to convey the idea that he had no intention of defrauding the customers and investors of his companies FTX and Alameda Research, a hedge fund that also acts as a trading platform.

Compass Mining Launches Bitcoin Miner Protection Plan
Eliza Gkritsi – CoinDesk
Compass Mining, a firm that brokers bitcoin mining machines and hosting services primarily to retail clients, said it is offering its first protection product so that customers can safeguard their bitcoin mining machines. Insurance options for miners are severely limited, in part because traditional insurers have had a hard time coming up with plans for the nascent industry. The new “low cost” plans protect in case of fire, theft, government action and electrical damage, said Will Foxley, director of content at Compass and a CoinDesk contributor.

Sam Bankman-Fried apologized to an FTX customer who said he lost his life savings of $2 million, and accused the former CEO of stealing it
Pete Syme – Business Insider
Sam Bankman-Fried apologized to an FTX user who said he lost $2 million after the crypto exchange went bankrupt. The controversial “Crypto King” was interviewed at the New York Times DealBook Summit on Wednesday evening, and one of his previous customers wrote in to demand answers. Andrew Ross Sorkin – the journalist hosting the summit – shared the email “from a gentleman who said he lost his life savings.” It had the subject line: “Sam Bankman-Fried stole $2 million from me.”

Novogratz Says Bankman-Fried Is ‘Delusional’ Over FTX Collapse; On Wednesday, Bankman-Fried denied he tried to commit fraud; ‘People should go to jail,’ Novogratz said in a BTV interview
Olga Kharif and Sonali Basak – Bloomberg
Galaxy Digital Chief Executive Officer Mike Novogratz characterized Sam Bankman-Fried as “delusional” when the former FTX exchange head recently sought to explain the collapse of his cryptocurrency empire. “It’s kind of surprising that his lawyers are letting him speak,” Novogratz said on Bloomberg Television. “Having watched two interviews, the word delusional kept coming to mind.” FTX and more than 100 affiliated companies filed for bankruptcy in November after failing to meet redemptions from customers that had lost faith in the exchange. The reason behind a $8 billion shortfall is still unclear.

If Sam Bankman-Fried Isn’t Lying, Crypto Is in Trouble
Michael P. Regan – Bloomberg
In Sam Bankman-Fried’s telling, it wasn’t fraud, theft or other assorted skullduggery that caused the FTX crypto conglomerate to implode. It was just incompetence. That’s the outline of the defense he tried to lay out this week in interviews at a New York Times event, on Good Morning America and in New York magazine. Mind you, he hasn’t actually been charged with anything, so he seems to be trying to front-run any potential criminal prosecution and launder his once-heroic reputation.

Crown Ribbon is Shaking Up the $300B Horse Racing Industry With NFTs
Decrypt Staff
The horse racing industry has ballooned to an astonishing $300 billion globally-and now NFT-backed horse ownership platform Crown Ribbon is bringing that value onto the blockchain. Crown Ribbon enables users to buy and own NFT shares of a racehorse syndicate that maps to a specific horse, or to a collection of horses. The introduction of blockchain technology will increase efficiencies in the “notoriously slow and monotonous” equine industry, according to a statement from Crown Ribbon accompanying its launch announcement.


Shale pioneer Harold Hamm attacks US-Venezuela oil deal as ‘desperation’; Founder of Continental Resources says Biden administration wants to put American industry ‘out of business’
Derek Brower – Financial Times
Shale pioneer Harold Hamm has hit out at the US’s oil deal with Venezuela, saying it marked a new sign of “desperation” from the administration of Joe Biden as it tries to beat back fuel inflation. The US last week said it would allow supermajor Chevron to restart some operations in Venezuela, more than three years after Donald Trump’s administration imposed sanctions on the country’s oil sector. The move could help free up more global crude supplies amid an energy crunch triggered by Russia’s invasion of Ukraine.

Florida to pull $2bn from BlackRock in spreading ESG backlash; Republican chief financial officer says US state will take ‘business elsewhere’ in move that surprises asset manager
Patrick Temple-West and Brooke Masters – Financial Times
Florida will replace BlackRock as the manager of $2bn in state Treasury funds, part of a spreading Republican backlash against sustainable investing. The move comes after Florida governor Ron DeSantis, a potential Republican US presidential candidate in 2024, led a resolution to stop the state’s pension funds from considering environmental, social and governance principles to guide investment.

New York’s Financial Services Regulator Moves to Bill Crypto Firms for Supervision; Would align with existing policies for non-crypto firms; Revenue could help agency add to its virtual currency team
Max Reyes – Bloomberg
New York state’s financial regulator has proposed rules that would allow it to charge cryptocurrency companies it oversees for the costs related to supervising them. The New York State Department of Financial Services said Thursday that it was seeking public comment on proposed changes that would allow for the charges and help the agency “continue adding top talent to its virtual currency regulatory team.”

Elon Musk Warned by EU Official to Keep Putin Propaganda Off Twitter; Twitter boss must keep disinformation in check, Jourova says; Failure would be to ‘actively’ support Russia, she warns
Stephanie Bodoni – Bloomberg
Elon Musk risks giving a helping hand to Russian President Vladimir Putin if Twitter Inc.’s recent staff cuts prevent the platform from rooting out propaganda about the war in Ukraine, one of the European Union’s top officials warned. Failing to take on fake or misleading content online could “lead to the very quick abuse” of Twitter, European Commission Vice President Vera Jourova, who’s spearheading efforts to tackle online disinformation, said in an interview with Bloomberg. This includes making sure the platform doesn’t become a hub for Russian propaganda.


Korean Prosecutors Seek Arrest of Terra Co-Founder Over $105M LUNA Sale
Stephen Graves – Decrypt
Terraform Labs co-founder Daniel Shin appeared in court Friday, at a hearing to decide whether he should be arrested for allegedly extracting illegal profits prior to the collapse of the Terra ecosystem. Per the Korea Times, Shin stands accused of selling a $105 million hoard of Terra’s LUNA tokens at the cryptocurrency’s peak price; the tokens had been pre-issued without regular investors being made aware of the fact. The court will decide whether to approve Shin’s arrest either Friday or Saturday, with prosecutors arguing that Terra’s LUNA cryptocurrency constitutes a financial investment security.

NYDFS Proposes Regulation Allowing It to Charge Crypto Companies in New York for Supervision Costs
Cheyenne Ligon – CoinDesk
The New York Department of Financial Services (NYDFS) published a proposed regulation on Thursday that lays out how the state agency would assess New York-regulated crypto companies for costs associated with their supervision. The proposed regulation comes eight months after the New York State Senate first authorized NYDFS to charge the crypto companies it oversees, bringing its oversight mandate for crypto in line with how the regulator oversees more traditional banks and financial services firms.

Commissioner Pham to Speak at the Harvard Law School Program on International Financial Systems 25th Annual Japan-U.S. Symposium
Commissioner Caroline D. Pham will speak on a panel titled “The Future of Crypto Assets – Regulation, Cross-Border Issues and Role of Traditional Financial Institutions” at the HLS-PIFS and International House of Japan 25th Annual Japan-U.S. Symposium on Building the Financial System of the 21st Century.

U.S. CFTC head urges Congress to act fast on crypto regulation
Hannah Lang and Chris Prentice – Reuters
A leading U.S. financial regulator on Thursday urged lawmakers to act quickly to install a regulatory framework for digital assets following the spectacular collapse of cryptocurrency exchange FTX. In the first of several congressional hearings to examine FTX’s failure, members of the Senate Agriculture Committee pressed Rostin Behnam, chairman of the Commodity Futures Trading Commission, over whether the turmoil could have been avoided with better oversight.

Statement of Commissioner Kristin N. Johnson Regarding CFTC Consent Order of $2.8 Million in Restitution for Virtual Currency Fraud; A Call to Action: Let’s Use Our Existing Authority to Stop Crypto-Fraud
Over the last several months, and with increasing escalation in recent weeks, liquidity crises and a lack of responsible governance at cryptocurrency exchanges and other prominent crypto-intermediaries have roiled the digital asset ecosystem. A series of bankruptcy filings reveals a grim portrait of some of the most egregious corporate governance and risk management failures in recent financial markets history.

Federal Court Orders Rhode Island Man to Pay More than $2.8 Million in Restitution for Virtual Currency Fraud
The Commodity Futures Trading Commission today announced the U. S. District Court for the Southern District of New York entered a consent order on November 29 for a permanent injunction, restitution, and equitable relief against Jeremy Spence of Bristol, Rhode Island. Spence, at times, conducted business as Coin Signals.

CFTC Staff Extends Brexit-Related No-Action Positions
The Commodity Futures Trading Commission’s Division of Market Oversight (DMO) and the Market Participants Division (MPD) announced today they are extending temporary no-action positions in connection with the withdrawal of the United Kingdom (UK) from the European Union (EU), known as Brexit.

Watchdog warns firms over CFD mis-selling risks; Market turmoil increases dangers in highly-leveraged products
Rafe Uddin – Financial Times
The UK financial watchdog has warned it will crack down on companies offering a highly-leveraged investment product to retail customers if they breach marketing and selling rules. In a letter on Thursday, the Financial Conduct Authority raised concerns over a “significant minority” of contract for difference (CFD) brokers undertaking pressure selling, charging inappropriate fees and refusing to process withdrawals.

“The Beatles and the Treasury Market”: Remarks Before the U.S. Treasury Market Conference
Thank you. It’s good to be here for the eighth annual U.S. Treasury Market Conference. Thank you to the conference organizers and my colleagues across the Inter-Agency Working Group on Treasury Market Surveillance (IAWG) for putting it together and issuing the latest IAWG report. As is customary, I’d like to note that I’m not speaking on behalf of my fellow Commissioners or the SEC staff. In March 1998, when I was an Assistant Secretary in the Department of the Treasury, I gave my first speech in public service. What was it about? The Treasury market.

Fort Worth Regional Director David L. Peavler to Leave SEC; Eric R. Werner and Marshall Gandy named acting co-heads of Fort Worth Office
The Securities and Exchange Commission today announced that David L. Peavler, the Director of the Fort Worth Regional Office since 2019, is leaving the agency after more than 19 years of service. Eric R. Werner and Marshall Gandy will serve as the office’s Co-Acting Regional Directors when Mr. Peavler departs.

SEC Investor Advisory Committee to Discuss Investor Account Statements, Corporate Tax Transparency, and Single-Stock ETFs on Dec 8
The Securities and Exchange Commission’s Investor Advisory Committee will hold a virtual public meeting on December 8 at 10 a.m. ET. The meeting will be webcast on the SEC website.

SEC Charges Additional Parties in Fraudulent Office Space Investment Scheme
The Securities and Exchange Commission today filed charges against James Robinson and David Kennedy in connection with an investment scheme that defrauded investors out of more than $57 million. The SEC previously charged the principal of the scheme and associated entities with securities fraud.

SEC Charges New Defendant and Adds Whistleblower Impeding and Retaliation Claims in $149 Million Offering Fraud Case
On November 22, the Securities and Exchange Commission filed an amended complaint against Adam Rogas, the former CEO of Las-Vegas-based NS8, Inc., who was previously charged with defrauding investors by falsely claiming millions of dollars in revenue for NS8. The amended complaint adds charges against Rogas for allegedly impeding and retaliating against an NS8 employee who blew the whistle on Rogas’ fraudulent conduct. The amended complaint also charges Paul Korol, an NS8 co-founder and former Chief Customer Officer, with assisting in and profiting from Rogas’ fraud.

Interim stop orders placed on three funds from Australian Fiduciaries Limited
ASIC has issued interim stop orders preventing Australian Fiduciaries Limited (AFL) from offering or distributing three funds to retail investors because of deficiencies in their target market determinations (TMDs). These funds are: Global SRI Ethical Alpha Fund (ARSN 629 361 315); Global SRI All Seasons Fund (ARSN 629 361 600); Global SRI Multi-Strategy Fund (ARSN 603 285 801) (together, the funds).

Interim stop order placed on offers from APS Savings Limited
ASIC has placed an interim stop order on offers from APS Savings Limited (APS Savings) in response to deficiencies in the issuers’ target market determination (TMD).
The order stopped APS Savings from issuing interests in, giving a prospectus for, or providing financial advice to retail clients under the existing TMD. The order is valid for 21 days unless revoked earlier.

Investing and Trading

LSEG CEO says weak links in markets exposed by recent volatility
Peter Thal Larsen – Reuters
London Stock Exchange Group Plc Chief Executive David Schwimmer said on Thursday that large spikes in volume associated with algorithmic trading have worsened recent market volatility, exposing weak links in the global market infrastructure. “What that means is when there’s an event … some kind of crisis like the onset of COVID in the spring of 2020, you see massive moves in the markets very quickly, and a lot of the plumbing out there cannot handle that,” he said in an interview at the Reuters NEXT conference. At the onset of the COVID pandemic in March 2020, some banks asked LSEG to close its markets for a day or two so they could catch up with post-trade settlement and processing, he said.

Ye Will No Longer Acquire Social Site Parler, Company Says
Julia Love – Bloomberg
Ye, formerly known as Kanye West, will no longer be acquiring the social media site Parler, the company said in a statement. “This decision was made in the interest of both parties in mid-November,” the company said in a statement. “Parler will continue to pursue future opportunities for growth and the evolution of the platform for our vibrant community.”

U.S. farm incomes seen soaring to new highs on global food, feed demand
P.J. Huffstutter – Reuters
Soaring grain and livestock prices are expected to push U.S. farm incomes to a historic high this year, as producers benefit from strong global grain and oilseed demand amid tight supplies, the U.S. Department of Agriculture reported on Thursday. Net farm income – which is a broad measure of profits in the agricultural economy, according to the agency – is forecast to increase to $160.5 billion in 2022 from $141.0 billion a year earlier, an increase of $19.5 billion.

David Bonderman’s Family Office Is Opening Up to World’s Rich; Wildcat Capital is looking to raise a fund of about $500 million with contributions from a small group of wealthy individuals and other family offices.
Benjamin Stupples and Heather Perlberg – Bloomberg
The family office of private equity legend David Bonderman is looking to raise money from other members of the world’s ultra-wealthy as it seeks to expand. Wildcat Capital Management is starting to build a fund of roughly $500 million with contributions from a small group of wealthy individuals and family offices, according to a person with knowledge of the plan. Wildcat will adopt the same strategy for the fund as it has for managing the fortune of the Bonderman family, which is expected to provide a large portion of the capital, the person said, asking not to be identified as the details are private.

US Savings Rate Falls to 17-Year Low Amid Relentless Inflation
Molly Smith – Bloomberg
Americans are saving at the lowest rate since 2005, underscoring how inflation and higher borrowing costs are thinning out financial cushions. The personal savings rate as a share of disposable income dropped to 2.3% in October, according to data from the Commerce Department released Thursday. The report also showed that inflation-adjusted spending remained strong despite elevated, yet moderating price pressures.

Cash-Hungry Companies Get Creative Raising Capital; ‘Bespoke’ financing such as structured private investments help companies woo wary investors
Corrie Driebusch and Laura Cooper – The Wall Street Journal
The end of the era of easy money is forcing companies that need cash to get creative. Dozens of companies have recently raised money through so-called structured private funding rounds, and bankers and lawyers say there are many more in the works. A number of companies with depressed stocks and limited access to traditional financing are doing so, often adding sweeteners like extra dividends or preferred-note status to lessen the risk and make the deals more attractive for investors.

When It Comes to Investments, the VIP Section Isn’t Always Better; Real estate and credit investments accessible only to certain investors have performed well, but also have some important limitations
Telis Demos – The Wall Street Journal
Congratulations. You’ve worked hard and made some money, and now you have access to a new class of investments. But when the velvet rope opens up, it can also close behind you. On Thursday, investors in the $69 billion nontraded Blackstone Real Estate Income Trust, known as BREIT, were informed that their requests to take cash out of it had been limited. That highlighted the double-edged sword many relatively well-heeled investors are facing as they try to diversify their portfolios in a complex, rising-rate environment.

Blackstone Limits Redemptions From Real Estate Vehicle, Stock Sinks; Blackstone Real Estate Income Trust Inc. posts letter saying withdrawals requested in October exceeded limits
Miriam Gottfried – The Wall Street Journal
Blackstone Inc. BX -7.09%decrease; red down pointing triangle shares took a big hit after the investing giant’s real-estate fund aimed at wealthy individuals said it would limit redemptions. Blackstone Real Estate Income Trust Inc., more commonly known as BREIT, said Thursday in a letter posted to its website that the amount of withdrawals requested in October exceeded its monthly limit of 2% of its net-asset value and its quarterly threshold of 5%.

Deluge of Fraud Claims Adds to Concerns About Credit Scores; False claims of identity theft raise questions about how reliable the credit-reporting system really is
AnnaMaria Andriotis – The Wall Street Journal
The consumer credit-scoring system has long been opaque and confusing. One change intended to help people navigate the system has created a whole new set of problems. In recent years, a government website has made it easier for people to file claims of identity theft so they can remove fraudulent accounts from their credit reports. Those reports are the basis of credit scores sold by Equifax Inc., EFX 2.47%increase; green up pointing triangle Experian PLC EXPGY 2.68%increase; green up pointing triangle and TransUnion TRU -0.97%decrease; red down pointing triangle to banks as they make lending decisions.

Hollywood insider and Clinton ally could lose $300 million in FTX debacle: insiders
Lydia Moynihan – NY Post
As creditors in the FTX bankruptcy case look to claw back cash from the fallen crypto giant, an uncomfortable spotlight is focusing on a well-connected Hollywood insider with ties to the Clintons, the Kardashians and Elon Musk. Michael Kives – a former Tinseltown agent who has served as an aide to Bill and Hillary Clinton, advised Warren Buffett and helped with Kendall Jenner’s 818 Spirits – runs a venture firm called K5 Global that got $300 million earlier this year from FTX’s now-defunct investment arm, Alameda Research, according to reports.

Environmental, Social and Corporate Governance

Most in Finance Support ESG, Despite Republican Attacks; The strategy is being heavily criticized, but the consensus in Bloomberg survey is that it isn’t going away anytime soon.
Saijel Kishan and Natasha White – Bloomberg
ESG is being tested like never before. Republicans are pressing to get rid of it, regulators are cracking down on the misselling of ESG-labeled funds and bonds, and sustainable investing purists want to eliminate the acronym altogether. It’s also become less of a talking point for corporate executives. Still, love it or hate it, most in finance have decided that ESG is here to stay. A survey of 550 Bloomberg Terminal users found that more than 60% expect ESG to be a standard part of, or increasingly critical to, running a business. By comparison, roughly a third of the respondents think the strategy that takes into account environmental, social and governance issues – and impacts roughly $40 trillion of assets – is just a “fad.”

ESG Book Launches Global Ranking Of The Top 100 ESG Companies
Mondo Visione
ESG Book’s new online ranking identifies the 100 leading corporate performers worldwide on environmental, social, and governance issues. Public corporations with a market value above $10 billion are ranked on their ESG Score, with each firm’s climate performance also profiled in the ranking. Dutch semiconductor firm ASML tops the leaderboard, followed by cyber security specialist Check Point Software Technologies, and luxury goods company Hermès. ESG Book’s data-driven platform provides access to almost 100,000 corporate sustainability disclosures, making ESG information freely available, comparable, and transparent. ESG Book, a global leader in sustainability data and technology, today launched the Top 100 ESG Companies leaderboard, a new global ranking of the 100 leading corporate performers on environmental, social, and governance issues.

Countries Around the World Affirmed LGTBQ Rights This Week
Janet Paskin – Bloomberg
In most places around the world, life for LGBTQ people has gotten significantly better over the last decade. But as developments this week in India, the US, Singapore and Japan demonstrate, there’s much progress to be made still. And even the wins aren’t always so clear. Singapore, for example, officially decriminalized sex between men – a colonial-era law that was rarely if ever enforced. But at the same time, it amended the constitution to give parliament the authority to define marriage. As of now, that rules out same-sex couples, putting Singapore in the awkward position of affirming sex but denying marriage in the name of conservative values.

ESG Shouldn’t Convince Anyone Anymore. Look at the World Cup; Investors only have to look at the World Cup in Qatar to see how the concept of ESG breaks down.
Merryn Somerset Webb – Bloomberg
ESG is the devil. That, at least, is what Elon Musk thinks (or what he tweets he thinks). That view might be a little extreme, but he’s right that there is something wrong with both the concept (investing with a view to environmental, social and governance factors) and its implementation. Fund managers have long said that if you follow the ESG rules, you can’t help but win: You’ll make money and you’ll feel good too. It’s looking like they’re wrong.

Global Central Banks Brace for ‘Greenflation’ and Climate Change
Siegfrid Alegado and Anup Roy – Bloomberg
Climate change and the energy transition are becoming top of mind for central bank policymakers as they grapple with volatile energy prices and the effects of more frequent extreme weather events. The shift to green energy may be “inflationary and even slightly stagflationary,” Bank of France Governor Francois Villeroy de Galhau said Friday, speaking virtually on a panel at a central bank conference in Bangkok. “I stress might, we don’t know yet.”


Chicago Fed Appoints Ex-Obama Adviser Goolsbee as New President; Goolsbee formerly chaired Obama’s Council of Economic Advisers; Current Chicago Fed President Charles Evans retires in January
Matthew Boesler – Bloomberg
The Federal Reserve Bank of Chicago appointed Austan Goolsbee, an economist and former adviser to President Barack Obama, as its new president to replace Charles Evans, who retires in January. Goolsbee, 53, who is currently a professor of economics at the University of Chicago Booth School of Business, will start on Jan. 9, the Chicago Fed said in an emailed statement Thursday. Evans will retire after 15 years helming the Chicago Fed and has through most of his tenure been among the US central bank’s most dovish policymakers.

Wall Street’s Annual Stress Tests Face Overhaul Under Fed’s Barr; Michael Barr says review of capital requirements ongoing; Changes to exams would aim to address contagion risks
Benjamin Bain – Bloomberg
The annual exams that test Wall Street banks’ ability to withstand market turmoil are poised for an overhaul. The Federal Reserve is considering changes to take into account new forms of financial stress as part of a broad look at lenders’ capital requirements, the central bank’s head of supervision said Thursday. The exams affect how much banks can return to investors through dividends and share buybacks.

Jefferies Warns Employees That Bonus Season Will Be ‘Difficult’
Daniel Taub and Jennifer Surane – Bloomberg
Jefferies Financial Group Inc. told staffers that the upcoming bonus season will be a “difficult” one following a volatile year across Wall Street. “As always, we will do the right thing for the long-term success of everyone at Jefferies,” Chief Executive Officer Rich Handler and President Brian Friedman said in a memo to employees Thursday. “Let’s just spell it out here: ‘This is going to be a more difficult compensation season at Jefferies, just like it will be for every firm in our industry.’ We will work through the compensation process fairly, expeditiously and as transparently as possible.”

Ex Brevan Howard Money Manager to Start $400 Million Hedge Fund; Deem Global Macro Fund is expected to start with $400 million; Asfandyar Nadeem had worked at Brevan Howard for five years
Nishant Kumar and Miles Weiss – Bloomberg
Asfandyar Nadeem, a former money manager at Brevan Howard Asset Management, is preparing to start his own macro hedge fund as the trading strategy racks up gains in volatile markets. His London-based firm plans to launch Deem Global Macro Fund in the first quarter, according to people with knowledge of the matter. The fund is expected to start with about $400 million in initial capital, the people said, asking not to be identified because the details are private.

FTSE 250 celebrates 30th anniversary
FTSE Russell
FTSE Russell is celebrating the 30th anniversary of one of its flagship UK indexes, the FTSE 250. Launched in 1992, following a consultation with the FTSE Advisory Committee, the FTSE 250 marked the start of a new era for market participants who wanted to benchmark their investments to mid-cap UK equities.

Credit Suisse’s fund outflows may spark M&A talk – JPMorgan
Continued client outflows at Credit Suisse could spark speculation of a takeover of the embattled Swiss bank and may lead to the partial sale of its domestic unit, analysts at JPMorgan said on Thursday. Credit Suisse has reported steep outflows as wealthy clients move assets elsewhere, while the bank battles to recover from a string of scandals by focusing more on its flagship wealth management franchise and pruning back investment banking.

Credit Suisse Surges as Much as 10% After Halt to Mass Outflows; Chairman says Swiss lender is already seeing partial inflows; Says top investors not pleased with share price declines
Marion Halftermeyer and Myriam Balezou – Bloomberg
Credit Suisse Group AG shares surged as much as 10% on Friday after Chairman Axel Lehmann said the bank’s liquidity was improving and the huge outflows of client assets that had spooked markets were coming to an end. Withdrawals at the Swiss lender, which surged to about 84 billion francs ($90 billion) earlier this quarter after rumors about the bank’s stability, have “basically stopped,” Lehmann said in a Bloomberg Television interview with Francine Lacqua. The bulk of the bleeding occurred in October, and the bank has since seen some assets come back in Switzerland.

Swiss Private Bankers Turn Fire on Each Other to Overturn UK Ban; Trio of bankers facing lifetime bans over “corrupt” practices; UK watchdog fined Julius Baer for systematic failings
Jonathan Browning – Bloomberg
A trio of bankers at Julius Baer Group Ltd.’s UK unit tried to blame each other as they sought to reverse a proposed ban for enabling “corrupt” finders-fees on foreign exchange transactions. The private bankers are facing a lifetime prohibition from working in UK finance from the Financial Conduct Authority, which said they acted recklessly by funneling fees to officials at Yukos companies. The three — a relationship manager and two of her bosses — have all rejected the FCA’s conclusions, but cast doubt on the levels of awareness of each other.

Blackstone limits withdrawals at $125bn property fund as investors rush to exit; Private equity group sells stakes in Las Vegas casinos
Antoine Gara and Sujeet Indap – Financial Times
Blackstone has limited withdrawals from its $125bn real estate investment fund following a surge in redemption requests, as investors clamour to get their hands on cash and concerns grow about the long-term health of the commercial property market. The private equity group approved only 43 per cent of redemption requests in its Blackstone Real Estate Income Trust fund in November, according to a notice it sent to investors on Thursday. Shares in Blackstone fell as much as 8 per cent.

Wellness Exchange

Chinese farmers let cabbages rot as COVID curbs disrupt sales
China’s vegetable growers are ploughing their produce back into their fields or leaving it to rot, as widespread restrictions to curb the spread of COVID cut off distribution channels and close markets. Thousands of tonnes of vegetables are unsold in central Henan province, one of the country’s top producing regions, according to local media reports, charities and farmers, while farmers in northern Shandong province, another top growing region, are also unable to reach markets.

China Could Face a ‘Tsunami’ of Covid Deaths. What the Options Are if Lockdowns Are Lifted.
Tanner Brown – Barron’s
China this week continued to signal that it is tentatively moving toward loosening its rigid Covid restrictions, as the country’s worst-ever virus wave plateaued and reported deaths remain rare. The signs of easing come just days after protests erupted across the country opposing lengthy lockdowns and frequent testing requirements. Bloomberg reported that some low-risk patients in Beijing are allowed to isolate at home rather than quarantine camps.

Long Covid Doesn’t Explain This Many Quitters in the UK; Ailing health and shoddy care are driving many older people out of the workforce, threatening Britain’s growth prospects.
Therese Raphael – Bloomberg
Even as the country slides into a recession, Britain has too many job vacancies and too few workers willing or able to fill them. Unemployment is at record lows, but at least half a million more Britons are out of the workforce and not looking for work than before Covid-19, putting the UK on track to be the only advanced country next year with employment below pre-pandemic levels. The questions puzzling economists and policy makers are why so many working-age people have dropped out – and how to reverse the trend. The stakes are high. Too much economic inactivity hampers the post-pandemic recovery, increases inflationary pressures (as Bank of England Chief Economist Huw Pill noted Wednesday) and threatens Britain’s future growth prospects at a time when the UK is already grappling with low growth and productivity.

US warns Beijing it cannot control Covid-19 without western jabs; Joe Biden’s coronavirus tsar says Chinese vaccines are ‘not as good’ as alternatives
Sarah Neville and Jamie Smyth – Financial Times
Beijing will be unable to control the spread of Covid-19 unless it imports foreign-made vaccines that are more effective than Chinese-made jabs, Joe Biden’s coronavirus tsar has warned. Ashish Jha, who runs the US coronavirus response, said in an interview at a conference organised by the FT and the Commonwealth Fund that all the empirical evidence suggests Chinese-made Covid vaccines are “not as good” as mRNA shots made by Moderna, BioNTech and Pfizer.


Chinese Developers Plan Bonds Protected by Derivatives in Crunch; Such deals first emerged in May following regulatory support; Investors can buy derivatives to protect against bond default
Bloomberg News
Two Chinese private developers are planning bond deals that come with derivative protection, in the latest sign of regulatory support to help ease select builders’ liquidity crunch. Country Garden Holdings Co. and Midea Real Estate Holding Ltd. are planning new debt deals with separate issuance of derivatives that allow investors to buy partial or full protection against default. That may encourage investors to put their money in those notes due to the reduced risk that they won’t get their money back in an emergency.

Spain Weighs Indra Options as Activist Calls for Break-up, Sources Say
Rodrigo Orihuela and Alonso Soto – Bloomberg
Spain and the board of Indra Sistemas SA are mulling options for the company after an activist shareholder called for it to be broken up, people familiar with the matter said. Board members have discussed possibilities for Indra’s future since activist hedge fund Amber Capital LP said Nov. 22 that the state-controlled company should be split in two by separating its defense activities from information technology, said the people, asking not to be named discussing confidential information. Still, the board hasn’t had any formal deliberations on a break-up, they said.

Shell Allowed to Appeal $1.8 Billion Nigerian Court Order; Dispute has stopped Shell from completing asset sales; Shell appealing order to compensate community over oil spill
William Clowes – Bloomberg
Nigeria’s Supreme Court said a Shell Plc subsidiary can appeal a judgment directing the company to pay compensation over alleged pollution in a legal dispute that is holding up the oil giant’s efforts to sell assets in the West African country. On Friday, the highest court in Africa’s largest economy allowed an application made by Shell’s local unit and its joint venture partner, the state-owned Nigerian National Petroleum Co. They are challenging a November 2020 ruling by a federal court ordering the Shell subsidiary to pay 800 billion naira ($1.8 billion) to residents of the crude-rich Niger Delta over an alleged oil spill.

OPEC+ Oil Export Cut Blunted by Surge in Russian Shipments; Cartel slashed output by about 1 million barrels a day in Nov.; Russia has boosted output ahead of European sanctions
Grant Smith – Bloomberg
OPEC’s efforts to deliver a substantial oil-output cut are being blunted the group’s allies. The Organization of Petroleum Exporting Countries slashed output by about 1 million barrels a day, according to a Bloomberg survey, roughly fulfilling their half of a cutback co-ordinated with the wider OPEC+ coalition. Group leader Saudi Arabia took considerable political heat from the US when it first announced the reduction, which has proven necessary to steady oil markets against deteriorating demand in China.

Bahrain’s Investcorp buys US private credit manager for $200mn; Middle Eastern investors flush with cash push into sector in search for yield
Antoine Gara and Eric Platt – Financial Times
Investcorp is buying US private credit manager Marble Point for about $200mn as the Bahrain-based investment manager significantly boosts its presence in US credit markets at a time of higher interest rates. The acquisition underscores the push into private credit markets by Middle Eastern investors flush with cash thanks to high oil and gas prices at a time when sharply rising rates are boosting yields.


Boone Pickens Texas Ranch Sells After Price Cut to $170 Million; Energy investor Bill Kent headed a group that bought the larger portion of the 64,000-acre spread, which had been on the market for five years.
Eric O’Keefe – Bloomberg
After five years and two price cuts, the sprawling Texas ranch of the late oil billionaire T. Boone Pickens has found a buyer. West Texas oil-and-gas investor Bill Kent, whose Kent Cos. operates a chain of convenience stores, headed a group that purchased the larger and improved western portion of the 64,000-acre (25,900-hectare) ranch in a deal that was completed Wednesday. Cattle rancher Travis Chester bought the smaller eastern section in September.

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Music financing boom reverberates to markets

Music financing boom reverberates to markets

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