ALMOST CRIMINAL CAPITALI$M
B. Riley Fails to File Audited Results as Grace Period Ends

Rick Green
Fri, March 15, 2024 



The company said it continues to work with its auditors as it seeks to complete and file its annual report “as soon as reasonably practicable,” it said in a statement.

Shares in the bank were down about 6% as of 5:30 p.m. in New York, after falling about 16% year to date.

A representative for the bank declined to comment beyond the statement.

The delay has added to pressure on B. Riley, whose stock has been battered by concerns about its relationship with Brian Kahn, the founder of Franchise Group Inc. B. Riley helped Kahn arrange a buyout of Franchise Group, lent money to Kahn and used some of his assets to help back a loan that B. Riley obtained from Nomura Holdings Inc.

B. Riley missed the initial deadline for filing its annual report and attributed the delay in a Feb. 29 disclosure to the board’s review of the firm’s transactions with Kahn. He was labeled as an unidentified co-conspirator in a US Department of Justice criminal case prompted by the 2020 collapse of the Prophecy Asset Management hedge fund, Bloomberg News previously reported.

Kahn has categorically denied any wrongdoing and said he was among those who lost money when Prophecy collapsed. Riley has said it had no knowledge of what happened at Prophecy and wasn’t involved with the hedge fund.

The US Securities and Exchange Commission gives companies a customary 15-day extension to file overdue reports. B. Riley missed last year’s initial deadline too, citing recent acquisitions, but was able to finish the job within the grace period. The firm said in its Feb. 29 filing that it didn’t expect significant changes to the financial results it had posted for the fourth quarter and full-year of 2023.

B. Riley, founded by Chief Executive Officer Bryant Riley, traces its roots to 1997 as a boutique stock-picking firm focused on smaller companies. It now offers a birth-to-death business model for smaller publicly traded clients, including stock and bond offerings.

Arcadium Lithium says Argentina operation not affected by court ban

Reuters
Fri, March 15, 2024 

BUENOS AIRES, March 15 (Reuters) - Global lithium mining firm Arcadium Lithium Plc said on Friday that its operations in the northern Argentina region of Catamarca would not be impacted by a ruling by a provincial court blocking the issuance of new permits.

The ruling, which came after a petition by local indigenous communities, temporarily halts the issuance of new permits and authorizations in a lithium rich basin in Catamarca, where Arcadium operates, until the local government carries out environmental impact studies.

"The court ruling does not impact Arcadium Lithium's existing mining operations and expansion activities at its Fenix and Sal de Vida projects," the firm said in a statement.

"All of the company's existing permits and Environmental Impact Assessments (EIAs) remain valid."

Arcadium already produces lithium from brine at the Salar del Hombre Muerto and the firm has expansion plans underway.

The case underscores wider tensions between companies and local communities over water use and the environmental impact of extracting ultra-light battery metal lithium, which is key for the electric vehicle revolution.

Argentina, inside South America's so-called "lithium triangle", is one of the world's top producers of the metal with a strong pipeline of regional projects under development. (Reporting by Arunima Kumar in Bengaluru and Lucila Sigal in Buenos Aires; Editing by Alan Barona, Kirsten Donovan)

Lordstown Motors comes out of bankruptcy with a new name to fight Foxconn

Sean O'Kane
Fri, March 15, 2024 

Image Credits: Lordstown Motors

Lordstown Motors has emerged from bankruptcy with a new name and a nearly singular focus: continuing its lawsuit against iPhone-maker Foxconn for allegedly "destroying the business of an American startup."

The company announced in a late Thursday regulatory filing that it has put into effect a Chapter 11 restructuring plan that was recently approved by the Delaware Bankruptcy court. That makes it one of the first EV startups to survive the bankruptcy process in some form, albeit extremely diminished. Electric Last Mile Solutions liquidated in a Chapter 7 proceeding in 2022, while IndiEV's Chapter 11 proceeding is still playing out in California. A decade ago, both Fisker Automotive and Coda sold themselves off to other buyers in their Chapter 11 restructurings.

Now known as Nu Ride Inc., the reconstituted version of Lordstown Motors will also pursue "potential business combinations," though it did not say what kinds of mergers it is seeking. The company has little left to its name. It sold the former General Motors factory it once owned to Foxconn; the assets related to its electric pickup truck were snapped up by Lordstown founder Steve Burns.

With the restructuring plan in effect, Nu Ride is now being led by an entirely new board of directors and slate of executives. It will now trade on the over-the-counter markets as "NRDE."

The newly named company has two federal investigations and other lawsuits that it needs to resolve beyond its beef with Foxconn. The Securities and Exchange Commission recently charged the company with misleading investors about the potential success of its defunct electric pickup truck, forcing Lordstown to set aside $25.5 million to help settle some of the ongoing shareholder lawsuits. That investigation is still active, according to the agency, as is one from the U.S. Attorney's Office for the Southern District of New York.

Lordstown Motors sued Foxconn in June 2023 when it initially filed for bankruptcy protection. It claimed the Taiwanese conglomerate misled the startup about its plans to collaborate on a lineup of electric vehicles. Lordstown's lawsuit has more or less been on hold while the Chapter 11 proceedings played out.

Foxconn now operates the factory Lordstown once owned, and even built a few dozen of the startup's electric pickup trucks before they had to be recalled. Foxconn's effort to become a contract manufacturer for American EVs has mostly failed to date. Two of its four prospective customers -- Lordstown and IndiEV -- filed for bankruptcy, while Fisker (which is reportedly weighing its own bankruptcy filing) has recently distanced itself from the conglomerate, saying it would rather partner with an established automaker. The only thing Foxconn has been making in its Ohio factory are tractors for California-based Monarch.

Poland’s LPP Sheds $3 Billion as Hindenburg Alleges Russia Ties

Konrad Krasuski
Fri, March 15, 2024 





(Bloomberg) -- Shares in one of eastern Europe’s biggest fashion retailers plunged 36% after activist short-seller Hindenburg Research said the Polish company’s withdrawal from Russia was a “sham.”

Hindenburg’s report on Friday alleged LPP SA didn’t fully divest its Russia business as promised following the start of war in Ukraine two years ago and has been selling its goods there through third parties. The short-seller dispatched “secret shoppers” to Moscow and St. Petersburg stores which it said sold “identical” clothes to LPP’s.

The stock plummeted the most on record, wiping out $3 billion in shareholder value in one day. The selloff pushed Warsaw’s blue chip WIG20 stocks gauge down by 2.5%, making it the world’s worst performer among more than 90 primary indexes tracked by Bloomberg.

In a series of statements, LPP said it’s a victim of an “organized disinformation attack” that no longer owns or runs businesses in Russia and alerted Polish prosecutors about the matter. Still, investors remain concerned about LPP’s transparency and reputation.

“Polish consumer sentiment may not be so forgiving as it likely assumed a cleaner break” from Russia, said Charles Allen, a senior analyst at Bloomberg Intelligence.

Russia was the biggest market for LPP following Poland until the retailer, which owns several brands including its flagship Reserved label, suspended its fast-growing operations in the country in March 2022.

Two months later, it sold its Russian unit, with inventories, to a Chinese consortium, while pledging to support the buyer with logistics, IT and supplies on a temporary basis.

“We think LPP devised an elaborate sham ‘divestment’ strategy to continue retailing in Russia while trying to fool investors and consumers in Poland, Ukraine, and its other markets into thinking otherwise,” Hindenburg, founded by Nate Anderson, said in its report.

Hindenburg had a remarkable 2023, when it released reports on the empires of high-profile businessman Gautam Adani, followed by attacks on companies run by Jack Dorsey and Carl Icahn. Short-seller activists carry out investigations into companies and seek to make money when their findings depress the stock price.

‘Identical Designs’

Hindenburg said its “secret shoppers” in Russia’s two biggest cities had in December found and photographed garments with “identical designs and colors to fall/winter collections in LPP’s online catalogs in Poland.”

This, according to the short-seller, indicated that LPP products were still “somehow making their way into Russia at least 18 months after the claimed divestiture.” It also accused LPP of using Kazakhstan as a backdoor to help supply stores in Russia, a claim denied by the retailer.

LPP said on Friday that it had previously informed investors that as part of the sale agreement of its Russian business there would be a transition phase “during which the buyer successively assumes complete autonomy over the various business areas.” It added that this period would run out as late as in 2026.

“The degree to which merchandise assortment overlaps between LPP’s core stores and the sold Russian units can be explained by transitory contractual obligations could reassure about reported revenue from new countries,” said Allen from Bloomberg Intelligence.

The Gdansk, Poland-based company’s sales recovered swiftly after its exit from Russia, which was broadly attributed then by analysts to the reopening of shopping centers from pandemic shutdowns as well as new demand from Ukrainian refugees fleeing war.

Strong public pressure pushed Polish companies to retreat quickly from Russia following the start of war in Ukraine in February 2022, with shoppers boycotting brands which failed to do so.

LPP, controlled by the family trust of founder Marek Piechocki, has gained 10% this year before Friday’s tumble, compared with a 3% advanced by the WIG20. The company has 14 buy-equivalent ratings, one hold and two sell views, according to data compiled by Bloomberg.

Following Friday’s collapse, the firm is the 10th biggest company by market value in Warsaw’s blue-stock index. On Thursday, it was the seventh.

The import of food, essential items and clothes — with the exception of luxury goods — aren’t under any international sanctions in Russia. Products ranging from iPhones to Coca Cola and garments made by international producers continue to enter the Russian market through so-called parallel imports, when they are purchased and re-exported by third countries. Russia has imported $70 billion of goods using this mechanism since early 2022, the government said in December.

Poland’s financial regulator KNF said in a statement that it was analyzing the situation in LPP, as it does whenever “there are doubts regarding the correctness of the performance of disclosure obligations by public companies or suspicion of manipulation of shares.”

--With assistance from Piotr Bujnicki and Piotr Skolimowski.

(Updates with closing market prices, new comments from LPP and analyst.)

Most Read from Bloomberg Businessweek

Hertz’s electric vehicle and CEO about-face is the latest twist after a COVID bankruptcy filing and a deep relationship with Carl Icahn

Steve Mollman
Sat, March 16, 2024

F. Carter Smith/Bloomberg via Getty Images

It seemed like a good idea at the time. Now we know better.

Hertz, reeling from a bankruptcy and the pandemic, announced plans to buy 100,000 Teslas in late 2021. The splashy move certainly helped Elon Musk’s electric-vehicle maker, which saw its market cap surge past $1 trillion for the first time.

Hertz enjoyed a bump in its market value as well, and the car-rental giant hired NFL star Tom Brady to show off its new fleet of Teslas.

“How do we democratize access to electric vehicles? That’s a very important part of our strategy,” interim CEO Mark Fields said at the time. “Tesla is the only manufacturer that can produce EVs at scale.”

But Hertz paid close to list prices for the Teslas, rather than demanding a large discount as car-rental giants often do. That decision would come back to bite it.

Last year, Musk’s EV maker cut prices across its lineup to boost sales. That not only angered individual customers who’d recently bought a Tesla at a higher price, but it also crushed the resale value of Hertz’s used EVs.
'Elevated costs' of EVs

This January, the rental giant revealed that it was selling off 20,000 electric vehicles, noting the costly depreciation, weak demand, and pricey repairs. It took a $245 million hit and suffered its steepest quarterly loss since the pandemic.

“The elevated costs associated with EVs persisted,” Hertz CEO Stephen Scherr said at the time. “Efforts to wrestle it down proved to be more challenging.”

This week, Hertz announced that Scherr was stepping down and would be replaced by Gil West, the former COO of General Motors’ Cruise robotaxi unit. While Scherr took over after the Tesla deal, under his leadership Hertz continued its focus on EVs, placing orders for some with GM and Polestar.

The ill-fated EV push followed a difficult stretch for Hertz that culminated in billionaire activist investor Carl Icahn unloading his substantial stake in the car-rental company in 2020 days after its bankruptcy. In 2014, Icahn had begun acquiring his stake in Hertz, which was struggling. He called Hertz “a great brand” that he hoped would “return to its former glory,” and three of his allies soon had board seats, while the hunt for a new CEO began.

After selling selling his stake, Icahn said, “Yesterday I sold my equity position at a significant loss, but this does not mean that I don’t continue to have faith in the future of Hertz.”

The following year, the company announced the decision to buy Teslas. Now it's about to welcome yet another new CEO, again tasked with turning things around.

US appeals court temporarily pauses SEC climate disclosure rules


Updated Fri, March 15, 2024 
By Clark Mindock

March 15 (Reuters) - A U.S. appeals court on Friday temporarily paused new rules issued by the Securities and Exchange Commission (SEC) requiring public companies to report climate-related risks.

The New Orleans-based 5th U.S. Circuit Court of Appeals granted a request from Liberty Energy Inc. and Nomad Proppant Services LLC to put the rules on hold while it considers the oilfield companies' lawsuit challenging them.

The 5th Circuit did not explain the reasoning behind the order. It was the first court action on a flurry of lawsuits filed over the rules since the SEC approved them March 6.

The rules aim to standardize climate-related company disclosures about greenhouse gas emissions, weather-related risks and how companies are preparing for the transition to a low-carbon economy.

The SEC did not immediately respond to a request for comment.

First

proposed in 2022

, the rules are part of Democratic President Joe Biden’s efforts to leverage federal agency rulemaking to address climate change threats.

The companies said in court filings that the rules would force companies to collectively spend over $4 billion in compliance costs and could open companies up to increased litigation.

They argued the rules go beyond the SEC's authority under U.S. securities law, and that they are a "thinly veiled attempt" to inject the SEC into climate policy by requiring disclosure of a "breathtaking volume of information" about greenhouse gas emissions and other climate concerns.

On Wednesday, the SEC told the 5th Circuit that a pause was unnecessary, since the rules have extended compliance deadlines that do not require disclosures before March 2026. The agency said any potential harm to the companies is therefore not imminent.

The agency also said the rules "fit comfortably within" its authority to require disclosure of information important to investors, and that they would provide "consistent, comparable and reliable information" about climate risks.

At least 25 Republican-led states

including West Virginia

, Texas and Ohio and major business groups like the U.S. Chamber of Commerce have challenged the rules in court, including in the 5th, 6th, 8th and 11th U.S. Circuit Courts of Appeals.


The Sierra Club, one of the largest environmental advocacy groups in the U.S., has meanwhile

challenged the rules

in the U.S. Court of Appeals for the D.C. Circuit, arguing they do not go far enough to protect investors.

It is unclear whether the 5th Circuit or one of the other courts will ultimately hear the challenges, since the cases are expected to be consolidated and the venue picked via a lottery. (Reporting by Clark Mindock Editing by Franklin Paul, Alexia Garamfalvi and David Gregorio)

Bangladesh Launches Largest Offshore Exploration Drive in a Decade


Editor OilPrice.com
Sat, March 16, 2024 

This month, the Bangladesh government invited international bids for oil and gas exploration in 24 blocks in the Bay of Bengal. This is aimed at increasing the country’s oil output. For several years, Bangladesh has been plagued with energy shortages, as its gas reserves have been depleting. Further, the rise in energy prices following the Russian invasion of Ukraine and subsequent sanctions on Russian energy have hit the low-income country hard.

It is the first round of bidding since 2012 to offer offshore acreage, with 15 deep-water and nine shallow-water blocks available. The bidding round was approved following the provision of a 2D multi-client seismic data survey from the energy data firm TGS. The company delivered data from over 75,000 km2 across all 24 blocks on offer in April 2023.

David Hajovsky, the Executive Vice President of Multi-Client at TGS, stated: “The Bengal Fan is one of the world's largest deep-water fans with significant evidence of working petroleum systems. It is widely considered one of the most extensively underexplored frontier regions. With limited existing offshore Bangladesh data, this new high-quality seismic, combined with the revised Production Sharing Contract 2023 (PSC), is a critical component for companies to evaluate and submit competitive bids for the blocks on offer in the Bid Round.”

The government set a deadline for bids for the first week of September, with evaluations and deals expected to be finalised by the end of the year. Zanendra Nath Sarker, the chairman of state-owned Bangladesh Oil, Gas and Mineral Corporation (Petrobangla), stated “We're making plans to reduce supply shortages to keep gas-fired power plants and industries running.” He also stated the company’s intention to “drill 100 new gas wells in the country between 2025 and 2028 to boost local production.” There are two shallow water blocks under contract for exploration with a joint venture of ONGC Overseas Limited and Oil India Limited where drilling has already begun, according to officials.

Bangladesh has proven oil reserves of around 82 million barrels and a production rate of approximately 4,105 bpd. However, there are fears that Bangladesh’s gas reserves could be completely depleted by 2033 if no new discoveries are found in the region. The country, which already depends heavily on energy imports, is finding it increasingly difficult to fund its energy deficit, making new exploration projects increasingly attractive. The International Monetary Fund already provided Bangladesh with a $4.7-billion bailout to tackle increased energy costs in 2023, but new oil and gas finds could provide it with a longer-term solution to its energy crisis.

In February, the International Islamic Trade Finance Corporation (ITFC) signed a $2.1 billion financing plan with Bangladesh to fund the country's oil and gas imports. The State Minister for Power, Energy and Mineral Resources Nasrul Hamid explained, “ITFC has been cooperating with us in oil imports for a long time. Now $500 million can be used to import gas, which will help solve the gas crisis.” The funds will allow state-owned Bangladesh Petroleum Corporation to import oil and Petrobangla to import liquefied natural gas. This provided Bangladesh with a lifeline after its foreign exchange reserves fell below $20 billion at the end of January, enough for just four months of imports.


Bangladesh hopes to increase its trade with Saudi Arabia after the country’s Foreign Minister Hasan Mahmud met with the Foreign Minister of Saudi Arabia Faisal bin Farhan Al Saud in Jeddah this month. Mahmud emphasised Bangladesh’s interest in purchasing more crude from the Middle Eastern power, as well as seeking investment in its refining and petrochemicals industry. Bangladesh currently imports around 700,000 metric tonnes of crude from Saudi’s state-owned oil firm Aramco.

The Deputy General Manager of Bangladesh Petroleum Corp., Zahid Hossain, explained, “It’s very important as we are importing a large volume of crude oil from Saudi Arabia … If we can achieve this opportunity, it will definitely be a great support for us.” He added, “If we can defer the payment longer than 30 days, we would be able to use this ITFC fund to import other refined petroleum products. So, it will ease our financial burden to some extent.” If a payment plan can be arranged, it is expected to alleviate the financial pressure on Bangladesh and help its economic crisis.

Bangladesh is looking to boost its oil production through the announcement of a new bidding round, while also seeking financial support to help it import the crude needed to meet its energy needs. New exploration activities could help provide the energy needed to meet the country’s growing needs, helping to reduce its reliance on foreign energy sources. However, Bangladesh needs a long-term solution to its energy shortages and economic crisis, which likely includes funding from high-income nations to support the rollout of more sustainable alternative energy projects.

By Felicity Bradstock for Oilprice.com

Tesla settles race bias claims by Black former worker after $3 million verdict

Daniel Wiessner
Fri, March 15, 2024 a

(Reuters) -Tesla has settled a long running lawsuit by a Black former factory worker who claimed he was subjected to severe racial harassment, according to a court filing on Friday, as the electric carmaker faces a series of other discrimination lawsuits.

Tesla and lawyers for Owen Diaz, a former elevator operator at the company's Fremont, California assembly plant, did not disclose details of the settlement in the filing in San Francisco federal court.

The agreement ends appeals that both sides were pursuing after a jury last year awarded Diaz $3.2 million in damages. Tesla claimed it was not liable for the alleged discrimination and Diaz had argued that the company's lawyers engaged in misconduct warranting a new trial.

A different jury in 2021 had awarded Diaz $137 million, one of the largest verdicts ever in a discrimination case involving a single worker. But a judge found that the verdict was excessive and ordered a second trial after Diaz refused a lowered award of $15 million.

Diaz, who first sued Tesla in 2017, claimed that when he worked at the Fremont plant he was subjected on a daily basis to racial slurs, scrawled swastikas and other racist conduct, and that Tesla ignored his complaints.

Tesla and lawyers for Diaz did not immediately respond to requests for comment. The company has said it does not tolerate discrimination and has fired employees accused of racist conduct.

Tesla faces similar claims of tolerating race bias at the Fremont plant in a pending class action on behalf of 6,000 workers, separate cases from California and U.S. anti-bias agencies, and multiple lawsuits involving individual employees. The company has denied wrongdoing in those cases.

(Reporting by Daniel Wiessner in Albany, New YorkEditing by Chris Reese, David Gregorio and Alexia Garamfalvi)

Leaked SpaceX documents show company forbids employees to sell stock if it deems they've misbehaved

Aria Alamalhodaei
Updated Mon, March 18, 2024 

Image Credits: TechCrunch

SpaceX requires employees to agree to some unusual terms related to their stock awards, which have a chilling effect on staff, according to sources and internal documents viewed by TechCrunch.

That includes a provision that allows SpaceX the right to purchase back vested shares within a six-month period following an employee leaving the company for any reason. SpaceX also gives itself the right to ban past and present employees from participating in tender offers if they are deemed to have committed “an act of dishonesty against the company” or to have violated written company policies, among other reasons.

Employees often aren’t aware of the “dishonesty” condition when they initially sign up on the equity compensation management platform, one former employee said.

If SpaceX bars an employee from selling stock in the tender offers, the person would have to wait until SpaceX goes public to realize cash from the shares — and it’s unclear when that will happen, if it ever does.

SpaceX did not respond to multiple requests for comment.
Employees pay taxes on their shares

Like most tech companies, SpaceX includes stock options and restricted stock units (RSUs) as part of its compensation package to attract top talent. No doubt this has paid off: SpaceX's 13,000-strong workforce is helping to push the limits of what was thought possible in aerospace, including delivering crew to and from the International Space Station and building out the largest satellite constellation in history.

Unlike stock in public companies, stock in private companies cannot be sold without the company’s permission. So employees can only turn that part of their pay into cash when their employer allows such transactions. SpaceX is known for generally holding buyback events twice a year — meaning SpaceX will buy the shares back from employees; this schedule, which has been fairly reliable in recent years, means that employees have biannual opportunities to liquidate assets that have likely appreciated since the vesting date.

It’s not uncommon for additional terms to be attached to employee stock compensation at startups, and employees who stay with the company long enough to vest stock may have acquired stock under various stock plans with various conditions. Yet no employee at startups and private companies is entitled to sell their stock without their employer's approval.

Indeed, at SpaceX, if an employee was fired “for cause,” the company stated it can repurchase their stock for a price of $0 per share, according to documents viewed by TechCrunch.


“It sounds unusual to have [a] cause type exclusion provision in a tender offer agreement,” attorney and stock options expert Mary Russell told TechCrunch. She said it is also unusual for a traditional venture-based startup to have repurchase rights for vested shares that are unrelated to a bad-actor-type “for cause” termination.

These terms “keep everyone under their control, even if they have left the company,” one former employee said, because employees don’t want to be forced to return their valuable SpaceX stock for no compensation. “And since there is no urgency by SpaceX to go public, being banned from tender offers effectively zeros out your shares, at least for a long time. Even though you paid thousands to cover the taxes.”

“They also try and force a non-disparagement agreement on you when you leave, either with a carrot, or a stick if they have one,” the person said.
SpaceX names Elon Musk actions as a "risk factor"

As recently as 2020, SpaceX was also providing to employees a separate document outlining the risks of investing in the company’s securities. It reads similar to an S-1 registration statement that public companies must file; given that SpaceX is private, it is a unique disclosure into the company’s risk profile.

To a large extent, such documents are written to minimize the company’s legal liability. The SpaceX document rightly points out that equity investments are inherently risky, because participants are trading a highly liquid asset — cash — for highly illiquid shares. As such, they exhaustively list various material risk factors, no matter how unlikely — for example, in its risk document, seen by TechCrunch, SpaceX includes that Hawthorne, California, which is home to its headquarters, is a “seismically active region.”

The company also includes a number of risk factors related to Elon Musk, its CEO and founder.

“To date, the Company has been highly dependent on the leadership provided by the Company’s founder, Chief Executive Officer and Chief Technical Officer, Elon Musk,” the document reads. “SpaceX, Mr. Musk, and other companies Mr. Musk is affiliated with, frequently receive an immense amount of media attention. As such, Mr. Musk’s actions or public statements could also potentially have a positive or negative impact on the market capitalization of SpaceX.”

The document also calls out a $40 million settlement between Musk and the SEC, which came about after he tweeted in August 2018 that he was considering taking Tesla private. Even though that tweet did not relate to SpaceX, “the settlement has implications for SpaceX,” the document says.

“If there is a lack of compliance with the settlement, additional enforcement actions or other legal proceedings could be instituted against Mr. Musk, which could have adverse consequences for SpaceX. Most notably, the SEC could deny SpaceX the right to rely on Regulation D, which is an exemption from registration under the Securities Act of 1933 for private financing transactions. A denial of future reliance on Regulation D could potentially make it more difficult for the Company to raise capital in the future.”

While Tesla’s recent securities statements do call out the SEC settlement, they do not address potential media attention in the same direct manner.

The document also states that there is a risk that there may never be a public market for the company’s common stock — an issue should an employee ever be barred from tender events.

SpaceX is one of the most valuable private companies in the world, with the valuation topping out at $180 billion as of last December. Like other private companies, its stock is split into preferred and common stock. Employees are awarded the latter, while preferred stock is generally owned by institutional investors and entities affiliated with Musk. Preferred stock has some superior rights attached to it, including liquidation preferences and dividends.

The common stock is split into three stock classes: Class A, B and C. According to an equity incentive plan approved by the SpaceX board in March 2015, and which has a termination date in 2025, employees receive Class C stock, a non-voting stock.

Almost all top BP shareholders unhappy with green strategy, claims activist investor

Luke Barr
Sat, March 16, 2024 

BP's chief executive Murray Auchincloss has vowed to continue to pursue his predecessor's investment in renewables - RYAN LIM/AFP via Getty Images

Almost all of BP’s biggest shareholders are unhappy with its shift to green energy, an activist investor has claimed, amid a growing backlash over the oil giant’s focus on net zero targets.

Giuseppe Bivona, chief executive of Bluebell Capital, which has a minority stake in BP, said he had spent the past three weeks talking to many of the company’s top 30 investors.

He said: “With only the exception of one shareholder, I am still to find someone who supports BP in its entirety.”

Bluebell is spearheading a brewing investor revolt after sending a 30-page letter to the FTSE 100 company in January.

In the letter it urged BP to halt investment in renewable energy schemes, prioritise oil and gas production, and rewrite net zero targets to clarify that they will be achieved “in line with society”.

BP has been under increasing pressure over net zero commitments that have allegedly left shareholders £40bn poorer.

Mr Bivona said he plans to share negative feedback with BP on a no-name basis, which he said will “clearly expose them to the fact that many investors are sympathetic to what we are saying”.

He is hopeful this will serve as a “wake-up call” for the company, with Bluebell having previously taken similar action against blue-chip giants Glencore and Danone.

The activist threat represents the first major test for Murray Auchincloss, BP’s new chief executive, who has told staff that he will stick to the green energy plans rolled out by his predecessor Bernard Looney.

One of Mr Bivona’s biggest criticisms of BP is that it has destroyed shareholder value by investing billions of pounds in loss-making renewable energy businesses.

He said: “When you want to deploy £30bn on renewable power at a return of 6pc to 8pc, that is insane. BP is such a poorly managed company.”

Despite the criticism, Mr Bivona has given BP a stay of execution to allow it to respond to Bluebell’s concerns, adding that he was not looking to stir up trouble at the forthcoming shareholder meeting.

He added: “But watch out for the next one.”

Mr Bivona said BP is open to the idea of scrutinising its green energy plans but said the company is too scared to follow through with Bluebell’s requests in case of a backlash from environmentalists.

A BP spokesman said: “We do not recognise the assertions Bluebell has made. In recent weeks and months, we have engaged extensively right across our shareholder base internationally, including with our largest shareholders.

“We have heard clear and widespread support for BP’s strategy and our focus on delivery. Throughout this engagement, we have not heard support for Bluebell’s proposals.”

Mnuchin’s interest in TikTok and distressed NY bank echoes his pre-Trump investment playbook


STAN CHOE and CHRISTOPHER RUGABER
Updated Sat, March 16, 2024 


NEW YORK (AP) — It seems like a bizarre mishmash: A former Trump cabinet official is saying he wants to buy TikTok just days after leading a group that pumped $1 billion into a beaten-down bank. But it all actually fits in with the complicated career of Steven Mnuchin.

The man who served as former President Donald Trump’s Treasury secretary is well connected in the world of finance, after all. From 1985 to 2002, he worked at Goldman Sachs, one of the most storied — and criticized — investment banks on Wall Street.

Mnuchin also has a history in media and entertainment. Among his Hollywood credits are “Mad Max: Fury Road” and “The Lego Movie,” where he was one of the executive producers. Think of them as much bigger-budget versions of TikTok videos.

And Mnuchin certainly has experience taking risks with troubled institutions. He famously swooped in to turn around the struggling IndyMac bank after its failure in the financial crisis of 2008.

But for critics, Mnuchin's dealmaking also raises concerns about ethics. Robert Weissman, president of the watchdog group Public Citizen, points to TikTok in particular, where the U.S. government may force its Chinese owners to sell. Imagine something similar happening in another country, where its former finance minister ended up as the buyer, he said.

"When you’re at the top of the financial policymaking hierarchy, you don’t jump from that to figure out how you can help yourself,” Weissman said.

Other former Treasury secretaries have gone to Wall Street after their terms ended, including Robert Rubin, a Goldman Sachs executive who served under President Clinton. In all cases, the move carries the appearance of cashing in on their time in government, Weissman said.

Mnuchin, who couldn’t be reached for comment through a request via his private-equity firm, has often generated controversy as he has generated cash.

After leaving the Treasury Department in January 2021, he launched his private-equity fund, Liberty Strategic Capital, which raised $2.5 billion by that September, according to news reports.

Much of that money was from government-controlled investment funds in Saudi Arabia and other Persian Gulf states, which Mnuchin had frequently visited as Treasury secretary. He was in the Middle East just weeks before leaving office, cutting the trip short after the Jan. 6 Capitol riot.

The rapid shift from his government travel overseas to business dealings in those same countries prompted a watchdog group, Citizens for Responsibility and Ethics in Washington, to call for a one-year ban on senior government officials doing business overseas after leaving office.

Earlier this month, Mnuchin jumped back into the headlines when his PE firm led a roughly $1 billion investment in embattled New York Community Bancorp.

NYCB was looking for a lifeline, and its stock had at one point plunged more than 80% from the start of the year. The bank is struggling with falling values for investments tied to commercial real estate and the growing pains associated with some of its past acquisitions.

It all hearkens back to the move that may have defined Mnuchin's career.

In 2009, OneWest Bank Group, where Mnuchin was chairman and CEO, bought the troubled IndyMac after federal regulators took over the bank. Other big-name backers included funds tied to George Soros and hedge-fund manager John Paulson.

OneWest bought all of IndyMac’s deposits and assets at a discount of $4.7 billion following an auction by the Federal Deposit of Insurance Corp. The FDIC also agreed to share in the losses created by some mortgages tied to single-family homes.

Kevin Kaiser, an adjunct professor of finance at the Wharton School, said such investors can profit by buying at steep discounts when markets are panicking. To ensure the investment pays off, however, investors like Mnuchin have to pay hardball with borrowers at risk of default, he said.

“They’re a little bit sharp elbowed,” Kaiser said, referring to distressed-property investors as a group. “And what that means is they’re not shy to get into a bit of a conflict situation.”

After OneWest, Mnuchin was Trump’s top fundraiser in the 2016 election. He came under fire in Congress when he was nominated for the Treasury post, after it came out that OneWest foreclosed on tens of thousands of homes after the U.S. housing bubble popped.

Advocates found the bank particularly difficult to work with under government mortgage modification programs. Some of those who lost their homes had voted for Trump in 2016 and were disappointed in Mnuchin’s nomination.

Maxine Waters, the top Democrat of the House’s financial committee, at the time called Mnuchin the “foreclosure king.”

In testimony before a Senate committee considering his nomination, Mnuchin said he had worked to help homeowners remain in their homes and that his company had extended more than 100,000 loan modifications to borrowers.

Mnuchin was Treasury secretary in 2020, when the Trump administration brokered a deal where Oracle and Walmart would take a large stake in TikTok. That deal eventually fizzled for several reasons, but the popular video app is again under pressure after the House of Representatives passed a bill Wednesday to ban it in the U.S. if its China-based owner doesn't sell its stake.

On Thursday, Mnuchin said in an interview with CNBC that he had spoken with “a bunch of people” about creating an investor group to buy TikTok.

And Mnuchin may not be done.

Mnuchin has plenty of potential, distressed targets given the banking industry's troubles, said Chris Caulfield, who runs the banking practice at West Monroe, a consulting firm.

Besides having a history of bringing in new leadership teams to right struggling banks, Mnuchin also has experience in the potentially thorny world of regulations.

“He also has access to capital,” Caulfield said of Mnuchin. “Should there be need for more capital, he's somebody who’s very adept at putting consortiums together.”

___

Rugaber reported from Washington.

Trump official and Goldman Sachs alum Steve Mnuchin plots to buy TikTok as Gen Z panics about a possible ban

Dylan Sloan
Fri, March 15, 2024 

On Tuesday, former Treasury Secretary Steve Mnuchin closed a $1 billion equity deal to rescue the faltering New York Community Bank. On Thursday, he said he was working to buy TikTok with a group of investors after the House passed a bill demanding that Chinese firm ByteDance sell the app. It's been the source of considerable Gen Z (and probably a lot of millennial) panic, as the realization dawns that the defining social-media platform of the 2020s really could go away.

After leaving the public eye for years after Joe Biden’s electoral defeat of Donald Trump in 2020, Mnuchin is back in the business pages. It’s just the latest in a wide-ranging career that’s brought him from the Goldman Sachs trading floor to Hollywood—Mnuchin has production credits on “Avatar” and “The Lego Batman Movie.”

Mnuchin’s interest in TikTok dates back at least to his time in Trump’s cabinet, when he urged the then-president to block Chinese company ByteDance from acquiring TikTok, back when it was called musical.ly. Mnuchin’s experience as a dealmaker and fundraiser, though, goes back much further, to the very beginnings of his career in business.

Mnuchin is a Wall Street veteran through and through. His father, Robert Mnuchin, was a partner at Goldman Sachs who worked at the bank for over three decades. After Steve graduated from Yale in 1985, he took a job at his father’s company, working in Goldman’s mortgage-backed securities department.

Working his way up to partner and Chief Information Officer, Mnuchin left Goldman in 2002 and spent over a decade bouncing around between various management roles, ranging from film to California-based OneWest Bank to serving on the Sears board. (Dune Capital, a hedge fund that Mnuchin co-founded with seed money from George Soros, put up some of the money for David Cameron’s 2009 movie Avatar, alongside other hits such as Magic Mike XXL.)

Donald Trump tapped Mnuchin to lead the finance arm of his presidential campaign in 2016, and nominated him to be Secretary of the Treasury after the election—the first Wall Street vet to hold the role since his old Goldman Sachs boss Hank Paulson nearly a decade earlier. Democrats were unanimously opposed to Mnuchin, pointing to his allegedly predatory track record of foreclosing on California homeowners while serving as OneWest Bank’s CEO. But Mnuchin was narrowly confirmed by the Senate, and was one of the few Trump cabinet members to remain in office for all four years of Trump’s term.

As Treasury Secretary, Mnuchin stuck close to the party line, emerging as an unflinching Trump ally: he pushed to enact Trump’s tax cuts and supported rolling back the Dodd-Frank Act passed after the 2008 financial crisis, which weakened the Consumer Financial Protection Bureau. But his work across the aisle during a crisis will likely be his legacy, as he worked with Speaker Nancy Pelosi to shepherd the Covid-19 stimulus bill that he helped through Congress: allocating nearly $1 trillion in federal aid and temporarily expanding the social safety net at a sorely needed time.
What has Mnuchin been up to during the Biden administration?

In 2021, after leaving office, Mnuchin founded Liberty Strategic Capital, a $3.1 billion private equity firm focusing on tech and fintech. By far its highest-profile investment to date came earlier this week, when it handed New York Community Bank a $1 billion lifeline to keep it afloat after the bank’s shares plummeted off ratings downgrades and concerns over its struggling commercial real estate portfolio.


“It’s a top-20 bank. We put up a lot of capital which will stabilize the business, brought in Joseph Otting as CEO, and I think there’s going to be a great turnaround,” Mnuchin said of the deal on CNBC on Thursday.

A potential TikTok purchase would be a far bigger—and far more complicated—prize. In a deal with high geopolitical stakes, Mnuchin’s fundraising ability can only take him so far.

“I’m assuming he can raise the money easily enough…I don't know what the price would be. [But] I think the identity of the CEO of the buyer is a pretty low level consideration,” Columbia Law professor and corporate governance expert John C. Coffee told Fortune. “This is not an ordinary business transaction between a buyer and a seller. It's two sovereigns facing off, and one may want to say, ‘You can't do that to us. Go ahead and do it, and we'll engage in economic reprisals of our own.’”

The House of Representatives voted 352-65 on Wednesday to pass a bill that would ban TikTok unless the app’s Chinese parent company, ByteDance, sells it. The bill isn't expected to pass the Senate, but it’s reignited debate over the risks of a Chinese company potentially having access to over 170 million American users’ data—as well as control over what they’re seeing on an app where close to a third of adults age 13-29 get their news, according to Pew Research Center data.

“I had President Trump sign an order that TikTok had to be sold, and I continue to believe that. So I think the legislation should pass…It’s a great business, and I’m going to put together a group to buy TikTok,” said Mnuchin on CNBC on Thursday. “It should be owned by U.S. businesses. There’s no way that the Chinese would ever let a U.S. company own something like this in China.”
Another feather in the cap

Buying TikTok would be a huge get for Mnuchin. The app reported $16 billion in annual sales on Friday, and an Oxford Economics report found that it contributed $24.2 billion to US GDP last year (TikTok contributed funding for the study). Bloomberg Intelligence recently valued TikTok’s U.S. business at an estimated $40-50 billion.

The last major social media buyout was Elon Musk’s Twitter takeover in 2022. Musk has taken a central role in Twitter (now X.com)’s operations ever since, dictating content moderation policies and experimenting with payment models. NYU Business professor and former Obama Assistant Secretary of State Michael H. Posner told Fortune that he wasn’t concerned about Mnuchin potentially exerting Musk-like control over TikTok.

“It's a very different thing than Elon Musk owning X, or even Mark Zuckerberg effectively having operational control of Meta. So, you know, I would be less concerned,” Posner said. “Elon Musk at X has inserted himself in a way that I think is very detrimental to the company and not good for our society…I think Mnuchin probably wouldn't have that kind of control.”

Posner pointed out that if legislators are concerned about Chinese influence over TikTok, forcing a sale is only one half of the equation: it would also be necessary to remove that all of the app’s data centers and engineering staff from any Chinese oversight, a process that could take a long time.

“Mnuchin and his group, if they had the money, and they were able to buy [TikTok], and separate not only ownership but the technology—making sure that the algorithms, all the engineering was also taken out of China—that would obviously, to me at least, be a very positive development,” Posner said.

This story was originally featured on Fortune.com