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The Morning Risk Report: Credit Suisse Faces Banker Talent Drain After $5.5 Billion Archegos Hit
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Credit Suisse’s headquarters in Zurich. The bank had to sell large stock positions at losses after Archegos’s investments plummeted in March.
PHOTO: STEFAN WERMUTH/BLOOMBERG NEWS
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Credit Suisse Group AG is facing an exodus of senior investment bankers in the wake of a $5.5 billion loss tied to the meltdown of Archegos Capital Management.
At least 10 managing directors in the Swiss firm’s U.S. investment-banking division have internally disclosed plans to leave, most for rival firms, according to people familiar with the matter. Other bankers are considering their options, and more are expected to depart in the coming weeks.
[Continued below...]
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Investments held by Archegos, a family investment vehicle for Bill Hwang, plummeted in late March, forcing Credit Suisse and other banks to sell large stock positions at losses. Credit Suisse lent more to Archegos relative to its size than others and was one of the last to exit the positions, The Wall Street Journal previously reported.
The debacle, coming on the heels of Credit Suisse’s involvement with the now-insolvent financing firm Greensill, forced the bank to cut its dividend and raise fresh capital from investors to shore up its balance sheet. The Swiss bank ousted top executives in the wake of the loss.
As information trickled out foreshadowing the big hit to the bank, competitors on Wall Street and recruiters began circling.
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From Risk & Compliance Journal
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White House to Nominate National Security Veteran for DOJ Post
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Matt Olsen, Uber Technologies Inc.’s chief trust and security officer and a veteran of Washington’s national security circles, is expected to be nominated to serve as head of the Justice Department’s National Security Division, according to people familiar with the matter.
The White House plans to nominate Mr. Olsen in the coming days, one of the people said, to the division that oversees sensitive national security cases, including those involving terrorism, counterintelligence threats and export controls violations. He would lead the division as it confronts extremist violence, foreign interference in U.S. elections and ransomware cyberattacks, which the DOJ sees as rising threats.
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The Securities and Exchange Commission said S&P Dow Jones Indices didn’t have enough people available to monitor the index.
PHOTO: ANDREW KELLY/REUTERS
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The Securities and Exchange Commission charged S&P Dow Jones Indices LLC with failing to properly oversee a volatility-related index that landed at the center of market turmoil in February 2018.
The civil charge pertains to the S&P 500 VIX Short Term Futures Index, which fed into the VelocityShares Daily Inverse VIX Short Term Exchange-Traded Note. The once-popular exchange-traded note, overseen by Credit Suisse Group AG, left investors with big losses during a bout of market volatility.
Exchange-traded products based on volatility swelled in popularity over the past decade, and the Credit Suisse note, known by its ticker XIV, had been a favorite among investors who sought to profit from a decline in volatility—a lucrative but dangerous wager.
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Lawyers for Rudy Giuliani are pushing back against a Manhattan U.S. Attorney’s office investigation that led to a federal raid of his home and office last month, asking a federal judge to compel prosecutors to disclose their underlying evidence and reasoning for the search warrants.
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The Supreme Court scaled back protections for criminal defendants, holding that decisions establishing new procedural rules, no matter how significant, may never provide relief for inmates whose direct appeals have concluded.
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The city of Baltimore filed suit in 2018, alleging energy companies failed to warn the public about the dangers of their products.
PHOTO: STEPHANIE KEITH/REUTERS
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The Supreme Court handed the city of Baltimore a preliminary setback in its bid to sue more than 20 multinational oil-and-gas companies on allegations they contributed to climate change and misled the public.
Baltimore filed the 2018 lawsuit in Maryland state court, alleging energy companies failed to warn the public about the dangers of their products. The city says it has suffered climate-change-related injuries, including from rising sea levels and extreme weather, and seeks to recover monetary damages. Other state and local governments have filed similar lawsuits.
The defendants fighting such claims include BP PLC, Chevron Corp., Exxon Mobil Corp. and Royal Dutch Shell PLC. They sought to move Baltimore’s case to federal court, which they argued is a more appropriate venue with fairer procedural protections. The companies said the case belonged in the federal system because some of their oil-and-gas exploration efforts have come at the behest of the federal government.
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Apple and Google removed Parler from their app marketplaces in January in the wake of the deadly Capitol riot.
PHOTO: HOLLIE ADAMS/GETTY IMAGES
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Parler LLC on Monday named prominent U.K. conservative George Farmer as its new chief executive and said that its social network has returned to Apple Inc.’s App Store, the company’s latest steps to rebuild its business months after the U.S. Capitol riot.
Mr. Farmer is succeeding interim chief Mark Meckler, who is leaving the company. Mr. Farmer joined Parler in March as operating chief and previously worked in financial services for a decade, the company said.
In Parler’s return to service, executives have said they have rebuilt the platform with new community guidelines that indicate it is “viewpoint neutral” and won’t allow itself to be used as a tool for crime or unlawful acts.
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Tim Cook became CEO of Apple in 2011, three years after the company launched its App Store, where the number of apps has since exploded.
PHOTO: MARCIO JOSE SANCHEZ/ASSOCIATED PRESS
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If there is one thing Epic Games Inc. and Apple Inc. can both agree on even as they battle each other, it is that the app economy is worth fighting over.
In the 13 years since Apple launched its App Store, the number of apps has exploded. The business of delivering them to people’s smartphones has grown into a revenue stream worth tens of billions of dollars annually for Apple and the other main marketplace operator, Alphabet Inc.’s Google.
The fees that Apple and Google charge—30% in many cases—are at the center of lawsuits filed by “Fortnite” creator Epic Games against the tech giants. Epic claims that Apple’s App Store rules stifle competition and run afoul of antitrust law. Apple disputes Epic’s allegations, saying that its rules are applied evenly and that charging a commission is legal and covers expenses such as maintaining user privacy.
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AT&T Inc. is giving up its dreams of marrying media content and distribution—one of the biggest about-faces in corporate deal history.
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