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What does HB 1775 mean for educators' free speech? Lawyers offer perspectives
Robert L. Kerr
Mon, October 17, 2022
The approach to Free Speech Week (Oct. 17-23) this year has felt like Oklahoma teachers are living through a textbook example of what First Amendment law calls a “chilling effect.”
That has been one of the Supreme Court’s cornerstones of vigilance against overly broad government restrictions on expression for some 70 years — “because First Amendment freedoms need breathing space to survive,” as the court has emphasized, and Chief Justice John Roberts invoked in a major ruling just last year.
Since Oklahoma’s 2021 enactment of House Bill 1775, recent news-media accounts, and one conversation after another among teachers, have dramatized its chilling effect in terms of fear and confusion as to what can be legally addressed in the classroom.
Should educators be so fearful? Based on purported violations of HB 1775 already leading to harsh penalties by the state against two larger school districts and to threatened revocation of a teacher’s state teaching certificate by a candidate for state schools superintendent, the answer would seem to be yes.
So in the spirit of Free Speech Week, I sought the perspectives of three of Oklahoma’s very best First Amendment lawyers on HB 1775.
Most basically, on its face, the new law can be read as doing two things. First, it bans state higher-education institutions from requiring students to take diversity training or imposing “any orientation or requirement that presents any form of race or sex stereotyping or a bias on the basis of race or sex.” Second, it forbids K-12 teachers from requiring or making part of a course any of eight banned “concepts” related to race and sex.
Although the law has not been tested in court, a plain reading of it suggests that it doesn’t, for example, make it illegal for any student to ever feel “discomfort, guilt, anguish or any other form of psychological distress on account of his or her race or sex” from a lecture or assignment — as some media accounts have suggested and many teachers seem to believe, based on the language of one of the most-discussed concepts.
Rather, the text of the law bans requiring or making it part of a course that students should feel such things. However, trusting that all administrators and politicians will interpret that part of the law in exactly that way — and all other parts reasonably and consistently — understandably makes many educators nervous.
“Colleagues across campus have expressed concern to me about what they can teach now,” said Joe Thai, who teaches First Amendment and constitutional law at the OU College of Law, and has served as lead counsel in successful free speech litigation. “I tell them, I don’t think it prevents the teaching of topics related to race or gender, such as teaching that there has been structural racism, sex discrimination, or other relevant historical facts on the subject.”
“The provision people misread the most [concerning students feeling discomfort, etc., on account of their race or sex] doesn’t turn on the subjective feeling of students. It turns on teaching that people ought to feel those things. So I would argue that a teacher can even pose the question as to whether we should feel discomfort or anguish because of relevant historical realities.”
His confidence derives partly from his strong doubts that “HB 1775’s eight banned concepts in Section B (applicable to ‘a school district, a charter school or a virtual school’) could be reasonably or successfully argued to apply to Section A’s diversity-training prohibitions (applicable to ‘an institution of higher education’).”
“It would run counter to the text and structure of the law to apply the prohibitions in one section to the institutions in the other,” he said.
But college educators may still wonder whether opportunistic politicians might seek to apply the broad language from the ban on higher-education requiring diversity training to classes not primarily devoted to that subject. Given the law’s ban on “any form of mandatory gender or sexual diversity training or counseling,” could a politician seeking headlines — regardless any formal legal actions — demand penalties for, say, university-required history courses whose topics necessarily involve discussions of past race or sex stereotyping, bias, etc.
Thai doubts the courts would uphold reading the law’s ban on higher-education requiring diversity training in that way. Nevertheless, such concerns represent another example of how a law arguably as overly broad and vague as HB 1775 can potentially chill legitimate expression protected by the First Amendment.
Rick Tepker, recently retired as the first Floyd & Irma Calvert Chair of Law and Liberty at OU Law, where he taught First Amendment and constitutional law and argued successfully before the U.S. Supreme Court, similarly is no fan of HB 1775. He observes that “the drafters seem intent on being slippery, with strategies of censorship by intimidation.”
Tepker advised, “Teachers need to develop defensible teaching strategies to resist. There must be more attention to the influence of race and gender in our history and civic life. We must not insist our teachers go backwards ― backwards to days when the Tulsa Race Riot could not be discussed; backwards to a ‘Gone with the Wind’ perspective on the Civil War and its impact on the American heritage; backwards to a storybook view of the nation.”
He questioned how “Oklahoma’s so-called leaders expect teachers to discuss the book and upcoming movie ‘Killers of the Flower Moon.' The murky words of HB 1775 offer little real leadership. So, teachers must prepare for undue political influence. The appearance of ideological indoctrination must be avoided. Illiberal liberalism is hard to defend. Sponsoring debate and discussion is better than inculcation of a new ideologically dictated set of ‘truths.’ ”
Bob Nelon, a nationally known media and First Amendment lawyer in Oklahoma City, sees considerable grounds for arguing teachers’ free-speech rights in relation to HB 1775. In response to my inquiry, he briefed a nine-page analysis in which he concludes the statute is unconstitutional.
Invoking language from the Supreme Court, Nelon emphasized, “If educated professionals do not clearly understand what they are permitted and not permitted to teach — and thus ‘steer far wider of the unlawful zone’ — then the statute is unconstitutionally vague and overbroad, it interferes with the teacher’s academic freedom, and it impedes the ‘wide exposure to that robust exchange of ideas which discovers truth out of a multitude of tongues, rather than through any kind of authoritative selection.’ ”
His basis for that argument included analysis of case law regarding academic freedom and regulation of the speech of government employees, contrasting HB 1775 with the Oklahoma Academic Standards through which the Oklahoma State Department of Education prescribes the curriculum for K-12 public school students, but preserves “teachers’ academic freedom to instruct using words and methodologies they believe appropriate and best suited to convey the history, historical context, and sociopolitical issues students should learn consistent with the OAS.”
“All of this is to say it appears that HB 1775 unduly constrains teachers from addressing, discussing, or providing context for much of the history of our country — a history that contains many events that, in retrospect, make us uncomfortable, but about which we need to know and be able to discuss openly,” Nelon said.
Robert L. Kerr teaches Media Law and Media History at the University of Oklahoma. More information on Free Speech Week: (https://www.freespeechweek.org/)
This article originally appeared on Oklahoman: Guest column: What does Oklahoma HB 1775 mean for free speech?
Tuesday, October 18, 2022
Religious polarization in India seeping into US diaspora
Kuhu Singh, left, and Kuljeet Kaur, right, gather at the Minneapolis house of two other members of the “India Coalition” group on Sunday, Oct. 9, 2022. Singh, who calls herself “culturally Hindu,” and Kaur, who’s Sikh, both worry that religious tensions in India are spreading to Indian diaspora communities like theirs in Minnesota.
Kuhu Singh, left, and Kuljeet Kaur, right, gather at the Minneapolis house of two other members of the “India Coalition” group on Sunday, Oct. 9, 2022. Singh, who calls herself “culturally Hindu,” and Kaur, who’s Sikh, both worry that religious tensions in India are spreading to Indian diaspora communities like theirs in Minnesota.
(AP Photo/Giovanna Dell’Orto)
DEEPA BHARATH and MARIAM FAM
Sun, October 16, 2022 at 6:31 AM·7 min read
In Edison, New Jersey, a bulldozer, which has become a symbol of oppression of India’s Muslim minority, rolled down the street during a parade marking that country's Independence Day. At an event in Anaheim, California, a shouting match erupted between people celebrating the holiday and those who showed up to protest violence against Muslims in India.
Indian Americans from diverse faith backgrounds have peacefully co-existed stateside for several decades. But these recent events in the U.S. — and violent confrontations between some Hindus and Muslims last month in Leicester, England — have heightened concerns that stark political and religious polarization in India is seeping into diaspora communities.
In India, Hindu nationalism has surged under Prime Minister Narendra Modi and his Bharatiya Janata Party, which rose to power in 2014 and won a landslide election in 2019. The ruling party has faced fierce criticism over rising attacks against Muslims in recent years, from the Muslim community and other religious minorities as well as some Hindus who say Modi's silence emboldens right-wing groups and threatens national unity.
Hindu nationalism has split the Indian expatriate community just as Donald Trump’s presidency polarized the U.S., said Varun Soni, dean of religious life at the University of Southern California. It has about 2,000 students from India, among the highest in the country.
Soni has not seen these tensions surface yet on campus. But he said USC received blowback for being one of more than 50 U.S. universities that co-sponsored an online conference called “Dismantling Global Hindutva.”
The 2021 event aimed to spread awareness of Hindutva, Sanskrit for the essence of being Hindu, a political ideology that claims India as a predominantly Hindu nation plus some minority faiths with roots in the country such as Sikhism, Jainism and Buddhism. Critics say that excludes other minority religious groups such as Muslims and Christians. Hindutva is different from Hinduism, an ancient religion practiced by about 1 billion people worldwide that emphasizes the oneness and divine nature of all creation.
Soni said it's important that universities remain places where "we are able to talk about issues that are grounded in facts in a civil manner,” But, as USC's head chaplain, Soni worries how polarization over Hindu nationalism will affect students' spiritual health.
“If someone is being attacked for their identity, ridiculed or scapegoated because they are Hindu or Muslim, I'm most concerned about their well-being — not about who is right or wrong," he said.
Anantanand Rambachan, a retired college religion professor and a practicing Hindu who was born in Trinidad and Tobago to a family of Indian origin, said his opposition to Hindu nationalism and association with groups against the ideology sparked complaints from some at a Minnesota temple where he has taught religion classes. He said opposing Hindu nationalism sometimes results in charges of being “anti-Hindu,” or “anti-India,” labels that he rejects.
On the other hand, many Hindu Americans feel vilified and targeted for their views, said Samir Kalra, managing director of the Hindu American Foundation in Washington, D.C.
"The space to freely express themselves is shrinking for Hindus,” he said, adding that even agreeing with the Indian government's policies unrelated to religion can result in being branded a Hindu nationalist.
Pushpita Prasad, a spokesperson for the Coalition of Hindus of North America, said her group has been counseling young Hindu Americans who have lost friends because they refuse “to take sides on these battles emanating from India.”
“If they don’t take sides or don’t have an opinion, it’s automatically assumed that they are Hindu nationalist," she said. "Their country of origin and their religion is held against them.”
Both organizations opposed the Dismantling Global Hindutva conference criticizing it as “Hinduphobic” and failing to present diverse perspectives. Conference supporters say they reject equating calling out Hindutva with being anti-Hindu.
Some Hindu Americans like 25-year-old Sravya Tadepalli, believe it's their duty to speak up. Tadepalli, a Massachusetts resident who is a board member of Hindus for Human Rights, said her activism against Hindu nationalism is informed by her faith.
“If that is the fundamental principle of Hinduism, that God is in everyone, that everyone is divine, then I think we have a moral obligation as Hindus to speak out for the equality of all human beings,” she said. “If any human is being treated less than or as having their rights infringed upon, then it is our duty to work to correct that.”
Tadepalli said her organization also works to correct misinformation on social media that travels across continents fueling hate and polarization.
Tensions in India hit a high in June after police in the city of Udaipur arrested two Muslim men accused of slitting a Hindu tailor's throat and posting a video of it on social media. The slain man, 48-year-old Kanhaiya Lal, had reportedly shared an online post supporting a governing party official who was suspended for making offensive remarks against the Prophet Muhammad.
Hindu nationalist groups have attacked minority groups, particularly Muslims, over issues related to everything from food or wearing head scarves to interfaith marriage. Muslims' homes have also been demolished using heavy machinery in some states, in what critics call a growing pattern of “bulldozer justice.”
Such reports have Muslim Americans afraid for the safety of family members in India. Shakeel Syed, executive director of the South Asian Network, a social justice organization based in Artesia, California, said he regularly hears from his sisters and senses a “pervasive fear, not knowing what tomorrow is going to be like.”
Syed grew up in the Indian city of Hyderabad in the 1960s and 1970s in “a more pluralistic, inclusive culture.”
“My Hindu friends would come to our Eid celebrations and we would go to their Diwali celebrations,” he said. “When my family went on summer vacation, we would leave our house keys with our Hindu neighbor, and they would do the same when they had to leave town.”
Syed believes violence against Muslims has now been mainstreamed in India. He has heard from girls in his family who are considering taking off their hijabs or headscarves out of fear.
In the U.S., he sees his Hindu friends reluctant to engage publicly in a dialogue because they fear retaliation.
“A conversation is still happening, but it’s happening in pockets behind closed doors with people who are like-minded,” he said. “It’s certainly not happening between people who have opposing views.”
Rajiv Varma, a Houston-based Hindu activist, holds a diametrically opposite view. Tensions between Hindus and Muslims in the West, he said, are not a reflection of events in India but rather stem from a deliberate attempt by “religious and ideological groups that are waging a war against Hindus.”
Varma believes India is “a Hindu country” and the term “Hindu nationalism” merely refers to love for one’s country and religion. He views India as a country ravaged by conquerors and colonists, and Hindus as a religious group that does not seek to convert or colonize.
“We have a right to recover our civilization,” he said.
Rasheed Ahmed, co-founder and executive director of the Washington D.C.-based Indian American Muslim Council, said he is saddened “to see even educated Hindu Americans not taking Hindu nationalism seriously." He believes Hindu Americans must make “a fundamental decision about how India and Hinduism should be seen in the U.S. and the world over.”
“The decision about whether to take Hinduism back from whoever hijacked it, is theirs.”
Zafar Siddiqui, a Minnesota resident, is hoping to "reverse some of this mistrust, polarization” and build understanding through education, personal connections and interfaith assemblies. Siddiqui, a Muslim, has helped bring together a group of Minnesotans of Indian origin — including Hindus, Muslims, Sikhs, Christians and atheists — who meet for monthly potlucks.
“When people sit down, say, over lunch or dinner or over coffee, and have a direct dialogue, instead of listening to all these leaders and spreading all this hate, it changes a lot of things,” Siddiqui said.
But during one recent gathering, some argued over a draft proposal to at some point seek dialogue with people who hold different views. Those who disagreed explained that they didn’t support reaching out to Hindu nationalists and feared harassment.
Siddiqui said that for now, future plans include focusing on education and interfaith events spotlighting India's different traditions and religions.
“Just to keep silent is not an option,” Siddiqui said. “We needed a platform to bring people together who believe in peaceful co-existence of all communities.”
___
Giovanna Dell'Orto in Minneapolis contributed to this report.
___
Associated Press religion coverage receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content.
DEEPA BHARATH and MARIAM FAM
Sun, October 16, 2022 at 6:31 AM·7 min read
In Edison, New Jersey, a bulldozer, which has become a symbol of oppression of India’s Muslim minority, rolled down the street during a parade marking that country's Independence Day. At an event in Anaheim, California, a shouting match erupted between people celebrating the holiday and those who showed up to protest violence against Muslims in India.
Indian Americans from diverse faith backgrounds have peacefully co-existed stateside for several decades. But these recent events in the U.S. — and violent confrontations between some Hindus and Muslims last month in Leicester, England — have heightened concerns that stark political and religious polarization in India is seeping into diaspora communities.
In India, Hindu nationalism has surged under Prime Minister Narendra Modi and his Bharatiya Janata Party, which rose to power in 2014 and won a landslide election in 2019. The ruling party has faced fierce criticism over rising attacks against Muslims in recent years, from the Muslim community and other religious minorities as well as some Hindus who say Modi's silence emboldens right-wing groups and threatens national unity.
Hindu nationalism has split the Indian expatriate community just as Donald Trump’s presidency polarized the U.S., said Varun Soni, dean of religious life at the University of Southern California. It has about 2,000 students from India, among the highest in the country.
Soni has not seen these tensions surface yet on campus. But he said USC received blowback for being one of more than 50 U.S. universities that co-sponsored an online conference called “Dismantling Global Hindutva.”
The 2021 event aimed to spread awareness of Hindutva, Sanskrit for the essence of being Hindu, a political ideology that claims India as a predominantly Hindu nation plus some minority faiths with roots in the country such as Sikhism, Jainism and Buddhism. Critics say that excludes other minority religious groups such as Muslims and Christians. Hindutva is different from Hinduism, an ancient religion practiced by about 1 billion people worldwide that emphasizes the oneness and divine nature of all creation.
Soni said it's important that universities remain places where "we are able to talk about issues that are grounded in facts in a civil manner,” But, as USC's head chaplain, Soni worries how polarization over Hindu nationalism will affect students' spiritual health.
“If someone is being attacked for their identity, ridiculed or scapegoated because they are Hindu or Muslim, I'm most concerned about their well-being — not about who is right or wrong," he said.
Anantanand Rambachan, a retired college religion professor and a practicing Hindu who was born in Trinidad and Tobago to a family of Indian origin, said his opposition to Hindu nationalism and association with groups against the ideology sparked complaints from some at a Minnesota temple where he has taught religion classes. He said opposing Hindu nationalism sometimes results in charges of being “anti-Hindu,” or “anti-India,” labels that he rejects.
On the other hand, many Hindu Americans feel vilified and targeted for their views, said Samir Kalra, managing director of the Hindu American Foundation in Washington, D.C.
"The space to freely express themselves is shrinking for Hindus,” he said, adding that even agreeing with the Indian government's policies unrelated to religion can result in being branded a Hindu nationalist.
Pushpita Prasad, a spokesperson for the Coalition of Hindus of North America, said her group has been counseling young Hindu Americans who have lost friends because they refuse “to take sides on these battles emanating from India.”
“If they don’t take sides or don’t have an opinion, it’s automatically assumed that they are Hindu nationalist," she said. "Their country of origin and their religion is held against them.”
Both organizations opposed the Dismantling Global Hindutva conference criticizing it as “Hinduphobic” and failing to present diverse perspectives. Conference supporters say they reject equating calling out Hindutva with being anti-Hindu.
Some Hindu Americans like 25-year-old Sravya Tadepalli, believe it's their duty to speak up. Tadepalli, a Massachusetts resident who is a board member of Hindus for Human Rights, said her activism against Hindu nationalism is informed by her faith.
“If that is the fundamental principle of Hinduism, that God is in everyone, that everyone is divine, then I think we have a moral obligation as Hindus to speak out for the equality of all human beings,” she said. “If any human is being treated less than or as having their rights infringed upon, then it is our duty to work to correct that.”
Tadepalli said her organization also works to correct misinformation on social media that travels across continents fueling hate and polarization.
Tensions in India hit a high in June after police in the city of Udaipur arrested two Muslim men accused of slitting a Hindu tailor's throat and posting a video of it on social media. The slain man, 48-year-old Kanhaiya Lal, had reportedly shared an online post supporting a governing party official who was suspended for making offensive remarks against the Prophet Muhammad.
Hindu nationalist groups have attacked minority groups, particularly Muslims, over issues related to everything from food or wearing head scarves to interfaith marriage. Muslims' homes have also been demolished using heavy machinery in some states, in what critics call a growing pattern of “bulldozer justice.”
Such reports have Muslim Americans afraid for the safety of family members in India. Shakeel Syed, executive director of the South Asian Network, a social justice organization based in Artesia, California, said he regularly hears from his sisters and senses a “pervasive fear, not knowing what tomorrow is going to be like.”
Syed grew up in the Indian city of Hyderabad in the 1960s and 1970s in “a more pluralistic, inclusive culture.”
“My Hindu friends would come to our Eid celebrations and we would go to their Diwali celebrations,” he said. “When my family went on summer vacation, we would leave our house keys with our Hindu neighbor, and they would do the same when they had to leave town.”
Syed believes violence against Muslims has now been mainstreamed in India. He has heard from girls in his family who are considering taking off their hijabs or headscarves out of fear.
In the U.S., he sees his Hindu friends reluctant to engage publicly in a dialogue because they fear retaliation.
“A conversation is still happening, but it’s happening in pockets behind closed doors with people who are like-minded,” he said. “It’s certainly not happening between people who have opposing views.”
Rajiv Varma, a Houston-based Hindu activist, holds a diametrically opposite view. Tensions between Hindus and Muslims in the West, he said, are not a reflection of events in India but rather stem from a deliberate attempt by “religious and ideological groups that are waging a war against Hindus.”
Varma believes India is “a Hindu country” and the term “Hindu nationalism” merely refers to love for one’s country and religion. He views India as a country ravaged by conquerors and colonists, and Hindus as a religious group that does not seek to convert or colonize.
“We have a right to recover our civilization,” he said.
Rasheed Ahmed, co-founder and executive director of the Washington D.C.-based Indian American Muslim Council, said he is saddened “to see even educated Hindu Americans not taking Hindu nationalism seriously." He believes Hindu Americans must make “a fundamental decision about how India and Hinduism should be seen in the U.S. and the world over.”
“The decision about whether to take Hinduism back from whoever hijacked it, is theirs.”
Zafar Siddiqui, a Minnesota resident, is hoping to "reverse some of this mistrust, polarization” and build understanding through education, personal connections and interfaith assemblies. Siddiqui, a Muslim, has helped bring together a group of Minnesotans of Indian origin — including Hindus, Muslims, Sikhs, Christians and atheists — who meet for monthly potlucks.
“When people sit down, say, over lunch or dinner or over coffee, and have a direct dialogue, instead of listening to all these leaders and spreading all this hate, it changes a lot of things,” Siddiqui said.
But during one recent gathering, some argued over a draft proposal to at some point seek dialogue with people who hold different views. Those who disagreed explained that they didn’t support reaching out to Hindu nationalists and feared harassment.
Siddiqui said that for now, future plans include focusing on education and interfaith events spotlighting India's different traditions and religions.
“Just to keep silent is not an option,” Siddiqui said. “We needed a platform to bring people together who believe in peaceful co-existence of all communities.”
___
Giovanna Dell'Orto in Minneapolis contributed to this report.
___
Associated Press religion coverage receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content.
In Neom, Western executives have found their LIV golf league
Samanth Subramanian
October 10, 2022
It’s a pet project of the Saudi Arabian government, and therefore presumably of Mohammed bin Salman, the Saudi crown prince. It’s obscenely well-funded, and is flinging purses of wealth to anyone who comes on board. It’s also controversial: a maverick enterprise, intent on doing its own thing, consequences be damned.
We could be talking about the LIV golf league, which is backed by Saudi Arabia’s sovereign wealth fund. Or we could be talking about Neom, the multi-billion dollar city being built in the desert in northwestern part of the country.
On Tuesday (Oct. 11), the Wall Street Journal reported that Saudi Arabia is pursuing Western c-suite executives with million-dollar salaries to work on Neom and other real-estate projects. Average basic pay alone is $1.1 million, not counting bonuses, and income taxes are non-existent. In response, a number of people have signed on, including executives formerly at GE, Cisco, Amazon, and the German energy company RWE.
Should Western executives be working for Neom?
When well-known golfers agreed to play in the LIV league, which launched its first season earlier this year, they had to contend with criticisms of selling out. Repeatedly, they were asked about human rights in the Saudi kingdom, and whether they were taking part in a giant “sportswashing” exercise. A chasm opened up between LIV and the PGA Tour, which banned golfers participating in the Saudi-backed league.
No similar dynamic is playing out in the corporate world, though. It’s as if golfers are expected to forgo big paychecks in the pursuit of some nobler ideal, while executives are expected to be in it for the money and nothing else. But given what we know of Neom and MBS, perhaps executives should be asked some difficult questions as well.
In early October, a Saudi court sentenced three men to death because they resisted the displacement of their tribe from the area where Neom is meant to emerge. The government is, in fact, relying heavily on evictions to clear the region, according to Al Qst, a human rights organization working on Saudi Arabia. Additionally, while Neom itself is touted to be a green city, its construction will be funded by Saudi oil revenues.
Executives shouldn’t be let off easy. If Phil Mickelson, who hits a ball towards a hole, had to respond to a letter from the families of 9/11 victims, CXOs can certainly be asked why they’re actively participating in greenwashing the kingdom.
Samanth Subramanian
October 10, 2022
It’s a pet project of the Saudi Arabian government, and therefore presumably of Mohammed bin Salman, the Saudi crown prince. It’s obscenely well-funded, and is flinging purses of wealth to anyone who comes on board. It’s also controversial: a maverick enterprise, intent on doing its own thing, consequences be damned.
We could be talking about the LIV golf league, which is backed by Saudi Arabia’s sovereign wealth fund. Or we could be talking about Neom, the multi-billion dollar city being built in the desert in northwestern part of the country.
On Tuesday (Oct. 11), the Wall Street Journal reported that Saudi Arabia is pursuing Western c-suite executives with million-dollar salaries to work on Neom and other real-estate projects. Average basic pay alone is $1.1 million, not counting bonuses, and income taxes are non-existent. In response, a number of people have signed on, including executives formerly at GE, Cisco, Amazon, and the German energy company RWE.
Should Western executives be working for Neom?
When well-known golfers agreed to play in the LIV league, which launched its first season earlier this year, they had to contend with criticisms of selling out. Repeatedly, they were asked about human rights in the Saudi kingdom, and whether they were taking part in a giant “sportswashing” exercise. A chasm opened up between LIV and the PGA Tour, which banned golfers participating in the Saudi-backed league.
No similar dynamic is playing out in the corporate world, though. It’s as if golfers are expected to forgo big paychecks in the pursuit of some nobler ideal, while executives are expected to be in it for the money and nothing else. But given what we know of Neom and MBS, perhaps executives should be asked some difficult questions as well.
In early October, a Saudi court sentenced three men to death because they resisted the displacement of their tribe from the area where Neom is meant to emerge. The government is, in fact, relying heavily on evictions to clear the region, according to Al Qst, a human rights organization working on Saudi Arabia. Additionally, while Neom itself is touted to be a green city, its construction will be funded by Saudi oil revenues.
Executives shouldn’t be let off easy. If Phil Mickelson, who hits a ball towards a hole, had to respond to a letter from the families of 9/11 victims, CXOs can certainly be asked why they’re actively participating in greenwashing the kingdom.
ABOLISH THE DEATH PENALTY
‘Botched execution’ lasted 90 minutes as Alabama inmate survived ‘torture,’ lawsuit says
DAVE MARTIN/AP
Julia Marnin
Tue, October 11, 2022
An Alabama inmate on death row survived a “botched execution” lasting 90 minutes as prison workers unsuccessfully searched for his veins, according to a federal lawsuit.
In late September, a knock on the window bordering the execution chamber ended the lethal injection attempt before Alan Miller was left alone for 20 minutes hanging vertically on a gurney with needle puncture wounds — wondering if he was to die that day, court documents state.
The event was described as “torture” after the U.S. Supreme Court allowed the execution to proceed.
Now attorneys representing Miller say he is “the only living execution survivor in the United States.”
Miller has awaited his execution after a judge sentenced him to death after two workplace shootings in 1999 that left three men dead in Alabama, according to the Montgomery Advertiser.
A month before his execution date, Miller filed a complaint against John Q. Hamm, the commissioner of the Alabama Department of Corrections, Terry Raybon, the warden of Holman Correctional Facility in Atmore and state Attorney General Steve Marshall on Aug. 22, alleging he faced “constitutionally inadequate treatment” in prison, court records show.
Since the “botched execution,” Miller filed a new complaint on Oct. 6 to include claims related to his failed lethal injection at Holman Correctional Facility after Hamm, Raybon and Marshall sought to have his lawsuit dismissed, according to court filings.
The Alabama Attorney General’s Office declined McClatchy News’ request for comment on Miller’s lawsuit on Oct. 11. Attorneys from the office are representing Hamm, Raybon and Marshall. McClatchy News contacted Miller’s attorneys for comment on Oct. 11 and was awaiting a response.
Miller’s new complaint says officials are rushing to have him executed by lethal injection again — even though he initially opted for a different execution method — to end his lawsuit and avoid facing his claims. On Oct. 4, the defendants asked the state Supreme Court for permission to execute Miller “as soon as possible.”
“Defendants are well aware that if they kill Mr. Miller, this litigation—and all judicial scrutiny of their constitutional violations against Mr. Miller — becomes moot,” the new complaint states.
The case
In 2018, Miller selected nitrogen hypoxia as his execution method on an election form, the lawsuit says.
With this method, an inmate inhales nitrogen, eventually resulting in asphyxiation and death, according to the Death Penalty Information Center.
However, Miller’s lawsuit accuses officials of losing his nitrogen hypoxia election form, as well as other inmates’ election forms. State officials claimed there was no record of Miller’s form, according to the complaint, and it was ultimately decided that Miller was to be executed by lethal injection.
Previously, medical professionals have had trouble finding Miller’s veins, and the lawsuit accuses officials of having this knowledge and knowing “Miller would suffer greatly from their attempts to set an IV in his veins.”
On Sept. 1, Miller submitted a motion for a preliminary injunction to prevent him from being executed by a method other than nitrogen hypoxia, the complaint says.
On Sept. 22, Hamm, Raybon and Marshall filed an emergency application with the U.S. Supreme Court seeking to have Miller’s preliminary injunction vacated, according to the complaint. Hours later, the Supreme Court granted the defendants’ request, allowing for Miller’s execution to proceed by lethal injection that evening.
“It is difficult to overstate the mental — and eventually physical — anguish that Mr. Miller experienced on the night of September 22 into the early morning hours of September 23,” the complaint states.
The day of Sept. 22, Miller visited his family before learning he was to be executed that night due to the Supreme Court’s decision, according to the lawsuit. Then, he said his final goodbyes to his attorneys.
After Miller laid down and officials strapped him to the execution gurney, he was repeatedly slapped as prison workers tried to find his veins and made puncture wounds in a process described as “painful and traumatic,” according to the complaint.
Miller’s upper body was punctured in a number of places as he experienced excruciating pain before they tried puncturing his foot, where he says they hit a nerve, creating more pain, the complaint states.
After roughly 90 minutes, the process was abandoned entirely and Miller was left alone hanging on the gurney, according to the lawsuit.
“Mr. Miller felt nauseous, disoriented, confused, and fearful about whether he was about to be killed, and was deeply disturbed by his view of state employees silently staring at him from the observation room while he was hanging vertically from the gurney,” the complaint states. “Blood was leaking from some of Mr. Miller’s wounds.”
Eventually, Miller heard a prison worker tell him “your execution has been postponed” and he was sent back to his death row cell on Sept. 23 with no explanation, according to the complaint.
Miller’s lawsuit argues he has suffered post-traumatic stress and physical pain since the “botched execution.”
“Defendants’ insistence on continuing to execute Mr. Miller via lethal injection can only be considered intent to inflict unnecessary pain and suffering on him,” the complaint states.
The lawsuit seeks to prevent Miller’s execution by lethal injection and to recover monetary damages for him in connection with his failed execution, according to the complaint.
Atmore is about 120 miles southwest of Montgomery near the Alabama-Florida border.
MONOPOLY CAPITALI$M
Analysis-Kroger, Albertsons spin-off is extra ammunition in regulatory battle
Abigail Summerville and Anirban Sen
Mon, October 17, 2022 a
A customer leaves an Albertsons grocery store in Riverside
NEW YORK (Reuters) - Kroger Co and Albertsons Cos Inc are willing to divest up to 650 supermarket stores to secure regulatory clearance for their $24.6 billion deal, but if they cannot find buyers they have an unusual spin-off structure up their sleeves.
The two largest U.S. operators of stores dedicated to groceries said on Friday they may divest some stores by placing them in a new company that will be owned by Albertsons shareholders. They said the spun-off company could have between 100 and 375 stores.
The structure is intended to give the companies a stronger hand in negotiations with the Federal Trade Commission (FTC), the U.S. regulator that can sue to block the deal if it believes it will be detrimental to consumers at a time of rampant price inflation.
Companies that agree to merge can take months to divest assets as they try to appease antitrust regulators. The spin-out structure would make it easier and faster for Kroger and Albertsons to divest stores if they cannot easily sell them outright, people familiar with the arrangement said.
The companies may struggle to find many buyers because Albertsons' stores are unionized, making them less attractive to potential bidders such as private equity firms. Kroger and Albertsons are likely to shed their least profitable stores and keep the best ones to themselves, analysts said.
Kroger and Albertsons did not immediately respond to requests for comment.
A previous merger involving Albertsons offers a cautionary tale to potential buyers. When Albertsons agreed to acquire peer Safeway for more than $9 billion in 2014, it subsequently won regulatory backing by signing a deal to sell 146 stores to West Coast regional grocer Haggen for $300 million. Haggen filed for bankruptcy months later and blamed the deal with Albertsons for its demise. Albertsons then agreed to buy many of the Haggen stores back for $300 million.
To be sure, at least one competitor of Albertsons and Kroger is expected to take a close look at their potential divestitures. Ahold Delhaize Chief Executive Frans Muller has said his company, the fourth-largest player in the U.S. grocery sector, has a "very active" mergers and acquisitions strategy and that it is looking to expand in the western United States. That region contains the most store-overlap between Kroger and Albertsons and is where divestitures are most likely, according to analysts.
Ahold did not immediately respond to requests for comment.
"Any stores that we need to divest, we would intend to fully market them, and we will look at SpinCo as one option within that plan," Kroger's chief financial officer, Gary Millerchip, told analysts on a call on Friday, referring to the company that Kroger and Albertsons plan to form which encompasses the spun-off stores.
Between them, Kroger and Albertsons now operate a total of 4,996 stores. Their contract specifies that Kroger does not have to agree to divestitures exceeding 650 stores to appease regulators. If their deal falls through, Kroger will then owe Albertsons a breakup fee of $600 million.
FTC CHALLENGES
The FTC, under Chair Lina Khan, has sued to block six mergers in the past year, sometimes successfully. It forced U.S. arms maker Lockheed Martin Corp to abandon its acquisition of rocket engine maker Aerojet Rocketdyne Holdings Inc and forced chipmaker Nvidia Corp to walk away from its purchase of SoftBank Group Corp's Arm Ltd.
But the agency also suffered a bruising defeat last month, when a U.S. administrative judge ruled against its challenge to genetic analysis equipment manufacturer Illumina Inc's acquisition of cancer detection test maker Grail Inc, finding that the deal would not hurt competition. The FTC's counterpart in the European Union was successful in challenging the Grail deal, a decision Illumina has appealed.
Khan, an appointee of U.S. President Joe Biden and former law professor, has been highly skeptical of the purported benefits of big mergers to consumers and has criticized the FTC's handling of Albertsons' deal with Safeway. In a Harvard Law & Policy Review article published five years ago, she wrote that "even a casual observer could have predicted that Haggen would have great difficulty expanding its store fronts nearly ten-fold" following its deal with Albertsons, and argued that the antitrust remedy that was agreed "backfired".
The FTC declined to comment.
Kroger and Albertsons are mindful that any new company they create to take some of their stores has to be financially healthy, given what happened with Haggen, people who worked on their deal said. They intend for the spun-off company to not carry any debt, the sources added.
(Reporting by Anirban Sen and Abigail Summerville in New York; Editing by Matthew Lewis)
Analysis-Kroger, Albertsons spin-off is extra ammunition in regulatory battle
Abigail Summerville and Anirban Sen
Mon, October 17, 2022 a
A customer leaves an Albertsons grocery store in Riverside
NEW YORK (Reuters) - Kroger Co and Albertsons Cos Inc are willing to divest up to 650 supermarket stores to secure regulatory clearance for their $24.6 billion deal, but if they cannot find buyers they have an unusual spin-off structure up their sleeves.
The two largest U.S. operators of stores dedicated to groceries said on Friday they may divest some stores by placing them in a new company that will be owned by Albertsons shareholders. They said the spun-off company could have between 100 and 375 stores.
The structure is intended to give the companies a stronger hand in negotiations with the Federal Trade Commission (FTC), the U.S. regulator that can sue to block the deal if it believes it will be detrimental to consumers at a time of rampant price inflation.
Companies that agree to merge can take months to divest assets as they try to appease antitrust regulators. The spin-out structure would make it easier and faster for Kroger and Albertsons to divest stores if they cannot easily sell them outright, people familiar with the arrangement said.
The companies may struggle to find many buyers because Albertsons' stores are unionized, making them less attractive to potential bidders such as private equity firms. Kroger and Albertsons are likely to shed their least profitable stores and keep the best ones to themselves, analysts said.
Kroger and Albertsons did not immediately respond to requests for comment.
A previous merger involving Albertsons offers a cautionary tale to potential buyers. When Albertsons agreed to acquire peer Safeway for more than $9 billion in 2014, it subsequently won regulatory backing by signing a deal to sell 146 stores to West Coast regional grocer Haggen for $300 million. Haggen filed for bankruptcy months later and blamed the deal with Albertsons for its demise. Albertsons then agreed to buy many of the Haggen stores back for $300 million.
To be sure, at least one competitor of Albertsons and Kroger is expected to take a close look at their potential divestitures. Ahold Delhaize Chief Executive Frans Muller has said his company, the fourth-largest player in the U.S. grocery sector, has a "very active" mergers and acquisitions strategy and that it is looking to expand in the western United States. That region contains the most store-overlap between Kroger and Albertsons and is where divestitures are most likely, according to analysts.
Ahold did not immediately respond to requests for comment.
"Any stores that we need to divest, we would intend to fully market them, and we will look at SpinCo as one option within that plan," Kroger's chief financial officer, Gary Millerchip, told analysts on a call on Friday, referring to the company that Kroger and Albertsons plan to form which encompasses the spun-off stores.
Between them, Kroger and Albertsons now operate a total of 4,996 stores. Their contract specifies that Kroger does not have to agree to divestitures exceeding 650 stores to appease regulators. If their deal falls through, Kroger will then owe Albertsons a breakup fee of $600 million.
FTC CHALLENGES
The FTC, under Chair Lina Khan, has sued to block six mergers in the past year, sometimes successfully. It forced U.S. arms maker Lockheed Martin Corp to abandon its acquisition of rocket engine maker Aerojet Rocketdyne Holdings Inc and forced chipmaker Nvidia Corp to walk away from its purchase of SoftBank Group Corp's Arm Ltd.
But the agency also suffered a bruising defeat last month, when a U.S. administrative judge ruled against its challenge to genetic analysis equipment manufacturer Illumina Inc's acquisition of cancer detection test maker Grail Inc, finding that the deal would not hurt competition. The FTC's counterpart in the European Union was successful in challenging the Grail deal, a decision Illumina has appealed.
Khan, an appointee of U.S. President Joe Biden and former law professor, has been highly skeptical of the purported benefits of big mergers to consumers and has criticized the FTC's handling of Albertsons' deal with Safeway. In a Harvard Law & Policy Review article published five years ago, she wrote that "even a casual observer could have predicted that Haggen would have great difficulty expanding its store fronts nearly ten-fold" following its deal with Albertsons, and argued that the antitrust remedy that was agreed "backfired".
The FTC declined to comment.
Kroger and Albertsons are mindful that any new company they create to take some of their stores has to be financially healthy, given what happened with Haggen, people who worked on their deal said. They intend for the spun-off company to not carry any debt, the sources added.
(Reporting by Anirban Sen and Abigail Summerville in New York; Editing by Matthew Lewis)
Goldman Sachs Chooses the Rich over the Average Joe
Luc Olinga - Yesterday
The prestigious investment bank seems to be giving up on its ambitions to seduce Main Street.
It looks like a flip-flop that doesn't say its name.
Goldman Sachs (GS) - Get Goldman Sachs Group Inc. (The) Report seems to be giving up on its ambitions to seduce Main Street.
The prestigious investment bank whose name is associated with Wall Street and complex financial products has just made a decision that clearly indicates that it is returning to its origins and what makes it bread and butter.
The famous bank will carry out a major reorganization, the fourth since 2020, report the Wall Street Journal and Bloomberg News. This restructuring will create three major divisions within the bank, much like its rivals.
This reorganization plans to regroup the investment-banking and trading businesses into a single unit. Basically, bankers advising companies on their M&A transactions, IPOs and capital raising will once again be under the same roof as traders.
Rafael Henrique/SOPA Images/LightRocket via Getty Images© Provided by TheStreet
Luc Olinga - Yesterday
The prestigious investment bank seems to be giving up on its ambitions to seduce Main Street.
It looks like a flip-flop that doesn't say its name.
Goldman Sachs (GS) - Get Goldman Sachs Group Inc. (The) Report seems to be giving up on its ambitions to seduce Main Street.
The prestigious investment bank whose name is associated with Wall Street and complex financial products has just made a decision that clearly indicates that it is returning to its origins and what makes it bread and butter.
The famous bank will carry out a major reorganization, the fourth since 2020, report the Wall Street Journal and Bloomberg News. This restructuring will create three major divisions within the bank, much like its rivals.
This reorganization plans to regroup the investment-banking and trading businesses into a single unit. Basically, bankers advising companies on their M&A transactions, IPOs and capital raising will once again be under the same roof as traders.
Rafael Henrique/SOPA Images/LightRocket via Getty Images© Provided by TheStreet
Disbandment of Retail Bank
Goldman Sachs will also merge the asset management and wealth management activities into a single entity. Employees managing the money of the wealthy will unite with those managing the money of pension funds and other institutions with deep pockets.
A third division will house the bank's portfolio of fintech platforms, specialist lender GreenSky and partnership activities with Apple (AAPL) - Get Apple Inc. Report and General Motors (GM) - Get General Motors Company Report, write the Wall Street Journal and Bloomberg.
Contacted by TheStreet, Goldman Sachs declined to comment.
The bank publishes its results for the third quarter on Oct. 18 and could undoubtedly formalize this reorganization on this occasion.
The big bang of this reorganization is the radical disbandment of retail banking or consumer banking, which CEO David Solomon made one of his priorities when he took the reins in October 2018.
These efforts to reach consumers through an online retail banking platform offering traditional Main Street financial services - loans, deposits and credit cards - appear to be taking a big hit.
Part of the activities of this retail bank are thus found in the third division created by the reorganization, its partnerships with GM and Apple that includes GreenSky, a "fintech" that provides home improvement project loans to consumers since its inception in 2006.
The bank acquired GreenSky in 2021 to strengthen its consumer banking unit, Marcus. The goal was to have more predictable revenue businesses and reduce Goldman Sachs' reliance on trading and investment activities, which are more fluctuating.
The other piece of retail banking, that is under the Marcus brand, is going to be housed in the wealth management business. Marcus was launched in 2016.
Bet on the Rich
All this suggests that Goldman Sachs, whose bet on Main Street was met with internal skepticism, seems to be stepping on the brakes. The firm will again become the bank of the wealthy.
The reorganization indeed appears to mark the end of efforts to make Goldman Sachs everyone's bank. The firm no longer expects a big rollout of checking accounts to the masses, says Bloomberg News. These checking accounts will be reserved for well-off customers and employees of its partner companies.
Marcus Invest, the bank's robo-adviser (online savings management platform) and savings accounts will also now be reserved for the same wealthy customers.
"In the decades to come, I expect us to be a leader in our consumer business, just like we are in our institutional and corporate businesses," Solomon had said in a memo to employees in 2019 when the bank launched its first credit card in partnership with Apple.
But the strategic reversal illustrates the difficulties of the prestigious New York bank to develop in the business of retail banking, whose economic model is based on a large volume of customers and low margins contrasts with that of the more lucrative investment bank.
If Goldman Sachs has managed to attract around 13 million customers with Marcus, and accumulated more than $100 billion in deposits, it is still struggling to make this diversification profitable.
This year, the losses of Marcus, whose activity is 100% online and also available in the United Kingdom, should amount to at least $1.2 billion. Goldman Sachs hopes Marcus will be profitable from 2022.
Marcus generated revenues of nearly $1.1 billion in the first half, including $608 million in the second quarter alone, up 67.5% year-on-year. The firm had set a target of $4 billion annually in 2024.
Goldman Sachs will also merge the asset management and wealth management activities into a single entity. Employees managing the money of the wealthy will unite with those managing the money of pension funds and other institutions with deep pockets.
A third division will house the bank's portfolio of fintech platforms, specialist lender GreenSky and partnership activities with Apple (AAPL) - Get Apple Inc. Report and General Motors (GM) - Get General Motors Company Report, write the Wall Street Journal and Bloomberg.
Contacted by TheStreet, Goldman Sachs declined to comment.
The bank publishes its results for the third quarter on Oct. 18 and could undoubtedly formalize this reorganization on this occasion.
The big bang of this reorganization is the radical disbandment of retail banking or consumer banking, which CEO David Solomon made one of his priorities when he took the reins in October 2018.
These efforts to reach consumers through an online retail banking platform offering traditional Main Street financial services - loans, deposits and credit cards - appear to be taking a big hit.
Part of the activities of this retail bank are thus found in the third division created by the reorganization, its partnerships with GM and Apple that includes GreenSky, a "fintech" that provides home improvement project loans to consumers since its inception in 2006.
The bank acquired GreenSky in 2021 to strengthen its consumer banking unit, Marcus. The goal was to have more predictable revenue businesses and reduce Goldman Sachs' reliance on trading and investment activities, which are more fluctuating.
The other piece of retail banking, that is under the Marcus brand, is going to be housed in the wealth management business. Marcus was launched in 2016.
Bet on the Rich
All this suggests that Goldman Sachs, whose bet on Main Street was met with internal skepticism, seems to be stepping on the brakes. The firm will again become the bank of the wealthy.
The reorganization indeed appears to mark the end of efforts to make Goldman Sachs everyone's bank. The firm no longer expects a big rollout of checking accounts to the masses, says Bloomberg News. These checking accounts will be reserved for well-off customers and employees of its partner companies.
Marcus Invest, the bank's robo-adviser (online savings management platform) and savings accounts will also now be reserved for the same wealthy customers.
"In the decades to come, I expect us to be a leader in our consumer business, just like we are in our institutional and corporate businesses," Solomon had said in a memo to employees in 2019 when the bank launched its first credit card in partnership with Apple.
But the strategic reversal illustrates the difficulties of the prestigious New York bank to develop in the business of retail banking, whose economic model is based on a large volume of customers and low margins contrasts with that of the more lucrative investment bank.
If Goldman Sachs has managed to attract around 13 million customers with Marcus, and accumulated more than $100 billion in deposits, it is still struggling to make this diversification profitable.
This year, the losses of Marcus, whose activity is 100% online and also available in the United Kingdom, should amount to at least $1.2 billion. Goldman Sachs hopes Marcus will be profitable from 2022.
Marcus generated revenues of nearly $1.1 billion in the first half, including $608 million in the second quarter alone, up 67.5% year-on-year. The firm had set a target of $4 billion annually in 2024.
REAL AMERICAN BANKING
"ANTI-WOKE" ONLINE BANK IMMEDIATELY DISINTEGRATES INTO CHAOS
WHAT AN ABSOLUTE DISASTER.
GETTY IMAGES/FUTURISM
Conservative Banking
An "anti-woke" bank, which tried to woo customers who think Wall Street is too liberal, has imploded and almost went bankrupt shortly after launching, The Wall Street Journal reports.
Despite backing from big-name investor billionaires including Ken Griffin and Peter Thiel, the startup — called GloriFi — descended into chaos within a matter of months, according to the WSJ's reporting, with investors' money rapidly drying up.
GloriFi touts itself as a place for blue collar "pro-American values" people, who want to experience unfettered freedom to "celebrate your love of God and country," according to the company's website.
Founder Toby Neugebauer said he wanted to target those who didn't want to do business with large banks that became too progressive, divesting from industries like coal mining, guns, and the private prison system.
"It is about my friends that played football at ‘Friday Night Lights,'" Neugebauer told the WSJ. "And they don’t feel loved. They don’t feel respected."
Volatile Leadership
The company has been off to a rough start, though.
Staff had to work from Neugebauer's 16,000-square-foot mansion in Dallas, for one thing. According to the report, staffers complained about Neugebauer, who they said was volatile and had a drinking problem ("The attacks on what I do in my home after 5 p.m. are beneath" the WSJ, he told the paper.)
GloriFi failed to meet its own deadlines, with contracting insurance company Unqork filing a lawsuit against the startup, claiming an alleged breach of contract. According to lawsuit documentation viewed by the WSJ, an unnamed GloriFi manager was seen on camera "in a state of undress, on a bed with a companion who was similarly in a state of undress" following a conference call with Unqork.
That wasn't its only snafu; a plan to build credit cards out of the same material as shell casing fell apart, according to the WSJ, when the material turned out to interfere with chips and be too thick for point-of-sale systems.
In March, Neugebauer informed investors the startup had run out of cash, and investors were understandably wary to give them any more funds, which resulted in the company coming close to bankruptcy.
GloriFi's fate is still uncertain. In July, the company merged with an acquisition company, which valued it at an astonishing $1.7 billion.
But the company has yet to release any projected earnings or presentation, which isn't exactly surprising, given the circumstances.
READ MORE: How a New Anti-Woke Bank Stumbled
BANK CRISIS
Credit Suisse Weighs US Asset-Management Sale, Investment Bank Chief to Exit
(Bloomberg) -- Credit Suisse Group AG is exploring a sale of its US asset-management operations and moving closer to securing financing for other businesses, as it nears a strategy revamp that’s likely to fundamentally reshape it.
The Swiss bank has recently begun a sales process for the US operations of Credit Suisse Asset Management, or CSAM, according to people familiar with the matter. No final decision has been made and Credit Suisse could opt to hold onto the unit, the people said, asking for anonymity to discuss internal considerations.
Abu Dhabi and Saudi Arabia, meanwhile, are separately weighing whether to put money into Credit Suisse’s investment bank and other businesses to take advantage of depressed values, other people said. Deliberations are at an early stage and it isn’t clear if they’ll lead to firm offers.
With little more than a week remaining, Credit Suisse is racing to line-up financing for a restructuring that will likely see steep job cuts and a significant reshaping of the business. The investment bank is at the center of the plans and could even be broken up. While Credit Suisse made preparations to tap shareholders if needed, it would prefer to raise money through asset sales and by winning outside investors to fund businesses that it wants to spin out.
Shares of the lender rose for a second day, gaining 1.3% at 9:27 a.m. in Zurich trading. They’ve lost about half of their value this year and recently hit a new low.
“We have said we will update on progress on our comprehensive strategy review when we announce our third-quarter earnings,” Credit Suisse said in a statement. “It would be premature to comment on any potential outcomes before then.”
A sale of the US asset management operations, which include a platform for investing in collateralized loan obligations, could draw interest from private equity firms or other asset managers, the people familiar with the process said. The bank has said that the Americas account for 146 billion Swiss francs ($147 billion) of its assets under management.
The unit is one of two large businesses that the bank is looking to sell. Credit Suisse is also in the process of finding investors for or divesting its securitized products group, which has drawn interest from parties including Mizuho Financial Group Inc. and Apollo Global Management Inc., Bloomberg News has reported.
The bank is also seeking to bring in an outside investor to inject money into a potential spinoff of its advisory and investment banking businesses. A separation of the dealmaking and underwriting unit would effectively break the troubled investment banking division into three pieces.
Abu Dhabi and Saudi Arabia are exploring investments through sovereign wealth funds such as Abu Dhabi’s Mubadala Investment Co. and Saudi Arabia’s Public Investment Fund, people familiar with the matter said. A deal could also come through other vehicles in which each country owns significant stakes, the people said. But the potential investors are wary about the risk of future losses or legal issues, they said.
Abu Dhabi’s media office and the PIF in Saudi Arabia didn’t immediately have representatives available to comment. Mubadala declined to comment.
Credit Suisse has long counted on wealthy Middle Eastern investors as top shareholders, including the Qatar Investment Authority and Saudi Arabia’s Olayan Group. They’ve often invested in times of need, including the QIA’s participation in Credit Suisse’s approximately $2 billion convertible notes issuance in April 2021. That helped shore up the balance sheet after Archegos.
Separately, Credit Suisse has gauged the QIA’s interest in investing via a capital injection or stake purchase in one of the units, according to people familiar with the matter. A representative for QIA declined to comment.
As part of the planned changes, investment bank head Christian Meissner is set to depart the lender, Bloomberg reported. The banker, who has been focusing on the overhaul of the business, is looking at options including starting his own advisory firm or joining another institution next year.
An Austrian citizen, he was initially hired by Credit Suisse in October 2020 to co-run a newly created group connecting clients of the wealth management unit with investment-banking services. He became Credit Suisse’s investment-bank chief in 2021 in the wake of the $5 billion hit from the collapse of Archegos Capital Management.
John Revill and Oliver Hirt
Mon, October 17, 2022
A clock is seen near the logo of Swiss bank Credit Suisse in Zurich
ZURICH (Reuters) - Credit Suisse Group AG has approached at least one Middle Eastern sovereign wealth fund for a capital injection, a source said, while some funds are looking at the scandal-hit Swiss bank's businesses as potential investment opportunities.
Abu Dhabi and Saudi Arabia were weighing up, through their sovereign wealth funds, whether to put money into Credit Suisse's investment bank and other businesses, Bloomberg reported. An investment would be to take advantage of low valuations, it said.
Credit Suisse's investment banking chief, Christian Meissner, will be leaving the bank once it has announced a strategic overhaul on Oct. 27, a source familiar with the situation said.
The size and other details of a potential capital injection could not be learned.
A spokesperson for Credit Suisse declined to comment, reiterating that it will update on its strategy review when it announces third-quarter earnings.
The largest Middle Eastern sovereign fund investor in Credit Suisse, the Qatar Investment Authority, declined to comment. Mubadala declined to comment. ADIA and PIF did not immediately respond to requests for comment.
Credit Suisse's U.S.-listed depository receipts closed 3.6% higher on Monday. (Graphic: Cost of insuring Credit Suisse debt, https://graphics.reuters.com/CREDITSUISSE-CDS/dwpkroxdxvm/chart.png)
Credit Suisse, one of the largest banks in Europe, is trying to recover from a string of scandals, including losing more than $5 billion from the collapse of investment firm Archegos last year, when it also had to suspend client funds linked to failed financier Greensill.
Analysts have said the company might need as much as 9 billion Swiss francs ($9 billion) as part of a reorganization, some of which may have to come from investors and some from the sale of assets.
It has already begun a sale process for its U.S. asset management arm, with initial bids due at the end of this week, a source familiar with the matter said. Bloomberg News, which first reported the news on Monday, said the unit is expected to draw interest from private equity firms.
Its approach for a capital raise indicates that the sale of assets alone may not be enough to cover the costs of an imminent overhaul that the embattled bank hopes will draw a line under heavy losses and a string of scandals.
On Monday, the Swiss lender agreed to pay $495 million to settle legal action over mortgage-linked investments in the United States, adding to the billions it has been paying out to resolve legal cases linked to its residential mortgage-backed securities (RMBS) business in the run up to the 2008 financial crisis.
The New Jersey case was the largest of its remaining exposure on its legacy RMBS business, Credit Suisse said, with five remaining cases, all far smaller, still in litigation.
In June, Credit Suisse was convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang, while a Bermuda court ruled that a former Georgian prime minister and his family were due damages of more than half a billion dollars from Credit Suisse's local life insurance arm.
Credit Suisse's chairman, Axel Lehmann, pledged on Friday to reform the bank after a "horrible" 2021 in which it lost billions of dollars, the biggest ever loss in its history.
"We are fully aware that we need to change and we will change, clearly," he said.
Lehmann took over in January at the Swiss bank.
(Reporting By Paritosh Bansal in New York, Elisa Martinuzzi in London, John Revill, Oliver Hirt and Noele Illien in Zurich, and David French in New York; additional reporting by Yousef Saba in Dubai; editing by John O'Donnell, David Evans and Stephen Coates)
Credit Suisse pays $495 million to settle legacy U.S. case
John Revill
Mon, October 17, 2022
ZURICH (Reuters) -Credit Suisse has agreed to pay $495 million to settle a case related to mortgage-linked investments in the United States, the latest pay-out related to past blunders that have battered the Swiss bank's reputation.
The lender has been paying out billions of dollars to resolve legal cases linked to its residential mortgage-backed securities (RMBS) business in the run up to the 2008 financial crisis.
The decline in mortgage payments reduced the value of the assets, leading to huge losses for investors.
Switzerland's second biggest bank is trying to move on from these legacy issues which have dogged its performance and cost it billions of dollars.
The bank is also trying to recover from other missteps, including losing more than $5 billion from the collapse of investment firm Archegos last year, when it also had to suspend client funds linked to defunct financier Greensill Capital.
The latest RMBS case, brought by the New Jersey Attorney General, alleged Credit Suisse had "misled investors and engaged in fraud or deceit in connection with the offer and sale of RMBS."
The attorney general's office had claimed more than $3 billion in damages in a case filed in 2013.
"Credit Suisse is pleased to have reached an agreement that allows the bank to resolve the only remaining RMBS matter involving claims by a regulator," the bank said in a statement.
"The settlement, for which Credit Suisse is fully provisioned, marks another important step in the bank’s efforts to pro-actively resolve litigation and legacy issues."
The New Jersey case was the largest of its remaining exposure on its legacy RMBS business, Credit Suisse said, with five remaining cases at various stages of litigation.
These are expected to be resolved in the next six months, a person familiar with the matter told Reuters. The total cost likely to be much less than $100 million, the source added.
RMBS are a debt-based securities, seen as similar to bonds, which are backed by the interest paid on home loans packaged together to sell to investors.
But poorly constructed RMBS's contributed to the financial crisis in 2008 - when wider groups of mortgages defaulted leading to big losses.
Credit Suisse, whose share price has more than halved in the last 12 months, has already paid out huge sums to resolve claims related to the products, including a $5.3 billion deal with the Department of Justice in 2017.
It said at that time products it sold did not meet underwriting guidelines.
It also paid $600 million to MBIA Inc last year after the New York based-municipal bond insurer paid out hundreds of millions to compensate investors.
The bank, one of the largest in Europe and one of Switzerland's global systemically important banks, is scheduled to release details of a much anticipated strategic review alongside third-quarter results on Oct. 27.
In June, the bank was convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang, while a Bermuda court ruled that a former Georgian Prime Minister and his family were due damages of more than half a billion dollars from Credit Suisse's local life insurance arm.
The U.S. Justice Department is also investigating whether Credit Suisse continued helping U.S. clients hide assets from authorities, eight years after the Swiss bank paid a $2.6-billion tax evasion settlement.
(Reporting by John Revill and Oliver Hirt; Editing by Kirsten Donovan, Mark Potter and Jane Merriman)
Morgan Stanley evaluating job cuts, CEO says
Steve Gelsi - Yesterday - Bloomberg
Morgan Stanley CEO James Gorman said the marquee investment bank is studying potential job cuts as the latest big financial institution to look for ways to reduce costs headed into an expected economic slowdown.
“Obviously we’re looking at head count,” Gorman said on the firm’s conference call with analysts on Friday, according to a transcript from FactSet. “You’ve got to take into account the rate of growth we’ve had until the last few years, and we’ve learned some things during COVID about how we can operate more efficiently.”
The bank is working on these plans from now until the end of the year, Gorman said.
“We want to provide growth opportunities across the platform, but we’ve also identified some efficiencies, so over time, that will become clearer,” Gorman said.
Morgan Stanley ended the most recent third quarter with 81,567 personnel, up from 78,386 in the second quarter and 73,620 in the year-ago quarter.
Overall, layoffs have been increasingly on the table for the megabanks as they cut back businesses with less demand such as mortgages, which have weakened in the face of higher interest rates.
For now, however, the only major bank to report a head count reduction in the third quarter was Wells Fargo & Co. which has been stating publicly it would make cuts in its mortgage business.
Meanwhile, Goldman Sachs Group Inc. is reportedly eyeing a re-alignment of its business units in a move that often includes job cuts when companies restructure their businesses into three major units.
Goldman Sachs will group its investment bank and trading operations in the same business unit. It will also combine its asset and wealth management into a second department, while a third division will be home to its financial technology platforms as well as specialty lender GreenSky, The Wall Street Journal reported.
Bank of America Corp. which reported better-than-expected earnings on Monday, finished out the third quarter with 213,270 employees, up 18% from 209,407 people in the year-ago quarter, and ahead of the 209,824 figure as of June 30.
Wells Fargo reported total head count of 239,209 as of Sept. 30, down from 243,674 people at the end of the second quarter and 253,871 at the end of the year-ago quarter.
JPMorgan Chase & Co.’s head count grew to 288,474 as of Sept. 30, up from 278,494 at the end of the second quarter and 265,790 at the end of the third quarter of 2021.
Citigroup, which rounds out its head count numbers to the nearest thousand, ended the third quarter with 238,000 people on its payroll, up from 231,000 at the end of the second quarter and 220,000 in the year-ago quarter.
Steve Gelsi - Yesterday - Bloomberg
Morgan Stanley CEO James Gorman said the marquee investment bank is studying potential job cuts as the latest big financial institution to look for ways to reduce costs headed into an expected economic slowdown.
“Obviously we’re looking at head count,” Gorman said on the firm’s conference call with analysts on Friday, according to a transcript from FactSet. “You’ve got to take into account the rate of growth we’ve had until the last few years, and we’ve learned some things during COVID about how we can operate more efficiently.”
The bank is working on these plans from now until the end of the year, Gorman said.
“We want to provide growth opportunities across the platform, but we’ve also identified some efficiencies, so over time, that will become clearer,” Gorman said.
Morgan Stanley ended the most recent third quarter with 81,567 personnel, up from 78,386 in the second quarter and 73,620 in the year-ago quarter.
Overall, layoffs have been increasingly on the table for the megabanks as they cut back businesses with less demand such as mortgages, which have weakened in the face of higher interest rates.
For now, however, the only major bank to report a head count reduction in the third quarter was Wells Fargo & Co. which has been stating publicly it would make cuts in its mortgage business.
Meanwhile, Goldman Sachs Group Inc. is reportedly eyeing a re-alignment of its business units in a move that often includes job cuts when companies restructure their businesses into three major units.
Goldman Sachs will group its investment bank and trading operations in the same business unit. It will also combine its asset and wealth management into a second department, while a third division will be home to its financial technology platforms as well as specialty lender GreenSky, The Wall Street Journal reported.
Bank of America Corp. which reported better-than-expected earnings on Monday, finished out the third quarter with 213,270 employees, up 18% from 209,407 people in the year-ago quarter, and ahead of the 209,824 figure as of June 30.
Wells Fargo reported total head count of 239,209 as of Sept. 30, down from 243,674 people at the end of the second quarter and 253,871 at the end of the year-ago quarter.
JPMorgan Chase & Co.’s head count grew to 288,474 as of Sept. 30, up from 278,494 at the end of the second quarter and 265,790 at the end of the third quarter of 2021.
Citigroup, which rounds out its head count numbers to the nearest thousand, ended the third quarter with 238,000 people on its payroll, up from 231,000 at the end of the second quarter and 220,000 in the year-ago quarter.
BYD flags huge quarterly profit jump as China sales surge past Tesla
Mon, October 17, 2022
(Reuters) -BYD Co, China's biggest electric car maker, said third-quarter net profit likely more than quadrupled as it extends its sales lead over Tesla Inc in the world's largest auto market. Shares in BYD jumped.
Having ditched gasoline vehicles from its product mix this year, BYD has, more than any other automaker, been able to capitalise on a range of incentives for electric cars offered by the Chinese central government as well as local governments.
Robust sales and a product range broader than other EV competitors have in turn allowed the company, which is 19% owned by Warren Buffett's Berkshire Hathaway, to significantly reduce costs per vehicle.
An improved product mix led by vehicles such as its upmarket Han sedan has also helped drive earnings.
BYD estimated net profit for the July-September quarter to come in between 5.5 billion yuan and 5.9 billion yuan ($765 million to $820 million) - an increase of 333% to 365% from the same period a year earlier.
Its Hong Kong-listed shares shot 6% higher by Tuesday afternoon, giving the automaker a market capitalisation of around $93 billion - not far off the combined market values of General Motors Co and Ford Motor Co. Its Shenzhen-listed shares climbed 5%.
BYD's combined sales of pure electric and hybrid plug-in vehicles increased 250% in the first nine months to 1.2 million units, outpacing a 110% rise for the overall EV segment.
By comparison, Tesla sold just over 318,000 electric vehicles in China during the first nine months of the year. Among domestic EV rivals, XPeng Inc and Nio Inc - both loss-making - sold more than 98,500 and over 31,600 respectively.
BYD said its huge jump in vehicle sales had relieved the pressure brought on by increases in raw materials costs, though it did raise prices on some models by as much as 6,000 yuan.
BYD's strategy of producing batteries and some microchips internally has also helped it to better weather supply-chain bottlenecks and inflation-driven cost increases, analysts at Fitch Ratings have noted.
The China Association of Automobile Manufacturers has estimated that EV sales in China will increase by about 56% this year to 5.5 million units - a market far greater than most countries' entire auto sales.
EVs are also expected to account for 20% of overall China vehicle sales this year, up from 13.6% in 2021, the industry association said.
Some subsidies for electric vehicles are set to expire this year although the government has extended an exemption of the purchase tax for EVs to the end of 2023.
($1 = 7.1993 Chinese yuan)
(Reporting by Zhang Yan and Brenda Goh; Editing by Edwina Gibbs)
Mon, October 17, 2022
(Reuters) -BYD Co, China's biggest electric car maker, said third-quarter net profit likely more than quadrupled as it extends its sales lead over Tesla Inc in the world's largest auto market. Shares in BYD jumped.
Having ditched gasoline vehicles from its product mix this year, BYD has, more than any other automaker, been able to capitalise on a range of incentives for electric cars offered by the Chinese central government as well as local governments.
Robust sales and a product range broader than other EV competitors have in turn allowed the company, which is 19% owned by Warren Buffett's Berkshire Hathaway, to significantly reduce costs per vehicle.
An improved product mix led by vehicles such as its upmarket Han sedan has also helped drive earnings.
BYD estimated net profit for the July-September quarter to come in between 5.5 billion yuan and 5.9 billion yuan ($765 million to $820 million) - an increase of 333% to 365% from the same period a year earlier.
Its Hong Kong-listed shares shot 6% higher by Tuesday afternoon, giving the automaker a market capitalisation of around $93 billion - not far off the combined market values of General Motors Co and Ford Motor Co. Its Shenzhen-listed shares climbed 5%.
BYD's combined sales of pure electric and hybrid plug-in vehicles increased 250% in the first nine months to 1.2 million units, outpacing a 110% rise for the overall EV segment.
By comparison, Tesla sold just over 318,000 electric vehicles in China during the first nine months of the year. Among domestic EV rivals, XPeng Inc and Nio Inc - both loss-making - sold more than 98,500 and over 31,600 respectively.
BYD said its huge jump in vehicle sales had relieved the pressure brought on by increases in raw materials costs, though it did raise prices on some models by as much as 6,000 yuan.
BYD's strategy of producing batteries and some microchips internally has also helped it to better weather supply-chain bottlenecks and inflation-driven cost increases, analysts at Fitch Ratings have noted.
The China Association of Automobile Manufacturers has estimated that EV sales in China will increase by about 56% this year to 5.5 million units - a market far greater than most countries' entire auto sales.
EVs are also expected to account for 20% of overall China vehicle sales this year, up from 13.6% in 2021, the industry association said.
Some subsidies for electric vehicles are set to expire this year although the government has extended an exemption of the purchase tax for EVs to the end of 2023.
($1 = 7.1993 Chinese yuan)
(Reporting by Zhang Yan and Brenda Goh; Editing by Edwina Gibbs)
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