Business News Daily

Vital dispatches on what matters

Money

SEC targets ESG investments from BlackRock, Vanguard, asking for new 13D filings

by Leave a Comment

The Jeffrey Energy Center coal-fired power plant operates near Emmett, Kan., Saturday, Jan. 25, 2025. (AP Photo/Charlie Riedel, File)
The Jeffrey Energy Center coal-fired power plant operates near Emmett, Kan., Saturday, Jan. 25, 2025. (AP Photo/Charlie Riedel, File)

The U.S. Securities and Exchange Commission (SEC) introduced new guidance on Feb. 26, requiring major asset managers like BlackRock and Vanguard to shift from 13G to more complex 13D filings when advocating for environmental, social, and governance (ESG) changes.

As the Trump administration and White House advisor Elon Musk call for a rollback in ESG investing, asset managers now have to prepare a more complex 13D filing for such investments, in the name of increasing transparency. Passive investment funds are facing stricter regulations, with reduced influence on corporate policies.

The SEC’s new rule also reclassifies ESG engagement as activist investing, forcing firms to disclose their strategies in greater detail.

–

BlackRock, one of the world’s largest asset managers with approximately $11.6 trillion under management, has built its reputation on passive funds and ETFs. In recent years, the firm has scaled back its support for ESG-focused shareholder resolutions, arguing that many are unwarranted.

In a statement to Reuters, BlackRock denied such actions were leveraged or influenced by its shareholder, to exert control over publicly traded companies. The firm also noted that “we are complying with the new requirements including by highlighting our role as a ‘passive’ investor at the start of each engagement.”

BlackRock recently withdrew from the Net Zero Asset Managers group, amid increasing regulatory scrutiny and legal challenges from public officials. 

–

Trump’s anti-ESG sentiments can be traced back to June 1, 2017, when he announced in the Rose Garden of the White House during his first term that the U.S. would pull out of the Paris Climate Agreement. 

The return of Donald Trump as U.S. president has led to increased regional divergence in sustainable finance, with the U.S. adopting a more conservative stance compared to Europe.

His administration has also frozen federal funding for several environmental programs, including grants for climate research under the National Oceanic and Atmospheric Administration (NOAA), renewable energy initiatives within the Department of Energy, and conservation efforts managed by the Environmental Protection Agency (EPA).

Upstream asset managers follow hedge funds in ramping up crypto investments

by Leave a Comment

In this Feb. 7, 2018 file photo, a neon sign hanging in the window of Healthy Harvest Indoor Gardening in Hillsboro, Ore., shows that the business accepts bitcoin as payment. (AP Photo/Gillian Flaccus, File)
In this Feb. 7, 2018 file photo, a neon sign hanging in the window of Healthy Harvest Indoor Gardening in Hillsboro, Ore., shows that the business accepts bitcoin as payment. (AP Photo/Gillian Flaccus, File)

Interest in crypto investing continues to grow as Congress announced the formation of a cryptocurrency working group on Feb. 4, following former President Donald Trump’s executive order last month, according to Reuters.

Asset managers at all other levels are also testing the waters of crypto investing as the U.S. government increases efforts to integrate digital assets into the existing financial system.

A bill proposed today in North Carolina, the NC Digital Assets Investments Act, would authorize the state treasurer to purchase certain virtual currencies, primarily Bitcoin, as part of managing state investment pools, including the Highway Fund and the Teachers’ and State Employees’ Retirement System. Under the legislation, digital assets could comprise up to 10% of any fund.

Major institutional players are expanding their stakes in crypto. Hedge funds were early adopters, and now U.S. endowments and foundations are joining the rush, drawn by potential upside risk. 

“We don’t have a crystal ball on what cryptocurrencies will become in 10 years,” Chun Lai, chief investment officer of the $4.8 billion Rockefeller Foundation, told the Financial Times. “We don’t want to be left behind when their potential materializes dramatically.”

A 2023 EY report predicted institutional interest in digital assets would continue to grow. “Most institutional investors believe in the long-term value of blockchain and crypto/digital assets and plan to scale digital asset investments over the next two to three years,” the report said, “Investors are also interested in tokenized financial assets, and institutions are actively exploring tokenizing their own assets.”

Even in 2023, hedge funds were an outlier in crypto adoption. “Given their risk-on nature, hedge funds are a notable exception, with 36% of respondents allocating more than 5% of their portfolios to the asset class,” the EY report found.

Among hedge funds trading in traditional markets, 47% had exposure to digital assets in 2024, up from 29% in 2023 and 37% in 2022, according to the Global Crypto Hedge Fund Report, published in October 2024 by the Alternative Investment Management Association and PwC. Among those already invested, 67% planned to maintain their current level of crypto investments, while the rest planned to increase exposure by the end of 2024, the survey found.

Elliott Investment Management, a roughly $70 billion fund, likened the trend to a crowd of sports bettors, writing in a Jan. 31 letter to clients that it “has never seen a market like this,” according to the Financial Times, which reviewed the document.

SAMSUNG’S DUMPING OF GOOGLE MAY BE A BLESSING IN DISGUISE

by Leave a Comment

In the latest battle of the AI wars, on Monday rumours began swirling that Samsung might be dumping Google’s search engine for the new kid on the block, Microsoft’s ChatGPT enhanced Bing search.

Alphabet shares fell as much as 4% on the reports that Samsung was looking to pick sides in the Bard/ChatGPT race, which Google has been struggling to gain ground on since Bard’s embarrassing unveiling in February.

But the news of the impending breakup might be a blessing in disguise.

[Read more…] about SAMSUNG’S DUMPING OF GOOGLE MAY BE A BLESSING IN DISGUISE

Google tries to pass the anti-trust buck, as the big tech rivals trade jabs.

by Leave a Comment

Google has accused Microsoft of anti-competitive behaviour in the European cloud market in the same week that it sought dismissal in a US court over allegations of its own anti-competitive behaviour and was fined for market manipulation in India.

In what seems to be a case of the pot calling the kettle black, Google Cloud Vice President Amit Zavey told Reuters that it has flagged concerns with European antitrust regulators over Microsoft’s licencing agreements that discourage rival cloud usage. Microsoft hit back saying that it was not the market leader in the space, with only 20% of global cloud services revenue after Amazon Web Services.

[Read more…] about Google tries to pass the anti-trust buck, as the big tech rivals trade jabs.

Powell blinks, the Fed’s printer goes ‘Brrrrr’ and the ‘taper tantrum’ ends

by Leave a Comment

According to the markets, this week marked the end of our current quantitative tightening cycle, as a new phrase entered the lexicon of the once hawkish Fed Chair’s speech.

“Some additional policy firming may be appropriate,” he said during Wednesday’s Federal Open Markets Committee meeting in which the federal funds rate was raised for the ninth consecutive time to 4.75%.

Layman’s translation: “It’s over.”

[Read more…] about Powell blinks, the Fed’s printer goes ‘Brrrrr’ and the ‘taper tantrum’ ends

GOOGLE STAFF ASKED TO CHIP IN FOR BARD AS CRITICISMS GROW CONCERNING THE COMPANIES’ MANAGEMENT CULTURE AND FUTURE COMPETITIVENESS

by Leave a Comment

In what appears to be increasingly desperate times at Google, employees are now being asked to teach Google’s ChatGPT competitor BARD how to respond to topics they are “experts in”. The request came the same day that CEO Sundar Pichai asked staff to find up to four hours of their workday to devote to improving BARD.           

In an email circulated to staff on Wednesday and leaked to CNBC, one of Google’s senior Vice President’s, Prabhakar Raghavan, asked staff to fact check BARD’s answers. “Your participation in the dogfood will help accelerate the model’s training and test its load capacity” the email said.

Last week Google employees criticized CEO Sundar Pichai for the botched unveiling of the AI which saw the search giant’s market cap fall over $200 billion in just three days. On internal messaging boards employees derided the event as “rushed”, “botched” and “comically short sighted”.

[Read more…] about GOOGLE STAFF ASKED TO CHIP IN FOR BARD AS CRITICISMS GROW CONCERNING THE COMPANIES’ MANAGEMENT CULTURE AND FUTURE COMPETITIVENESS

GOOGLE MISSES ESTIMATES, YOUTUBE AD REVENUES SLIDE AS LAYOFFS BITE

by Leave a Comment

Google’s parent company Alphabet on Thursday reported a fourth consecutive quarterly decline in profit, missing Wall Street’s expectations for both earnings per share and revenues as advertising sales slowed from their peaks during 2021.

Amid the super-Thursday of big-tech earnings that also included quarterly results from Apple and Amazon, Google announced net income had fallen by 34% to $13.6 billion, missing consensus expectations of $15.3 billion.

For only the second time in the search giant’s history as publicly traded company, revenue from ads fell 3.6% to $59 billion, missing estimates of $60.58 billion. Revenues from Google’s YouTube segment fell 7.6% year on year in the face of increased competition from the likes of TikTok and Instagram.

[Read more…] about GOOGLE MISSES ESTIMATES, YOUTUBE AD REVENUES SLIDE AS LAYOFFS BITE

The Ukraine-Russia Crisis is Accelerating the Economy into Recession

by Leave a Comment

The on-going war in eastern Europe is to trigger a recession that was already on its way.

The on-going war in eastern Europe is to trigger a recession that was already on its way. To hedge against that, an analyst said, best performers this year might be gold, bitcoin, and long term bonds.

“I think what’s happening right now, with Russia invading Ukraine, is a very high potential trigger for a global recession,” said Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, “which is probably where we are heading toward anyhow.”

Since most central banks on the planet are implementing tightening policies due to excessive inflation, a recession is unavoidable, McGlone said, stating that the current geopolitical crisis is just a trigger that accelerates the process.

McGlone thinks such market correction is long overdue, and while the market arms itself for a recession, hedging tools like gold, bonds, and bitcoin will be in favor for investors.

A slower demand during the recession is in fact going to drive commodity prices down in the long run, McGlone added, suggesting that crude oil is likely to have peaked at $10,000 a ton and cooper at $100 a barrel.

In terms of natural resources directly impacted by the crisis like natural gas, supply won’t decrease as the U.S. will fill in to provide for the European countries.

In a recession where a 20%, or even 30%, stock market fall is expected, investors are likely to flee toward less risky assets such as gold and long term bonds. McGlone said bond prices are still high because the market does not expect the Fed to tighten as aggressively as it said, and might still tolerate an inflation above 2%. Normally, when investors expect inflation to be in control and real interest rates to be high, they will put the money back in the bank instead of in the inflation immuned bonds.

As for gold, it might go above $2,000 an ounce and never look back, McGlone said, because it is not only a hedge against inflation, but also a store of value during recessions.

McGlone’s personal view indicates that while bitcoin is still in its early stage of price exploration, it will eventually become the digital gold.

“Bitcoin is the least risky crypto, and I fully expect it to come out ahead,” McGlone said, “Right now it’s got pretty good resistance around 40,000. For it to get to $100,000, to me, it’s only a question of time.”

If commodity prices really go up instead of down, a lose-lose situation will occur. Inflation will aggravate, further slowing down economic growth, and triggering risks akin to the ones in 2008 and a possible 80% market correction.

Tether, Bitfinex Freed From Organized Crime Claims, But Lawsuit Continues

by Leave a Comment

Cryptocurrency exchange Bitfinex and stablecoin issuer Tether will no longer face claims for being criminal organizations, but accusations of monopoly and market manipulation still keep the companies under spotlight two years after the initial lawsuit.  

U.S. District Court Judge Katherine Polk Failla dismissed claims against cryptocurrency exchange iFinex Inc., DigFinex Inc., stablecoin issuer Tether Holdings Limited and its relevant entities for racketeering, wire fraud, bank fraud, and money laundering brought under Racketeer Influenced and Corrupt Organizations (RICO), according to a court filing last September. 

“The causal connection between defendants’ purported racketeering and plaintiffs’ injury is insufficiently “direct” and “straightforward” to satisfy the proximate cause requirement,” the judge wrote.  

With part of the claims being dismissed, the companies still face legal scrutiny under the Sherman Act, the Commodities Exchange Act and the New York General Business Law, for claims including forming a monopoly power and manipulating the cryptocurrency market.

Bitfinex and Tether said they look forward to litigating this case and won’t settle what remains of the plaintiffs’ ”baseless claims.” In their latest statement, the companies called the complaint “a clumsy attempt at a money grab, which recklessly harms the whole cryptocurrency ecosystem.”

The lawsuit was initiated in October 2019 by a group of individual cryptocurrency investors. In the 593-paragraph complaint submitted to the United States District Court, Southern District of New York, plaintiffs said the company Tether arbitrarily printed 2.8 billion tether stablecoins (USDT) from 2017 through 2018 to flood the Bitfinex exchange and purchase other cryptocurrencies, causing their prices to spike. 

“Tether’s 1:1 USDT/USD guarantee is a lie,” according to the complaint, “Together, Bitfinex and Tether manipulated a market that, by design, is supposed to be decentralized”. 

A blockchain-based cryptocurrency, Tether’s tokens in circulation are in theory backed by an equivalent amount of U.S. dollars, making it a stablecoin with a price pegged to USD $1.00. As of February 2022, Tether is the third-largest cryptocurrency by market capitalization, worth more than $77 billion.

The lawsuit is the latest movement of a series of legal inspections against Tether and Bitfinex in the last two years. Early in February last year, The New York Attorney General’s office (NYAG) alleged that Bitfinex and Tether attempted to cover up the loss of approximately $850 million in customer funds. As part of the settlement, Bitfinex and Tether agreed to pay $18.5 million, cease trading with New York residents and entities, and provide quarterly transparency reports to the NYAG. 

According to its recent report as of September 30, 2021, the company’s consolidated assets exceeded its liabilities by more than $1 million, a sign that its reserve is sufficient for potential redemptions of the digital asset tokens issued, according to its accounting report audited by Moore Cayman, an accounting firm. 

Tether and Bitfinex petitioned the New York State Supreme Court in August to block the NYAG from providing the cryptocurrency news site CoinDesk with documents detailing the reserves, according to the petition filed. 

“The full detail of the investment strategy behind how Tether achieves its returns, and the counterparties and issuers it works with to achieve them, is a key part of its business and one it does not want to reveal to the broader public,” according to the filing. 

Meanwhile, the Commodity Futures Trading Commission (CFTC) stepped in last October and fined Tether $41 million for misleading statements and omissions of material fact in connection with the U.S. dollar tether token (USDT) stablecoin. It also fined Bitfinex $1.5 million for not registering for “illegal, off-exchange digital asset transactions”. 

The CFTC said that between June 1, 2016 and February 25, 2019, Tether misrepresented to customers and the market that it had sufficient U.S. dollar reserves to back every USDT in circulation which they “safely deposited” in Tether’s bank accounts. 

The U.S. government agency, which regulates derivatives markets, found Tether’s fiat reserves in its accounts to back USDT tether tokens could only support 27.6 percent of the days in a 26-month sample time period from 2016 through 2018. Instead of holding all USDT token reserves in U.S. dollars as claimed, Tether relied upon unregulated entities and certain third-parties to hold funds comprising the reserves. Tether and Bitfinex’s combined assets included at least 29 unregistered arrangements that were not documented through any agreement or contract. 

“This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace,” said Rostin Behnam, Acting Chairman of CFTC in the press release.