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Business

Adani abandons $2.5 billion share sale in big blow to Indian tycoon

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NEW DELHI, Feb 1 (Reuters) – Gautam Adani’s flagship firm called off its $2.5 billion share sale in a dramatic reversal on Wednesday as a rout sparked by a U.S. short-seller’s criticisms wiped billions more off the value of the Indian tycoon’s stocks.

The withdrawal of the Adani Enterprises (ADEL.NS) share offering marks a stunning setback for Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years in line with stock values of his businesses.

“Today the market has been unprecedented, and our stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the Company’s board felt that going ahead with the issue will not be morally correct,” Adani said.

“Our balance sheet is very healthy with strong cashflows and secure assets, and we have an impeccable track record of servicing our debt. This decision will not have any impact on our existing operations and future plans,” the billionaire added in a statement to Indian exchanges.

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Adani, whose global business interests span ports, airports, mining, cement and power, is battling to stabilise his companies and defend his reputation.

“Once the market stabilizes, we will review our capital market strategy,” he added.

A report by Hindenburg Research last week alleged improper use by the of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.

The Jan. 24 report has since triggered a $86 billion erosion in market capitalisation of seven listed Adani Group companies.

Adani Group has denied the allegations, saying the short-seller’s allegation of stock manipulation has “no basis” and stems from an ignorance of Indian law. The group has always made the necessary regulatory disclosures, it added.

REFUNDS

Adani Group was working with its bankers to refund the proceeds received by in the secondary share sale of Adani Enterprises. Anchor investors who had supported the issue included Maybank Securities and Abu Dhabi Investment Authority.

The company aims to protect the interests of its investing community by returning the proceeds, it said.

Adani Group had on Tuesday mustered enough support from investors for the share sale to proceed, in what some saw as a stamp of investor confidence amid the storm.

But after a brief respite, the selloff in Adani Group stocks and bonds resumed on Wednesday, with shares in Adani Enterprises plunging 28% and Adani Ports and Special Economic Zone (APSE.NS) dropping 19%, the worst day on record for both.

The fundraising was critical for Adani, not just because it would have helped cut his group’s debt, but also because it was being seen by some as a gauge of confidence as he faced the biggest business and reputational challenge of his career.

Wednesday’s stock losses saw Adani slip to 15th on the Forbes rich list with an estimated net worth of $75.1 billion, below rival Mukesh Ambani, the chairman of Reliance Industries (RELI.NS) who ranks ninth with a net worth of $83.7 billion.

The share sale had succeeded on Tuesday even when the Adani Enterprises stock price in Mumbai markets traded below the offer price of the share sale.

“I do not know how the markets will behave in short term. But this is a measure to enhance (Adani’s) reputation since the investors were staring at a 30% loss even before the shares were alloted,” said Rajesh Baheti, chief executive, Crossseas Capital Services, an algo trading firm.

Reporting by Aditya Kalra and Jahnavi Nidumolu in Bengaluru; Editing by Anil D’Silva, Kirsten Donovan and Alexander Smith

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Business

Adani loses Asia’s richest crown as stock rout deepens to $84 billion

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BENGALURU, Feb 1 (Reuters) – Shares in Indian tycoon Gautam Adani’s conglomerate plunged again on Wednesday as a rout in his companies deepened to $84 billion in the wake of a U.S. short-seller report, with the billionaire also losing his title as Asia’s richest person.

Wednesday’s stock losses saw Adani slip to 15th on Forbes rich list with an estimated net worth of $76.8 billion, below rival Mukesh Ambani, the chairman of Reliance Industries Ltd (RELI.NS) who ranks ninth with a net worth of $83.6 billion.

Before the critical report by U.S. short-seller Hindenburg, Adani had ranked third.

The losses mark a dramatic setback for Adani, the school-dropout-turned-billionaire whose business interests stretch from ports and airports to mining and cement. Now, the tycoon is fighting to stabilise his businesses and defend his reputation.

It comes just a day after the group managed to muster support from investors for a $2.5 billion share sale for flagship firm Adani Enterprises on Tuesday, in what some saw as a stamp of investor confidence.

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The report by Hindenburg Research last week alleged improper use by the Adani Group of offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuations of seven listed Adani companies.

The group has denied the allegations, saying the short-seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.

Shares in Adani Enterprises (ADEL.NS), often described as the incubator of Adani businesses, plunged 30% on Wednesday. Adani Power (ADAN.NS) fell 5%, while Adani Total Gas (ADAG.NS) slumped 10%, down by its daily price limit.

Adani Transmission (ADAI.NS) was down 6% and Adani Ports and Special Economic Zone (APSE.NS) dropped 20%.

Adani Total Gas, a joint venture with France’s Total (TTEF.PA), has been the biggest casualty of the short seller report, losing about $27 billion.

“There was a slight bounce yesterday after the share sale went through, after seeming improbable at a point, but now the weak market sentiment has become visible again after the bombshell Hindenburg report,” said Ambareesh Baliga, a Mumbai-based independent market analyst.

“With the stocks down despite Adani’s rebuttal, it clearly shows some damage on investor sentiment. It will take a while to stabilise,” Baliga added.

Reuters Graphics

SCRUTINY

Underscoring the nervousness in some quarters, Bloomberg reported on Wednesday that Credit Suisse (CSGN.S) had stopped accepting bonds of Adani group companies as collateral for margin loans to its private banking clients.

Deven Choksey, managing director of KRChoksey Shares and Securities, said this was a big factor in Wednesday’s share slides.

Credit Suisse had no immediate comment.

Scrutiny of the conglomerate is stepping up, with an Australian regulator saying on Wednesday it would review Hindenburg’s allegations to see if further enquiries were warranted.

Data also showed that foreign investors sold a net $1.5 billion worth of Indian equities after the Hindenburg report – the biggest outflow over four consecutive days since Sept. 30.

Headaches for the Adani Group are expected to continue for some time.

India’s markets regulator, which has been looking into deals by the conglomerate, has said it will add Hindenburg’s report to its own preliminary investigation.

State-run Life Insurance Corporation (LIC) (LIFI.NS)said on Monday it would seek clarifications from Adani’s management on the short seller report. The insurance giant was, however, a key investor in the Adani Enterprises share sale.

Hindenburg said in its report it had shorted U.S.-bonds and non-India traded derivatives of the Adani Group.

Reporting by Chris Thomas in Bengaluru and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran and Aditya Kalra; Editing by Edwina Gibbs and Mark Potter

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Business

Adani’s $2.5 bln share offer backed by investors, despite short-seller attack

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MUMBAI, Jan 31 (Reuters) – Indian billionaire Gautam Adani’s $2.5 billion share sale inched closer to full subscription on Tuesday as investors pumped in funds after a tumultuous week for his group in which its stocks were pummeled by a scathing short-seller report.

The secondary share sale of flagship Adani Enterprises (ADEL.NS) was subscribed 93% on Tuesday, including the anchor investor portion, Indian stock exchange data showed. The share sale needed at least 90% subscription to go through.

By Monday, the book building process of the country’s largest share sale had received only 3% in bids, amid swirling concerns that the share sale could struggle due to a market rout in Adani’s stocks in recent days.

The share sale is critical for Adani, not just because it is India’s largest follow-on offering and will help cut debt, but also because its success will be seen as a stamp of confidence by investors at a time the tycoon faces one of his biggest business and reputational challenges of recent times.

The offer closes days after Adani’s public faceoff with Hindenburg Research, which on Jan. 24 flagged concerns about the use of tax havens and “substantial debt” at the group. It added that shares in seven Adani listed companies have an 85% downside due to what it called “sky-high valuations”.

That has since sparked $65 billion in cumulative losses for stocks of the Adani group, which called the report baseless.

The support for Adani’s share sale came even as the flagship’s shares were trading at 2,967 rupees, up nearly 2.5% but below the lower end of the share sale price band of 3,112 rupees.

“It looks down to the wire with just a few hours remaining on the last day, but the offering should go through. Institutions seem to be subscribing to capitalise on opportunity to buy in bulk quantities outside the open market,” said Dipan Mehta, founder director of Elixir Equities.

Adani Group’s total gross debt in the financial year ended March 31, 2022, rose 40% to 2.2 trillion rupees ($26.83 billion). Adani said on Sunday – while responding to Hindenburg’s allegations – that over the past decade the group has “consistently de-levered”. Hindenburg later said Adani’s “response largely confirmed our findings and ignored our key questions.”

Reuters Graphics

The group had in recent days repeatedly said investors were standing by its side and the share offering would go through, amid rising concerns that may not happen. Bankers at one point had considered tweaking the pricing of the issue, or extending the sale, Reuters had reported.

Adani even said the Hindenburg report was a “calculated attack” on the country and its institutions while its CFO compared the market rout of its stocks to a colonial-era massacre.

Demand from retail investors remained muted, garnering bids only worth around 10% of the shares on offer for that segment. On Tuesday, demand mostly came from foreign institutional investors, as well as corporates who bid in excess of 1 million rupees each, data showed.

Over the weekend and through Monday, Adani’s firm held extensive discussions with investment bankers and institutional investors to attract subscriptions, according to two sources with direct knowledge of the talks.

Abu Dhabi conglomerate International Holding Company (IHC.AD) said it will invest $400 million in the issue.

“The follow-on public offering has to go through to restore investor confidence,” said V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Hindenburg report and its fallout have drawn global attention. Adani is now the world’s eighth richest person, down from third ranking on Forbes’ rich list last week.

Adani Transmission (ADAI.NS) rose 1.6% on Tuesday, after losing 38% since the Hindenburg report, while Adani Ports and Special Economic Zone (APSE.NS) climbed 3.2%.

Adani Total Gas (ADAG.NS) languished at its 10% lower price limit, while Adani Power (ADAN.NS) and Adani Wilmar (ADAW.NS) were down 5% each.

Reuters Graphics

Global index publisher FTSE Russell said on Tuesday it continues to monitor publicly available information on the group, in particular from the Indian regulatory authorities.

Hindenburg said in its report it had shorted U.S.-bonds and non-India traded derivatives of the Adani Group. On Tuesday, U.S. dollar-denominated bonds issued by Adani Ports and Special Economic Zone continued their fall into a second week.

($1 = 82.0025 Indian rupees)

Reporting by M. Sriram and Chris Thomas; Editing by Aditya Kalra and Muralikumar Anantharaman

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US

Factbox: FACTBOX Georgia on his mind: Donald Trump troubled by more legal woes

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Jan 25 (Reuters) – Donald Trump could learn soon whether he or any associates will be charged or cleared of wrongdoing in a Georgia probe into his efforts to overturn his 2020 election defeat, one of a series of legal threats looming over the Republican former U.S. president:

GEORGIA ELECTION TAMPERING PROBE

On Tuesday, the prosecutor in the state of Georgia spoke to a judge on behalf of a special grand jury empanelled in May to investigate Trump’s alleged efforts to influence that state’s 2020 election results.

Fani Willis, the Fulton County district attorney and a Democrat who will ultimately decide whether to pursue charges against Trump or anyone else, said the grand jury had completed its task and decisions were “imminent.”

The investigation focuses in part on a phone call Trump made to Georgia Secretary of State Brad Raffensperger, a Republican, on Jan. 2, 2021. Trump asked Raffensperger to “find” enough votes needed to overturn Trump’s election loss in Georgia.

Legal experts said Trump may have violated at least three Georgia criminal election laws: conspiracy to commit election fraud, criminal solicitation to commit election fraud and intentional interference with performance of election duties.

Trump could argue that his discussions were constitutionally protected free speech.

U.S. CAPITOL ATTACK

The U.S. Justice Department has investigations under way into both Trump’s actions in the 2020 election and his retention of highly classified documents after departing the White House in 2021.

Both investigations involving Trump are being overseen by Jack Smith, a war crimes prosecutor and political independent. Trump has accused the FBI, without evidence, of launching the probes as political retribution.

A special House of Representatives committee investigating the deadly Jan. 6, 2021, assault by Trump supporters on the U.S. Capitol urged the Justice Department to charge Trump with corruption of an official proceeding, conspiracy to defraud the United States, conspiracy to make a false statement and inciting or aiding an insurrection.

The request is non-binding. Only the Justice Department can decide whether to charge Trump, who has called the Democratic-led panel’s investigation a politically motivated sham.

MISSING GOVERNMENT RECORDS

U.S. Attorney General Merrick Garland appointed Smith to investigate whether Trump improperly retained classified records at his Florida estate after he left office in 2021 and then tried to obstruct a federal investigation.

Garland also appointed former U.S. Attorney Robert Hur for Maryland to investigate the removal of classified records in President Joe Biden’s possession dating to his time as vice president.

It is unlawful to willfully remove or retain classified material.

In Trump’s case, the FBI seized 11,000 documents from the former president’s Mar-a-Lago Florida estate in a court-approved Aug. 8 search. About 100 documents were marked classified; some were designated top secret, the highest level of classification.

Trump has accused the Justice Department of engaging in a partisan witch hunt.

NEW YORK ATTORNEY GENERAL CIVIL LAWSUIT

New York Attorney General Letitia James said in a civil lawsuit filed in September that her office uncovered more than 200 examples of misleading asset valuations by Trump and the Trump Organization business between 2011 and 2021.

Former U.S. President Donald Trump speaks during a rally in Commerce, Georgia, U.S. March 26, 2022. REUTERS/Alyssa Pointer/File Photo

A Democrat, James accused Trump of inflating his net worth by billions of dollars to obtain lower interest rates on loans and get better insurance coverage.

A New York judge ordered that an independent monitor be appointed to oversee the Trump Organization before the case goes to trial in October 2023.

James seeks to permanently bar Trump and his children Donald Jr., Eric and Ivanka Trump from running companies in New York state, and to prevent them and his company from buying new properties and taking out new loans in the state for five years.

James also wants the defendants to hand over about $250 million that she says was obtained through fraud.

Trump has called the attorney general’s lawsuit a witch hunt. A lawyer for Trump has called James’ claims meritless.

James said her probe also uncovered evidence of criminal wrongdoing, which she referred to federal prosecutors and the Internal Revenue Service for investigation.

DEFAMATION CASE

E. Jean Carroll, a former Elle magazine writer, has filed two lawsuits accusing Trump of having defamed her when he denied her allegation that he raped her in New York’s Bergdorf Goodman department store dressing room in late 1995 or early 1996.

Trump accuses her of lying to drum up sales for a book.

Carroll first sued Trump after he denied the accusation in June 2019 and told a reporter at the White House that he did not know Carroll, that “she’s not my type,” and that she concocted the claim to sell her new memoir.

The second lawsuit arose from an October 2022 social media post where Trump called the rape claim a “hoax,” “lie,” “con job” and “complete scam,” and said “this can only happen to ‘Trump’!”

That lawsuit includes a battery claim under the Adult Survivors Act, which starting last Nov. 24 gave adults a one-year window to sue their alleged attackers even if statutes of limitations have expired.

A U.S. judge on Jan. 13 rejected as “absurd” Trump’s effort to dismiss the second lawsuit.

Trump and Carroll are awaiting a decision from a Washington, D.C., appeals court on whether, under local law, Trump should be immune from Carroll’s first lawsuit over his June 2019 comments.

That lawsuit would likely be dismissed if the court decided that Trump spoke within his role as president, and continue if Trump spoke in his personal capacity as Carroll argues.

Any decision would have no effect on Carroll’s second defamation and battery lawsuit. A trial in the first lawsuit is scheduled for April 10.

NEW YORK CRIMINAL PROBE

Although Trump was not charged with wrongdoing, his real estate company was found guilty on Dec. 6 of tax fraud in New York state. A judge this month sentenced Trump’s namesake real estate company to pay a $1.6 million criminal penalty, the maximum the judge could impose.

Jurors convicted the Trump Organization, which operates hotels, golf courses and other real estate around the world, of paying personal expenses for top executives including former chief financial officer Allen Weisselberg, and issuing bonus checks to them as if they were independent contractors.

Weisselberg, the company’s former chief financial officer, pleaded guilty and was required to testify against the Trump Organization as part of his plea agreement. He is also a defendant in James’ civil lawsuit.

Reporting by Joseph Ax, Luc Cohen, Karen Freifeld, Sarah N. Lynch, Jonathan Stempel and Jacqueline Thomsen; Editing by Howard Goller

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Business

Hindenburg shorts India’s Adani Group, flags debt and accounting concerns

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BENGALURU, Jan 25 (Reuters) – Hindenburg Research said on Wednesday it held short positions in India’s Adani Group, accusing the conglomerate of improper extensive use of entities set up in offshore tax havens and expressing concern about high debt levels.

The report, which comes days ahead of a $2.5 billion share offering by flagship firm Adani Enterprises (ADEL.NS), sent shares in Adani group firms sliding.

Hindenburg, a well known U.S. short-seller, said key listed companies in the group controlled by billionaire Gautam Adani had “substantial debt” which has put the entire group on a “precarious financial footing”.

It also said that seven Adani listed companies have an 85% downside on a fundamental basis due to what it called “sky-high valuations”.

An Adani spokesperson did not immediately respond to Reuters request for comment on the report, which Hindenburg said was based on research that involved speaking with dozens of individuals, including former Adani Group executives as well as a review of documents.

Hindenburg said it held its short positions through U.S.-traded bonds and non-Indian-traded derivative instruments.

Adani has repeatedly dismissed debt concerns. Adani Chief Financial Officer Jugeshinder Singh told media on Jan. 21 “Nobody has raised debt concerns to us. No single investor has.”

In the wake of the Hindenburg report, Adani Ports And Special Economic Zone (APSE.NS) slid 7.3% to its lowest level since early July, while Adani Enterprises dropped 3.7% to a near three-month low.

Reuters Graphics Reuters Graphics

Adani-owned cement firms ACC (ACC.NS) and Ambuja Cements (ABUJ.NS) fell 6.7% and 9.7% respectively.

Hindenburg’s report said that five of seven key listed Adani companies have reported current ratios – a measure of liquid assets minus near-term liabilities – below 1. This, the short-seller said, suggested “a heightened short-term liquidity risk.”

Adani Group’s total gross debt in the financial year ending March 31, 2022, rose 40% to 2.2 trillion rupees.

Refinitiv data shows that debt at all the Adani Group’s seven key listed Adani companies exceeds equity, with debt at Adani Green Energy Ltd (ADNA.NS) exceeding equity by more than 2,000%.

CreditSights, part of the Fitch Group, described the group last September as “overleveraged” and said it had concerns over its debt. While the report later corrected some calculation errors, CreditSights said it maintained its concerns over leverage.

Hindenburg is known for shorting electric truck maker Nikola Corp (NKLA.O) and Twitter though it later reversed its position in Twitter.

Shares in Adani Enterprises surged 125% in 2022, while other group companies, including power and gas units, rose more than 100%.

Reporting by Mrinmay Dey, Chris Thomas and Aditya Kalra; Additional reporting by Miyoung Kim; Editing by Dhanya Ann Thoppil and Edwina Gibbs

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Business

Goldman job cuts hit investment banking, global markets hard -source

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  • Mass redundancies, spending review beckons for Wall Street giant
  • Cuts to all major divisions expected, globally
  • Restructuring in Asian wealth unit kicks off Wednesday’s layoffs

NEW YORK/LONDON/HONG KONG, Jan 12 (Reuters) – Goldman Sachs (GS.N) began laying off staff on Wednesday in a sweeping cost-cutting drive, with around a third of those affected coming from the investment banking and global markets division, a source familiar with the matter said.

The long-expected jobs cull at the Wall Street titan is expected to represent the biggest contraction in headcount since the financial crisis. It is likely to affect most of the bank’s major divisions, with its investment banking arm facing the deepest cuts, a source told Reuters this month.

Just over 3,000 employees will be let go, the source, who could not be named, said on Monday. A separate source confirmed on Wednesday that cuts had started.

“We know this is a difficult time for people leaving the firm,” a Goldman Sachs statement on Wednesday said.

“We’re grateful for all our people’s contributions, and we’re providing support to ease their transitions. Our focus now is to appropriately size the firm for the opportunities ahead of us in a challenging macroeconomic environment.”

The cuts are part of broader reductions across the banking industry as a possible global recession looms. At least 5,000 people are in the process of being cut from various banks. In addition to the 3,000 from Goldman, Morgan Stanley (MS.N) has cut about 2% of its workforce, or 1,600 people, a source said last month while HSBC (HSBA.L) is shedding at least 200, sources previously said.

Last year was challenging across groups including credit, equities, and investment banking broadly, said Paul Sorbera, president of Wall Street recruitment firm Alliance Consulting. “Many didn’t make budgets.”

“It’s just part of Wall Street,” Sorbera said. “We’re used to seeing layoffs.”

The latest cuts will reduce about 6% of Goldman’s headcount, which stood at 49,100 at the end of the third quarter.

[1/3] A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012. REUTERS/Brendan McDermid/File Photo

The firm’s headcount had added more than 10,000 jobs since the coronavirus pandemic as markets boomed.

The reductions come as U.S. banking giants are forecast to report lower profits this week. Goldman Sachs is expected to report a net profit of $2.16 billion in the fourth-quarter, according to a mean forecast by analysts on Refinitiv Eikon, down 45% from $3.94 billion net profit in the same period a year earlier.

Shares of Goldman Sachs have partially recovered from a 10% fall last year. The stock closed up 1.99% on Wednesday, up around 6% year-to-date.

LAYOFFS AROUND GLOBE

Goldman’s layoffs began in Asia on Wednesday, where Goldman completed cutting back its private wealth management business and let go of 16 private banking staff across its Hong Kong, Singapore and China offices, a source with knowledge of the matter said.

About eight staff were also laid off in Goldman’s research department in Hong Kong, the source added, with layoffs ongoing in the investment banking and other divisions.

At Goldman’s central London hub, rainfall lessened the prospect of staff huddles. Several security personnel actively patrolled the building’s entrance, but few people were entering or leaving the property. A glimpse into the bank’s recreational area just beyond its lobby showed a handful of staffers in deep conversation but few signs of drama. Wine bars and eateries local to the office were also short of post-lunch trade, in stark contrast to large-scale layoffs of the past when unlucky staffers would typically gather to console one another and plan their next career moves.

In New York, employees were seen streaming into headquarters during the morning rush.

Goldman’s redundancy plans will be followed by a broader spending review of corporate travel and expenses, the Financial Times reported on Wednesday, as the U.S. bank counts the costs of a massive slowdown in corporate dealmaking and a slump in capital markets activity since the war in Ukraine.

The company is also cutting its annual bonus payments this year to reflect depressed market conditions, with payouts expected to fall about 40%.

Reporting by Sinead Cruise and Iain Withers in London, Selena Li in Hong Kong, Scott Murdoch in Sydney and Saeed Azhar in New York; Editing by Josie Kao and Christopher Cushing

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Business

Elon Musk starts Twitter poll on whether to bring back Trump

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Nov 18 (Reuters) – Elon Musk started a Twitter poll late on Friday asking followers to vote on whether to reinstate former U.S. President Donald Trump’s account on the platform, with early results showing roughly 60% voting yes.

“Vox Populi, Vox Dei,” Musk tweeted, a Latin phrase that roughly means meaning “the voice of the people is the voice of God.” The poll was open for 24 hours.

Musk, Twitter’s new owner, said in May he would reverse Twitter’s ban on Trump, whose account was suspended after last year’s attack on the U.S. Capitol.

Musk said earlier in the day that a decision to bring back Trump’s account was yet to be made, and that Twitter had reinstated some controversial accounts that had been banned or suspended, including satirical website Babylon Bee and comedian Kathy Griffin.

Musk’s decision to ask Twitter users for guidance on who should be on the platform is part of a huge restructuring of the company, including massive layoffs.

In a memo on Friday to remaining employees that was seen by Reuters, Musk asked those who write software code to report to the 10th floor of the Twitter’s headquarters in San Francisco by early afternoon.

The billionaire said in a follow-up email: “If possible, I would appreciate it if you could fly to SF to be present in person,” adding he would be at the office until midnight and would return Saturday morning.

He asked employees to email him a summary of what their software code has “achieved” in the past six months, “along with up to 10 screenshots of the most salient lines of code.”

“There will be short, technical interviews that allow me to better understand the Twitter tech stack,” Musk wrote in one of the emails, and asked engineers to report at 2 p.m. on Friday.

The emails came a day after hundreds of Twitter employees were estimated to have decided to leave the beleaguered social media company following a Thursday deadline from Musk that staffers sign up for “long hours at high intensity.”

The exodus adds to the change and chaos that have marked Musk’s first three weeks as Twitter’s owner. He has fired top management including former CEO Parag Agarwal and senior officials in charge of security and privacy, drawing scrutiny from a regulator.

A White House official also weighed in, saying Twitter should tell Americans how the company was protecting their data.

Tech website Platformer reported on Friday that Robin Wheeler, the company’s top ad sales executive, had been fired.

Wheeler, who told employees in a memo last week that she was staying, tweeted on Friday: “To the team and my clients…you were always my first and only priority”, with a salute emoji that has been adopted as a send off for departing employees.

Twitter told employees on Thursday that it would close its offices and cut badge access until Monday, according to two sources. Reuters could not immediately confirm whether the headquarters reopened.

On Friday afternoon, the company had started cutting off access to company systems for some of the employees who had declined to accept Musk’s offer, three people told Reuters.

Another source said the company was planning to shut down one of Twitter’s three main U.S. data centers, at the SMF1 facility near Sacramento, to save costs.

In his first email to Twitter employees this month, Musk warned that Twitter may not be able to “survive the upcoming economic downturn.” He also said, “We are also changing Twitter policy such that remote work is no longer allowed, unless you have a specific exception.”

Amid the changes, Moody’s withdrew its B1 credit rating for Twitter, saying it had insufficient information to maintain the rating.

Reporting by Hyunjoo Jin and Sheila Dang; Additional reporting by Katie Paul; Writing by Sheila Dang and Katie Paul; Editing by Jonathan Oatis, David Gregorio, Emelia Sithole-Matarise, Daniel Wallis, Sayantani Ghosh and Gerry Doyle

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Business

EXCLUSIVE At least $1 billion of client funds missing at failed crypto firm FTX – sources

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  • FTX founder Bankman-Fried secretly moved $10 billion in funds to trading firm Alameda – sources
  • Bankman-Fried showed spreadsheets to colleagues that revealed shift in funds to Alameda – sources
  • Spreadsheets indicated between $1 billion and $2 billion in client money is unaccounted for – sources
  • Executives set up book-keeping “back door” that thwarted red flags – sources
  • Whereabouts of missing funds is unknown – sources

New York, Nov 11 (Reuters) – At least $1 billion of customer funds have vanished from collapsed crypto exchange FTX, according to two people familiar with the matter.

The exchange’s founder Sam Bankman-Fried secretly transferred $10 billion of customer funds from FTX to Bankman-Fried’s trading company Alameda Research, the people told Reuters.

A large portion of that total has since disappeared, they said. One source put the missing amount at about $1.7 billion. The other said the gap was between $1 billion and $2 billion.

While it is known that FTX moved customer funds to Alameda, the missing funds are reported here for the first time.

The financial hole was revealed in records that Bankman-Fried shared with other senior executives last Sunday, according to the two sources. The records provided an up-to-date account of the situation at the time, they said. Both sources held senior FTX positions until this week and said they were briefed on the company’s finances by top staff.

Bahamas-based FTX filed for bankruptcy on Friday after a rush of customer withdrawals earlier this week. A rescue deal with rival exchange Binance fell through, precipitating crypto’s highest-profile collapse in recent years.

In text messages to Reuters, Bankman-Fried said he “disagreed with the characterization” of the $10 billion transfer.

“We didn’t secretly transfer,” he said. “We had confusing internal labeling and misread it,” he added, without elaborating.

Asked about the missing funds, Bankman-Fried responded: “???”

FTX and Alameda did not respond to requests for comment.

In a tweet on Friday, Bankman-Fried said he was “piecing together” what had happened at FTX. “I was shocked to see things unravel the way they did earlier this week,” he wrote. “I will, soon, write up a more complete post on the play by play.”

At the heart of FTX’s problems were losses at Alameda that most FTX executives did not know about, Reuters has previously reported.

Customer withdrawals had surged last Sunday after Changpeng Zhao, CEO of giant crypto exchange Binance, said Binance would sell its entire stake in FTX’s digital token, worth at least $580 million, “due to recent revelations.” Four days before, news outlet CoinDesk reported that much of Alameda’s $14.6 billion in assets were held in the token.

That Sunday, Bankman-Fried held a meeting with several executives in the Bahamas capital Nassau to calculate how much outside funding he needed to cover FTX’s shortfall, the two people with knowledge of FTX’s finances said.

Bankman-Fried confirmed to Reuters that the meeting took place.

Bankman-Fried showed several spreadsheets to the heads of the company’s regulatory and legal teams that revealed FTX had moved around $10 billion in client funds from FTX to Alameda, the two people said. The spreadsheets displayed how much money FTX loaned to Alameda and what it was used for, they said.

The documents showed that between $1 billion and $2 billion of these funds were not accounted for among Alameda’s assets, the sources said. The spreadsheets did not indicate where this money was moved, and the sources said they don’t know what became of it.

In a subsequent examination, FTX legal and finance teams also learned that Bankman-Fried implemented what the two people described as a “backdoor” in FTX’s book-keeping system, which was built using bespoke software.

They said the “backdoor” allowed Bankman-Fried to execute commands that could alter the company’s financial records without alerting other people, including external auditors. This set-up meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX, they said.

In his text message to Reuters, Bankman-Fried denied implementing a “backdoor”.

The U.S. Securities and Exchange Commission is investigating FTX.com’s handling of customer funds, as well its crypto-lending activities, a source with knowledge of the inquiry told Reuters on Wednesday. The Department of Justice and the Commodity Futures Trading Commission are also investigating, the source said.

FTX’s bankruptcy marked a stunning reversal for Bankman-Fried. The 30-year-old had set up FTX in 2019 and led it to become one of the largest crypto exchanges, accumulating a personal fortune estimated at nearly $17 billion. FTX was valued in January at $32 billion, with investors including SoftBank and BlackRock.

The crisis has sent reverberations through the crypto world, with the price of major coins plummeting. And FTX’s collapse is drawing comparisons to earlier major business meltdowns.

On Friday, FTX said it had turned over control of the company to John J. Ray III, the restructuring specialist who handled the liquidation of Enron Corp – one of the largest bankruptcies in history.

Reporting by Angus Berwick; editing by Paritosh Bansal and Janet McBride

Our Standards: The Thomson Reuters Trust Principles.

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Business

Credit Suisse pays down debt to calm investor fears

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  • To buy back up to $3 billion in debt
  • Seen as bid to reassure nervous investors
  • Move comes weeks ahead of planned overhaul
  • Shares up as much as 3% in early trade

ZURICH, Oct 7 (Reuters) – Credit Suisse (CSGN.S) will buy back up to 3 billion Swiss francs ($3 billion) of debt, the embattled Swiss bank said on Friday, making a show of strength as it seeks to reassure investors after a tumultuous week.

The move trims the bank’s debts and is an attempt to bolster confidence after steep falls in its stock price and bonds. Unsubstantiated rumours that its future was in doubt have swirled on social media amid concern it may need to raise billions of francs in fresh capital.

One of the largest banks in Europe, Credit Suisse is embarking on a radical turnaround after losing more than $5 billion from the collapse of investment firm Archegos last year, when it also had to suspend client funds linked to failed financier Greensill.

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Bank executives spent last weekend reassuring large clients and investors about its financial strength, seeking to dispel speculation about its future.

CEO Ulrich Koerner also told staff in a memo that it has sufficient capital and liquidity. read more

But his words only fuelled rumours about the bank, as a social media storm gathered pace, triggering a sell-off of its stock.

The bank said the debt buyback would “allow us to take advantage of market conditions to repurchase debt at attractive prices”.

Investors took heart. Credit Suisse shares gained as much as 3% in early trading on Friday, while the price of its euro-denominated bonds rose.

“It’s an opportunistic move to take advantage of market conditions that might be reassuring to some investors,” said Vontobel analyst Andreas Venditti. “If bought below par, a gain results that will increase capital slightly.”

TROUBLED CHAPTER

Earlier this week, in an unusual step, the Swiss National Bank, which oversees the financial stability of systemically important banks in Switzerland, said it was monitoring the situation at Credit Suisse.

Banks are deemed systemically important if their failure would undermine the Swiss economy and financial system.

The move is reminiscent of a multi-billion-euro debt buyback by Deutsche Bank in 2016, when it faced a similar crisis and doubts over its future.

Dixit Joshi, a former Deutsche executive, has recently joined Credit Suisse as finance chief.

Zuercher Kantonalbank said the bonds are currently trading at a high discount, which allows Credit Suisse to cut debt at a low cost. Analyst Christian Schmidiger said the move was also a “signal that Credit Suisse has sufficient liquidity”.

Credit Suisse said it was making a 1 billion euro cash tender offer in relation to eight euro or pound sterling denominated senior debt securities and another offer to buy back 12 U.S. dollar denominated senior debt securities for up to $2 billion.

The developments unfolded after sources recently told Reuters that Credit Suisse was sounding out investors for fresh cash, approaching them for the fourth time in around seven years.

Under a restructuring launched by Chairman Axel Lehmann, the bank envisions shrinking its investment bank to focus even more on its flagship wealth management business. Chiefly, he hopes to close a troubled chapter for the bank and repair its reputation.

Over the past three quarters alone, losses have added up to nearly 4 billion Swiss francs. Given the uncertainties, the bank’s financing costs have surged.

The bank is due to present its new business strategy on Oct. 27, when it announces third-quarter results.

Rating agency Moody’s Investors Service expects losses for Credit Suisse to swell to $3 billion by year-end, Moody’s lead analyst on the bank told Reuters on Thursday. read more

The bank has also said it is looking to sell its upmarket Savoy Hotel, one of the best-known hotels in Zurich. read more

($1 = 0.9897 Swiss francs)

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Writing by John Revill and John O’Donnell; additional reporting by Amanda Cooper in London; editing by Mark Potter and Jason Neely

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US

IDB directors unanimously recommend firing of Claver-Carone after ethics probe

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Visitors walk past a screen with the logo of Banco Interamericano de Desarrollo (BID) at the Atlapa Convention Center in Panama City March 13, 2013. REUTERS/Carlos Jasso

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WASHINGTON, Sept 22 (Reuters) – The Inter-American Development Bank’s board of directors voted unanimously on Thursday to recommend firing President Mauricio Claver-Carone after an independent ethics investigation found misconduct, three sources familiar with the vote said.

The recommendation throws the final decision regarding Latin America’s largest development bank to its senior-most body, the board of governors, which will vote from Friday through Tuesday, one of the sources said.

Claver-Carone did not immediately respond to a phone call or text message seeking comment.

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A U.S. Treasury spokesperson declined to confirm the vote, but said the United States, the bank’s largest shareholder with 30% of its voting shares, supported Claver-Carone’s removal from office and wanted to see “swift resolution” by the governors.

“President Claver-Carone’s refusal to fully cooperate with the investigation, and his creation of a climate of fear of retaliation among staff and borrowing countries, has forfeited the confidence of the bank’s staff and shareholders and necessitates a change in leadership,” the spokesperson said.

Claver-Carone, in a statement in response to the Treasury said, “It’s shameful the U.S. commented to the press before notifying me and that it is not defending two Americans against what is clearly fabricated information.”

The bank’s 14 directors voted after four long days of discussions and an appearance by Claver-Carone, who had been in New York for meetings on the sidelines of the United Nations General Assembly this week.

Reuters reported on Wednesday that the board was nearing consensus on a vote to fire Claver-Carone.

Termination of Claver-Carone, a nominee of former U.S. President Donald Trump, requires a majority of the total voting power of the governing board. The bank’s three largest shareholders – the United States, Argentina and Brazil – together hold nearly 53% of the voting power. Claver-Carone took office in October 2020.

The governors are expected to approve the recommendation, said one of the sources.

Legal firm Davis Polk told the directors it found evidence to support whistleblower allegations that Claver-Carone had engaged in an intimate relationship with a subordinate and engaged in misconduct that violated the bank’s rules.

Investigators said they had uncovered evidence including a photograph of a hand-written contract on the back of a paper placemat, purportedly written and signed by Claver-Carone and the staffer, which stated, “we deserve absolute happiness” and a clause that stipulated any contract breach would result in “candle wax and a naughty box.”

U.S. officials were particularly concerned by Claver-Carone’s “behavior during the investigation, including his refusal to make available his IDB-issued work phone and other records,” a separate source familiar with the matter said.

They took issue with his “selective and misleading release of confidential information intended to taint the investigation and shape public opinion,” the source said. This had “undermined confidence in Claver-Carone’s trustworthiness and ability to lead a rules-based multilateral development institution,” the source added.

Claver-Carone also denied “direct evidence” that he had been in an undisclosed relationship with an IDB staff member who reported directly to him, and to whom he gave raises totaling more than 45% of base pay in less than one year, the source added.

U.S. officials felt Claver-Carone had created “an environment in which staff feared retaliation, including what appears to be actual retribution against senior and rank-and-file staff who participated fully and honestly in the investigation,” the source said.

U.S. Senator Patrick Leahy, who chairs the Senate Appropriations Committee, had strongly opposed Trump’s nomination of Claver-Carone as the first American to lead the bank, a job traditionally held by someone from Latin America.

“That tradition should be reinstated, with a person of the highest integrity and professionalism,” Leahy told Reuters.

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Reporting by Andrea Shalal in Washington and Cassandra Garrison in Mexico City; Editing by Josie Kao and Stephen Coates

Our Standards: The Thomson Reuters Trust Principles.

Cassandra Garrison

Thomson Reuters

Mexico-based reporter focusing on climate change and companies with an emphasis on telecoms. Previously based in Santiago de Chile and Buenos Aires covering the Argentine debt crisis, the tussle for influence between the United States and China in Latin America and the coronavirus pandemic.

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