March 28 (Reuters) – Tesla Inc (TSLA.O) will seek investor approval to increase its number of shares to enable a stock split in the form of a dividend, the electric-car maker said on Monday, sending its shares up about 5%.
The proposal has been approved by its board and the shareholders will vote on it at the annual meeting. The stock split, if approved, would be the latest after a five-for-one split in August 2020 that made Tesla shares cheaper for its employees and investors.
Following a pandemic-induced rally in the technology shares, Alphabet Inc (GOOGL.O), Amazon.com Inc (AMZN.O) and Apple Inc (AAPL.O) too have in the recent past split their shares to make them more affordable.
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Tesla shares soar after stock split in 2020 Tesla shares soar after stock split in 2020
“This (stock split) could further fuel the bubble in Tesla’s stock that has been brewing over the past two years,” said David Trainer, Chief Executive of investment research firm New Constructs.
Tesla has delivered nearly a million electric cars annually, while ramping up production by setting up new factories in the Austin and Berlin amid increasing competition from legacy automakers and startup companies.
“We think Berlin ramping, and both the MiniCar and India are on the horizon, we would agree with the timing,” Roth Capital analyst Craig Irwin said, hinting that companies usually execute stock splits when a good news is ahead.
Meanwhile, Tesla on Monday notified its suppliers and workers that its Shanghai factory in China will be closed for four days as the financial hub said it would lock down in two stages to carry out mass COVID-19 testing. read more
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Reporting by Nivedita Balu and Akash Sriram in Bengaluru; Editing by Maju Samuel and Arun Koyyur
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Banks face mounting pressure to commit to custody roles
Banks say they will meet existing client obligations
Some clients afraid exits will follow as costs soar
LONDON/NEW YORK, March 23 (Reuters) – Global banks including Citigroup Inc (C.N), JPMorgan Chase & Co (JPM.N) and Societe Generale (SOGN.PA) face pressure to commit to remaining as custodian banks in Russia, as rivals and funds fret they may lose services critical to future investment in the country.
Traders, bankers and executives from three other financial institutions told Reuters they were seeking or had sought reassurances on behalf of clients on each bank’s long-term plans for these businesses, which clear, settle and safeguard billions of dollars of Russian holdings.
Custodian banks have departments that look after assets for clients in return for fees.
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One London-based banking source, speaking anonymously to respect confidentiality of their large global fund client, said they were in weekly contact with senior executives at Citibank Moscow on the status of their custodian business.
The source said their client was waiting to trade Russian equities when the Moscow Exchange (MOEX) reopens, but they needed the reassurance of having a Western custodian in place.
According to the source, the Citigroup executives said they would serve clients for as long as sanctions permitted.
A source with knowledge of Citi said that major U.S. and international businesses in Moscow use that bank and cutting those customers off would damage client relations. Other bankers said it is crucial to the industry that Citi, a key player, keep operating in Moscow.
Citigroup declined to comment.
A second banker, based in New York, said he had sought assurances from SocGen that they would “stay on the ground” so that his bank could meet custody obligations to clients. Executives at SocGen provided assurances that they would, at least in the near term, the source said.
Citigroup and SocGen, the French parent of Rosbank (ROSB.MM), have already announced plans to dramatically pare operations in Moscow as part of a sweeping programme of Western sanctions aimed at isolating Russia economically following its invasion of Ukraine. read more
Both banks have said they will aid their clients with the complex tasks of unwinding or reducing exposures to Russia, and said withdrawals will take time to execute.
But neither has made a public statement on the long-term status of their custodian services, leaving some clients nervous for the future.
In an emailed statement, a spokeswoman for SocGen said the group was “conducting its business in Russia with the utmost caution and selectivity, while supporting its historical clients.”
SocGen “is rigorously complying with all applicable laws and regulations and is diligently implementing the necessary measures to strictly enforce international sanctions as soon as they are made public.”
The bank declined to comment specifically on its custody business in Russia.
JPMorgan Chase & Co (JPM.N) also provides similar custody services from its Moscow outpost. The bank has received queries from clients seeking assurances that custody services will continue to be provided, according to a source familiar with the matter. It has previously said it will continue acting as a custodian to its clients.
Bank of New York Mellon Corp (BK.N) has also said it will continue to provide custodian services in Russia.
SHUT OUT
If banks decide to mothball their custody services in Moscow, many Western investors already holding Russian stocks or bonds would have to look elsewhere for a bank to hold those assets, while others keen to exploit a financial market or economic rally when sanctions are lifted could find it harder to pursue those plans.
SocGen, France’s third-largest bank, warned stakeholders on March 3 that it could be stripped of its property rights to its business in Russia in a “potential extreme scenario.” read more
Citi, meanwhile, originally said it would operate its Russian business on a more “limited basis” in the wake of the war, which President Vladimir Putin has called “a special military operation.”
But by March 14, it said it would accelerate and expand the scope of that retreat by giving up its institutional and wealth management clients in Russia. read more
Besides transaction services, many of the Moscow-based custody teams are providing add-ons like language translation of central bank documents that are also highly valued by Western clients, the source said.
Russia’s central bank said separately on Wednesday that some stock market trading would resume on Thursday, with 33 securities set to be traded on the Moscow Exchange for a limited period of time and with short selling banned. read more
The challenge for banks in meeting obligations to clients in Russia is getting tougher, and might become even more daunting if sanctions are tightened, with the one-month anniversary of the invasion falling this week.
Russia laid down strict new rules for foreigners seeking permits to buy and sell Russian assets ranging from securities to real estate. read more
Another New York-based banker described the business of ensuring clients are in compliance with sanctions in relation to securities holdings as a “logistical nightmare” and said his firm had hired 20 new compliance staff in recent weeks.
Global companies, banks and investors have so far disclosed nearly $135 billion in exposure to Russia, company statements show. read more
U.S. asset managers including Vanguard and Capital Group Companies Inc, which manages the American Funds franchise popular among millions of mom and pop retirement savers, have also disclosed large exposures topping billions of dollars, according to the most recent portfolio information available. read more
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Reporting by Sinead Cruise in London, and Matt Scuffham and Megan Davies in New York
Additional reporting by Paritosh Bansal in New York
Editing by Matthew Lewis
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File Photo: A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015. REUTERS/Mike Segar
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NEW YORK, March 17 (Reuters) – Coupon payments on Russian sovereign bonds due this week were received by correspondent bank JPMorgan (JPM.N), processed and the bank then made an onwards credit to the paying agent Citi (C.N), a source familiar with the situation said on Thursday, an indicator that the country may have averted default.
The payment received was a U.S. dollar payment, the source said. After being credited to the paying agent, it would be checked and distributed on to various bondholders, the source said.
Russia said on Thursday it had made debt payments that were due this week. Russia was due to pay $117 million in coupon payments on Wednesday on two dollar-denominated sovereign bonds and some creditors had received payments, market sources separately told Reuters, also indicating it avoided what would have been its first external bond default in a century. read more
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The payments were widely seen as the first test of whether Moscow would meet its obligations after Western sanctions hobbled its financial dealings.
The source said that JPMorgan’s obligation as a foreign correspondent bank was to process payments, but that given the circumstances, also to check with authorities before doing so.
Sanctions imposed over Moscow’s invasion of Ukraine have cut Russia off from the global financial system and blocked the bulk of its gold and foreign exchange reserves, while Moscow has in turn retaliated – all of which complicate payments.
The bank checked with authorities before processing, the source said. Not to process the payment would have harmed bondholders, the source said.
Under the sanctions and restrictions announced last month, in response to Russia’s invasion of Ukraine, U.S. banks were prohibited from correspondent banking – allowing banks to make payments between one another and move money around the globe – with Russia’s largest lender, Sberbank, within 30 days. Washington and its partners also started barring some Russian banks from the SWIFT international payment system – a step that will stop lenders from conducting most of their financial transactions worldwide. read more
A March 2020 report by the Bank for International Settlements showed that correspondent banks have been “paring back their cross-border banking relations for the past decade.” The number of correspondent banks fell by 20% between 2011 and 2018, even as the value of payments increased, the report said.
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Reporting by Megan Davies;
Editing by Chizu Nomiyama and Andrea Ricci
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LONDON, Feb 28 (Reuters) – Russia’s stock market is “uninvestable” after stringent new Western sanctions and central bank restrictions on trading, making a removal of Russian listings from indexes a “natural next step”, a top executive at equity index provider MSCI said on Monday.
“It would be not make a lot of sense for us to continue to include Russian securities if our clients and investors cannot transact in the market,” Dimitris Melas, MSCI’s head of index research and chair of the Index Policy Committee, told Reuters.
“It is obvious to all of us that the market is very difficult to trade and, in fact, it is uninvestable today.”
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Melas said the company could launch a consultation with investors immediately, the result of which could be announced within days along with the action which would be taken.
MSCI announced on Thursday that it had frozen the index and would not the implement changes for Russian securities it had previously announced as part of its February review. read more
“The natural next step that we could potentially implement – we haven’t made any decision yet – but the natural next step might be to actually consider removing MSCI Russia or removing Russian securities from our indices” Melas added.
Russia (.MIRU00000PUS) has a weighting of 3.24% in MSCI’s emerging market benchmark (.MSCIEF) and a weighting of around 30 bps in the index provider’s global benchmark (.MIWD00000PUS).
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Reporting by Sujata Rao and Karin Strohecker
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Tesla CEO Elon Musk attends the Tesla Shanghai Gigafactory groundbreaking ceremony in Shanghai, China January 7, 2019. REUTERS/Aly Song
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San Francisco, Dec 28 (Reuters) – Tesla Inc (TSLA.O) Chief Executive Elon Musk has exercised all of his options expiring next year, signaling an end to his stock sales that triggered a fall in the share price of the world’s most valuable carmaker.
Musk said last week that he would reach his target of selling about 10% of his stake in Tesla “when the 10b preprogrammed sales complete,” likely referring to his options-related stock sales. read more
Since early November, he has exercised options expiring next year and sold a portion of Tesla stock to pay tax under a “rule 10b5-1” trading plan set up in September.
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With the option exercise on 1.6 million shares on Tuesday, he has exercised all of the options on 22.8 million shares, which are due to expire in August. He also sold 934,090 shares for $1.02 billion to pay for taxes, the filings showed.
“This rule 10b5-1 trading plan was completed on December 28, 2021,” Tesla said in filings on Tuesday.
Tesla shares lost about a quarter of their value after Musk in November asked his followers on Twitter if he should sell 10% of his holdings. They have rebounded to $1,088.47, but are still below the record closing high of $1,229.91 in November.
CLOSE TO 10% TARGET
Musk has so far offloaded 15.7 million shares in Tesla, coming close to the 10% stake the billionaire has pledged to sell.
Out of the 15.7 million shares, 10.3 million were related to the options exercise. Musk sold an additional 5.4 million, cashing in on Tesla’s strong rally.
He has offloaded $16.4 billion worth of shares since early November when he said he would sell 10% of his Tesla stocks if Twitter users agreed.
The Twitter poll came two days after Tesla shares hit a record high following a rally sparked by an order for Tesla cars from rental company Hertz.
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Reporting by Hyunjoo Jin;
Editing by Stephen Coates
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Dec 10 (Reuters) – The U.S. Department of Justice has launched an expansive criminal investigation into short selling by hedge funds and research firms, according to two people familiar with the matter.
Investigators are probing firms’ trading records, public reports the firms issued on certain stocks, and the web of relationships some may have used to push stocks lower, the people said.
The Justice Department, which declined to comment on Friday, issued subpoenas to more than two dozen companies early this year and is scrutinizing trades in dozens of stocks, according to the two sources.
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Bloomberg News firstreportedthe probe on Friday, adding that authorities are examining whether the funds engaged in insider trading or other abuses.
Anson Funds and Marcus Aurelius Value are among the firms under the scanner of the investigators, according to Bloomberg.
The companies did not immediately respond to a request for comment.
Among the stocks whose trading activity the Justice Department is examining are Luckin Coffee Inc and GSX Techedu Inc (GOTU.N), on which Carson Block’s Muddy Waters Capital and Andrew Left’s Citron Research circulated research, Bloomberg said.
In a statement, Citron Research said it “knows of no wrongdoing and has cooperated fully with the government’s investigation.”
Trading in short targets such as Santa Ana, California-based Banc of California Inc (BANC.N) and Mallinckrodt Plc (MCDG.MU) is also being examined, Bloomberg reported.
The Justice Department probe comes after the U.S. securities regulator earlier this year said it is considering measures to require big investors to disclose more about short positions, or bets that stocks will fall and the use of derivatives to bet on other stock moves.
The regulator also moved to protect small investors from trading apps that use features common to video games in order to boost risky trading activity.
The review of rules by the Securities and Exchange Commission was prompted by January’s GameStop (GME.N) saga and the meltdown of Archegos Capital.
Citron, one of the world’s best known short-sellers, in January said it would publicly stop detailing companies’ shortcomings following backlash against it and others who said retailer GameStop’s stock is not worth its price.
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Reporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Chris Prentice in Washington; Editing by Shailesh Kuber and Nick Zieminski
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Nov 24 (Reuters) – A growing number of Federal Reserve policymakers indicated they would be open to speeding up the elimination of their bond-buying program if high inflation held and move more quickly to raise interest rates, minutes of the U.S. central bank’s last policy meeting showed.
The readout released on Wednesday was the latest indication that anxiety about rising inflation at the Fed has now taken root, with many officials at the Nov. 2-3 meeting also suggesting elevated price pressures could prove more persistent.
The durability and broadening in price pressures has taken the White House and the central bank by surprise and prompted both to respond. U.S. President Joe Biden and Fed Chair Jerome Powell stressed earlier this week that they would take steps to tackle the rising costs of everyday items, including food, gasoline and rent.
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Although the surge in inflation in late spring and over the summer was portrayed as transitory, concern within the Fed has mounted as readings have continued to remain elevated into the fall.
“Various participants noted that the (policy-setting) Committee should be prepared to adjust the pace of asset purchases and raise the target range for the federal funds rate sooner than participants currently anticipated if inflation continued to run higher than levels consistent with the Committee’s objectives,” the Fed said in the minutes.
Fed policymakers unanimously decided at last month’s meeting to begin reducing the central bank’s $120 billion in monthly purchases of Treasuries and mortgage-backed securities, a program introduced in early 2020 to help nurse the economy through the COVID-19 pandemic. A number outright favored a faster taper of the bond-buying program during those deliberations, the minutes showed.
The original pace would see the asset purchases tapered completely by next June. Since then, however, there have been increasing calls by some policymakers to accelerate the timeline in the face of the continued high inflation readings and stronger job gains, in order to give the Fed greater flexibility to raise its benchmark overnight interest rate from the current near-zero level earlier next year if needed.
Investors’ reaction to the release of the minutes was largely muted, with the S&P 500 index (.SPX) up about 0.2% in late afternoon trading. Yields on the shorter-dated Treasuries most sensitive to Fed policy expectations held steady at slightly higher levels, while the dollar remained near its highest mark since July 2020 against a basket of major trading partners’ currencies.
“The (policy committee) has clearly woken up to the realisation that, even if it falls back somewhat, inflation is likely to remain above target for some considerable time,” said Paul Ashworth, chief U.S. economist at Capital Economics.
‘WOULD NOT HESITATE’
A number of other policymakers at the Fed’s November meeting, however, still advocated for a more patient approach, wanting more data in hand, although all agreed the Fed “would not hesitate to take appropriate actions to address inflation pressures that posed risks to its longer-run price stability and employment objectives.”
But with further robust economic data released over the past three weeks, all signs point to an acceleration of the bond-buying taper now being firmly on the table at the Fed’s next policy meeting on Dec. 14-15.
Data released on Wednesday showed the number of Americans filing new claims for unemployment benefits fell to the lowest level since 1969 last week, while the Fed’s preferred measure of inflation continued to run at more than twice the central bank’s 2% flexible average goal in October.
San Francisco Fed President Mary Daly, one of the central bank’s most cautious policymakers, also said on Wednesday she is open to a quicker wind-down of the bond-buying program if jobs and inflation data remain steady and that she could see the Fed’s policy-setting committee raising rates once or twice next year.
Investors currently see a 53% probability that the Fed’s overnight lending rate will rise in May of 2022, up from 45% on Tuesday, according to CME Group’s FedWatch program.
Inflation in October rose at its fastest annual pace in 31 years, testing the Fed’s working assumption for most of the year that the pandemic-induced burst would be temporary as supply bottlenecks eased and demand rotated from goods to services.
Some other policymakers have said recently they too are now more comfortable with an interest rate hike earlier next year than previously anticipated, noting that the current pace of job gains would put the Fed on track to be near or at its maximum employment goal by the middle of 2022.
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Reporting by Lindsay Dunsmuir; Editing by Paul Simao
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NEW YORK, Nov 15 (Reuters) – JPMorgan Chase & Co (JPM.N) on Monday sued Tesla Inc (TSLA.O) for $162.2 million, accusing Elon Musk’s electric car company of “flagrantly” breaching a contract related to stock warrants after its share price soared.
According to the complaint filed in Manhattan federal court, Tesla in 2014 sold warrants to JPMorgan that would pay off if their “strike price” were below Tesla’s share price upon the warrants’ expiration in June and July 2021.
JPMorgan, which said it had authority to adjust the strike price, said it substantially reduced the strike price after Musk’s Aug. 7, 2018 tweet that he might take Tesla private at $420 per share and had “funding secured,” and reversed some of the reduction when Musk abandoned the idea 17 days later.
But Tesla’s share price rose approximately 10-fold by the time the warrants expired, and JPMorgan said this required Tesla under its contract to deliver shares of its stock or cash. The bank said Tesla’s failure to do that amounted to a default.
“Though JPMorgan’s adjustments were appropriate and contractually required,” the complaint said, “Tesla has flagrantly ignored its clear contractual obligation to pay JPMorgan in full.”
Tesla did not immediately respond to requests for comment after market hours.
According to the complaint, Tesla sold the warrants to reduce potential stock dilution from a separate convertible bond sale and to lower its federal income taxes.
JPMorgan said it had been contractually entitled to adjust the warrants’ terms following “significant corporate transactions involving Tesla.”
The automaker in February 2019 complained that the bank’s adjustments were “an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock,” but did not challenge the underlying calculations, JPMorgan said.
Musk’s tweets led to U.S. Securities and Exchange Commission civil charges and $20 million fines against both him and Tesla.
Reporting by Jonathan Stempel in New York; Editing by Chris Reese and Cynthia Osterman
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NEW YORK, Oct 11 (Reuters) – Jamie Dimon, JPMorgan Chase & Co (JPM.N) chief executive, said on Monday at a conference that cryptocurrencies will be regulated by governments and that he personally thinks bitcoin is “worthless.”
“No matter what anyone thinks about it, government is going to regulate it. They are going to regulate it for (anti-money laundering) purposes, for (Bank Secrecy Act) purposes, for tax,” Dimon said, referring to banking regulations in a conversation held virtually by the Institute of International Finance.
Dimon, head of the largest U.S. bank, has been a vocal critic of the digital currency, once calling it a fraud and then later saying he regretted the statement.
This summer, JPMorgan gave wealth management clients access to cryptocurrency funds, meaning the bank’s financial advisers can accept buy and sell orders from clients for five cryptocurrency products.
A representation of the virtual cryptocurrency Bitcoin is seen in this picture illustration taken June 7, 2021. REUTERS/Edgar Su/Illustration
Read More
Stating that his views are different from those of the bank and its board, Dimon said he remains skeptical.
“I personally think that bitcoin is worthless,” Dimon said. “I don’t think you should smoke cigarettes either.”
“Our clients are adults. They disagree. If they want to have access to buy or sell bitcoin – we can’t custody it – but we can give them legitimate, as clean as possible access.”
Bitcoin trading showed no immediate reaction to Dimon’s comments. The cryptocurrency was last up 5% for the day at $57,304.
Reporting by Elizabeth Dilts Marshall and David Henry; Editing by Steve Orlofsky
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WASHINGTON, Sept 16 (Reuters) – Federal Reserve Chair Jerome Powell has ordered a sweeping review of the ethics rules governing financial holdings and dealings by senior officials at the U.S. central bank, a Fed spokesperson said on Thursday.
Powell ordered the review late last week, the spokesperson said in an emailed statement, following recent reports that two of the Fed system’s 12 regional reserve bank presidents had been active investors during 2020, a notably volatile year for asset prices as the country battled the COVID-19 pandemic.Those revelations, originally reported by the Wall Street Journal, prompted senior U.S. lawmakers – including Senator Elizabeth Warren of Massachusetts – to demand more stringent restrictions on such activities.
“Because the trust of the American people is essential for the Federal Reserve to effectively carry out our important mission, Chair Powell late last week directed Board staff to take a fresh and comprehensive look at the ethics rules around permissible financial holdings and activities by senior Fed officials,” the statement said.
The rules that guide personal financial practices for Fed officials are the same as those for other government agencies, the spokesperson said. Moreover, the Fed has supplemental rules that are stricter than those for Congress and other agencies that are specific to its work.
“This review will assist in identifying ways to further tighten those rules and standards. The Board will make changes, as appropriate, and any changes will be added to the Reserve Bank Code of Conduct,” the statement said.
Following news reports on their trading last week,Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren both said they would divest any holdings of individual stocks by Sept. 30 and put the proceeds into index funds or cash.
Their investments were judged by in-house ethics officers to have complied with Fed ethics rules. Kaplan, a former vice-chair of Goldman Sachs, has been an active trader since taking over the Dallas Fed in 2015, with multiple, million-dollar transactions in individual stocks each year, according to finiancial disclosures dating to 2016.
Still, their activity drew a sharp reaction given the context of a pandemic year in which tens of millions faced joblessness and the economy was on the precipice of a threatened depression.
The Fed, beginning in March of 2020, rolled out a response that was record-breaking for its speed and scope, with interest rates slashed to zero and open-ended promises to use bond buying and other tools to keep the economy afloat.
The effort stabilized financial markets, underwrote credit to small businesses and helped set the stage for a fast rebound of jobs and economic growth.
It also triggered a record surge of asset prices following a crash early in the pandemic. Between the Fed’s efforts and trillions of dollars in government spending approved by Congress, the S&P 500 Index (.SPX) has more than doubled from its pandemic low on March 23, 2020 and is about 30% above the high hit in the previous month.
It is not unusual for Fed officials to hold extensive portfolios. Powell, a private equity lawyer with a stint at the Washington-based Carlyle Group, has net worth in excess of $17 million and perhaps much higher, according to his latest ethics filings.
But they are not as a rule active traders, and many join the Fed from academic backgrounds or government posts. St. Louis Fed President James Bullard’s holdings are modest enough that he hand writes his ethics form. Former Fed Chair Janet Yellen’s disclosure was notable largely for its stamp collection.
Fed rules explicitly prohibit trading around the time of Fed policy meetings – when market-sensitive information is distributed – requires securities to be held for at least 30 days and forbids officials from holding bank stocks or funds with holdings concentrated in the financial sector that the Fed oversees.
But broader language in the Fed’s internal rules requires officials to avoid even the appearance of conflict or of using their position for personal gain.
For Powell, promoted to Fed chair in 2018 by former President Donald Trump and subsequently a target of Trump’s ire for his management of Fed interest rate policy, the revelations come at a particularly awkward time.
His current term as chair ends in February, and President Joe Biden is in the midst of deciding whether to appoint him to a second four-year term.
Among those advocating for a change in Fed leadership, one of the chief arguments has been that Powell, a private equity lawyer, has not been strict enough in his approach to Wall Street.
He has also worked to build strong relationships among U.S. lawmakers and has preached the need for the unelected central bankers to be transparent in their actions and accept oversight by the country’s elected officials.
Reporting by Howard Schneider; Additional reporting by Ann Saphir;
Writing by Dan Burns; Editing by Chizu Nomiyama and Dan Grebler
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