Generation Z Is Getting a Harsh Lesson in Stock Risk

Jun 15, 2022

First Read

Hits & Takes
John Lothian & JLN Staff

We have more remembrances of Hal Hansen today from a couple of former CIS colleagues, a former NFA president, the current FIA president and CEO, and the head of BOX’s regulatory arm that owns BOX Options. These are: former CIS staffers Tony Drake and Kyle Unterseher, Dan Roth, Walt Lukken and Tony McCormick. The NFA has a memoriam on their website for Hansen as well with quotes from Tom Sexton and Maureen Downs

The SEC is the focus of a couple of YouTube videos this morning. The first is from the SEC, with Gary Gensler reading mean tweets as if he were on Jimmy Kimmel. Gensler is trying to explain why it takes the SEC so long to take action to develop public policies in his “Office Hours with Gary Gensler” YouTube show. The reason is “The Administrative Procedure Act,” he says.

The second YouTube video is from Gensler’s nemesis, the comedian Jon Stewart, via his show “The Problem With Jon Stewart” in an episode titled “A Dangerous Precedent: Law Professors Explain Jarkesy v. SEC.” Three female constitutional law professors have a podcast they publish looking at key issues. They explained to Stewart the case of Jarkesy, a hedge fund manager and blues musician who is taking the SEC to task for not giving him a jury trial in their case against him and the implications of this for regulation and the SEC’s use of administrative law judges to adjudicate cases.

Coinbase laid off 1100 employees by locking them out of their company email accounts because the firm was concerned some of the former employees might make rash decisions that would harm the company, Business Insider reported. Coinbase CEO Brian Armstrong is also quoted in a MarketWatch story saying the company “has no risk of bankruptcy.” Not to state the obvious, but Armstrong’s risk-o-meter needs to be recalibrated. The good news for the employees is that FINRA is saying, “Hey, come work for us,” paraphrasing the John McCrank Reuters story. Does FINRA have a crypto-coin to give employees?

I am coming to downtown Chicago for the first time since last May for an event at the CBOT Building. This will be my first time as a visitor to the CBOT Building, and not as a tenant, since 1992, when I joined Bud Frazier at the CBOT member firm of U.S. Futures and Options Company. Every firm I worked at subsequently had offices in the CBOT: First Options of Chicago, The Frazier Associates, The Price Futures Group and John J. Lothian & Company, Inc.

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


Craig Iseli Talks SpiderRock History and Growth in JLN OIC 2022 Interview

JLN interviewed Craig Iseli of SpiderRock at the 2022 Options Conference in San Antonio, Texas. We asked Iseli how SpiderRock started and what his role is. Iseli started running the business side of the firm and his business partner George Papa ran the trading side. Today, Iseli is the chief operating officer and Papa is the CEO.

Watch the video »


Bill Gates Blasts Crypto, NFTs as Based on ‘Greater-Fool’ Theory
Mark Bergen – Bloomberg
Billionaire Bill Gates dismissed cryptocurrency projects such as nonfungible tokens as shams “based on the greater-fool theory” at a climate conference Tuesday, reviving past criticisms of digital assets. “Obviously, expensive digital images of monkeys are going to improve the world immensely,” Gates said sarcastically while speaking at an event in Berkeley, California hosted by TechCrunch. He said he’s neither long nor short the asset class.

***** Gates “noted the difficulty of recruiting Silicon Valley engineers to work in industries like chemicals and steel production in need of lower greenhouse gas emissions.” Yes, let’s spend more time developing NFTs of yachting apes.~JJL


Coinbase Made Some Mistakes; Overspending and buying a Super Bowl ad despite signs of a bubble echoed blunders of the dot-com collapse.
Mark Gongloff – Bloomberg
Crypto has long been sold as the tradition-busting future of finance, but its collapse is following a decades-old script. Take Coinbase. The crypto exchange went public at $250 a share in April 2021, when Bitcoin was worth more than $63,000, near its all-time high. Now Bitcoin is flirting with $20,000, and Coinbase is trading at less than $50 a share. It’s also laying off 18% of its workforce, roughly the number of people it hired this year. It’s not alone. Peter Thiel-backed crypto lender BlockFi is laying off 20% of its people. Gemini Trust Co., founded by the Winklevoss twins, is cutting staff by 10%. (The Winklevi drowned their sorrows soon after by playing a rockin’ set in Delaware, including a Rage Against the Machine cover.)

******* Some mistakes just bark and howl at you forever.~JJL


Denmark Overtakes Switzerland as World’s Most Competitive Nation
Christian Wienberg – Bloomberg
Denmark has overtaken Switzerland as the world’s most competitive economy after the Nordic country outperformed peers during the pandemic. Denmark rose from third place last year to take 2022’s top spot for the first time in the 34 years that the IMD Business School has published its World Competitiveness Ranking, according to a statement on Wednesday.

*****I have always said the Danes were the greatest.~JJL


Jolted Wall Streeters Seek Night of Solace at Apollo Theater; ‘It’s a cause worth supporting in any market,’ says Citi CFO Mark Mason, who helped the Harlem venue raise $3.7 million.
Amanda L Gordon – Bloomberg
US stocks entering a bear market at the close on Monday didn’t interfere with the party scene a few hours later at New York’s Apollo Theater. “It probably brought more people out who needed relief,” Charles Phillips, chairman of the Apollo, said in an interview. “People were calling me all day about tickets.” But the sold-out event that honored Tyler Perry and merchant bank LionTree, with the Roots performing and Kenan Thompson orchestrating a “Black Jeopardy” skit, wasn’t just about the need for consolation.

*****There is always time to do good, and dance a little.~JJL


So long, Internet Explorer. The browser retires today
Richard Jacobsen – AP News
Internet Explorer is finally headed out to pasture. As of Wednesday, Microsoft will no longer support the once-dominant browser that legions of web surfers loved to hate — and a few still claim to adore. The 27-year-old application now joins BlackBerry phones, dial-up modems and Palm Pilots in the dustbin of tech history.

***** I remember having to give up Netscape for Internet Explorer and hating it. Of course, Netscape had its issues too. ~JJL


Tuesday’s Top Three
Our top clicked story Tuesday was the New York Post’s Winklevoss twins sing ‘Don’t Stop Believin” days after layoffs at crypto startup. Second was JLN’s Remembrances of Hal Hansen, which was also second on Monday. Third was The biggest crypto scams of 2022 (so far), from Mashable.


MarketsWiki Stats
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MarketsWiki Statistics


Lead Stories

Generation Z Is Getting a Harsh Lesson in Stock Risk; A whole new crop of investors is learning that bear markets are a fact of life and should adjust accordingly.
Allison Schrager – Bloomberg
The wealth destruction over the last few weeks has been brutal. Markets are down more than 20% from the start of the year; we are officially in a bear market. One estimate (from last week) said household net worth fell 0.4%. A bear market is never good, but this time it’s especially worrying because in the last few years stock investing has become trendy, with Tik Tok stars becoming the new investment gurus. Now many of these new investors are learning Tik Tok is not the best place to get investment advice.

Bond Traders Challenge BOJ With Biggest Futures Rout Since 2013; Bets mount on the BOJ tweaking its yield-curve control policy; BOJ purchases widened to cover futures-linked JGB zone
Chikako Mogi and Masaki Kondo – Bloomberg
The showdown between bond traders and the Bank of Japan is rapidly escalating as the central bank struggles to convince markets that its ultra-loose monetary policy is sustainable. Ten-year bond futures slumped by the most since 2013 on Wednesday, with traders betting that the BOJ will be forced to abandon its pledge to cap yields at 0.25%. The selloff persisted even after the BOJ ramped up its bond buying program, announcing unlimited purchases of so-called cheapest-to-deliver 10-year bonds for Thursday and Friday.

London market’s efforts at reinvigoration are flagging; Latest proposals to overhaul UK listing regime are confused and may achieve very little
Helen Thomas – FT
When one complaint is the complexity of the status quo, it’s a good sign if the proposed solution is obviously clear and simple. The latest ideas to overhaul the listing regime for the London market fail that test. The UK markets regulator wants to crunch together the existing “premium” segment that requires the highest levels of corporate governance standards with the more lightly regulated “standard” segment — a response to concerns that a two-tier market creates a stigma that deters companies from listing in London.

‘The Music Has Stopped’: Crypto Firms Quake as Prices Fall; Crypto companies are laying off staff, freezing withdrawals and trying to stem losses, raising questions about the health of the ecosystem.
David Yaffe-Bellany and Erin Griffith – NY Times
No one wanted to miss out on the cryptocurrency mania. Over the last two years, as the prices of Bitcoin and other virtual currencies surged, crypto start-ups proliferated. Companies that market digital coins to investors flooded the airwaves with TV commercials, newfangled lending operations offered sky-high interest rates on crypto deposits and exchanges like Coinbase that allow investors to trade digital assets went on hiring sprees. A global industry worth hundreds of billions of dollars rose up practically overnight. Now it is crashing down.

The Boom in Private Markets Has Transformed Finance. Here’s How
Dawn Lim and David Brooke – Bloomberg
Where do companies get money to grow? Time was, if it was a startup, the big bucks for expansion would come from an initial public offering (IPO) on the stock market, while established firms would turn to the bond market. Those things still happen, but increasingly, the capital behind corporate growth around the world is a product of private, not public, markets. In private markets, deep pools of money are used to make deals directly, in what proponents see as a flexible approach for providing the fuel needed by the world’s most innovative companies. Critics see the trend as promoting both inequality — since there’s no opportunity for the public to invest – and systemic risk.

Bitcoin Rout Hits ‘Darkest’ Phase With Entire Market Underwater; Market decline means it’s barely above cost basis: Glassnode; Bitcoin trades like a penny stock, says Nuveen’s Brian Nick
Vildana Hajric – Bloomberg
The bear market for Bitcoin has entered its “deepest and darkest” phase, with even long-term holders who had toughed it out until now coming under extreme pressure. That’s according to strategists at Glassnode, which tracks an indicator known as realized price, the average purchase price of all Bitcoins in circulation. The cryptocurrency is currently trading roughly $1,000 below the coin’s current realized price of $23,430, according to the firm. Bitcoin price was around $22,150 late Tuesday afternoon in New York. “The current bear market is now entering a phase aligned with the deepest and darkest phases of previous bears,” the strategists wrote in a note. “The market, on average, is barely above its cost basis, and even long-term holders are now being purged from the holder base.”

SEC Launches Inquiry Into Insider Trading at Crypto Exchanges: Report
Nelson Wang – CoinDesk
The U.S. Securities and Exchange Commission (SEC) has begun an investigation into whether crypto exchanges have sufficient protections against insider trading, according to Fox Business, which cited a source with direct knowledge of the inquiry.

Barclays Says Climate Disaster Will Collapse Major Currencies; Analysts model impact of global warming on FX markets; Study shows yen and yuan may fall 50% in worst-case scenario
Greg Ritchie – Bloomberg
A severe climate shock in the next 50 years will wreak havoc on the global economy and upend currency markets as we know them, according to a new study by Barclays Plc. Analysts at the bank have published a model of emissions scenarios, along with predictions for how foreign exchange markets will be affected. In the most extreme case, they predict the Chinese yuan and Japanese yen could drop by more than 50% by 2070 because of the economic toll stemming from rising sea levels, air pollution and crop failure. It’s a dramatic estimate entailing unprecedented disaster and human suffering in some of the world’s most populous cities, if global warming runs unchecked. The Barclays report also shows how quantitative finance is grappling with the probabilities of climate change in asset classes slower to adopt ESG as a trading theme, such as the $6.6-trillion-a-day foreign-exchange market.

Coinbase CEO says company has ‘no risk of bankruptcy’; The crypto exchange’s CEO, Brian Armstrong, did admit that some Coinbase users’ crypto assets may lack certain bankruptcy protections
Weston Blasi – MarketWatch
That’s a quote from Brian Armstrong, chief executive and co-founder of cryptocurrency exchange platform Coinbase COIN, -0.83%. In a series of tweets on May 10, Armstrong addressed a recent Coinbase 10-Q document filing with the Securities and Exchange Commission (SEC) that detailed potential risk factors with retail investors’ crypto assets in the event that Coinbase files for bankruptcy — to be clear, Armstrong stated that bankruptcy is not likely. But if such a “black swan event,” as Armstrong labeled it, ever occurred, some retail investors on the exchange may lose out on their crypto if a court deems those assets as part of the company in legal proceedings, he said.

U.S. SEC chair Gensler says investors should beware of crypto returns that seem “too good to be true”
Katanga Johnson – Reuters
U.S. Securities and Exchange Commission (SEC) Gary Gensler said on Tuesday that investors should beware promised returns from crypto lending platforms and products that seem “too good to be true.” The Wall Street watchdog’s comments come a day after the world’s largest cryptocurrency fell 15% on Monday, its sharpest one-day drop since March 2020. Bitcoin, which steadied on Tuesday, had earlier hit a new 18-month low as major crypto lender Celsius Network’s freezing of withdrawals and the prospect of sharp U.S. interest rate rises shook the volatile asset class. “We’ve seen again that lending platforms are operating a little like banks. They’re saying to investors ‘Give us your crypto. We’ll give you a big return 7% or 4.5% return.’ How does somebody offer (such large percentage of returns) in the market today and not give a lot of disclosure?” Gensler said during an industry event.

The biggest corporate holder of bitcoin is facing a reckoning
Scott Nover – Quartz
MicroStrategy is famous for owning more bitcoin than any other publicly-traded company. MicroStrategy chief Michael Saylor believes so deeply in the promise of the primordial cryptocurrency that the company took out a $205 million loan from Silvergate Bank to buy $190 million worth of bitcoin in April. “Bitcoin needs to cut in half for around $21,000 before we’d have a margin call,” MicroStrategy president Phong Les said in May during an earnings call. MicroStrategy chief Michael Saylor believes so deeply in the promise of the primordial cryptocurrency that the company took out a $205 million loan from Silvergate Bank to buy $190 million worth of bitcoin in April. But since then, the cryptocurrency market, which was already slumping, has gone into free fall.

SEC Chair Gensler Suggests Lummis-Gillibrand Bill May ‘Undermine’ Market Protections
Nikhilesh De – CoinDesk
A bill intended to specify the rules and roles for crypto regulation could inadvertently “undermine” other market protections, U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler said Tuesday. Speaking at The Wall Street Journal’s CFO Network Summit, Gensler suggested many crypto companies are already engaging in behaviors overseen by his agency, pointing to companies that offer yield for staking as one example. Asked about a bill introduced by U.S. senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) last week, Gensler said he would rather speak to the lawmakers first, but that from his agency’s point of view, “What we wanted to do is to continue to protect” the role his agency plays in overseeing how companies can raise money from the general public.

U.S. to sell up to 45 million bbls oil from reserve as part of historic release
The U.S. Department of Energy on Tuesday said it was selling up to 45 million barrels of oil from the Strategic Petroleum Reserve as part of the Biden administration’s previously announced, largest-ever release from the stockpile. Deliveries of crude from the SPR sale would take place from Aug. 16 through Sept. 30, the Energy Department said. The Biden administration said in late March it would release a record 1 million barrels of oil per day of oil for six months from the SPR, held in a series hollowed-out salt caverns on the coasts of Louisiana and Texas. The release was meant to help control oil prices that spiked after Russia, one of the world’s top petroleum producers, invaded Ukraine and as the West imposes sanctions on Moscow.

Celsius bid to rival Wall St with crypto lending scuppered by risky bets; Digital asset lender blocked redemptions this week after locking-up client funds in complex products
Kadhim Shubber, Joshua Oliver and Scott Chipolina – FT
Celsius Network co-founder Alex Mashinsky was in a defiant mood on Twitter this past weekend. When asked by one user why he had so many enemies, Mashinsky boasted: “because I am winning and giving it all to my community”. Days later, his crypto investment firm is in crisis after it blocked customer withdrawals, a move that shook crypto markets. The abrupt halt in redemptions underscores the risks for investors who have piled in to complex digital asset products that offer high returns. Celsius claimed to have 1.7mn retail customers, including in the US, UK and Israel, and gained a reputation for making aggressive bets with its depositors’ money. The investment group, which is broadly unregulated beyond lending licences in a handful of US states, had grown to as much as $24bn of crypto assets under management in December last year. It garnered a surge of inflows shortly after winning investment from Canada’s second largest pension fund, Caisse de dépôt et placement du Québec (CDPQ), and Westcap, a fund led by former Blackstone and Airbnb executive Laurence Tosi.

Schwab’s Robo-Adviser Hid Some Fees; Also banker chats, ESG, insider trading, M&A and Musk.
Matt Levine – Bloomberg
In 2015, Charles Schwab Corp. launched a robo-adviser service called Schwab Intelligent Portfolios. SIP would would invest customers’ money for them in a mix of funds optimized for their risk appetite, investment horizon and tax situation. Unlike competing robo-advisers, SIP would not charge customers a fee for this service. Instead, it would allocate a bizarrely large portion of their portfolios to cash, and it would keep the cash in a Schwab-affiliated bank account paying (initially) 0.1% interest. Schwab could use this cash to earn a higher rate and keep the difference, making this product profitable for Schwab. Other robo-advisers did not allocate so much to cash, because they are investing products; most customers keep their cash in bank accounts and want their investments to be invested. But the other robo-advisers charged fees.

Coinbase CEO says company has ‘no risk of bankruptcy’; The crypto exchange’s CEO, Brian Armstrong, did admit that some Coinbase users’ crypto assets may lack certain bankruptcy protections
Weston Blasi – MarketWatch
That’s a quote from Brian Armstrong, chief executive and co-founder of cryptocurrency exchange platform Coinbase COIN, -0.83%. In a series of tweets on May 10, Armstrong addressed a recent Coinbase 10-Q document filing with the Securities and Exchange Commission (SEC) that detailed potential risk factors with retail investors’ crypto assets in the event that Coinbase files for bankruptcy — to be clear, Armstrong stated that bankruptcy is not likely. But if such a “black swan event,” as Armstrong labeled it, ever occurred, some retail investors on the exchange may lose out on their crypto if a court deems those assets as part of the company in legal proceedings, he said.

1,100 Coinbase employees learned they were losing their jobs when they were locked out of their work emails. CEO Brian Armstrong said it was to ‘ensure not even a single person made a rash decision that harmed the business’
Grace Kay – Business Insider
About 1,100 Coinbase employees were notified that they had been laid off when they were unable to log into their work emails on Tuesday. Coinbase CEO Brian Armstrong announced that the company eliminated about 18% of its total workforce in a blog post. The CEO of one of the world’s largest cryptocurrency exchanges said the affected employees were notified via an email from HR to their personal account after the company decided to cut access to all Coinbase systems for the workers that had been terminated.

Wall Street watchdog to laid-off crypto employees: work for us
John McCrank – Reuters
The Financial Industry Regulatory Authority plans to increase its resources to understand and monitor cryptocurrencies as more of the Wall Street watchdog’s members trade digital assets, Chief Executive Officer Robert Cook said on Tuesday. “We are already having to be engaged in the space and we think that as a result it’s appropriate for us to bulk up our capabilities there,” Cook said at a trading industry conference. FINRA has several dozen members that have been approved to trade digital asset securities, as well as members who allow customers to access crypto products, and members with registered representatives who have outside business activities around crypto, Cook said.

CFTC’s Goldsmith Romero warns of similarities between crypto today and banks in 2008; ‘We’ve got a pretty sizable market that’s largely unregulated and regulators just have no window into it,’ she said.
Chris Matthews – MarketWatch
Prices of digital assets continued to fall Tuesday following steep declines in recent days, and at least one regulator is concerned about financial contagion spreading through the crypto economy. Christy Goldsmith Romero, who serves as a member of the Commodity Futures Trading Commission, said in an interview with Axios Tuesday that she sees parallels between crypto markets today and the banking industry in the 2000s, in the years leading up the financial crisis. “The first [similarity] is that we’ve got a pretty sizable market that’s largely unregulated and regulators just have no window into it,” she said. “The second is that the market has become pretty broadly correlated with the broader equity markets.”

ECB Is Discussing Crisis Strategy as Well as Pandemic Program Reinvestments; Governing Council was scheduled for 11 a.m. Frankfurt time; Two-hour emergency meeting to discuss market conditions
Alexander Weber, Jana Randow, and Carolynn Look – Bloomberg
European Central Bank officials are discussing a broader strategy to protect the integrity of the euro region as well as whether to use reinvestments of their pandemic asset-purchase program flexibly as a first defense, according to people familiar with the matter.

ECB Speeds Up Work on Crisis Tool After Italian Bond Blowout; Pandemic has left lasting euro-area vulnerabilities, ECB says; Officials held emergency meeting Wednesday amid debt turmoil
Carolynn Look, Alexander Weber, and Jana Randow – Bloomberg
The European Central Bank instructed committees to create a new tool to combat unwarranted jumps in euro-area bond yields as markets strain at the prospect of the first interest-rate increases in more than a decade. Following an emergency meeting Wednesday, convened after Italian yields surged to the highest since Europe’s sovereign-debt crisis, the Governing Council also said it will apply flexibility in reinvesting redemptions coming due in its pandemic portfolio, with a view to preserving the functioning of the monetary policy transmission mechanism.

Janet Yellen Is Struggling at the Treasury Job She Never Wanted; The ex-Fed chair has been sidelined by the White House on some key issues.
Saleha Mohsin – Bloomberg
It was supposed to have been a capstone. Instead, Janet Yellen’s stint as Treasury secretary threatens to become a stain on a storied career. The former Federal Reserve chair was recruited to help steer the US economy out of the pandemic by lending her gravitas and credibility to the Biden administration’s pursuit of a robust and lasting recovery. It took some arm-twisting to persuade her to take the job.

SNB Chief Told It’s Time to Raise Rates by His Former Professor; Swiss central bank quarterly decision is due on Thursday; Investors and economists are split on whether hike will ensue
Craig Stirling – Bloomberg
It’s time for the Swiss National Bank to raise interest rates, President Thomas Jordan got told by his former academic supervisor on the eve of a decision where investors are speculating he might do just that. The advice was delivered by Ernst Baltensperger, a professor emeritus at the University of Bern, in an opinion piece in the Neue Zuercher Zeitung published on Wednesday. “The SNB is in a position to keep the inflation dynamic under control,” he wrote. “The SNB must now have the courage to allow a nominal franc appreciation, which prevents further inflation imports. That means normalizing interest rates, reducing the inflated currency reserves and returning to its monetary policy concept.”

The CFA — Wall St’s toughest qualification — struggles to regain stature; Fewer traditional investment jobs around and intense stamina needed to complete programme is valued less
Laura Noonan – FT
There was a time when qualification as a chartered financial analyst was much more of a door-opener to a new career, changing lives around the world. Gary Brinson, who sold his asset management business to Swiss Bank Corp in 1995, was among those to hire almost exclusively from candidates who’d made it through “Wall Street’s toughest exams”. “If we hired someone who didn’t have a CFA, we made it mandatory that they complete the CFA process,” he says.

Crypto exchanges slash jobs as market turmoil triggers trading downturn; Sharp slowdown in volumes hits major platforms such as Coinbase and Gemini
Scott Chipolina and Joshua Oliver and Madison Darbyshire – FT
Major digital asset exchanges are shedding hundreds of workers in an abrupt reversal from the industry’s breakneck expansion as a two-year hot streak gives way to a crypto chill. US-listed Coinbase on Tuesday announced plans to lay off nearly a fifth of its workforce, amounting to more than 1,000 people, joining rivals including Gemini, and BlockFi in cutting headcount as this year’s tumble in crypto prices stifles the trading activity that is the industry’s lifeblood.

Continuous lit markets set to carry on suffering at the hands of the Close; Trading volumes are continuing to migrate towards the Close in light of the growing number of passive funds coming to market.
Annabel Smith – The Trade
Continuous lit markets are continuing to suffer at the hands of the growing portion of volumes now taking place in the final five minutes of the trading day. According to data sourced by The TRADE from big xyt, the Closing Auction currently accounts for 25.5% of value traded in the European equity markets with continuous lit markets accounting for the remaining 74.5%.

Ukraine Invasion

Putin Prepares to Declare Himself a Conqueror; The Kremlin’s emerging plans for occupied Ukraine could amount to a declaration of permanent, open-ended war against other parts of Europe.
Leonid Bershidsky – Bloomberg
In the early hours of June 12, celebrated in Vladimir Putin’s country as Russia Day, a curious piece appeared on the website of the pro-Kremlin daily Izvestia. Signed ostensibly by Putin’s First Deputy Chief of Staff Sergei Kiriyenko, it promised the residents of the occupied territories of Ukraine that these regions would be absorbed into Russia.

Biden touts grain silos on Ukraine border to help exports; Kyiv wants ports open
Michelle Nichols – Reuters
U.S. President Joe Biden said on Tuesday that temporary silos would be built along the border with Ukraine in a bid to help export more grain and address a growing global food crisis. Since the Russian invasion and blockade of Ukrainian Black Sea ports, grain shipments have stalled and more than 20 million tonnes are stuck in silos. Ukraine says it faces a shortage of silos for a new crop. The war is stoking prices for grains, cooking oils, fuel and fertilizer. Russia and Ukraine account for nearly a third of global wheat supplies. Ukraine is also a major exporter of corn and sunflower oil and Russia a key fertilizer exporter. “I’m working closely with our European partners to get 20 million tons of grain locked in Ukraine out onto the market to help bring down food prices,” Biden told a Philadelphia union convention. “It can’t get out through the Black Sea because it’ll get blown out of the water.”

Ukraine’s Farm Industry Has Lost $4.3 Billion From War Damage; Russia’s invasion has worsened the global food crisis; Study by Kyiv School of Economics calculates cost of conflict
Aine Quinn – Bloomberg
Ukraine has suffered $4.3 billion in damage to farmland, machinery and livestock as a result of Russia’s invasion, according to the Kyiv School of Economics. About half of the “already immense” destruction from the war comes from pollution caused by mines and unharvested crops, according to a report by authors Roman Neyter, Hryhorii Stolnikovych, and Oleg Nivievskyi. Almost a quarter of the total — $926 million — accounts for damage done to farm machinery due to military activity and occupation, they write. The “Ukrainian economy is projected to contract by 45% and dozens of millions across the world are threatened with hunger because of disrupted exports of grains from Ukraine and continued damage of its agri-food sector,” the report said.

Ukraine Grain Exporters Carve Out New Route Via Baltic Sea; Spain receives 18,000-ton corn cargo trucked through Poland; Ukraine has searched for alternate export routes amid the war
Alonso Soto and Megan Durisin – Bloomberg
Ukrainian grain shippers have carved out a fresh export route — via the Baltic Sea — to send their crops abroad. The country has been hunting for alternative paths for its crops as the war with Russia cuts off vital shipments from ports dotting the Black Sea, stoking global food prices and raising worries over hunger. Producers have resorted to sales by land instead, ferrying grain by railway, road and river to European Union neighbors.

UniCredit boss says giving away Russian unit would be morally wrong
Giving up for free the Russian arm of UniCredit would be morally wrong, the Italian bank’s chief executive said on Tuesday. UniCredit runs Russia’s 14th largest bank and has been studying alternatives including an exit since Russia invaded Ukraine in February. “Writing it off and gifting it is not consistent with sanctions and is, in our opinion, not morally correct,” CEO Andrea Orcel told a conference on financial education for students. “We would be gifting something worth 3 billion [euros] for nothing to someone who is probably in a leadership that we have decided to veto.”

Russia’s Oil Revenue Jumps to $20 Billion in May, IEA Says; Cash from exports gained 11% from April, volumes fell 3%: IEA; Higher Asian deliveries buoyed total crude volumes shipped
Bloomberg News
Russia’s oil-export revenues surged to around $20 billion in May despite shipping lower volumes, as a rally in global energy prices buoyed its coffers, according to the International Energy Agency. That’s a 11% increase from a month earlier, taking Russia’s total revenue for shipping crude and oil products roughly back to levels before the invasion of Ukraine, even as exports fell by about 3%, the IEA estimates in its monthly report published Wednesday.

Germany Says Latest Russian Gas-Flow Cuts Politically Motivated
Arne Delfs – Bloomberg
German Economy Minister Robert Habeck said he believes a decision Tuesday by Gazprom PJSC to cut gas flows through the key Nord Stream pipeline by 40% was “politically motivated” and not due to technical issues as the Russian company stated. Maintenance work on the pipeline that would have a “relevant” impact on supply isn’t due to be carried out by Siemens Energy AG until the fall and, in any case, wouldn’t affect 40% of the infrastructure, Habeck told reporters Wednesday at a news conference in Berlin.

Exchanges, OTC and Clearing

Marek Dietl Appointed President of GPW Management Board; The Extraordinary General Meeting of the Warsaw Stock Exchange (GPW) has appointed Mr Marek Dietl as President of the Management Board of GPW on 15 June 2022
On 15 June 2022, at the request of the Minister of State Assets acting on behalf of the Treasury of Poland, a shareholder representing 35.01% of the share capital of the Warsaw Stock Exchange (GPW), the Extraordinary General Meeting of GPW has adopted a resolution appointing Mr Marek Dietl as President of the Management Board of GPW for another term of office.

The BME Ombudswoman Office resolves all complaints within its jurisdiction in 2021
The fact that retail investors account for 96% of the queries proves how much they need to rely on this service; There were recurring queries about commissions charged for delisted securities and about the purchase value of securities acquired a long time ago; The volume of queries on the legal status of so called “fly-by-night operations” and stock trading platforms is also on the rise; The Investor Ombudswoman Office collaborates with Instituto BME in a course organised with the main body of the judiciary and has met with consumer and financial user associations

EEX Group Press Release – EEX Group: Five years of successful development of CSEE power markets
EEX Group
EEX Group looks back on five years of successful development of power markets in the Central and South Eastern European (CSEE) region. Five years ago today, on 15 June 2017, EEX extended its product portfolio to Central and Eastern Europe by adding power derivatives products for the Czech Republic, Slovakia, Hungary, Poland and Romania. This step became possible after the integration of the Prague-based Power Exchange Central Europe (PXE) which joined EEX Group in mid-2016.

Eurex MSCI roll update: Total OI of over EUR 167 billion; active roll markets in RSW and ZRP
Eurex – Global home of MSCI derivatives
Eurex MSCI roll updates for last 6 days (Jun 6 – 13)
Over 2.4 million contracts traded over last week; 840,000 contracts traded on June 13. Total Open Interest over EUR 167 billion.

Successful completion of the migration of Euronext’s Core Data Centre; Migration of Euronext’s Core Data Centre from Basildon, UK to the Aruba Global Cloud Data Centre in Bergamo, Italy has been successfully concluded on 6 June 2022
New green Core Data Centre migration was a major step in achieving Euronext’s ESG goals as part of its “Fit for 1.5º” commitment
Euronext, the leading pan-European market infrastructure, today announced the successful completion of the migration of its Core Data Centre and related colocation services from Basildon, UK, to the Aruba Global Cloud Data Centre IT3 in Bergamo, Italy. This key milestone has been completed on schedule in just 14 months, following the announcement of this strategic decision in April 2021 in the context of the Borsa Italiana Group acquisition.

Moscow Exchange has formed a new Listing Expert Council
The Moscow Exchange has approved a new composition of the Listing Expert Council.

Notice on Investigation and Penalties for Violations of Relevant Rules and Regulations in May 2022
Shanghai Futures Exchange (hereinafter referred to as “The Exchange”) has been on continuous efforts in investigating and penalizing violations of relevant rules and regulations, so as to strengthen the risk management of the futures market, regulate the futures trading activities and protect the legitimate rights and interests of futures market participants. The enforcement against such violations in May 2022 are listed as follows:

TAIFEX has been recognized as a qualifying CCP (QCCP) by the Financial Supervisory Commission (FSC) for its OTC derivatives clearing services
The QCCP recognition for Taiwan Futures Exchange’s (TAIFEX) OTC derivatives clearing services was granted by the FSC on June 9, 2022.


Opinion: As tech melts down, a truth remains: Semiconductors are eating the world; Global economies and the chip industry are intertwined more than ever
Daniel Newman – MarketWatch
Everyone’s favorite trade in the stock market, technology, has gone the way of the dodo. Oil and value stocks are all the rage. But one part of technology — semiconductors — is vital not only to the technology sector in the stock market but to the global economy and industries from cars to computers. The growing, shifting and manufacturing of chips and chipmakers will remain crucial.

Major banks and analytics provider launch Octaura electronic trading platform; Venue will launch for loans first, with a collateralised loan obligations (CLO) trading venue to follow and with plans to expand to other products in the credit market later.
Annabel Smith – The Trade
Citi, Bank of America, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley, Wells Fargo and Moody’s Analytics have launched an open market electronic trading platform. The platform is for syndicated loans and collateralised loan obligations (CLOs), launching with the former originally with plans to add CLOs and credit products later down the line. It will offer straight through processing (STP) for trade booking and data and analytics provided by Moody’s.


Atos Considers Spinoff of Cybersecurity Unit, CEO to Leave; Data unit will be listed before the second half of 2023; Firm estimates total funding needs of about $1.7 billion
Benoit Berthelot – Bloomberg
Atos SE shares tumbled the most on record after the company said Chief Executive Officer Rodolphe Belmer would resign just five months into his tenure, following a failure to agree on a potential restructuring that will lead to a breakup of the French IT business. Atos is studying spinning off its Big Data and Cybersecurity business in a separate entity, while Belmer will leave before September, the company announced at a capital markets day on Tuesday. Appointed in late January this year, Belmer said he has “no choice but to resign” following this reorganization, according to the statement.

A Ragtag Band of Hackers Is Waging Cyberwar on Putin’s Supply Lines; In Belarus, forces opposed to President Alexander Lukashenko have been derailing Russia’s war against Ukraine.
Ryan Gallagher – Bloomberg
Russia’s military began sending large numbers of weapons and troops into Belarus in late January. The official purpose of the movement was a joint military exercise, but Belarus, which has a 650-mile border with Ukraine and a government closely aligned with Moscow, was also a logical staging point for Russian President Vladimir Putin to carry out an invasion.

U.S., EU Plan Joint Foreign Aid for Cybersecurity to Counter China
Catherine Stupp – WSJ
The U.S. and the European Union plan to introduce joint funding of secure digital infrastructure in developing countries, according to officials involved in the talks.
The effort marks the first time the EU and U.S. will work together to fund and help protect other countries’ critical infrastructure against cyberattacks. By working together on cybersecurity, the EU and U.S. aim to help countries that otherwise might be eager to accept funding from China, an EU official said.

Top cyber official says transformation needed in cyberspace
Ines Kagubare – The Hill
National Cyber Director Chris Inglis said Monday that the administration and federal agencies should prioritize transforming the way they approach and invest in cybersecurity, as previous efforts have “not worked.”
Ingles was speaking at cyber summit hosted by the Information Technology Industry Council on ways the public and private sector can combat cyber threats.

The unrelenting threat of ransomware is pushing cybersecurity workers to quit
Owen Hughes – ZDNet
Security researchers have warned of “increasing and unsustainable stress levels” in the cybersecurity workforce resulting from persistent ransomware threats and looming, large-scale attacks, which are pushing security professionals towards abandoning the industry altogether.
A report by cybersecurity company Deep Instinct found that 46% of senior and executive-level cybersecurity professionals have considered quitting the industry due to stress.


El Salvador’s investment in Bitcoin loses about half its value since September, now worth $51.5 million
Andres Ensgler and CoinDesk – Fortune
El Salvador’s Bitcoin (BTC) holdings are now valued at $51.5 million, worth about half of the $104 million the country has invested in the cryptocurrency for its treasury in the 10 months since it made bitcoin legal tender last September. Bitcoin’s price at press time was $22,400. President Nayib Bukele has announced 10 purchases of Bitcoin since September 2021, with the country at last check holding 2,301 Bitcoins acquired at an average price of $45,171 each. The country’s most recent buy was on May 9, when Bukele stepped in front of Bitcoin’s decline then to purchase 500 coins for $15.3 million, or an average price of $30,744 each. Bukele, to this point, hasn’t announced any purchases during the plunge of the past few days. On Monday, El Salvador Finance Minister Alejandro Zelaya said the Bitcoin losses pose “extremely minimal” risk to his country’s fiscal position, noting that the amount is less than 0.5% of the government’s budget. He also pointed out that any loss for now is unrealized because the country hasn’t sold any of its coins.

The biggest corporate holder of bitcoin is facing a reckoning
Scott Nover & Nicolás Rivero – Quartz
MicroStrategy is famous for owning more bitcoin than any other publicly-traded company. As of June 14, the Virginia-based business intelligence company holds 129,218 bitcoins, more than two-and-a-half times as much as Tesla, the next largest bitcoin owner. That bitcoin is now worth about $2.9 billion, less than half of the roughly $6 billion it was worth just two months ago. MicroStrategy chief Michael Saylor believes so deeply in the promise of the primordial cryptocurrency that the company took out a $205 million loan from Silvergate Bank to buy $190 million worth of bitcoin in April. But since then, the cryptocurrency market, which was already slumping, has gone into free fall.

Tesla’s Bitcoin Bet Turns into a Nightmare; The electric vehicle manufacturer had invested $1.5 billion in Bitcoin in 2021.
Luc Olinga – The Street
The list of victims of the Bitcoin and cryptocurrency crash continues to grow every day. Tesla (TSLA) – Get Tesla Inc. Report, the manufacturer of electric vehicles is now part of it. Elon Musk’s company had invested $1.5 billion in Bitcoin on February 8, 2021. This investment lost a lot of value as cryptocurrency prices plummeted. Bitcoin has fallen and is currently trading at its lowest level since December 2020. Bitcoin is at $22,499.99, compared to $69,044.77 reached last November. In eight months, Bitcoin has lost 67.5% of its value. This fall caused important losses to Tesla.

MicroStrategy CEO Saylor Says No Margin Call on Bitcoin Loan
Olivia Raimonde – Bloomberg
MicroStrategy Inc. Chief Executive Michael Saylor told investors not to worry about a potential margin call on a Bitcoin-backed loan, saying the company has ample collateral to pledge if necessary. “As long as the Silvergate loan remains collateralized with an LTV less than 50%, there is no margin call,” Saylor wrote in a email to Bloomberg, referring to loan-to-value metrics. “We manage accordingly.” The software firm said on a conference call in May that the price of the Bitcoin would need to fall to around $21,000 before a call would be triggered on its $205 million loan from a unit of Silvergate Bank, but that it may contribute more to the collateral package so it never gets there. Bitcoin was trading around $22,500 Tuesday after dipping as low as $20,800 earlier in the session.

Bank of England boss Bailey says ‘be prepared to lose all your money’ in crypto after lender Celsius freezes accounts
Zahra Tayeb – Business Insider
As crypto markets tumbled, the governor of the Bank of England doubled down on warning people they should brace for big losses if they decide to invest in digital assets. “If you want to invest in these assets, OK. But be prepared to lose all your money,” Andrew Bailey told lawmakers Monday. “People may still want to buy them because they have extrinsic value … people value things for personal reasons. But they don’t have intrinsic value. This morning we have seen another blow-up in a crypto exchange,” the BoE chief told members of the Public Accounts Committee.

The crypto market has now lost $2 trillion in value. Here are 5 shocking facts from crypto’s Black Monday
Will Daniel – Fortune
Investors had nowhere to hide on Monday as both the stock market and cryptocurrencies tumbled. The rout followed yet another report of high inflation on Friday that has investors concerned the Federal Reserve will continue its aggressive interest rate hikes, thereby increasing the odds of a U.S. recession. The cryptocurrency market saw its total market cap drop by roughly 12% on Monday to just $980 billion. The sector as a whole has now seen more than $2 trillion in losses since its November 2021 peak. The crypto market was hit hard after crypto lender Celsius revealed it was suspending transactions, withdrawals, and transfers on its platform on Sunday citing “extreme market conditions.” The world’s largest crypto exchange, Binance, also briefly paused withdrawals, but has since resumed activity and called the interruption a result of “several minor hardware failures.”

What Happens To Your Bitcoin When You Die? Estate Planners Have Some Ideas; Questions about how to make sure your heirs inherit your Bitcoin and your NFTs are shaking up the traditional world of estate planning
Victoria Vergolina – Bloomberg
What happens to your crypto after you die? Beyond the existential question of the permanence of the blockchain, the answers here aren’t straightforward. For estate planners, what to do with digital assets like Bitcoin and NFTs present a new challenge to inheritance law. There’s more and more money pouring into these assets, and people are starting to think about their digital legacies. But how do you pass on something that’s built on principles of anonymity and individuality, and that requires both passwords and tech savvy to access? In this episode, Bloomberg reporter Jill Shah explores these questions.

Crypto Hedge Fund’s Tweet Fuels Speculation Over Losses; Three Arrows co-founder Zhu Su says firm is ‘working this out’; Crypto prices have been plunging on Celsius crisis, Fed angst
Muyao Shen – Bloomberg
A vague tweet by a founder of Three Arrows Capital, an influential hedge fund that has been liquidating crypto holdings as prices plummeted, is stirring fresh apprehension in an already shaken industry. “We are in the process of communicating with relevant parties and fully committed to working this out,” former Credit Suisse Group AG trader Zhu Su tweeted from his verified account, without providing further details. Zhu and Three Arrows co-founder Kyle Davies didn’t respond to requests for comment.

What were all those 6,200 Coinbasers doing anyway? LIFO > FOMO
Alexandra Scaggs – FT
If only Coinbase’s recruitment drive over the past year had brought in some human resources experts. The $11bn valued digital token shop revealed it was firing 1,100 people — about 18 per cent of its staff — on the back of a hiring freeze, retractions of job offers, and an employee revolt that was met by CEO Brian Armstrong telling employees in a Twitter thread: “quit and find a company to work at that you believe in!”

Goldman Sachs begins trading its first ever Ethereum derivatives products; The move follows the bank’s first trade of over-the-counter Bitcoin options nearly 16 months ago.
Wesley Bray – The Trade
Goldman Sachs has offered its first ever derivatives product linked to Ethereum (ETH), marking increased participation from major banks looking to embrace cryptocurrencies. The bank stated that it also plans to offer over-the-counter Ether options trading to meet growing interest from clients for the for the digital currency.


Harvard expert warns of potential ‘harm’ to index investing, as Republican bill takes on ‘woke fund managers’; INDEX Act would require advisers to vote in accordance with the instructions of individual investors, not at discretion of adviser
Victor Reklaitis – MarketWatch
Senators and legal experts tussled Tuesday over the merits of a Republican bill that aims to reduce the voting power of the three index-investing giants — BlackRock, Vanguard and State Street. Republican Sen. Dan Sullivan of Alaska introduced the Investor Democracy is Expected (INDEX) Act last month, and so far a dozen other senators from his party have signed on as co-sponsors of the measure. The legislation would require investment advisers for passively managed funds with more than 1% of a public company’s voting shares to cast their ballots in accordance with the instructions of fund investors, rather than vote on company issues as the adviser wishes.

SEC expands investigation into Donald Trump’s Truth Social
Chris Morris – Fortune
The government has expanded its inquiry into the proposed merger of Donald Trump’s Truth Social and the SPAC planning to bring it public. Digital World Acquisition Corp. (DWAC), in a filing with the Securities and Exchange Commission, said securities regulators are seeking additional documents and information about the proposed merger. Specifically, authorities are interested in “communications regarding and due diligence of potential targets other than [Trump’s company].” The investigation into the merger was previously announced, but this is the latest sign that authorities are stepping up their examination. The focus of the review seems to be on whether the two sides negotiated before DWAC went public, which would be illegal.

Corporate ‘Self-Sanctioning’ of Russia Has US Fearing Economic Blowback; Officials seek to clarify guidance so there aren’t unintended impacts on inflation, supply chains
Daniel Flatley, Nick Wadhams, and Saleha Mohsin – Bloomberg
Russia’s invasion of Ukraine galvanized the US, UK and European Union to unleash a slew of sanctions meant to punish Vladimir Putin’s government and pressure him to pull his forces back. But some Biden administration officials are now privately expressing concern that rather than dissuading the Kremlin as intended, the penalties are instead exacerbating inflation, worsening food insecurity and punishing ordinary Russians more than Putin or his allies.

Biden Pushes Oil Companies to Boost Capacity, Criticizes Profits; Facing pressure to act on high gasoline prices, the president said he was ready to use emergency measures to increase output if necessary
Andrew Restuccia and Collin Eaton – WSJ
President Biden urged U.S. oil refiners to expand capacity and criticized the companies for profiting as the public pays record prices at the pump, in the latest effort by the Biden administration to combat soaring gasoline prices.

Natural Gas Could Start to Melt United Front Against Russia; With storage levels low and geopolitical risks running high, it isn’t taking much for natural-gas prices to swing wildly
Jinjoo Lee – WSJ
There is a global market for natural gas, but when supplies are as tight as they are today, technical problems can be painful local events. Prices for the heating- and power-generation fuel have generally been moving in the same upward direction everywhere this year as storage levels remain depleted and as Europe’s geopolitical tension with Russia, a crucial natural-gas exporter, escalates in the wake of Russia’s invasion of Ukraine. But on Tuesday, they went in dramatically opposite directions. The U.S. futures benchmark, the Henry Hub, plunged more than 15% to $7.28 per million British thermal units, while the Dutch TTF benchmark surged 16% to nearly $30 per MMBtu.

New German KF51 Panther Battle Tank Is ‘Game Changer,’ Rheinmetall Says; KF51 Panther vehicle could replace flagship Leopard 2; model
German defense company boosts capacities following Ukraine war
Christoph Rauwald – Bloomberg
Rheinmetall AG unveiled a new main battle tank that will replace its flagship Leopard 2 as demand for military equipment is poised to surge in the wake of Russia’s war against Ukraine. The KF51 Panther is “destined to be game changer on the battlefields of the future,” Rheinmetall said this week when presenting the 59-ton vehicle at the Eurosatory 2022 defense exhibition in Paris.

EU Lawmakers Clinch Deal on Carbon Market Reform Before Vote; Political groups in EU Parliament reach agreement on EU ETS; Compromise would accelerate phaseout of free carbon permits
Ewa Krukowska – Bloomberg
The three biggest political groups in the European Parliament reached an agreement on a sweeping reform of the European Union’s carbon market in a bid to resolve a spat that derailed the overhaul and threatened to delay talks on a broader climate package. Lawmakers representing Christian Democrats, Socialists and Liberals in the EU Parliament said on Wednesday that they endorsed a compromise that would accelerate the phaseout of free carbon permits and slightly speed up emissions cuts. Last week, those issues helped prompt the rejection of the measure in a plenary vote. The second ballot is due to be held at a session starting on June 22 in Brussels.


EU banking union ‘not dead, just napping’, says EU official
Huw Jones – Reuters
The European Union’s decade-old push to complete a unified banking market is set to hit the buffers again but is “not dead, just napping”, an official from the bloc said on Tuesday. Plans for a banking union were launched in 2012 to create a single system for regulating top euro zone lenders to ensure taxpayers were no longer on the hook for rescuing failing lenders, as they were during the global financial crisis. The European Central Bank was made the lead regulator for big euro zone banks like UniCredit, BNP Paribas and Deutsche Bank, and a separate watchdog set up for handling failing lenders. But efforts to introduce the Banking Union’s final ‘pillar’, a bank-funded European deposit insurance scheme to compensate customers of a failed bank, have repeatedly floundered, with Germany worried it would end up bailing out banks from other member states.

SEC proposal on fund names looms over everything, not just ESG; Names Rule amendments could have a particular impact on thematic ETFs, analysts say
David Isenberg – FT
A rule recently proposed by the Securities and Exchange Commission could force all funds — not just those that incorporate environmental, social and governance factors — to re-evaluate their names and strategies. In late May, the commission floated a rule amendment that would allow US-listed funds to include their investment strategies in their names only if at least 80 per cent of their assets aligned with that strategy. Under current practice, the so-called Names Rule includes only “the type of investment, industry, country or geographic region”, as well as their “focuses”. It does not include strategies.

U.S., U.K. Collaborate to Spur Innovation in Tech Used to Combat Money-Laundering; New program aims to develop more robust machine-learning technologies to help governments and financial institutions tackle money laundering and other crimes while retaining data privacy
Richard Vanderford – WSJ
The U.S. and U.K. governments are teaming up to encourage the development of new machine-learning technologies that could be used to combat money laundering. The White House and the U.K. government on Monday said they are collaborating on a “prize challenge” program meant to spur innovation in ways to train software to combat financial crime. Prize challenge programs provide financial awards to members of the public who offer solutions to a problem posed by a government agency.

Building a Better Future: FINRA’s Diversity, Equity & Inclusion Program
Juneteenth is a day to celebrate, but it’s also a day to reflect upon the hardships that African Americans endured and the forces that continue to undermine the freedoms of Black Americans. One of the places that these forces are most clear is in the U.S. financial system, in which Black Americans and other people of color have been historically underrepresented.

SEC Charges Weiss Asset Management with Short Selling Violations
The Securities and Exchange Commission today announced that investment advisory firm Weiss Asset Management LP has agreed to pay approximately $6.9 million to settle charges that it violated the federal securities laws when it unlawfully purchased stock in seven public offerings after selling short those same stocks.

SEC Charges Private Equity Adviser for Failing to Disclose Disproportionate Expense Allocations to Fund
The Securities and Exchange Commission today charged New Jersey-based investment adviser Energy Capital Partners Management LP (ECP) with allocating undisclosed, disproportionate expenses to a private equity fund it advises. ECP agreed to pay a $1 million penalty to settle the SEC charges and has voluntarily paid back more than $3.3 million to the fund.

SEC Charges Rochester, NY, and City’s Former Executives and Municipal Advisor with Misleading Investors
The Securities and Exchange Commission today charged the City of Rochester, New York, its former finance director Rosiland Brooks-Harris, and former Rochester City School District CFO Everton Sewell with misleading investors in a $119 million bond offering. The SEC also charged Rochester’s municipal advisor Capital Markets Advisors, LLC (CMA) and its principal Richard Ganci with misleading investors and breaching their fiduciary duty to Rochester. CMA, Ganci and CMA co-principal Richard Tortora were also charged with failing to disclose conflicts to municipal clients.

SEC Charges Three Additional Investment Advisers for Recommending Ponzi Scheme to Clients
On June 10, 2022, the Securities and Exchange Commission filed a civil action in the United Stated District Court for the Northern District of Georgia against Michael Mooney, Britt Wright, and Penny Flippen in connection with their participation in a Ponzi scheme that raised more than $110 million from over 400 investors. According to the complaint, Mooney, Wright, and Flippen-each a former investment adviser representative of Livingston Group Asset Management Company d/b/a Southport Capital (Southport)- recommended that their clients invest or maintain at least $62 million in Horizon Private Equity, III, LLC (Horizon), a private investment fund controlled entirely by John J. Woods, Southport’s former owner and manager. In August 2021, the SEC charged Woods and Southport with multiple counts of securities fraud for operating Horizon as a Ponzi scheme.

SEC Charges Tar Sands Mining Company and Former Executives with Fraud
The Securities and Exchange Commission today charged Petroteq Energy, Inc., former executive chairman Aleksandr Blyumkin, and former Chief Financial Officer Mark Korb for their roles in making materially false and misleading disclosures in the company’s SEC filings about related party transactions, Petroteq’s assets, and Blyumkin’s receipt and use of Petroteq funds. Blyumkin also raised millions of dollars for Petroteq through a fraudulent, unregistered securities offering.

FCA to strengthen protection of access to banking services
The FCA is also consulting on requirements for more detailed analysis on how firms assess the impact on customers when they plan to close a branch, remove or convert an ATM or reduce the services they provide.
The FCA has warned that some banks and building societies are not currently doing enough to properly understand the impact of these changes and to keep their customers informed. Extending communications to other groups such as local charities and councils to understand the wider impact from changes to services, is also included in the proposals.

MAS, IFC and UNDP Launch Global Programme for MSME Financial Literacy and Empowerment
Monetary Authority of Singapore
The Monetary Authority of Singapore (MAS), in partnership with the International Finance Corporation (IFC) and the United Nations Development Programme (UNDP), today launched an open financial education and action programme for micro, small and medium enterprises (MSMEs) in Asia and Africa. Known as the SME Financial Empowerment (SFE) , this programme aims to help MSMEs build foundational digital financial literacy skills, and gain a good understanding of cross-border financial services relevant to MSMEs, to help them thrive in the post-pandemic digital economy. The SFE was rolled out with market partners in Asia and Africa, starting with Ghana, India, the Philippines, and Singapore, and will benefit more than 400,000 MSMEs across both regions.

Woman pleads guilty to role in laundering $4 bln via Danske Bank in Estonia
A Lithuanian woman on Wednesday pleaded guilty to involvement in laundering more than 29 billion Danish crowns ($4.1 billion) through Danske Bank’s (DANSKE.CO) Estonian branch, her defence lawyer said.

Investing and Trading

Hedge Fund Selling Was Never More Furious Than in Last Two Days
Lu Wang and Melissa Karsh – Bloomberg
The smart money dumped stocks at the fastest pace on record as a vicious selloff sent the S&P 500 into a bear market. Hedge funds tracked by Goldman Sachs Group Inc. offloaded US equities for a seventh straight day Monday, with the dollar amount of selling over the last two sessions exploding to levels not seen since the firm’s prime broker began tracking the data in April 2008. The exodus came as the equity rout worsened amid concerns that the Federal Reserve will need to hasten its inflation-fighting campaign at the risk of causing an economic recession. As stocks careened and Treasury yields spiked, the fast money rushed to double down on bearish wagers.

Wealth Shock Delays Gold Bull Market as Goldman Revises Targets
Ranjeetha Pakiam – Bloomberg
Gold has been hit by a large “wealth shock” on the back of a weaker yuan following the economic impact of the lockdowns in China, the world’s largest consumer, according to Goldman Sachs Group Inc., which revised its price targets. Still, the worst may be over, it added. The ongoing food and energy crisis and rising US rates have also seen other emerging market currencies under pressure, analysts including Mikhail Sprogis said in a June 14 note. This negative wealth effect for bullion has been further compounded by liquidation of short-term-oriented futures and exchange-traded fund positions, which are sensitive to trends in the dollar, they said.

BTS Pop Band Triggers $1.7 Billion Stock Rout on Shift to Solos; Hybe sinks by record in Seoul on its flagship band’s new plan; Stock touches all-time low since 2020 debut before paring loss
Youkyung Lee – Bloomberg
Shares of Hybe Co., the agency that manages the South Korean pop phenomenon BTS, plunged by a record after the band said its members will focus on individual projects for a while.

Environmental, Social and Corporate Governance

BP takes 40% stake in vast $30bn Australian renewables project; Solar, wind and green hydrogen scheme aims to generate equivalent to third of nation’s capacity
Tom Wilson and James Fernyhough – FT
BP has made one of its biggest renewable energy bets yet, acquiring the largest stake in a vast solar, wind and green hydrogen project in Western Australia that will cost more than $30bn to develop. The energy major said on Wednesday that it had agreed to buy 40.5 per cent of the Asian Renewable Energy Hub, which it will also operate. The deal remains subject to approval in Australia. Conceived in 2014 and developed by partners Intercontinental Energy, CWP Global and Macquarie, the 6,500 square kilometres site in the Pilbara mining region has the potential to be one of the largest renewable power hubs in the world. It hopes to develop 26GW of solar and wind power, equivalent to a third of Australia’s entire generating capacity, and produce roughly 1.6mn tonnes a year of green hydrogen.

Deutsche Bank says it is investigating DWS greenwashing claims
Deutsche Bank is conducting its own internal investigation into alleged greenwashing at asset management arm DWS, the lender’s chief executive said on Tuesday. DWS’s chief executive said earlier this month he would step down following raids by prosecutors over allegations that the fund misled investors over its environmental credentials. “We think we know what we have done, and we are doing our own investigations,” said Deutsche Bank CEO Christian Sewing, when asked about the consequences of the accusations against DWS at a conference in Milan.

Goldman Investigation Tarnishes ESG Halo as Investors Bail; With Goldman becoming the latest firm hit by a greenwashing probe, ESG’s problems may only just be starting.
Natasha White and Frances Schwartzkopff – Bloomberg
ESG has become a punching bag for the far right, for disgruntled corporate executives and even industry insiders. But there’s one group whose growing disapproval might be the ultimate game changer. Retail investors are slowly starting to look under the hood of the $40 trillion environmental, social and governance industry that’s increasingly steering their savings, and many aren’t liking what they see. What’s more, some of the biggest names in finance have been tainted by greenwashing allegations, with Goldman Sachs Asset Management and the investment arm of Deutsche Bank AG among the most prominent.

Japanese Firm to Tackle Dearth of Women Managers With Novel Bond; Mitsubishi Estate plans notes with diversity goals in terms; Japan lags major economies in women in leadership roles
Ayai Tomisawa – Bloomberg
One of Japan’s biggest real estate developers is planning a bond linked to it raising the share of women in management three decades from now. Mitsubishi Estate Co. on Wednesday announced it’s considering issuing sustainability-linked notes, whose terms are linked to variable targets like cutting emissions. In addition to the environmental objectives, the developer of office buildings and luxury condos aims to raise the proportion of its female managers to 40% in fiscal 2050, up from just 5.8% in fiscal 2020.

The SEC War on Greenwashing Has Begun; The regulator’s campaign against fund managers profiting from exaggerated ESG claims is off and running.
Tim Quinson
There’s now little doubt that the US Securities and Exchange Commission actually means business in its bid to crackdown on misleading claims by managers of ESG funds.

Carney-Led Climate Group Asks Investors to ‘Make Good’ on Net Zero; GFANZ says it provides template for how financial firms can help the global economy pivot to clean energy from fossil fuels.
Alastair Marsh – Bloomberg
It’s time for financial institutions to “make good on their commitments” to eliminate carbon emissions from their portfolios, according to the finance industry’s biggest climate coalition. The Glasgow Financial Alliance for Net Zero, which includes insurers, banks and asset managers overseeing a combined $130 trillion of assets, published a series of documents Wednesday it says provides a template for how finance firms can enable the global economy to pivot from fossil fuels to clean energy. The centerpiece of its efforts is a proposal for what credible net-zero transition plans for finance firms should look like. The plan would require banks to detail the actions they will take, the metrics by which their progress should be judged and evidence that their decisions are aligned with the ultimate objective of limiting global warming to 1.5 degrees Celsius.

Diesel Crisis Likely to Stay Unfixed by Oil Refining Revival; Net additions to global refining capacity this year and next; Increased refinery processing still won’t balance fuel markets
Jack Wittels – Bloomberg
A wave of new oil refining capacity that’s coming on stream won’t be enough to solve a global shortage of diesel, jet fuel and similar petroleum products. That’s the takeway from the Paris-based International Energy Agency’s monthly report on Wednesday, which shows that increased processing — as new plants come online — this year and next will fall well short of what’s needed to match demand for these so-called middle distillate fuels.

Oil baron’s Continental bid highlights sector dislike of Wall Street ESG scrutiny; Harold Hamm’s move could enable oil group to fire up drilling rigs to capitalise on surging prices
Derek Brower and Justin Jacobs – FT
Shale baron Harold Hamm has hardly hidden his disdain for Wall Street’s environmental, social and governance movement, considering it a leash on companies such as Continental Resources as they try to get on with the job of producing more fossil fuels.

Power Play: The State of Electric Vehicle Charging Station Finance
Michael Joyce, Aaron Prince, Paige Anderson, Ellen Campbell, Ramey Layne and Michael Kurzer – Vinson & Elkins
Global sales of electric vehicles (“EVs”) more than doubled in 2021 over 2020, from 3 million to 6.6 million, and sales were up 60% in the first quarter of 2022 over the same period in 2021.1 With this explosive growth in the EV market, an effective and reliable charging infrastructure will be in high demand. Financing the build-out of this infrastructure at the asset level, however, continues to be challenging. Furthermore, given the myriad nature of EV charging business models, there will not be a one-size-fits-all approach. Such complexities notwithstanding, with an increased focus on transportation electrification and the associated infrastructure, the financing models supporting each flavor of EV charging project are beginning to come into focus.


Citigroup Hires Trio of Tech Bankers From Barclays, Credit Suisse; Dan McDow joins as global head of software investment banking; Steve Anderson, Andrew Delia added as managing directors
Jennifer Surane – Bloomberg
Citigroup Inc. hired three bankers from Credit Suisse Group AG and Barclays Plc as the firm builds out its investment-banking division focused on technology. Credit Suisse’s Dan McDow joined as Citigroup’s global head of software, according to a memo to staff. He will be based in New York and report to Mark Keene, who leads technology investment banking globally at Citigroup. “Within technology, software represents the largest global universe wallet segment and is experiencing tremendous growth through convergence with all sectors,” Keene said in the memo. “We intend to continue to invest in dedicated vertical software domain expertise.”

Hedge Funds Spawned by Hillhouse Burned in China Tech Crash
Bei Hu and Nishant Kumar – Bloomberg
For years, it’s been one of the best calling cards that hedge fund startups in Asia could ask for: getting support from billionaire Zhang Lei or gaining experience at his Hillhouse Capital Group. After leveraging that Hillhouse pedigree to raise a combined $20 billion, the offshoot funds are losing some of their luster. Most have posted double-digit declines this year on the same Chinese tech, consumer and health-care sectors that Hillhouse itself backed to mint so many millionaires.

Andurand’s Biggest Hedge Fund Surges 162% on Commodities Rally
Grant Smith – Bloomberg
Commodities trader Pierre Andurand is heading for a stellar first half, with the biggest of his funds returning 162% so far this year, according to a person with knowledge of the matter. The advance by the Andurand Commodities Discretionary Enhanced Fund, which holds half of the trader’s $2 billion in managed assets, follows a gain of 87% in 2021. His older Andurand Commodities Fund, which holds $750 million, closed up 41.5%. The Andurand Climate and Energy Transition Fund, launched last summer, returned 14%. The Bloomberg Commodity Spot Index, which tracks energy, metals and crop futures, has climbed about 30% this year amid a combination of surging consumption and Russia’s war in Ukraine. Last year, Andurand predicted that the world was entering a bull market for commodities, supported by a global shift toward decarbonization.

Hedge fund backed by legendary investor Julian Robertson closes; Tiger Legatus shuts doors as equity funds suffer worst start to a calendar year
Laurence Fletcher – FT
A hedge fund backed by legendary investor Julian Robertson has shut its doors after nearly 13 years of trading in the latest sign of the tough conditions for managers trying to bet on the rise and fall of stock prices. New York-based Tiger Legatus Capital Management, founded by former Viking Global Investors trader Jesse Ro, told investors in a letter seen by the Financial Times that it would liquidate its fund and return capital after recent disappointing returns.

JP Morgan and Goldman Sachs halt Russian debt trading following increased US sanctions; The move is in response to new guidance from the US Treasury prohibiting the purchase of new and existing debt and equity securities issued by a Russian Federation entity.
Wesley Bray – The Trade
JP Morgan and Goldman Sachs have withdrawn from handling trades of Russian debt following the Biden administration’s announcement banning US investors from scooping up such assets, as reported by Bloomberg.

Wellness Exchange

Hong Kong Covid Cases Top 1,000 as Home Isolation Tweaked Again
Michelle Fay Cortez – Bloomberg
Hong Kong reported more than 1,000 new Covid-19 cases on Wednesday, the highest in two months, with the rise in infections spurring officials to continue to tighten rules around who can isolate at home. There were 971 new local infections, including many among school children, their families and patrons of nightlife venues, Department of Health official Albert Au said at the daily virus briefing. Another 76 infections were detected among travelers who recently entered the city, bringing the total to 1,047 — the highest since April 14.

Harry Potter Publisher Says Covid Reading Surge is Here to Stay; Bloomsbury Publishing says sales soar as book-buying continues; Profit and sales at company are now above pre-pandemic levels
Irina Anghel – Bloomberg
Bloomsbury Publishing Plc said the surge in reading during lockdown in Britain is the new normal post-pandemic as the company, best known for the Harry Potter series, reported record revenue. Full-year sales climbed 24% to to £230.1 million ($277 million) and profit jumped 40% as people continued to buy novels and books related to hobbies and personal interests, the company said in a statement on Wednesday, beating analyst estimates.


Hong Kong Pension Pot Shrinks 11% on China Market Turmoil; Mandatory retirement fund lost $17 billion since start of 2021; China and Hong Kong equities saw sharpest declines in assets
Lulu Yilun Chen – Bloomberg
It’s been a bad year for Hong Kong residents counting on Greater China for their retirement savings. The mandatory provident fund — Hong Kong’s pension system — has lost about 11% since the start of 2021, walloped by China’s industry crackdowns and Covid Zero policy, which overshadowed gains in US assets. That erased HK$130 billion ($17 billion) in total, or about HK$28,300 for each account at the end of May, according to researcher MPF Ratings Ltd.

Gazprom cuts gas supplies to Italy, says Eni; Reduction comes day after Russian state-owned gas supplier restricted supply to Germany
Tom Wilson and Roman Olearchyk – FT
Gazprom has cut its gas supply to Italy by 15 per cent, says the Italian energy major Eni, a day after Russian flows to Germany were also reduced. Eni on Wednesday said the state-owned Russian company had not provided a reason for the reduction and that it was monitoring the situation.

Thomson Reuters launches investigation, halts work with S.African partner
Global media and services company Thomson Reuters has suspended work with a South African subcontractor following a newspaper report that focused on an alleged conflict of interest related to the awarding of a 225 million rand ($14 million) government IT contract. South African newspaper The Sunday Times reported that Thomson Reuters, having won a contract from the Office of the Chief Justice (OCJ) to supply court software, subcontracted 30% of the deal, as South African law requires, to a local company called ZA Square.


Alibaba’s SCMP Poaches Former Expedia, AOL Exec for New CEO; Catherine So will head Alibaba’s media firm from July; She joins during an uncertain time for the media industry
Linda Lew – Bloomberg
The South China Morning Post has picked Expedia’s Asian head Catherine So to become its new chief executive officer, putting a technology and media veteran at the helm of the news outlet owned by Alibaba Group Holding Ltd. So replaces Gary Liu, who will leave in July to oversee crypto-spinoff Artifacts Lab, the SCMP said in a statement. The Harvard-educated So, who’s also worked at Groupon, Star TV and AOL Time Warner, will focus on growing the newspaper’s global readership and expanding its commercial opportunities.

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The Spread

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