The Justice Department on Friday asked a federal judge to bar FTX founder
Sam Bankman-Fried
from communicating with current and former employees of the collapsed crypto exchange without a lawyer present after prosecutors alleged he recently contacted a potential witness in his criminal case.
Mr. Bankman-Fried, who faces federal charges related to the implosion of FTX, reached out to the general counsel of the company’s U.S. operation through an encrypted messaging application earlier this month, federal prosecutors said in a filing. Prosecutors said Mr. Bankman-Fried has also contacted other current and former FTX employees and are concerned that the communications could lead to witness tampering.
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Prosecutors also requested the judge prohibit Mr. Bankman-Fried from communicating through encrypted messaging applications like Slack and Signal, saying that when he headed FTX he directed employees of the company and his crypto-investment firm Alameda Research to set their communications on these platforms to auto-delete after 30 days. That policy has impeded the government’s investigation, prosecutors said.
“Potential witnesses have described relevant and incriminating conversations with the defendant that took place on Slack and Signal that have already been autodeleted because of settings implemented at the defendant’s direction,” prosecutors said in the filing.
Lawyers for Mr. Bankman-Fried in a letter to the judge said the government was mischaracterizing innocuous conduct by their client in “an apparent effort to portray our client in the worst possible light.” They said the government’s request was overbroad and unnecessary, proposing instead that Mr. Bankman-Fried be prohibited from contacting certain limited witnesses, not all of FTX’s current and former employees.
FTX’s U.S. general counsel, Ryne Miller, couldn’t immediately be reached.
The Manhattan U.S. attorney’s office charged Mr. Bankman-Fried last month with stealing billions of dollars from FTX customers while misleading lenders and investors. He pleaded not guilty and is currently under court-ordered confinement in his parents’ Palo Alto, Calif., home while he awaits trial.
Mr. Bankman-Fried sent a Jan. 15 Signal message to the general counsel in which prosecutors allege he said he “would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other.”
Prosecutors didn’t identify the other employees that Mr. Bankman-Fried has allegedly tried to contact but called the communications to the general counsel and others troubling.
“Were the defendant to ‘vet’ his version of relevant events with potential witnesses, that might have the effect of discouraging witnesses from testifying in a manner contrary to the defendant’s narrative,” the Justice Department said in the filing.
Mr. Bankman-Fried’s lawyers said the message to Mr. Miller was more reasonably read as an attempt by Mr. Bankman-Fried to offer his assistance to FTX, not a “sinister attempt” to influence testimony at trial.
Mr. Solomon received $25 million in total compensation last year, down from $35 million in 2021. His 2022 pay package consisted of a $2 million base salary, a cash bonus of $6.9 million and a $16.1 million stock award that is tied to how well the bank performs in the next few years, Goldman said in a regulatory filing.
Mr. Solomon’s 2022 compensation reflects the bank’s performance compared with 2021, Goldman said in the filing. Profit fell 48% last year, and revenue declined 20%, largely due to a slowdown in corporate deal-making that had previously fueled blockbuster earnings. Still, Goldman shares outperformed the KBW Nasdaq Bank Index and the broader S&P 500 last year.
In 2021, the bank’s shares were soaring and the bank was minting money in a merger boom that kept its high-price bankers busy.
Goldman doubled Mr. Solomon’s pay that year, an acknowledgment of the bank’s record profits and following a year when he was penalized for the firm’s involvement in the 1MDB corruption scandal. The bank also awarded Mr. Solomon a one-time stock award of about $30 million that year, citing “the rapidly increasing war for talent in the current environment.”
Late last year, Mr. Solomon engineered a restructuring of Goldman’s businesses meant to spotlight steadier businesses like asset and wealth management, taking some of the focus off its more volatile Wall Street operations.
He’s also paring back the bank’s consumer-facing Marcus operations and has admitted that Goldman’s attempts to do too much there contributed to missteps. The bank’s newly created Platform Solutions division, which houses credit cards and other pieces of the consumer business, lost about $2 billion on a pretax basis in 2022.
Mr. Solomon has moved to cut costs at Goldman. The bank laid off some 3,000 employees this month and slashed bonuses for many bankers by up to 40%.
Goldman’s compensation committee also considered the bank’s “continued progress in its strategic evolution as well as Mr. Solomon’s strong individual performance and effective leadership,” according to the filing.
Mr. Solomon’s pay fell more than his Wall Street counterparts.
Morgan Stanley
paid Chief Executive James Gorman $31.5 million for his work in 2022, a 10% pay cut from the year before.
JPMorgan Chase
& Co. awarded CEO Jamie Dimon $34.5 million in 2022 compensation, in line with a year earlier.
Wells Fargo
& Co. CEO Charles Scharf’s 2022 pay also stayed flat at $24.5 million in 2022.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com
Bonds and stocks may be getting back to their usual relationship, a plus for investors with a traditional mix of assets in their portfolios amid fears that the U.S. faces a recession this year.
“The bottom line is the correlation now has shifted back to a more traditional one, where stocks and bonds do not necessarily move together,” said Kathy Jones, chief fixed-income strategist at Charles Schwab, in a phone interview. “It is good for the 60-40 portfolio because the point of that is to have diversification.”
That classic portfolio, consisting of 60% stocks and 40% bonds, was hammered in 2022. It’s unusual for both stocks and bonds to tank so precipitously, but they did last year as the Federal Reserve rapidly raised interest rates in an effort to tame surging inflation in the U.S.
While inflation remains high, it has shown signs of easing, raising investors’ hopes that the Fed could slow its aggressive pace of monetary tightening. And with the bulk of interest rate hikes potentially over, bonds seem to be returning to their role as safe havens for investors fearing gloom.
“Slower growth, less inflation, that’s good for bonds,” said Jones, pointing to economic data released in the past week that reflected those trends.
The Commerce Department said Jan. 18 that retail sales in the U.S. slid a sharp 1.1% in December, while the Federal Reserve released data that same day showing U.S. industrial production fell more than expected in December. Also on Jan. 18, the U.S. Bureau of Labor Statistics said the producer-price index, a gauge of wholesale inflation, dropped last month.
Stock prices fell sharply that day amid fears of a slowing economy, but Treasury bonds rallied as investors sought safe-haven assets.
“That negative correlation between the returns from Treasuries and U.S. equities stands in stark contrast to the strong positive correlation that prevailed over most of 2022,” said Oliver Allen, a senior markets economist at Capital Economics, in a Jan. 19 note. The “shift in the U.S. stock-bond correlation might be here to stay.”
A chart in his note illustrates that monthly returns from U.S. stocks and 10-year Treasury bonds were often negatively correlated over the past two decades, with 2022’s strong positive correlation being relatively unusual over that time frame.
CAPITAL ECONOMICS NOTE DATED JAN. 19, 2023
“The retreat in inflation has much further to run,” while the U.S. economy may be “taking a turn for the worse,” Allen said. “That informs our view that Treasuries will eke out further gains over the coming months even as U.S. equities struggle.”
The iShares 20+ Year Treasury Bond ETF
TLT,
-1.62%
has climbed 6.7% this year through Friday, compared with a gain of 3.5% for the S&P 500
SPX,
+1.89%,
according to FactSet data. The iShares 10-20 Year Treasury Bond ETF
TLH,
-1.40%
rose 5.7% over the same period.
Charles Schwab has “a pretty positive view of the fixed-income markets now,” even after the bond market’s recent rally, according to Jones. “You can lock in an attractive yield for a number of years with very low risk,” she said. “That’s something that has been missing for a decade.”
Jones said she likes U.S. Treasurys, investment-grade corporate bonds, and investment-grade municipal bonds for people in high tax brackets.
Read: Vanguard expects municipal bond ‘renaissance’ as investors should ‘salivate’ at higher yields
Keith Lerner, co-chief investment officer at Truist Advisory Services, is overweight fixed income relative to stocks as recession risks are elevated.
“Keep it simple, stick to high-quality” assets such as U.S. government securities, he said in a phone interview. Investors start “gravitating” toward longer-term Treasurys when they have concerns about the health of the economy, he said.
The bond market has signaled concerns for months about a potential economic contraction, with the inversion of the U.S. Treasury market’s yield curve. That’s when short-term rates are above longer-term yields, which historically has been viewed as a warning sign that the U.S. may be heading for a recession.
But more recently, two-year Treasury yields
TMUBMUSD02Y,
4.193%
caught the attention of Charles Schwab’s Jones, as they moved below the Federal Reserve’s benchmark interest rate. Typically, “you only see the two-year yield go under the fed funds rate when you’re going into a recession,” she said.
The yield on the two-year Treasury note fell 5.7 basis points over the past week to 4.181% on Friday, in a third straight weekly decline, according to Dow Jones Market Data. That compares with an effective federal funds rate of 4.33%, in the Fed’s targeted range of 4.25% to 4.5%.
Two-year Treasury yields peaked more than two months ago, at around 4.7% in November, “and have been trending down since,” said Nicholas Colas, co-founder of DataTrek Research, in a note emailed Jan. 19. “This further confirms that markets strongly believe the Fed will be done raising rates very shortly.”
As for longer-term rates, the yield on the 10-year Treasury note
TMUBMUSD10Y,
3.479%
ended Friday at 3.483%, also falling for three straight weeks, according to Dow Jones Market data. Bond yields and prices move in opposite directions.
‘Bad sign for stocks’
Meanwhile, long-dated Treasuries maturing in more than 20 years have “just rallied by more than 2 standard deviations over the last 50 days,” Colas said in the DataTrek note. “The last time this happened was early 2020, going into the Pandemic Recession.”
Long-term Treasurys are at “a critical point right now, and markets know that,” he wrote. “Their recent rally is bumping up against the statistical limit between general recession fears and pointed recession prediction.”
A further rally in the iShares 20+ Year Treasury Bond ETF would be “a bad sign for stocks,” according to DataTrek.
“An investor can rightly question the bond market’s recession-tilting call, but knowing it’s out there is better than being unaware of this important signal,” said Colas.
The U.S. stock market ended sharply higher Friday, but the Dow Jones Industrial Average
DJIA,
+1.00%
and S&P 500 each booked weekly losses to snap a two-week win streak. The technology-heavy Nasdaq Composite erased its weekly losses on Friday to finish with a third straight week of gains.
In the coming week, investors will weigh a wide range of fresh economic data, including manufacturing and services activity, jobless claims and consumer spending. They’ll also get a reading from the personal-consumption-expenditures-price index, the Fed’s preferred inflation gauge.
‘Backside of the storm’
The fixed-income market is in “the backside of the storm,” according to Vanguard Group’s first-quarter report on the asset class.
“The upper-right quadrant of a hurricane is called the ‘dirty side’ by meteorologists because it is the most dangerous. It can bring high winds, storm surges, and spin-off tornadoes that cause massive destruction as a hurricane makes landfall,” Vanguard said in the report.
“Similarly, last year’s fixed income market was hit by the brunt of a storm,” the firm said. “Low initial rates, surprisingly high inflation, and a rate-hike campaign by the Federal Reserve led to historic bond market losses.”
Now, rates might not move “much higher,” but concerns about the economy persist, according to Vanguard. “A recession looms, credit spreads remain uncomfortably narrow, inflation is still high, and several important countries face fiscal challenges,” the asset manager said.
Read: Fed’s Williams says ‘far too high’ inflation remains his No. 1 concern
‘Defensive’
Given expectations for the U.S. economy to weaken this year, corporate bonds will probably underperform government fixed income, said Chris Alwine, Vanguard’s global head of credit, in a phone interview. And when it comes to corporate debt, “we are defensive in our positioning.”
That means Vanguard has lower exposure to corporate bonds than it would typically, while looking to “upgrade the credit quality of our portfolios” with more investment-grade than high-yield, or so-called junk, debt, he said. Plus, Vanguard is favoring non-cyclical sectors such as pharmaceuticals or healthcare, said Alwine.
There are risks to Vanguard’s outlook on rates.
“While this is not our base case, we could see a Fed, faced with continued wage inflation, forced to raising a fed funds rate closer to 6%,” Vanguard warned in its report. The climb in bond yields already seen in the market would “help temper the pain,” the firm said, but “the market has not yet begun to price such a possibility.”
Alwine said he expects the Fed will lift its benchmark rate to as high as 5% to 5.25%, then leave it at around that level for possibly two quarters before it begins easing its monetary policy.
“Last year, bonds were not a good diversifier of stocks because the Fed was raising rates aggressively to address the inflation concerns,” said Alwine. “We believe the more typical correlations are coming back.”
said a big chunk of its consumer lending business has lost about $3 billion since 2020, revealing for the first time the costly toll of the Wall Street giant’s Main Street push.
Ahead of fourth-quarter earnings next week, Goldman released financial information that reflects its new reporting structure. The bank in October announced a sweeping reorganization that combined its flagship investment-banking and trading businesses into one unit, while merging asset and wealth management into another.
Marcus, Goldman’s consumer-banking arm, launched in 2016 to a strong start.
Rivals
JPMorgan Chase
& Co. and
Bank of America Corp.
were posting big profits on the back of strong consumer businesses that carried them through rocky stretches in their Wall Street operations. Goldman, long reliant on its gold-plated investment banking and trading arms, wanted in on the action.
The bank rolled out savings accounts, personal loans and credit cards. Its 2019 credit-card partnership with
Apple Inc.
signaled its ambitions to be a big player in the business.
Goldman invested billions of dollars in Marcus. But it struggled to bulk up the credit-card business following an early win with the Apple Card. A long-awaited checking account never materialized.
Economists and financial analysts look at bank earnings to get a sense of the economy’s health. WSJ’s Telis Demos explains how inflation as well as recession concerns can be reflected in their results. Illustration: Lorie Hirose
The consumer unit was never profitable. In October, Goldman formally scaled back its plan to bank the masses.
The reshuffling parceled out the consumer business to different parts of the bank.
Before the shift, it was under the same umbrella as Goldman’s wealth-management division.
Much of Marcus will be folded into Goldman’s new asset and wealth management unit. Some pieces, including its credit-card partnerships with Apple and
General Motors Co.
, as well as specialty lender GreenSky, are moving into a new unit called Platform Solutions.
Goldman on Friday disclosed that its Platform Solutions unit lost $1.2 billion on a pretax basis in the nine months that ended in September 2022. It lost slightly more than $1 billion in 2021 and $783 million in 2020, after accounting for operating expenses and money set aside to cover possible losses on loans. The unit also includes transaction banking, with services such as enabling banks to send payments to each other, vendors and elsewhere.
Goldman shares closed up about 1% Friday at $374.
The bank said it set aside $942 million during the first nine months of 2022 for credit losses in Platform Solutions, up 35% from full-year 2021. Operating expenses for the division increased 27% during this period. After hovering around record lows for much of the pandemic, consumer delinquencies are rising across the industry.
Net revenue for Platform Solutions’ consumer platforms segment, which reflects credit cards and GreenSky, totaled $743 million during the first nine months of 2022, up 75% from all of 2021 and up 295% from 2020. Goldman completed its acquisition of GreenSky last year.
The disclosure didn’t reveal financial details for Goldman’s consumer deposit accounts, personal loans and other parts of Marcus. Those business lines are included in the firm’s asset and wealth management division, which is profitable, and aren’t material to the firm’s overall profits, according to people familiar with the matter.
Goldman is in the process of winding down personal loans, according to people familiar with the matter. It will be ending its checking account pilot for employees, one of the people said, while it considers other ways to offer the product. One possible option is pitching the checking account to workplace and personal-wealth clients.
As recently as the summer, Goldman executives were saying the checking account would unlock new business opportunities for the bank.
Marcus has been a divisive topic at Goldman. Some partners, senior executives and investors were against continuing to pour billions of dollars into the effort, in particular for checking accounts and other products that Goldman would be developing on its own.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com and Charley Grant at charles.grant@wsj.com
is ceding control of Ant Group Co., capping a tumultuous period for the Chinese fintech giant.
Mr. Ma will no longer be the controlling person of Ant, the company said in a statement on Saturday, confirming a previous report by The Wall Street Journal.
The changes are being made to reduce Ant’s reliance on the flamboyant Chinese billionaire, who co-founded
Alibaba Group Holding Ltd.
BABA 2.70%
and helped create Ant, the Journal reported previously.
Mr. Ma will continue to hold voting rights in an entity that controls Ant, alongside nine Ant executives and employees who will be also given voting rights.
Mr. Ma doesn’t hold an executive role at Ant or sit on its board, but is a larger-than-life figure at the company. He has controlled Ant via an entity in which he holds the dominant position. The agreements that allowed Mr. Ma’s dominance will be terminated. The nine other Ant executives and employees to be given the voting rights at the company can exercise their power independently of each other and of Mr. Ma, according to Ant’s statement.
Ant, which owns the popular digital-payment platform Alipay, has been forced to overhaul its operations amid a government crackdown that began with Beijing calling off the company’s multibillion-dollar initial public offering in November 2020. The IPO, which had been slated to happen in Shanghai and Hong Kong concurrently, would have raised more than $34 billion and valued Ant at more than $300 billion.
Ant has been revamping its various business lines, from consumer lending to insurance, and will eventually become a financial holding company subject to regulations in line with traditional financial firms.
The change of control moves Ant a step closer to finishing its overhaul. Yet it also could put back a potential revival of Ant’s IPO for a year or more. Chinese securities regulations require a timeout on public listings for companies that have gone through a recent change in control.
Regulators didn’t demand the change but have given their blessing, the Journal reported previously. Ant is required to map out its ownership structure when it applies to become a financial holding company.
The nine others who will hold voting rights include Chairman
Eric Jing,
Executive Vice President Xiaofeng Shao and Chief Technology Officer Xingjun Ni, in line with the details in the previous Journal report. Mr. Shao is also the general secretary of Ant’s Communist Party committee, according to people familiar with the matter. Mr. Ni was instrumental in founding Alipay in 2004.
Mr. Ma has all but vanished from the public spotlight since he laid into Chinese regulators in a controversial speech days before Ant’s planned IPO in 2020. He retired from Alibaba in 2019 but continued to control Ant. The two companies that Mr. Ma co-founded have been charting separate courses in light of Beijing’s crackdown on big internet platforms.
Mr. Ma’s control over Ant goes back more than a decade to the period when he was CEO of Alibaba. Throughout the years, he had contemplated giving up control of Ant out of corporate-governance concerns that risks may arise from Ant being too reliant on a single dominant figure atop the company, the Journal reported previously.
Converting your monthly billpay to paperless can result in “over $1,000 a year in savings”, according to an expert.
Getty Images/iStockphoto
The No. 1 financial new year’s resolution for 2023 is to boost savings, according to a recent Bank of America survey. And while building a savings account has never been easy, many savings accounts are now paying more than they have in a decade (see the highest savings rates you may get now here). That means that, at least on the interest-earning side of things, you’ll be able to boost your balance easier.
Here are simple steps that financial pros say you can take to save more in 2023.
1. Open a high-yield savings account
The national average annual percentage yield, or APY, for a conventional savings account these days is 0.30%, according to the latest Federal Deposit Insurance Corporation (FDIC) data. Taking advantage of a high-yield savings account like one of these, on the other hand, can deliver an average APY of around 3% or more.
Amy Hubble, principal investment advisor at Radix Financial in Oklahoma City, said for those with savings still parked in a low yielding bank account, now is the time to act. “Now that interest rates have increased, many online savings accounts through banks such as Capital One or SoFi can offer rates of over 3.5%,” she said.
MaxMyInterest CEO Gary Zimmerman says it’s also critical to read the fine print attached to any of those accounts. “Make sure your money is held directly in your own name, in your own FDIC-insured savings accounts,” and Zimmerman says to “be wary of Fintech apps or cryptocurrency platforms that promise high yield; there is often a catch.”
Another area to consider are fees, Zimmerman adds. “If there is a monthly fee on a bank account, it’s a sign that the bank doesn’t want your business.”
2. Play it smart with that holiday bonus
With the 2022 holiday season now behind us, Hubble says that those who were fortunate enough to have an employer who offered holiday bonuses should likely use it to boost their savings account. “Make sure that a portion of any bonuses or gifts you receive go towards your savings goals so that by this time next year, you’re not again making a pledge to begin saving,” he says. (See the highest savings rates you may get now here.)
3. Exceed your employer match
A Vanguard report found that the average employer match is somewhere in the ballpark of 4.5%, but Hubble says that isn’t necessarily enough. “Many employers will also match a portion of your contributions, but a mistake many people make is by limiting their contributions to the amount of the match, often 3% to 5%,” says Hubble, adding that “all Americans need to be saving at least 10% of their income, regardless of your age.”
And in 2023, maxing out your contribution limits for both 401(k)s and IRAs is even more lucrative. Employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan can now contribute as much as $22,500 per year, according to the IRS. That’s 2,000 more than in 2022. For IRAs, contribution limits increased to $6,500, up from $6,000.
4. Go paperless
It may be small, but it’s an easy way to save money, so we’re including it: Convert your billpay to paperless, says Bunio. Everyone from cell phone companies to insurance companies to financial companies offer discounts to those who opt out of paper statements.
5. Set long-term goals
Although financial markets largely posted losses this past year, the longer term results tell a different tale. Take the S&P 500 for instance. Its year-to-date figures, as measured by the SPDR S&P 500 EST Trust, also known as SPY, posted a loss of 18.04% as of Dec. 26, according to Morningstar. Over the past 10 years, however, the tracker had an annualized gain of 12.45%.
Jeanne Sutton, certified financial planner and managing director at Strategic Retirement Partners, in Nashville, says figures like that are just why it’s critical to set long-term investment goals and not focus on the short-term turmoil.
“A long-term diversified investment strategy, supported by a financial plan, is optimal for almost everyone,” Sutton says, adding that it’s also important for savers to “pay particular attention to time horizon,” and “not necessarily time to retirement.” She adds that it’s important for people to understand that “the day you plan to actually start distributing from your accounts may be very different than your actual retirement date. This same goes for younger investors saving for shorter goals, like a first home or kids college.”
6. Deal with your insurance coverage
Whether it’s medical, car, disability, homeowners or another kind of insurance, many of us get a plan and then stick with it for years and years to come. And that means many of us are overpaying. Switch providers, and you might be able to save you hundreds of dollars per year.
Even if you’re happy with your provider, it’s still worth looking at your coverage. “One should always look at what their current plans cover. What are they getting out of it for the monthly cost,” says Nicholas Bunio, a certified financial planner with Retirement Wealth Advisors in Berwyn, Pennsylvania.
The average 40-year-old adult in 2023 will spend $477 per month on health insurance, according to a Money Geek report. And while there’s no arguing the importance of health coverage, there is such a thing as being in the wrong plan, says Bunio. “For example, my parents are on Medicare,” Bunio says, adding that “their Part C plan also covers dental. Yet, they were paying $70 per month for a separate dental plan. Eliminating this extra plan is almost $900 per year in savings!”
7. Make a budget that plans for ‘fun along the way’
Tess Zigo, an LPL advisor, says the most critical factor of all when setting up a comprehensive spending plan is to “create your spending plan that encompasses enjoying yourself today, whether it’s through travel or other things that matter to you.” She adds that “being responsible with money doesn’t mean you have to pinch pennies and only save. If you’re not having fun along the way, it defeats the purpose.”
The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.
Bahamas securities regulators said they seized digital assets valued at $3.5 billion from FTX’s local operation in mid-November as the cryptocurrency exchange spiraled toward collapse, a figure that FTX’s U.S. managers cast doubt on Friday.
Christina Rolle, executive director of the Securities Commission of the Bahamas, said in an affidavit made public Thursday that the commission sought control of the crypto assets held by FTX Digital Markets Ltd. last month after FTX co-founder Sam Bankman-Fried told local authorities under oath about a hacking attempt. Her affidavit, filed with the Supreme Court of the Bahamas, also confirmed that the Securities Commission relied on Mr. Bankman-Fried and another FTX co-founder, Gary Wang, to make the transfers happen.
is likely to plead not guilty to fraud and other charges at his arraignment next week, according to people familiar with the matter.
The U.S. attorney’s office for the Southern District of New York earlier this month charged Mr. Bankman-Fried with engaging in criminal conduct that contributed to the cryptocurrency exchange’s collapse, alleging that he oversaw one of the biggest financial frauds in American history. Mr. Bankman-Fried is likely to appear in person in New York to enter his plea on Jan. 3, one of the people said.
Before his arrest, Mr. Bankman-Fried blamed the loss of customer funds on sloppy record-keeping and a bank-account issue that allowed Alameda Research, an affiliated trading firm, to cover large losses with money destined for FTX. His not guilty plea was widely expected.
The collapse of FTX has set off the largest crypto-related bankruptcy ever, and court filings are already shedding light on what went wrong and how complicated things could get. Here are three things to know about the company’s bankruptcy process. Photo: Lam Yik/Bloomberg News
Mr. Bankman-Fried stands at odds with his associates—
Caroline Ellison,
the former chief executive of Alameda Research, and
Gary Wang,
FTX’s former chief technology officer—who both pleaded guilty to criminal offenses similar to those Mr. Bankman-Fried was charged with. Both are cooperating with federal investigators.
The collapse of FTX and its sister trading firm Alameda have rattled the nascent world of crypto. Prosecutors allege that Mr. Bankman-Fried took billions of dollars of FTX.com customer money to pay the expenses and debts of his trading firm Alameda Research. Both companies filed for bankruptcy last month. Individual traders who entrusted FTX with their crypto are likely facing lengthy bankruptcy proceedings before they have a chance at seeing any of their funds back.
Mr. Bankman-Fried was released on a $250 million bond last week and has been ordered to stay in his parent’s Palo Alto, Calif., home after his appearance in a New York federal court following his extradition from the Bahamas.
Prosecutors say that from 2019 through November, Mr. Bankman-Fried conspired with unnamed individuals to defraud customers and lenders. He provided false and misleading information to lenders on the financial condition of Alameda, according to the indictment by the U.S. attorney’s office.
Mr. Bankman-Fried is also accused of defrauding the Federal Election Commission starting in 2020 by conspiring with others to make illegal contributions to candidates and political committees in the names of other people.
He and his associates contributed more than $70 million to election campaigns in recent years, The Wall Street Journal previously reported. He personally made $40 million in donations ahead of the 2022 midterm elections.
Mr. Bankman-Fried also faces allegations from the Securities and Exchange Commission and the Commodity Futures Trading Commission.
The SEC alleged in a civil lawsuit that Mr. Bankman-Fried diverted customer funds from the start of FTX to support Alameda and to make venture investments, real-estate purchases and political donations. The CFTC filed a lawsuit linking his allegedly fraudulent conduct at Alameda and FTX to markets that the CFTC regulates.
On Friday afternoon, Mr. Bankman-Fried returned to Twitter for the first time since Dec. 12 to defend himself against rumors that he has been moving funds out of several crypto wallet addresses associated with Alameda.
Cryptocurrency prices have cratered this year amid rising central bank rates and the collapses of a once-prominent hedge fund and crypto lenders, with bitcoin and ether plunging 64% and 67%, respectively, according to CoinDesk data. The total market cap of all digital tokens fell to $795 billion, compared with $2.2 trillion at the start of year, per CoinMarketCap data.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Vicky Ge Huang at vicky.huang@wsj.com
In the worst year for stocks since the Great Recession, several big names are headed for their worst year on record with just one trading day left in 2022.
The S&P 500 index
SPX,
+1.75%
and Dow Jones Industrial Average
DJIA,
+1.05%
are both headed for their worst year since 2008, with declines of 20.6% and 9.5% respectively through Thursday. But at least 19 big-name stocks — and half of another — are headed for a more ignominious title for 2022, according to Dow Jones Market Data: Worst year ever.
Tesla Inc.
TSLA,
+8.08%
is having the worst year among the group of S&P 1500 constituents with a market capitalization of $30 billion or higher headed for record annual percentage declines. Tesla shares have declined 65.4% so far this year, which would be easily the worst year on record for the popular stock, which has only had one previous negative year since going public in 2010, an 11% decline in 2016.
Tesla may not be the worst decliner on the list by the time 2023 arrives, however, as another Silicon Valley company is right on its heels. Meta Platforms Inc.
META,
+4.01%,
the parent company of Facebook, has fallen 64.2% so far this year, as Chief Executive Mark Zuckerberg has stuck to spending billions to develop the “metaverse” even as the online-advertising industry that provides the bulk of his revenue has stagnated. It would also only be the second year in Facebook’s history that the stock has declined, after a 25.7% drop in 2018, though shares did end Facebook’s IPO year of 2012 30% lower than the original IPO price.
Only one other stock could contend with Tesla and Meta’s record declines this year, and Tesla CEO Elon Musk has some familiarity with that company as well. PayPal Holdings Inc.
PYPL,
+4.46%,
where Musk first found fame during the dot-com boom, has declined 63.2% so far this year as executives have refocused the company on attracting and retaining high-value users instead of trying to get as many users as possible on the payments platform. It would be the second consecutive down year for PayPal, which had not experienced that before 2021 since spinning off from eBay Inc.
EBAY,
+4.76%
in 2015.
None of the other companies headed for their worst year yet stand to lose more than half their value this year, though Charter Communications Inc.
CHTR,
+1.99%
is close. The telecommunications company’s stock has declined 48.2% so far, as investors worry about plans to spend big in 2023 in an attempt to turn around declining internet-subscriber numbers.
In addition to the list below, Alphabet Inc.’s class C shares
GOOG,
+2.88%
are having their worst year on record with a 38.4% decline. MarketWatch is not including that on the list, however, as Alphabet’s class A shares
GOOGL,
+2.82%
fell 55.5% in 2008; the separate class of nonvoting shares was created in 2012 to allow the company — then still called Google — to continue issuing shares to employees without diluting the control of co-founders Sergey Brin and Larry Page.
Apart from that portion of Alphabet’s shares, here are the 19 large stocks headed for their worst year ever, based on Thursday’s closing prices.
Company
% decline in 2022
Tesla Inc.
TSLA,
+8.08%
65.4%
Meta Platforms Inc.
META,
+4.01%
64.2%
PayPal Holdings Inc.
PYPL,
+4.46%
62.6%
Charter Communications Inc.
48.0%
Edwards Lifesciences Corp.
EW,
+2.87%
41.9%
ServiceNow Inc.
NOW,
+3.67%
39.9%
Zoetis Inc.
ZTS,
+3.00%
39.3%
Fidelity National Information Services Inc.
FIS,
+2.03%
U.S. stock futures rose Monday night, ahead of the final trading week of 2022.
Dow Jones Industrial Average futures
YM00,
+0.44%
gained more than 150 points, or 0.5%, as of 11 p.m. Eastern. S&P 500 futures
ES00,
+0.59%
and Nasdaq-100 futures
NQ00,
+0.71%
were also logging solid gains, indicating positive market moves when regular trading resumes Tuesday from the three-day Christmas holiday.
Oil prices rose
CL.1,
+0.85%,
as the U.S. Dollar Index
DXY,
-0.30%
slipped.
Last week, the Dow gained nearly 1%, while the S&P 500 and Nasdaq fell for a third straight week.
See more: What to expect for the stock market in 2023 after the biggest decline since the financial crisis
On Friday, the Dow Jones Industrial Average
DJIA,
+0.53%
rose 176.44 points, or 0.5%, to close at 33,203.93. The S&P 500
SPX,
+0.59%
gained 22.43 points, or 0.6%, finishing at 3,844.82, for a weekly decline of 0.2%. The Nasdaq Composite
COMP,
+0.21%
closed at 10,497.86, up 6.85 points, or 0.4%. For the week, the Nasdaq fell 1.9%.
Friday marked the start of the so-called Santa Claus rally period — the final five trading days of the calendar year and the first two trading days of the new year. That stretch has, on average, produced gains for stocks, but failure to do so is often read as a negative indicator.
Read more: How a Santa Claus rally, or lack thereof, sets the stage for the stock market in first quarter