Notable News: Housing, B. Riley, Steward/MPT, Adani, and more
Catching up on some great stories I think you should read!
Some new and notable stories by friends and colleagues, great reporters, and other keen eyes.
Be careful what you wish for! When big changes come from litigation not legislation, there is no one analyzing the impact and mitigating the unintended consequences of “tear it all down”.
That’s what I said about a new story from BFF and former MarketWatch colleague Andrea Riquier. Andrea has a new byline at USA Today, focusing on the housing industry. She's hit the ground running and, in this one, bangs it out of the park!
Residential real estate was confronting a racist past. Then came the commission lawsuits
USA TODAY
Late in 2020, the National Association of Realtors issued an unusual statement – an apology.
“NAR initially opposed passage of the Fair Housing Act in 1968, and at one time allowed the exclusion of members based on race or sex,” said the Washington-based group, which boasts over 1.5 million member real estate agents. “This discrimination was part of a systematic policy of residential racial segregation, led by the federal government and supported by America's banking system and real estate industry, and driven by practices like redlining.”
Speaking onstage at a public event, Charlie Oppler, the group’s then-president, added, "Because of our past mistakes, the real estate industry has a special role to play in the fight for fair housing.”
But just a few years later, the fight for equitable homeownership may have taken a step back. By decoupling the commission paid to buyer brokers from seller proceeds, the landmark class-action lawsuits brought against NAR and other large national brokerages on behalf of consumers have unintended consequences, advocates say.
The concern: Black buyers, who often come to the house hunt with the deck stacked against them, will be further disadvantaged by having to pay more money out of pocket for an agent to represent them – or will choose to go without representation in a transaction that’s expensive, confusing and laden with unfamiliar pain points.
Also on the housing beat, with a local flavor, Cary Spivak, Genevieve Redsten, Daphne Chen and Princess Safiya Byers at the Milwaukee Journal and Sentinel are finalists for the UCLA Loeb Awards for Business Journalists in the Local News category. ( I am a preliminary judge for the last 12 years.) See the story here. I was quoted in a related story by the same authors here.
It's a sad situation that so few major media outlets and business magazines take on big business investigations anymore and definitely not by freelancers. There is a huge risk aversion based on liability risk and the for-profit business model that cherishes access over confrontation and adversarial reporting.
I met Lucy Komisar, a Loeb Award winning investigative reporter, a long time ago. She came to me recently with a story about UBS and try as I might, I could not come up with a good place for her to pitch it. It was half-reported story and she wanted to get the legal and practical editorial support of a newsroom while taking advantage of a bigger platform.
The story has now been published at Inside Paradeplatz and on her own site.
She tells me:
Inside Paradeplatz is a daily financial publication in Zurich read by all the bankers. I assume you know that Paradeplatz in Zurich is the square where the important banks are headquartered.
This is why I write on Substack. I like to write about what I write about and no longer want to compromise the story for others' priorities. At this point have also figured out how not to get sued. Here's a snippet. I encourage you to read the whole thing.
Evidence shows that International Bank UBS Bahamas took clients‘ money and made fictitious stock trades to U.S. markets.
10.8.2024
Documents from a Bahamas lawsuit show that UBS refused to send clients SEC-required confirmations of trades made into the U.S. market.
The clients believe the trades were not executed, that UBS created internal trading records and stole their money.
Could this have occurred to other clients? Top UBS officials refuse to comment on any of the claims or evidence this reporter sent them, or to discuss the matter at all, saying only, „We believe these allegations have no merit.“
Yuri and Irina Starostenko, Italian citizens living in the Bahamas, allege that UBS Bahamas defrauded them by promising to execute trades on their behalf in U.S. markets and taking their money but never actually making the trades.
There's more about Adani and the Hindenburg Research report.
Hindenburg Accusation of Adani Conflict Denied by Sebi Chief
Regulator denies ‘baseless’ claims and ‘insinuations’
The short-seller cites offshore fund investment made in 2015
Hindenburg Research accused the head of India’s market regulator of having conflicts of interest that prevented a thorough examination of manipulation and fraud claims at the Adani Group, an allegation she denied.
In a report published Saturday, Hindenburg said Madhabi Puri Buch and her husband, Dhaval Buch, invested in offshore entities that were allegedly part of a fund structure in which Vinod Adani — the brother of billionaire Gautam Adani — also had investments.
The short seller’s latest allegations go well beyond the infrastructure tycoon. They strike at the heart of India’s regulatory establishment.
August 11, 2024 at 9:00 PM EDT
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.
The real effect of Hindenburg’s report may be felt elsewhere. In January, the Indian Supreme Court gave a big relief to Adani when it ruled that SEBI’s probe would be the last word — and that no more investigations were needed. The SEBI chief’s alleged proximity to the situation is a new element for the judiciary to consider. If nothing else, the court could ask for a speedy end to the inquiry. In its own press statement Sunday, the SEBI said that it has concluded 23 out of its 24 investigations into the group, and the last one is close to completion. “Where investigations have been completed, enforcement proceedings initiated are ongoing and appropriate actions are being taken,” the regulator added.
The Congress Party, the main opposition, has already renewed its call for a joint probe by lawmakers into the Adani saga. It was easy for the government to refuse this demand when Modi’s ruling party had an iron-clad grip on parliament. This year’s election has eroded that advantage. On Sunday, Congress leader Rahul Gandhi, who has kept up his attack against the prime minister for favoring large monopolies, asked the government to sack the SEBI chief. He is unlikely to let the fodder from Hindenburg go to waste when parliament reconvenes for its winter session, in late November or early December.
I wrote about Adani and the Hindenburg report, and was quoted by Bloomberg's Anders Mellin.
My friend and frequent collaborator Olga Usvyatsky has a new piece on the status of the implementation of the new clawback rules. Quick take? Very slow...
Olga wrote after being quoted in this Bloomberg' article.
Of the 205 companies that reported accounting corrections in their annual financial statements so far this year, just 29—less than 15%—said they reviewed the error to see if they needed to force a compensation clawback, according to research firm Nonlinear Analytics LLC. Of those that conducted a review, two—payments technology provider NCR Voyix Corp. and fintech company Katapult Holdings Inc.—forced executives to return portions of their bonuses.
Inconsistencies were common. Businesses like human resources software provider Dayforce Inc., media and education firm Graham Holdings Co., and Teva Pharmaceutical Industries Inc. were among the few that scrutinized relatively small accounting mistakes, concluding pay clawbacks were unnecessary. But companies including air carrier Mesa Air Group Inc., First Real Estate Investment Trust of New Jersey, and theme park operator Six Flags Entertainment Corp. were among the majority skipping any analysis for what appear to be similar accounting trip-ups. The companies didn’t respond to requests for comment.
Of the small subset of companies that reported they reviewed their errors, 40% merely checked a new box on the front page of their filing, offering no details about how they weighed the information to figure out if they had to force a payback, the data show.
“There is diversity in practice around how companies do this,” said Olga Usvyatsky, an accounting analyst who reviewed more than 6,000 SEC filings.
Cooley's Cydney Posner also wrote on the subject citing the Bloomberg article.
After the jump, a few more stories and some original reporting for paid subscribers.