Under Armour Sold Some Clothes Early
Matt Levine, 04 May 2021
One theory is that the price of a share of stock reflects the present value of its future cash flows in perpetuity. People buy stock today not because they expect high profits tomorrow, but because they expect high profits over the long run. Investment decisions that cost money today, but that will bring in much more money in five years, increase the net present value of the stock, so the shareholders should support them.
Another theory is that public markets are myopically focused on the short term. Investors care only about this quarter’s earnings; they buy stocks whose earnings go up each quarter and sell stocks whose earnings go down. A decision that reduces earnings today, in exchange for higher earnings in the future, is bad, and shareholders will punish a company that makes those decisions. Continue reading “Article: Under Armour Sold Some Clothes Early”
Credit Suisse Basically Headquartered In Court These Days
JON SHAZAR, 30 April 2021
Thomas Gottstein has been CEO of Credit Suisse for 63 weeks. There is no doubt that the overwhelming majority of them, and indeed all of the last eight or so, have been waking nightmares. Surely, however, there have been some consecutive five-day calendrical periods that he has enjoyed the job he has presumably been pining and preparing for most if not all of his professional career, some Fridays when he walked out of his office with a genuine spring in his step and ability to enjoy the weekend as much as any Swiss can enjoy such a frivolity.
This was not that week.
Bank of America Corp. Credit Suisse Group AG and Credit Agricole SA were fined about 28.5 million euros ($34 million) by European Union regulators for colluding in chatrooms on trading of U.S. supra-sovereign, sovereign and agency bonds. Continue reading “Article: Credit Suisse Basically Headquartered In Court These Days”
BofA Hit Hardest as EU Fines Bond-Trading Trio $34 Million
Aoife White, 28 April 2021
Bank of America Corp. Credit Suisse Group AG and Credit Agricole SA were fined about 28.5 million euros ($34 million) by European Union regulators for colluding on trading of U.S. supra-sovereign, sovereign and agency bonds.
Bank of America got the largest individual penalty of 12.6 million euros, while Credit Suisse was fined 11.9 million euros and Credit Agricole was ordered to pay more than 3.9 million euros. Deutsche Bank AG participated in the cartel but dodged a potential penalty of about 21.5 million euros because it was the first to inform the EU about the illegal behavior. Continue reading “Article: BofA Hit Hardest as EU Fines Bond-Trading Trio $34 Million”
EU Fines Trio of Banks $34 Million for Bond-Trading Cartel
Aoife White, 28 April 2021
Bank of America Corp., Credit Suisse Group AG and Credit Agricole SA were fined a total of about 28.5 million euros ($34 million) by European Union regulators for colluding on trading of U.S. supra-sovereign, sovereign and agency bonds.
Bank of America got the largest individual penalty of 12.6 million euros. Credit Suisse was fined 11.9 million euros and Credit Agricole was ordered to pay more than 3.9 million euros. Deutsche Bank AG participated in the cartel but wasn’t fined because it was the first to inform the EU about the illegal behavior. Continue reading “Article: EU Fines Trio of Banks $34 Million for Bond-Trading Cartel”
Market Manipulation Case Reopening Adds to Credit Suisse’s Woes
Alicia McElhaney, 28 April 2021
Although appellate court judges threw out some claims against the bank, they said that market manipulation allegations were “plausible.”
Credit Suisse is having another rough week.
A U.S. Appeals Court reopened a 2018 case alleging that Credit Suisse had engaged in market manipulation of some exchange-traded notes that short the VIX, a popular proxy for volatility. Continue reading “Article: Market Manipulation Case Reopening Adds to Credit Suisse’s Woes”
UBS Joins Morgan Stanley With Surprise $861 Million Archegos Hit
Marion Halftermeyer, 27 April 2021
UBS Group AG disclosed an $861 million hit from the implosion of Archegos Capital Management and vowed to improve risk management, joining Morgan Stanley in blindsiding investors who’d been kept in the dark for weeks about the size of the losses.
The loss, mostly booked in the first quarter, overshadowed a better-than-expected profit, with strong performance in the key wealth management business. Chief Executive Officer Ralph Hamers said while the bank will require more transparency from clients to prevent such losses in the future, he defended the business with hedge funds as “strategic” and said he had no plans to follow rival Credit Suisse Group AG in cutting back lending.
“Clearly, we are very disappointed at this situation,” he said in an interview with Bloomberg TV. “We are reviewing the different prime brokerage relationships, as well as the GFO — the family office relationships.” Continue reading “Article: UBS Joins Morgan Stanley With Surprise $861 Million Archegos Hit”
Credit Suisse Pressed by Senator on $200 Million Tax Fraud
David Voreacos, 27 April 2021
Credit Suisse Group AG, already under pressure for losing $5.5 billion in the collapse of Archegos Capital Management, must now answer questions from a powerful U.S. senator about a seven-year-old tax evasion scandal.
Senate Finance Committee Chairman Ron Wyden wrote Tuesday to Credit Suisse and the Justice Department, asking their leaders to explain how the lender’s banking unit could have pleaded guilty in May 2014 to enabling U.S. tax evasion but failed to disclose more than $200 million in accounts held by an American.
Wyden asked Credit Suisse Chief Executive Thomas Gottstein and Attorney General Merrick Garland about the bank’s handling of accounts held by former business professor Dan Horsky. After whistle-blowers told the Justice Department about the accounts in July 2014, Internal Revenue Service agents approached Horsky in 2015. He cooperated with U.S. authorities and pleaded guilty to tax fraud in 2016. Continue reading “Article: Credit Suisse Pressed by Senator on $200 Million Tax Fraud”
Credit Suisse Must Face Suit Over Failed Play on Fear Index/strong>
Bob Van Voris, 27 April 2021
Credit Suisse Group AG must face allegations that it engineered a complex fraud to sink an investment vehicle and profit on investors’ losses, after an appeals court revived the claims.
The lawsuit, filed in 2018, claimed investors lost $1.8 billion in the Feb. 5, 2018, collapse of the market for VelocityShares Daily Inverse VIX Short Term Exchange Traded Notes, known as “XIV Notes,” a derivative investment that increased in value when the stock market was calm and decreased when it was volatile. Continue reading “Article: Credit Suisse Must Face Suit Over Failed Play on Fear Index”
Gary Gensler is now head of the SEC. What comes next?
TYLER DURDEN, 19 April 2021
Apparently, firing half a dozen executives including its head of risk management (Lara Warner, also one of the most high-ranking women in the global financial services industry) hasn’t done enough to quiet shareholders’ demands for change atop Credit Suisse, the Swiss banking giant that reported a $4.7 billion loss from the collapse of Archegos Capital Management, with billions of losses likely to follow from the collapse for Greensill.
As CEO Thomas Gottstein clings to his position, the Wall Street Journal reported Monday that John Dabbs and Ryan Nelson will immediately step down as co-heads of prime services, the prime-brokerage unit responsible for extending all that credit to Archegos (as a reminder, for an explainer on how Archegos built its $100 billion massively leveraged position. Continue reading “Article: Credit Suisse Prime Brokerage Heads Fired Over Archegos Blowup”
Morgan Stanley reveals nearly $1B loss from Archegos implosion
Reuters, 16 April 2021
Morgan Stanley lost nearly $1 billion from the collapse of family office Archegos Capital Management, the bank said Friday, muddying its 150 percent jump in first-quarter profit that was powered by a boom in trading and deal-making.
Morgan Stanley was one of several banks that had exposure to Archegos, which defaulted on margin calls late last month and triggered a fire sale of stocks across Wall Street. Continue reading “Article: Morgan Stanley reveals nearly $1B loss from Archegos implosion”
About Credit Suisse X-Links Silver CovCall ETN
U.S. News, 16 April 2021
The investment seeks a return linked to the performance of the Credit Suisse NASDAQ Silver FLOWSTM 106 Index. The index measures the return of a “covered call” strategy on the shares of the iShares® Silver Trust (the “SLV Shares”) by reflecting changes in the price of the SLV Shares and the notional option premiums received from the notional sale of monthly call options on the SLV Shares less notional transaction costs incurred in connection with the covered call strategy.
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Jack Ma’s Double-Whammy Marks End of China Tech’s Golden Age
Bloomberg, 14 April 2021
(Bloomberg) — The full implications of Beijing’s rapid-fire moves against Jack Ma’s internet empire in recent days won’t be apparent for weeks, but one lesson is already clear: The glory days for China’s technology giants are over.
The country’s government imprinted its authority indelibly on the country’s technology industry in the span of a few days. In landmark announcements, it slapped a record $2.8 billion fine on Alibaba Group Holding Ltd. for abusing its market dominance, then ordered an overhaul of Ant Group Co. On Tuesday, regulators summoned 34 of the country’s largest companies from Tencent Holdings Ltd. to TikTok owner ByteDance Ltd., warning them “the red line of laws cannot be touched.” Continue reading “Article: Jack Ma’s Double-Whammy Marks End of China Tech’s Golden Age”
Archegos Exposes SEC Blind Spots, Dithering on Market Oversight
Robert Schmidt and Benjamin Bainx, 10 April 2021
The U.S. Securities and Exchange Commission was supposed to be able to spot a whale like Bill Hwang by now. As the financial world knows, it didn’t. Will the agency be able to catch the next one?
The collapse of Hwang’s Archegos Capital Management represents one of the most spectacular failures of risk-management and oversight in recent memory. For the SEC, it caps a decade of foot-dragging on protections that were meant to avert, or at least minimize, just such a blowup. Continue reading “Article: Archegos Exposes SEC Blind Spots, Dithering on Market Oversight”
BlackRock, State Street Exploring Takeover Of Credit Suisse Asset Management Arm
TYLER DURDEN, 09 April 2021
Earlier, several financial media outlets reported that Credit Suisse was considering dramatically shrinking or selling off its prime brokerage unit, the hedge-fund-focused business that just lost $4.7 billion for the bank, obliterating 18 months of the bank’s average net profits.
But in the last few hours, the focus has shifted to the bank’s asset management unit, amid reports that several American firms might be interested in making a bid, even as the bank has yet to release the final tally of expected losses from the Greensill debacle. Continue reading “Article: BlackRock, State Street Exploring Takeover Of Credit Suisse Asset Management Arm”
Senate Banking Chair Probes Banks Over Archegos Collapse
Dean Seal, 08 April 2021
The chairman of the Senate Banking Committee is asking Credit Suisse, Goldman Sachs and other Wall Street giants that brokered for Bill Hwang’s Archegos Capital Management to explain their involvement in the fund’s high-profile collapse.
In letters released Thursday, Sen. Sherrod Brown, D-Ohio, told higher-ups at the Swiss bank, Goldman, Morgan Stanley and Nomura that he was “troubled, but not surprised” that risky derivatives transactions between the banks and Hwang’s generally unregulated family office were connected to a shocking multibillion-dollar firesale on stocks in late March. Continue reading “Article: Senate Banking Chair Probes Banks Over Archegos Collapse”