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Prominent short seller, Andrew Left, the founder of Citron Research was charged by a federal grand jury in Los Angeles for securities fraud. The Department of Justice alleges that Left made profits of at least $16mn from “a long-running market manipulation scheme.” In addition, the DoJ said, “Left knowingly exploited his ability to move stock prices by targeting stocks popular with retail investors and posting recommendations on social media to manipulate the market and make fast, easy money.” Each securities fraud count carries a maximum penalty of 20 years in prison and Left could face decades in prison if convicted. The SEC also filed a separate civil case seeking to recover $20 million from Left and his firm, Citron. https://www.ft.com/content/ad5fb0a7-7702-408f-98f7-1e3a4cb3e23d

UK-based litigation financier, Therium Capital, known for taking on unique cases, jumped right into a battler over the late Saudi businessman and billionaire Osama Ismail Abudawood’s estate. This move was unusual for litigation funders because of the unpredictability and emotions which involved Abudawood’s wife and daughter fighting for the estate against his brothers. Therium aimed to secure a portion of a potentially significant settlement, and after multiple lawsuits across three countries, the families reached a global settlement. Although Abudawood’s wife and daughter delayed signing the agreement and demanded additional guarantees shortly thereafter. Lawyers of Abudawood’s brothers say they were unable to track down the wife and daughter, and speculated they delayed signing to avoid paying Therium. This case highlights the risks and complexities associated with litigation funding emotional family disputes. https://news.bloomberglaw.com/litigation-finance/billion-dollar-estate-suits-show-hazards-of-funding-family-feuds

Synapse Financial Technologies, a key company in the fintech industry that served as a middleman between fintech startups and licensed banks, filed for bankruptcy in April. A month later banks froze accounts associated with Synapse, citing discrepancies in ledgers kept by Synapse. This has not only impacted consumers but also disrupted fintech startup companies that relied on them for fund transfers. The fintech industry now faces scrutiny over bank partnerships because of poor compliance with money laundering guidelines and other risk management issues. Investors fear that more strict regulation of bank-fintech partnerships following Synapse could disrupt opportunities for new fintech startups. https://www.wsj.com/articles/why-the-synapse-bankruptcy-has-the-fintech-world-on-edge-f83cbe6d

In the midst of summer across the U.S. heat waves have caused damage to roofs, crops, infrastructure and power supplies. Sectors such as agriculture and construction that rely on equipment and nature to conduct business face significant productivity losses from the heat. The problem is standard insurance policies often do not cover the effects of intense heat that cause tens of billions of dollars in damage each year. According to a report by insurance broker Aon, the U.S. agriculture and construction industries alone lose an estimated $100 billion of productivity a year due to extreme heat. Parametric insurance, which is tied to temperature, emerged as a solution to help businesses manage these risks, although its cost and effectiveness remain under scrutiny.

https://www.wsj.com/business/energy-oil/extreme-heat-waves-insurance-claims-8a74987e

David Li, CEO of Hesai, the world’s biggest producer of laser sensors used in electric vehicles, expressed surprise and concern over the allegations of ties with the Chinese military from the U.S. Congressional Research Service. Also, the Pentagon added Hesai to a list of Chinese entities alleged to be a part of China’s military-civil fusion program. These accusations has created a perception of investment risk that has triggered the downfall of Hesai’s share price. In response, Hesai took legal action by suing the Pentagon. Li denies any connection between Hesai and the Chinese military, and claims to have not received any investment from the Chinese government or state-linked entities. 

https://www.ft.com/content/f0fd46dc-62b9-4d60-8367-dc4ae860076d

Two former executives at Northern Data, a German-listed crypto and AI infrastructure company backed by Tether, allege they were fired for whistleblowing on fraudulent activities by top executives. Joshua Porter and Gulsen Kama filed a complaint accusing Northern Data of “falsely misrepresenting the strength of its financial condition to investors, regulators and business partners”, and “knowingly committing tax evasion to the tune of potentially tens of millions of dollars.” Northern Data denied these allegations stating it “refutes the allegations in the strongest terms, and we are contesting them vigorously to protect ourselves against false assertions which damage our company and our business.” With plans for a U.S. IPO, Northern Data now faces scrutiny over its financial practices.

https://www.ft.com/content/18cf9179-b7e1-49cd-badf-da7848147244

U.S. prosecutors are cracking down on commercial mortgage fraud due to inflated property values and manipulated financial statements. As property values drop and defaults rise, federal agencies are investigating and prosecuting cases, which resulted in numerous landlord plea deals. John Griffin, professor of finance at the University of Texas states, “It’s a general trend throughout history that fraud occurs during boom times and revealed during bust times.” Additionally, government backed mortgage enterprises such as Fannie Mae and Freddie Mac tightened their lending rules in response.

https://www.wsj.com/real-estate/property-fraud-allegations-snowball-as-commercial-real-estate-values-fall-492d964c?mod=hp_lead_pos5

The Securities and Exchange Board of India (SEBI) alleged that Hindenburg Research engaged in unfair trade practices in its report on Gautam Adani. SEBI says the firm “deliberately sensationalized and distorted certain facts” in collaboration with its silent partner, New York hedge fund Kingdon Capital Management. The report, that Hindenburg released in January 2023, disrupted Adani’s $2.5bn share sale and caused a $140bn market value loss. Hindenburg denied the allegations and called them “an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India.” After SEBI’s show-cause notice, penalties and market restrictions could follow.

https://www.ft.com/content/ae104fce-0576-4ff0-a7ec-a0eed7849e97

According to US prosecutors, two California residents allegedly worked with the Sinaloa cartel, deposited and laundered tens of thousands of dollars at Citibank ATMs. In January 2021, they allegedly deposited nearly $36,000 in illicit cash into Citibank machines, a few hundred dollars at a time to stay under the $10,000 reporting threshold. They used Citibank because they believed the bank had less robust fraud controls, and thus “more favorable.”  DEA officials say these two residents are a part of a criminal network that laundered at least $50m in fentanyl and meth proceeds in the US. A DEA official states, “We’re seeing a huge uptick in money, cash being deposited in banks and then wired wherever.”

https://www.ft.com/content/0187827b-f755-47fd-91ff-c3e755548097

Terren Peizer, former chairman of the healthcare company Ontrak, was convicted of insider trading despite using a 10b5-1 trading plan. A 10b5-1 trading plan provides affirmative defenses for corporate insiders and companies to buy and sell company stock as long as the plan was established in good faith at a time when that person or entity was unaware of material non-public information, even if actual trades made pursuant to the plan are executed at a time when the person or entity may be or is aware of material, non-public information. Peizer was accused of trading based on confidential information about Ontrak’s likelihood to lose Cigna as a major customer. Although Peizer was not in charge in dealing with Cigna, executives updated him about the efforts to save the $90mn deal. Peizer started trading a week before Ontrak’s intention to end the contract with Cigna. He now faces a maximum penalty of 25 years in prison on one securities-fraud charge and 20 years in prison on each of two insider-trading counts. https://www.wsj.com/finance/regulation/jury-convicts-milken-protege-terren-peizer-of-insider-trading-7c78ba2a