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Business News

Ex-Goldman CEO Blankfein says bank rout may depress growth, even with robust capital

by Reuters March 20, 2023
By Reuters

By Lananh Nguyen

NEW YORK (Reuters) -Turmoil in the banking sector will probably weigh on economic growth as lenders become more conservative, former Goldman Sachs Group Inc CEO Lloyd Blankfein said on Sunday.

“The greater risk environment for financials leads to husbanding of capital and risk-taking, less and more conservative investing and lending, and inevitably, lower growth,” said Blankfein, who also served as Goldman’s chairman, told Reuters.

“While some banks have been hung up by poorly managed, concentrated risk, the overall banking system is extremely well capitalized and substantially more tightly regulated than in prior challenging times,” he said.

Blankfein was chairman and CEO of the storied Wall Street firm from 2006 to 2018, steering it through the global financial crisis of 2008 and its aftermath.

He spoke after some of the world’s largest central banks came together on Sunday to stop a banking crisis from spreading as Swiss authorities persuaded UBS Group AG on Sunday to buy rival Credit Suisse Group AG in a historic deal.

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(Reporting by Lananh Nguyen; Editing by Tom Hogue)

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Marketmind: Investors adopt the brace position as banks topple

by Reuters March 20, 2023
By Reuters

A look at the day ahead in European and global markets from Wayne Cole

During the last big banking crises, an analyst was asked by a TV anchor what position he would recommend for investors? “Fetal” was his terse answer.

That pretty much sums up the reaction in Asian markets to the extraordinary government-engineered takeover of the storied Credit Suisse by UBS, along with a U.S. dollar supply operation by a Fed-led posse of major central banks. Incidentally, the BOJ’s US$ tender today found no takers, suggesting there’s no dollar drought in Asia as yet.

Investors seem torn between relief that Credit Suisse was not allowed to collapse or worries that it had to be saved in such a way in the first place. That worry about who might be next has greatly limited the risk-on rally, with U.S. stock futures and sovereign bond yields up only slightly.

It’s not helping that Credit Suisse shareholders are taking a nasty haircut in the deal, though not as painful as AT1 bond holders who seemingly won’t get their $17 billion back.

That’s a break with convention that could threaten the future of the entire $275 billion CoCo market. Interestingly, Goldman Sachs is reportedly setting up a claims market for the debt, so there must be a chance market pressure – or lawsuits – will soften this ruling.

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Volatility is still very much here, as two-year Treasury yields started at 3.90%, jumped to 4.03% only to come all the way back to 3.88%. Rates will no doubt have changed again by the time this sentence ends.

It’s not helping that speculators were super short of Treasuries into this event and must be sitting on huge paper losses and the market can’t correct properly until these are cleared out.

Likewise, Fed fund futures fell, rose, then fell again as investors dared to divine what all this might mean for interest rates. Right now, futures have a two-in-three chance the Fed hikes by 25bp on Wednesday, but then it’s all downhill with 75-100bp of easing implied by year-end.

The Bank of England also meets this week and markets are split on whether it pauses or goes 25bp. Note, in both cases it might be really hard to re-start hikes once you have paused, so markets would take it as an end to the whole cycle, whether policymakers want that or not.

Oddly, the market still thinks the SNB will hike borrowing costs by 50bp at its meeting on Thursday, just a few days after providing more than 160 billion francs in loans and guarantees to the new UBS grouping. No disconnect there.

Key developments that could influence markets on Monday:

– Introductory statement by Christine Lagarde, ECB President, at a hearing of the European Parliament in Brussels – 1400 GMT

(Editing by Jacqueline Wong)

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Business News

Marketmind: Fed halt being priced as bank blaze smoulders

by Reuters March 20, 2023
By Reuters

A look at the day ahead in U.S. and global markets from Mike Dolan

Another weekend of financial firefighting has doused the whole interest rate horizon as the banking blaze smoulders.

Central banks face a battle to separate serial financial rescues from underlying monetary policy. But world markets now bet their interest rate rise campaigns are over amid fears that an unfolding credit crunch resulting from increasingly stressed banks just hastens recession and disinflation on its own.

Futures markets now only see a one-in-three chance that the Fed will go ahead with a final rate hike this Wednesday and they see up to a percentage point of rate cuts by yearend.

As U.S. authorities struggle with workouts of two failed regional banks and resulting depositor runs that have undermined others, European markets are trying to assess the implications of a forced marriage in Swiss banking on Sunday.

In emergency weekend meetings, Swiss authorities orchestrated a deal for UBS to buy ailing rival bank Credit Suisse for $3.2 billion – at a fraction of Friday’s battered CS share price – to prevent a failure of the systemically important Credit Suisse sending shockwaves through world banking.

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The details of the buyout did little to ease market tensions first thing on Monday, with the UBS share price falling 12% in early trade and euro zone bank stock indices down another 3%.

Of particular concern was the impact on wider bank funding markets of a controversial decision to wipe out Credit Suisse’s junior bondholders even as equity investors gained something from the UBS deal. European bank chiefs were immediately on guard for further contagion and insisted more support was required.

Acknowledging the risk of wider stress shortly after the Swiss deal, the U.S. Federal Reserve, European Central Bank and other major central banks issued statements to reassure markets and announced coordinated action to provide U.S. dollar liquidity where needed and backstop their banking systems.

But in displaying that level of concern, the authorities merely underlined the potential of the shock and its implications for lending, growth and inflation.

“There’s going to be less credit. Less credit means less growth. So, some of the mission of the Fed in trying to slow the economy will be done here,” former Goldman Sachs chief executive Lloyd Blankfein said on Sunday.

And that thinking has crushed the interest rate horizon everywhere.

Futures markets now see the first Fed rate cut emerging by midyear. No further ECB rate rises are fully priced after it pushed ahead with a hefty half-point rate rise in the thick of the crisis last week and there’s less than a 50% chance of a further Bank of England rate rise when it meets this week.

U.S. Treasury yields plunged across the curve, with 2-year yields hitting 6-month lows of 3.6% and 10-year yields also hitting 6-month lows at 3.29%.

The steepening of the 2-10-year curve to show an inversion of just 40 bps was cold comfort as investors pointed out that the long-inverted curve – frequently a harbinger of recession and stress – often steepens just before the actual recession hits.

U.S. stock futures were down about 0.5% ahead of the open but the VIX volatility gauge jumped three points to near 29.

A U.S. official said on Sunday that the deposit outflows that left many regional banks reeling in the wake of Silicon Valley Bank’s failure had slowed and in some cases reversed – but European banking worries and credit rating downgrades for some of the banks kept markets on edge.

The U.S. Federal Deposit Insurance Corp is planning to relaunch the sale of Silicon Valley Bank after failing to attract buyers in its latest auction, possibly seeking a potential break-up of the collapsed lender. One of the options under consideration by the regulator is a sale of SVB’s private banking arm, which caters for wealthy clients.

Even though Fed discount window lending and liquidity provision was seen by some as a resumption of some form of quantitative easing, banks such as Morgan Stanley cautioned against reading it that way – stressing that Fed asset purchases were hugely different to emergency loans.

“It won’t stop the already tight lending standards across the banking industry from getting even tighter. It also won’t prevent the cost of deposits from rising, thereby pressuring net interest margins,” Morgan Stanley said on Sunday. “In short, the risk of a credit crunch has increased materially.”

Key developments that may provide direction to U.S. markets later on Monday:

* Meetings and statements on banking worries.

* European Central Bank President Christine Lagarde speaks at the European Parliament in Brussels

* Chinese President Xi Jinping meets Russian President Vladimir Putin in Moscow.

Graphic: US rate horizon sinks https://fingfx.thomsonreuters.com/gfx/mkt/xmvjkbrknpr/One.PNG

Graphic: Credit Suisse rescue https://www.reuters.com/graphics/GLOBAL-BANKS/myvmobgwyvr/chart.png

Graphic: National exposure to banks https://www.reuters.com/graphics/CREDITSUISSE-CRISIS/zgvobarewpd/chart.png

Graphic: UMich inflation expectations https://www.reuters.com/graphics/USA-STOCKS/movakwjyrva/umichinflation.png

(By Mike Dolan, editing by Nick Macfie [email protected]. Twitter: @reutersMikeD)

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Adam Sandler honored with Kennedy Center’s Mark Twain Prize

by Reuters March 20, 2023
By Reuters

By Jeff Mason

WASHINGTON (Reuters) – Actor and comedian Adam Sandler became the 24th recipient of the Kennedy Center’s Mark Twain Prize for American Humor on Sunday, at an evening event featuring stars Jennifer Aniston, Chris Rock and Conan O’Brien to celebrate his comedy and career.

Sandler, whose movies include “Spanglish,” “The Wedding Singer,” and “The Waterboy,” was celebrated for his comedic chops that, while not always winning the hearts of critics, have won over fans and generated billions of dollars.

Dressed uncharacteristically in business attire instead of his trademark shorts and T-shirt, Sandler, 56, said he thought his suit was baggy.

“I don’t know if this suit fits me or not, I just threw it on … for the second time,” he told reporters on the red carpet ahead of the show.

“But everything else … the honor itself, never thought about this in my entire life, never expected anything like this.”

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Comedian Dana Carvey referred to Sandler’s longevity. “No one’s had a career like this,” Carvey told reporters ahead of the show. “Who’s lasted this long? He’s beloved.”

Sandler’s friends and acting partners, along with his mother and his wife, took to the Kennedy Center stage to gently rib the actor and highlight his development as a stand-up comic, movie actor and singer.

“You’re making a terrible, terrible mistake,” comedian O’Brien quipped at the top of the show to the Kennedy Center for selecting Sandler, a former “Saturday Night Live” star.

Sandler’s mother, Judy, made light of his wardrobe preferences. “I say he’s a slob,” she said in her own quasi- comedy routine, before praising her son. “We are so proud of him.”

Comedian David Spade expressed mock awe at Sandler’s box office success. “Four billion dollars in movies, with this much talent!” Spade said, with a hand gesture that suggested a minute amount.

Aniston, who appeared with Sandler in films such as “Just Go with It” and Netflix’s “Murder Mystery,” praised her co-star. “Adam Sandler, you have no equal,” she said.

With the White House a short distance from the Kennedy Center, some presenters touched on politics.

Carvey did impressions of President Joe Biden and former President Donald Trump, and comedian Chris Rock mentioned potential criminal charges against the Republican leader.

“Are you guys really going to arrest Trump?” Rock asked. “This is only going to make him more popular!”

Rock, who was slapped on stage at the Oscars in 2022 by actor Will Smith, also referred to Paul Pelosi, the husband of former House Speaker Nancy Pelosi, who was attacked by an intruder in their San Francisco home last year.

“Paul Pelosi – only guy that knows how I felt,” Rock said, as the Pelosis sat in the audience.

Sandler joins the ranks of other comedians who have received the Mark Twain Prize, including Jon Stewart, Dave Chappelle, Julia Louis-Dreyfus, David Letterman, Carol Burnett, Eddie Murphy and Ellen DeGeneres.

The prize is named after novelist and essayist Samuel Clemens, better known by his pen name, Mark Twain. The show will air on CNN on March 26.

(Reporting by Jeff Mason; Editing by Clarence Fernandez)

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Philippines sees no significant impact from global banking crisis

by Reuters March 20, 2023
By Reuters

By Neil Jerome Morales

MANILA (Reuters) – Philippine financial authorities expressed optimism on Monday that a deepening crisis in the global banking sector does not pose a significant risk for the local industry and the domestic economy as a whole.

Global financial markets are reeling from a string of bank failures and fears of contagion, with a deal to rescue Credit Suisse and promises of liquidity from central banks doing little to stem fears of a wider crisis in the financial system.

“It does not look like other Global Systemically Important Banks have the same problem, in which case the impact on the global economy, and therefore the Philippines, will not be significant,” Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla said.

In notes prepared for President Ferdinand Marcos Jr. on the stability of the local banking system following the collapse of Silicon Valley Bank and Signature Bank in the United States, the BSP said the local banking system remains strong.

The sector is also ready to withstand possible shocks posed by the collapse of some U.S. banks, the BSP said, though it added it would continue to closely monitor developments, assess their impact on the banking system and respond accordingly.

“The BSP has long implemented structural reforms to ensure the safety and soundness of banks,” it said.

The BSP has also imposed prudent limits and requirements, including the Basel III reforms on capital and liquidity standards which enable banks to maintain adequate capital and liquidity, as well as strengthened surveillance mechanisms for risk monitoring, it said.

To address any serious liquidity conditions, the BSP said solvent banks can tap emergency loan facilities.

“There’s very little contagion on the Philippine side and in fact it can be a positive in the sense that central banks are likely to ease on hiking of interest rates,” Finance Secretary Benjamin Diokno said separately.

In remarks made at a forum organised by foreign journalists, Diokno said the BSP could decide to opt for a narrower 25 basis points interest rate hike or keep policy settings unchanged at its meeting on Thursday, amid global uncertainty.

“The option now is not to hike or to hike by 25 basis points,” said Diokno, though he added he is just one of the seven-person policy-making monetary board and that he could be outvoted.

(Reporting by Neil Jerome Morales; Editing by Ed Davies, Kanupriya Kapoor)

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US and World News

Witness may challenge Michael Cohen claims in Trump case – source

by Reuters March 20, 2023
By Reuters

By Karen Freifeld

NEW YORK (Reuters) -A lawyer called to testify behind closed-doors in New York on Monday may challenge the claims of a key witness before a grand jury decides whether to charge former President Donald Trump over hush money paid to a [censored] star, a source familiar with the matter told Reuters on Sunday.

    Robert Costello has been asked to appear before the grand jury at the request of Trump’s lawyers because he may have information that calls into question events as described by Michael Cohen, Trump’s former lawyer, the source said.

The Manhattan District Attorney’s office has asked Cohen to be available on Monday as a rebuttal witness, if needed, according to a second source, who did not want to be named. Cohen testified before the grand jury twice last week.       

Trump, whose supporters stormed the U.S. Capitol on Jan. 6, 2021 to overturn his 2020 election defeat, said Saturday that he expects to be arrested on Tuesday and called for protests. He said “illegal leaks” indicated an arrest on Tuesday, but provided no evidence, and his spokesman said Trump had not been notified of any impending arrest.

Trump’s call for protests overshadowed the start of a three-day Florida retreat for Republicans in the U.S. House of Representatives.

“I don’t think people should protest this, no,” House Speaker Kevin McCarthy told reporters. “We want calmness out there.”

The Manhattan District Attorney’s office earlier this month invited Trump to testify before the grand jury probing the payment, which legal experts said was a sign that an indictment could be close. Trump declined the offer, a person familiar with the matter said.

No U.S. president, while in office or afterward, has faced criminal charges. Trump, who is seeking the 2024 Republican presidential nomination, has said he would continue campaigning even if charged with a crime.

Manhattan District Attorney Alvin Bragg’s office has been investigating a $130,000 hush payment made by Cohen, Trump’s estranged former fixer, to [censored] star Stormy Daniels during the 2016 presidential campaign.

Sources have said Bragg’s office has been presenting evidence to a grand jury about the payment that was made to Daniels in return for her silence about an affair she said she had with Trump a decade earlier.

The grand jury will determine whether there is sufficient evidence to formally charge Trump with a crime. The proceedings are not public.

Costello’s testimony is expected to focus on the payment to Stormy Daniels and how that came about, the first source said. Costello is better known for his representation of former Trump lawyer Rudy Giuliani.

Cohen consulted with Costello years ago, and was given a retainer agreement but never signed it, the first source said. Cohen also waived attorney-client privilege in 2019, the source added.

‘WITCH HUNT’

Cohen was sentenced to prison in 2018 after pleading guilty in federal court to campaign finance violations tied to hush money payments to Daniels and another woman during Trump’s 2016 presidential campaign, among other crimes.

Trump has denied the affair with Daniels happened and called the investigation by Bragg a political persecution.

“THE WITCH HUNT NEVER ENDS, BUT WE WILL MAKE AMERICA GREAT AGAIN!!!” Trump posted on social media on Sunday.

Talk of a Trump arrest could be boosting his support, New Hampshire Governor Chris Sununu, a fellow Republican, told CNN’s “State of the Union” on Sunday.

“It’s building a lot of sympathy for the former president,” said Sununu, a relative moderate, who is considering his own presidential run and appeared to be trying to avoid alienating Trump supporters.

Asked if Trump had special responsibility to ensure protests did not turn violent, Sununu said “well, sure” but quickly added this was a broader societal responsibility, saying “you can’t just put it on the former president.”

Trump’s former national security adviser H.R. McMaster and former economic adviser Gary Cohn on Sunday both urged Trump supporters to respond peacefully to any developments this week.

Prominent Republicans, such as Trump’s former Vice President Mike Pence and House of Representatives Speaker Kevin McCarthy, suggested a possible prosecution by Manhattan District Attorney Alvin Bragg, a Democrat, would be politically motivated.

Trump also took to social media on Sunday to accuse President Joe Biden of playing a role in the Manhattan probe but offered no evidence. The White House did not immediately respond to a request for comment.

A spokesperson for Bragg declined to comment on Sunday.

Legal experts have said if Trump were indicted that any trial could still be more than a year away, possibly coinciding with the final months of the 2024 presidential campaign.

(Reporting by Karen Freifeld in New York and by Arshad Mohammed, Michelle Nichols, Kanishka Singh, Nandita Bose and David Morgan in Washington; Writing by Arshad Mohammed; Editing by Mark Porter, Chris Reese, Diane Craft and Don Durfee)

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Silicon Valley Bank’s parent company cut off from bank’s records

by Reuters March 20, 2023
By Reuters

By Dietrich Knauth

(Reuters) – SVB Financial, the bankrupt parent company of Silicon Valley Bank, has lost access to its financial records after the bank was placed into receivership by the Federal Deposit Insurance Corporation (FDIC), according to court documents filed in Manhattan on Sunday.

SVB Financial is exploring options, including a potential bankruptcy sale, for its venture capital and investment banking businesses, which were not included in the FDIC’s takeover of SVB. But its Chapter 11 bankruptcy has gotten off to a “challenging” start due to a breakdown in cooperation with the bridge bank set up to take over SVB’s business, according to a declaration filed Sunday by SVB Financial Chief Restructuring Officer William Kosturos in U.S. bankruptcy court.

SVB Financial has no employees of its own, and the new bank’s employees “cut off access” to a substantial portion of SVB Financial’s “books, records, files, electronic systems and key employees,” according to Kosturos.

Kosturos said SVB Financial is working to re-establish access.

SVB Financial filed for bankruptcy protection on Friday, about a week after California banking regulators closed Silicon Valley Bank in the largest U.S. bank failure since the 2008 financial crisis.

The FDIC is attempting to sell SVB and may seek a breakup of the failed lender.

The FDIC receivership removed SVB Financial’s primary source of liquidity and most of its business infrastructure, as well as triggering defaults on SVB Financial’s debt, forcing the company into bankruptcy, according to court documents.

SVB Financial’s court filings listed $19 billion in assets, $2.2 billion in cash and cash equivalents, and $3.4 billion in liabilities. About $15.5 billion of SVB Financial’s asset value was attributed to the SVB banking business that was seized by regulators.

SVB Capital, the venture capital and credit investment arm of the company, manages about $9.5 billion in other investors’ money spread across 30 pooled investment funds, according to Kosturos’ declaration.

Those investment funds include direct venture funds that invest in companies, funds-of-funds that invest in other venture capital funds, and debt funds that provide lending and other financing solutions to startups.

SVB Securities is an investment bank that provides financial services to healthcare and technology companies, according to Kosturos’ declaration.

In its court filings on Sunday, SVB Financial also made several requests intended to continue smooth operation of its business during its bankruptcy, such as asking for permission to maintain its existing bank accounts and to continue paying for services provided by SVB employees.  

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Chris Reese)

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Putin to offer ‘clarifications’ on Russia’s position on Ukraine during Xi visit

by Reuters March 20, 2023
By Reuters

(Reuters) – President Vladimir Putin will provide Chinese President Xi Jinping with detailed “clarifications” on Russia’s point of view on the Ukraine conflict during Xi’s state visit to Russia that begins on Monday, the Kremlin said.

During a call with reporters, Kremlin spokesman Dmitry Peskov said the two leaders would discuss themes in a peace plan for Ukraine proposed by Beijing last month.

“One way or another, the topics that figured in this plan will inevitably be touched upon during the exchange of views on Ukraine” between Putin and Xi, Peskov said.

“But here, of course, exhaustive clarifications will be given by President Putin, so that President Xi can get a first-hand view of the current moment from the Russian side.”

China’s 12-point paper, which called for dialogue between the two sides, contained no roadmap for how to end the war, now in its 13th month. Ukraine cautiously welcomed it but the United States was dismissive, given China’s refusal to condemn Russia’s invasion.

Xi was due to arrive in Moscow around 1030 GMT and to hold one-to-one “informal” talks with Putin on Monday afternoon, followed by dinner. Formal talks are scheduled for Tuesday.

Asked if China could become an intermediary between Moscow and Washington, Peskov declined to answer directly.

“For the time being, we see a continuing line on preventing any slowdown in hostilities. Washington, the State Department and the U.S. National Security Council are talking about this openly and officially,” he said.

Moscow accuses the United States and other Western countries of pouring weapons into Ukraine in order to inflict a “strategic defeat” on Russia. Washington and its allies say they are arming Ukraine to help it defend against an unprovoked Russian invasion and imperial-style land grab.

“The United States is sticking to its position, which is aimed at further provoking the conflict, preventing any decrease in the intensity of hostilities and pumping weapons into Ukraine,” Peskov said.

(Reporting by Reuters, writing by Mark Trevelyan; Editing by Gareth Jones)

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Donald Trump could be charged any day – what happens next?

by Reuters March 20, 2023
By Reuters

By Joseph Ax

NEW YORK (Reuters) – Donald Trump could be charged in New York as soon as this week for allegedly covering up hush money payments to a [censored] star during his 2016 presidential campaign, nearly seven years after the money changed hands.

But any trial of the former U.S. president would still be more than a year away, legal experts said, and could coincide with the final months of the 2024 presidential campaign as Trump seeks a return to the White House.

In a social media post on Saturday, Trump said he expected to be arrested on Tuesday and called on his followers to protest, though a spokesperson later said Trump has not been notified of any pending arrest.

Manhattan District Attorney Alvin Bragg has presented evidence to a New York grand jury about a $130,000 payment to [censored] star Stormy Daniels in the waning days of the 2016 presidential campaign in exchange for her silence about an alleged affair, according to sources. Trump has denied the affair, and his lawyer has accused Daniels, whose real name is Stephanie Clifford, of extortion.

Were he charged, Trump would become the first former U.S. president to face criminal prosecution. Polls show him leading other potential rivals for the Republican nomination, including Florida Governor Ron DeSantis, who is widely expected to mount a White House bid.

The average criminal case in New York takes more than a year to move from indictment to trial, said Karen Friedman Agnifilo, former Manhattan chief assistant district attorney, and Trump’s case is far from typical.

That raises the possibility of Trump having to stand trial in the middle of the 2024 presidential campaign, or even after Election Day, though putting a president-elect or president on trial for state charges would enter uncharted legal waters. If elected, he would not hold the power to pardon himself of state charges.

“This is so unprecedented that it’s hard for me to say,” Agnifilo said when asked whether a judge would put Trump on trial close to the election. “I think it’s tricky.”

The New York case is one of several focused on Trump, including a Georgia election interference probe and a pair of federal investigations into his role in the Jan. 6, 2021, assault on the U.S. Capitol by his supporters trying to overturn his defeat and into his retention of classified documents after leaving the White House.

CHALLENGING THE CASE

In his early career in real estate, as a television celebrity and then in politics, the famously litigious Trump has employed aggressive counter-attacks and delay tactics when confronted with legal challenges.

Trump has accused Bragg, an elected Democrat, of targeting him for political gain and could try to seek dismissal of the charges on those grounds.

Trump would likely pursue other avenues as well, some of which could present thorny legal issues that take time to resolve.

While serving as president, Trump reimbursed Cohen for the Daniels payments, and federal prosecutors who charged Cohen said in court papers that the payments were falsely recorded as for legal services. The New York Times, citing sources, has reported the most likely charges against Trump would be for falsifying business records, typically a misdemeanor.

To elevate that charge to a felony, prosecutors must prove that Trump falsified records to cover up a second crime. One possibility, according to the Times, is that prosecutors could assert the payment itself violated state campaign finance law, since it was effectively an illegal secret donation to boost his campaign.

Using state election law to elevate a false business record charge is an untested legal theory, experts said, and Trump’s lawyers would be sure to challenge it.

Trump could also challenge whether the statute of limitations – five years in this instance – should have run out. Under New York law, the statute of limitations can be extended if the defendant has been out of state, but Trump may argue that serving as U.S. president should not apply.

“There’s a whole host of possibilities,” said David Shapiro, a former FBI agent and prosecutor and a lecturer at the John Jay College of Criminal Justice in New York. “This is a dream case for defense attorneys.”

FINGERPRINTS AND MUGSHOT

In the near term, any indictment would require Trump to travel to the district attorney’s office in downtown New York to surrender. In white-collar cases, the defendant’s lawyers and prosecutors typically agree on a date and time, rather than arresting the person at home.

Trump would have his fingerprints and mugshot taken and would appear for arraignment in court. He would likely be released on his own recognizance and allowed to head home, experts said.

Trump’s lawyer, Joe Tacopina, told CNBC on Friday that Trump would surrender if charged. If Trump refused to come in voluntarily, prosecutors could seek to have him extradited from Florida, where he currently resides.

In an ironic twist, DeSantis would typically have to give formal approval for an extradition demand in his capacity as governor, though Florida legal experts said his role would be strictly administrative.

(This story has been refiled to correct typo to “changed hands” in paragraph 1)

(Reporting by Joseph Ax; Additional reporting by Luc Cohen and Tom Hals; Editing by Scott Malone and Alistair Bell)

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Bitcoin climbs to 9-month high as bank turmoil sparks rally

by Reuters March 20, 2023
By Reuters

By Tom Wilson and Georgina Lee

LONDON/HONG KONG (Reuters) -Bitcoin climbed to a nine-month high on Monday as turmoil in the banking sector drives some investors to turn to digital assets, as the cryptocurrency built on its best week in four years.

The biggest cryptocurrency rose as far as $28,567, its highest since mid-June, and was last up 0.9%, amid growing expectations that central banks would slow the pace of interest rate hikes.

Bitcoin rose 26% last week, its best weekly gain since April 2019, and has soared some 40% in 10 days as turmoil in the banking sector rippled around the globe – culminating, so far, in UBS Group’s takeover of rival Credit Suisse Group AG over the weekend.

Traditional assets such as banking stocks and bonds plummeted on Monday after UBS sealed its state-backed takeover of Credit Suisse, a deal orchestrated in an attempt to restore confidence in a battered sector.

Top central banks, faced with the risk of a fast-moving loss of confidence in the stability of the financial system, moved on Sunday to bolster the flow of cash around the world. Such a global response has not seen since the height of the COVID-19 pandemic.

“Its stunning rally is the result of the banking crisis, and as the interest rate markets prices in rate cuts in the second half of 2023,” said Tony Sycamore, an analyst at IG Markets, predicting a move towards $32,000 should bitcoin hold above the key support level about $25,000.

Other market players predicted that bitcoin would benefit from central bank efforts to bolster liquidity in the global financial system. It rose to a record of $69,000 in November 2021 after central banks and governments launched unprecedented monetary and fiscal stimulus measures.

“The momentum is all driven by liquidity,” said Markus Thielson at digital asset firm Matrixport in Singapore.

(Reporting by Tom Wilson in London and Georgina Lee in Hong Kong; Editing by Christian Schmollinger)

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Factbox-Credit Suisse’s troubles – spies, money laundering and takeover

by Reuters March 20, 2023
By Reuters

(Updates with sale to UBS)

(Reuters) – Switzerland’s UBS has agreed to buy rival Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock in a shotgun merger engineered by Swiss authorities.

Credit Suisse had embarked on an overhaul to recover from scandals, losses and lawsuits, but its shares slumped last week on fears of contagion from a banking crisis in the United States.

Here are some of the crises the bank has faced in the last few years (in reverse chronological order):

SOLD TO UBS

Authorities spent the weekend racing to rescue Credit Suisse, among the world’s largest wealth managers, with UBS eventually agreeing to buy its rival for 3 billion Swiss francs and assume up to 5 billion francs in losses.

SWISS CENTRAL BANK CASH

Credit Suisse in March 2023 had to tap the Swiss central bank for up to $54 billion to shore up liquidity and investor confidence, after its shares hit record lows after a bank collapse in the United States triggered fears of bank runs around the world.

The Zurich-based bank became the first major global bank to be thrown an emergency lifeline since the 2008 financial crisis.

Credit Suisse led a selloff in bank shares in Europe after its largest investor Saudi National Bank said it could not provide more financial assistance because of regulatory constraints.

‘MATERIAL WEAKNESSES’

Credit Suisse’s 2022 annual report identified “material weaknesses” in internal controls over financial reporting.

Auditor PricewaterhouseCoopers included in the report an “adverse opinion” on the effectiveness of the bank’s internal controls over its reporting but its statements “present fairly, in all material respects” the financial position of the bank in 2020 through 2022.

Swiss regulator FINMA said the bank must have appropriate control processes in place.

BIG LOSSES AND OUTFLOWS

Credit Suisse in February 2023 reported a total net loss of more than 7 billion Swiss francs for 2022, its biggest loss since the 2008 financial crisis and it warned of a “substantial” loss for 2023.

The bank saw an acceleration in withdrawals in the fourth quarter of 2022, with outflows of more than 110 billion Swiss francs, but said the picture had been improving.

COCAINE-RELATED MONEY LAUNDERING

In June, the bank was convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang.

The court found deficiencies within Credit Suisse regarding both its management of client relations with the criminal organisation and its monitoring of the implementation of anti-money laundering rules.

Both Credit Suisse and the convicted former employee had denied wrongdoing. Credit Suisse said it would appeal the conviction.

BERMUDA TRIAL

A Bermuda court ruled in March 2022 that former Georgian Prime Minister Bidzina Ivanishvili and his family are due damages of more than half a billion dollars from Credit Suisse’s local life insurance arm.

The court said Ivanishvili and his family were due the damages as a result of a long-running fraud committed by a former Credit Suisse adviser, Pascale Lescaudron.

Lescaudron was convicted by a Swiss court in 2018 of having forged the signatures of former clients, including Ivanishvili, over an eight-year period.

Credit Suisse has said it expects the case, which it is appealing, to cost it around $600 million.

‘SUISSE SECRETS’

Credit Suisse denied allegations of wrongdoing after dozens of media outlets in February 2022 published results of coordinated, Panama Papers-style investigations into a leak of data on thousands of customer accounts in previous decades.

CHAIRMAN EXIT

Chairman Antonio Horta-Osorio resigned in January 2022 after flouting COVID-19 quarantine rules.

Less than a year earlier, Horta-Osorio was brought in to clean up the bank’s corporate culture marred by its involvement with collapsed investment firm Archegos and insolvent supply-chain finance firm Greensill Capital.

ARCHEGOS DEFAULT

Credit Suisse lost $5.5 billion when U.S. family office Archegos Capital Management defaulted in March 2021.

The hedge fund’s highly leveraged bets on certain technology stocks backfired and the value of its portfolio with Credit Suisse plummeted.

An independent report into the incident criticised the bank’s conduct, saying its losses were the result of a fundamental failure of management and control at its investment bank, and its prime brokerage division in particular.

GREENSILL FUNDS COLLAPSE

Credit Suisse was forced to freeze $10 billion of supply chain finance funds in March 2021 when British financier Greensill Capital collapsed after losing insurance cover for debt issued against its loans to companies.

Swiss regulators have rebuked Credit Suisse for “serious” failings in its handling of the multi-billion dollar business with Greensill.

SHAREHOLDER ANGER

Credit Suisse shareholders rejected a proposal from the bank’s board to discharge management from other liabilities for 2020, highlighting investor anger at the bank’s costly missteps.

SPYING SCANDAL

Credit Suisse CEO Tidjane Thiam was forced to quit in March 2020 after an investigation found the bank hired private detectives to spy on its former head of wealth management Iqbal Kahn after he left for arch rival UBS.

Switzerland’s financial regulator said Credit Suisse had misled it about the scale of the spying. The regulator said the bank planned seven different spying operations between 2016 and 2019 and carried out most of them.

In response, Credit Suisse said it condemned the spying and had taken “decisive” steps to improve its governance and strengthen compliance.

(Reporting by Michael Shields in Zurich, Scott Murdoch in Hong Kong, David Clarke, Niket Nishant and Jane Merriman; Editing by Emelia Sithole-Matarise and Barbara Lewis)

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Goldman Sachs lowers euro zone growth forecast; sees no growth for UK

by Reuters March 20, 2023
By Reuters

(Reuters) – Goldman Sachs lowered its 2023 economic growth forecast for the euro zone on Monday, citing ongoing stress in the global banking system and an increase in economic uncertainty.

The investment bank said it sees a 0.3% hit to the euro zone’s real gross domestic product (GDP), reducing the growth forecast to 0.7% for 2023.

It added that it sees no economic growth in UK this year and no longer expects the Bank of England (BoE) to hike its policy rate in May, leaving its terminal rate forecast for BoE at 4.25%.

Global financial markets have been rattled by the collapse of some regional U.S. banks and the larger Swiss lender Credit Suisse, along with interest rate hikes by major central banks.

Goldman Sachs said there might be a tightening in bank lending by around 10 percentage points in both the euro area and the UK, due to banking stress and rise in financial spreads.

(Reporting by Siddarth S in Bengaluru; Editing by Varun H K)

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In US Supreme Court Jack Daniel’s case, a free speech fight over a dog toy

by Reuters March 20, 2023
By Reuters

By Blake Brittain

WASHINGTON (Reuters) – A trademark dispute over a poop-themed dog toy shaped like a Jack Daniel’s whiskey bottle coming before the U.S. Supreme Court could redefine how the judiciary applies constitutional free speech rights to trademark law.

In a case to be argued on Wednesday, the nine justices are expected to use this legal dogfight to clarify the line between a parody protected by the U.S. Constitution’s First Amendment and a trademark-infringing ripoff, with repercussions extending beyond booze and pet accessories. A ruling is due by the end of June.

Jack Daniel’s Properties Inc, owned by Louisville, Kentucky-based Brown-Forman Corp, is appealing a lower court’s decision that Phoenix-based VIP Products LLC’s “Bad Spaniels” chew toy is an “expressive work” protected by the First Amendment.

Some companies have expressed concern that a ruling against Jack Daniel’s would weaken their control over their brands and reputations. Others argue that a ruling favoring the whiskey maker would stifle free-speech rights.

“This is an interesting case because it’s a court that does care about the First Amendment but also cares about business,” said Elizabeth Brannen, a partner at the law firm Stris & Maher who has worked on intellectual property cases before the Supreme Court. “And this is a case where those interests intersect in a way that’s kind of hard to sort out.”

The toy mimics Lynchburg, Tennessee-based Jack Daniel’s famous whiskey bottles with humorous dog-themed alterations – replacing “Old No. 7” with “the Old No. 2, on your Tennessee Carpet” and alcohol descriptions with “43% Poo By Vol.” and “100% Smelly.”

“Jack Daniel’s loves dogs and appreciates a good joke as much as anyone,” the company told the justices in a brief. “But Jack Daniel’s likes its customers even more, and doesn’t want them confused or associating its fine whiskey with dog poop.”

THE ROGERS TEST

The San Francisco-based 9th U.S. Circuit Court of Appeals in its 2020 ruling in favor of VIP cited a 1989 decision by the New York-based 2nd U.S. Circuit Court of Appeals in a case brought by Hollywood legend Ginger Rogers. The actress unsuccessfully sued to block the release of the 1986 film “Ginger and Fred” from director Federico Fellini that referred to her famed dance partnership with actor Fred Astaire.

That precedent lets artists use trademarks if they have artistic relevance to a work and would not explicitly mislead consumers into thinking the trademark owner endorsed it.

Jack Daniel’s said that under the 2nd and 9th Circuit decisions, “anyone could use a famous mark to sell sex toys, drinking games or marijuana bongs, while misleading customers and destroying billions of dollars in goodwill – all in the name of just having fun.”

President Joe Biden’s administration supports Jack Daniel’s appeal, saying in a brief the 9th Circuit should have applied the normal standard for trademark infringement – whether a product creates a likelihood of confusion – with parody among several factors to consider.

Prominent brand owners including Nike, Campbell Soup, Patagonia and Levi Strauss told the Supreme Court that the 9th Circuit wrongly applied the Rogers test to consumer products and that a ruling for VIP would threaten their ability to protect their brands from bad actors.

VIP Products has said a ruling favoring Jack Daniel’s would make it easier for trademark owners to stifle free speech.

“Every First Amendment case has a spillover effect into other areas,” VIP’s attorney Ben Cooper of the firm Dickinson Wright said in an interview. “So this can’t be seen as being compartmentalized into the world of trademarks.”

“Whenever one person’s speech is limited, it gets everyone else nervous,” Cooper added.

VIP told the justices its toy comments on “iconic alcohol brands’ self-serious bombardment of consumers with advertising and dog owners’ joyful humanization of their pets.”

A group of intellectual property professors told the court the First Amendment was “under attack by brand owners that lack a sense of humor, monopolize discussion about their brands and exaggerate the harm expressive references cause to their trademarks.”

Megan Bannigan, a partner at the firm Debevoise & Plimpton who submitted the brief, said the impact of dumping the Rogers test could “go well beyond parody” and “impact all expression.”

The Brooklyn modern-art collective MSCHF, which has faced trademark lawsuits from Nike and Vans, filed a brief supporting VIP’s argument.

Its attorney, Bill Patterson of the firm Swanson Martin & Bell, said the case is “supremely important to MSCHF as it threatens its ability to challenge and comment on culture outside the safe havens of white-walled galleries.”

MSCHF’s brief included “connect-the-dots” puzzles for the justices and their law clerks to complete and return for the collective to sell, with winking references to their personal histories and famous trademarks. Patterson said the group has not yet received any of them back.

(Reporting by Blake Brittain in Washington; Editing by Will Dunham)

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Trump says he expects to be arrested on Tuesday, calls for protests

by Reuters March 20, 2023
By Reuters

By Luc Cohen and Karen Freifeld

NEW YORK (Reuters) -Former U.S. President Donald Trump on Saturday said he expects to be arrested on Tuesday as New York prosecutors consider charges over a hush money payment to a [censored] star, and called on his supporters to protest.

“Illegal leaks from a corrupt & highly political Manhattan district attorney’s office … indicate that, with no crime being able to be proven … the far & away leading Republican candidate & former president of the United States of America, will be arrested on Tuesday of next week,” Trump wrote on Truth Social.

A spokesman for Trump said the former president had not been notified of any arrest. Trump provided no evidence of leaks from the district attorney’s office and did not discuss the possible charges in his post.

“Protest, take our nation back!” said Trump, whose supporters stormed the U.S. Capitol building on Jan. 6, 2021, to try to overturn his 2020 presidential election defeat.

The probe comes as Trump seeks the Republican nomination for the presidency in 2024.

No U.S. president – while in office or afterward – has faced criminal charges. Trump has said he will continue campaigning even if he is charged with a crime.

A spokesperson for Manhattan District Attorney Alvin Bragg, whose office has been investigating a $130,000 hush payment Trump’s former personal lawyer Michael Cohen made to [censored] actor Stormy Daniels, declined to comment.

Sources have said Bragg’s office has been presenting evidence to a grand jury about the payment, which came in the waning days of Trump’s 2016 campaign in exchange for Daniels’ silence about an affair she said she had with Trump a decade earlier.

Trump has denied the affair happened and called the investigation by Bragg, a Democrat, a witch hunt.

An additional witness is expected to appear before the grand jury on Monday, at the request of Trump’s lawyers, a person familiar with the matter said on Saturday. 

    Trump’s statement that he expected to be arrested on Tuesday is based on news reports that Bragg’s office is going to be meeting with law enforcement to prepare for a possible indictment, said the person, who spoke on the condition of anonymity. 

The Republican speaker of the U.S. House of Representatives, Kevin McCarthy, on Saturday decried the investigation.

“Here we go again — an outrageous abuse of power by a radical DA who lets violent criminals walk as he pursues political vengeance against President Trump,” McCarthy said on Twitter.

‘RECKLESS’

McCarthy’s predecessor as speaker, Democratic Representative Nancy Pelosi, who like McCarthy was present at the Capitol when hundreds of Trump supporters stormed the building, battling with police, denounced Trump’s call.

“The former president’s announcement this morning is reckless: doing so to keep himself in the news and to foment unrest among his supporters,” Pelosi said in a statement. “He cannot hide from his violations of the law, disrespect for our elections and incitements to violence.”

Trump’s former vice president Mike Pence told ABC News Trump’s possible indictment “just feels like a politically charged prosecution here.” Asked about Trump’s call for people to protest if he is indicted, Pence said he thinks protesters will understand “they need to do so peacefully and in a lawful manner.”

Bragg’s office earlier this month invited Trump to testify before the grand jury probing the payment, which legal experts said was a sign that an indictment was close. Trump declined the offer, the person familiar with the matter said. 

Bragg addressed in an email to staff on Saturday reported by Politico and confirmed by Reuters that “we do not tolerate attempts to intimidate our office or threaten the rule of law in New York … We will continue to apply the law evenly and fairly and speak publicly only when appropriate.”

Bragg’s email did not mention Trump by name but cited “ongoing press attention and public comments surrounding an ongoing investigation.

Cohen pleaded guilty in 2018 to federal campaign finance violations tied to his arranging payments to Daniels and another woman in exchange for their silence about affairs they said they’d had with Trump, among other crimes. He has said Trump directed him to make the payments. The U.S. Attorney’s office in Manhattan did not charge Trump with a crime.

The probe is one of several legal woes Trump faces as he seeks the Republican nomination for the presidency.

Trump is also confronting a state-level criminal probe in Georgia over efforts to overturn the 2020 results in that state.

A special counsel named by U.S. Attorney General Merrick Garland is currently investigating Trump’s handling of classified government documents after leaving office, as well as his efforts to overturn the results of the 2020 election, which he lost to President Joe Biden, a Democrat.

Bragg’s office last year won the conviction of the Trump Organization on tax fraud charges. But Bragg declined to charge Trump himself with financial crimes related to his business practices, prompting two prosecutors who worked on the probe to resign.

Trump, who was in Tulsa, Oklahoma on Saturday and attended the NCAA wrestling championships, leads his early rivals for his party’s nomination. He had the support of 43% of Republicans in a February Reuters/Ipsos poll, compared with 31% for his nearest rival, Florida Governor Ron DeSantis, who has not yet announced his candidacy.

Trump in 2018 initially disputed knowing anything about the payment to Daniels. He later acknowledged reimbursing Cohen for the payment, which he called a “simple private transaction.”

Cohen, who served time in prison after pleading guilty, testified before the grand jury this week. Grand jury proceedings are not public. Outside the courthouse in lower Manhattan, he told reporters he did not testify out of a desire for revenge against Trump.

“This is all about accountability,” he said. “He needs to be held accountable for his dirty deeds.” 

Daniels, whose real name is Stephanie Clifford, spoke with prosecutors last week, according to her lawyer.

Trump founded his Truth Social media platform after being banned by Twitter, Facebook and YouTube following the Jan. 6 assault on the Capitol. He has since regained his accounts on those services, though he limited his Saturday statement to Truth.

“His messages on Truth Social are very concerning as he is declaring the entire justice system corrupt,” said Jennifer Stromer-Falley, a senior associate dean at Syracuse University and an expert in social media use during elections.

(Reporting by Luc Cohen and Karen Freifeld in New York, Additional reporting by Gram Slattery and David Shepardson; Editing by Scott Malone, Daniel Wallis, Noeleen Walder, Alistair Bell and Lincoln Feast)

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Looming Trump charges follow criticism of N.Y. prosecutor for not acting sooner

by Reuters March 20, 2023
By Reuters

By Luc Cohen

NEW YORK (Reuters) – A New York City prosecutor who was publicly criticized for declining to charge Donald Trump last year now appears very close to bringing the first criminal indictment against a former president in U.S. history.

Trump on Saturday said that he expects to be arrested this week on charges by Manhattan District Attorney Alvin Bragg, who is investigating whether Trump falsified business records by concealing his reimbursement of his former lawyer and fixer Michael Cohen for a $130,000 payment Cohen made to [censored] star Stormy Daniels, whose real name is Stephanie Clifford.

The payment, made during the waning weeks of Trump’s 2016 campaign for the White House, was intended to secure Daniels’ silence about an affair she said she had with Trump, prosecutors said. A spokesman for Bragg declined to comment on Saturday.

Trump said on his Truth Social platform that he expected to be arrested on Tuesday and called on his supporters to protest.

Trump, who is running for the Republican presidential nomination in 2024, did not say he had been formally notified of forthcoming charges and did not discuss the possible charges in the post.

Thousands of Trump supporters stormed the U.S. Capitol on Jan. 6, 2021, after a fiery speech in which he falsely claimed his election defeat was the result of widespread fraud.

Bragg, a Democrat, took office in January 2022, after his predecessor indicted the former president’s family company and its top financial executive over a 15-year-tax fraud scheme.

A prosecutor leading that probe, Mark Pomerantz, resigned in February 2022 after Bragg declined to charge Trump himself for financial crimes. Pomerantz has publicly criticized Bragg’s decision not to bring charges and published a book about the investigation.

Pomerantz has said concerns about potentially losing the case should be weighed against the possibility of “promoting disrespect for the law” by not bringing charges when warranted.

Bragg has defended his decision.

“I bring hard cases when they are ready,” Bragg said in a Feb. 7 news conference. “Mark Pomerantz’s case simply was not ready. So I said to my team, let’s keep working.”

Trump has called the probe a “witch hunt.”

A grand jury began hearing evidence in the case earlier this year.

Cohen previously testified that Trump directed him to arrange the payment, and Cohen pleaded guilty in December 2018 to campaign finance violations and other charges.

“For the DA’s office to charge former President Trump, a victim of extortion, with a crime because his then lawyer, Michael Cohen, a convicted liar, paid the extortionist would be unprecedented and outrageous selective prosecution,” Trump lawyer Susan Necheles said in a statement on March 10.

Proving Trump intended to commit a crime may be one of Bragg’s biggest challenges, said Jennifer Beidel, a partner at law firm Saul Ewing and former federal prosecutor.

“One would think that the former president would try to argue that people independent of him were making their own choices about what to do, maybe out of motivation to please him, but maybe not with his direction,” Beidel said.

Bragg, the first Black District Attorney in Manhattan, previously served as a federal prosecutor and as a senior official in the New York State Attorney General’s office, where he oversaw a lawsuit that forced the former president’s namesake charitable foundation to dissolve.

Shortly after taking office, his critics complained about a plan to refrain from prosecuting some minor offenses, reduce pretrial detention and limit sentence length. Bragg argued that “over-incarceration” has not improved public safety.

In the biggest trial victory so far in his tenure, his office last December won the conviction of the Trump Organization on tax fraud charges. Allen Weisselberg, the organization’s former chief financial officer, had pleaded guilty and testified against the company at trial.

Several observers have defended Bragg against Pomerantz’s criticism.

“Bragg’s decision not to pull the trigger in February 2022 … actually may have been courageous, not cowardly,” Andrew Weissman, a former federal prosecutor, wrote in a review of Pomerantz’s book in the Washington Post. “He hardly had anything to gain and a lot to lose politically by the decision.”

(Reporting by Luc Cohen in New York; Additional reporting by Karen Freifeld; Editing by Noeleen Walder, Grant McCool and Diane Craft)

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How Credit Suisse has evolved over 167 years

by Reuters March 20, 2023
By Reuters

ZURICH (Reuters) – Following is a timeline outlining the 167-year history of Credit Suisse Group, the Zurich-based bank that is being bought at a knockdown price by Swiss rival UBS after a string of scandals, losses and management upheavals.

1856

Politician and business leader Alfred Escher founds Schweizerische Kreditanstalt (SKA) to finance the expansion of the railroad network and promote Swiss industrialisation.

1870

SKA opens first foreign representative office in New York.

1876

The bank moves into new headquarters on Zurich’s Paradeplatz; its first branch outside Zurich opens in Basel nearly three decades later.

1934

First Boston becomes the first publicly held investment bank in the United States.

1939

SKA creates Swiss American Corporation (New York) to focus on the underwriting and investment business.

1962

SKA takes over White, Weld and Co AG in Zurich from U.S. investment bank White Weld, and renames it Clariden Finanz AG.

1964

SKA gets a licence as a full-service bank in New York.

1977

Chiasso Affair money-laundering scandal leads to a historic loss and spurs the bank’s transition to an international financial group.

1982

SKA becomes the first Swiss bank with a seat on the New York Stock Exchange via its SASI unit; CS Holding is set up as a sister company of SKA to hold stakes in industrial companies.

1988

CS Holding buys a 45% stake in First Boston as part of a rescue deal, and renames it CS First Boston; the two had first linked up a decade earlier to operate in the London bond market.

1989

CS Holding becomes SKA group’s parent company.

1990

The group takes a controlling stake in U.S. investment bank CS First Boston and buys Bank Leu, a Swiss private bank.

1993

The group buys Volksbank, Switzerland’s fourth-largest bank, and a year later buys Neue Aargauer Bank.

1997

A reorganisation turns CS Holding into Credit Suisse Group and drops the SKA name; it also buys insurer Winterthur, a strategic partner.

1999

The group buys the asset management business of Warburg, Pincus & Co, followed by the purchase of Wall Street firm Donaldson, Lufkin & Jenrette (DLJ) a year later.

2002

A reorganisation creates two units: Credit Suisse Financial Services and Credit Suisse First Boston; two years later it splits into three units by adding Winterthur.

2005

Credit Suisse and CSFB merge and stop using the Credit Suisse First Boston brand name.

2006

The group divests Winterthur to French insurer AXA.

2007

The group merges four private banking units and a securities trading company into Clariden Leu.

2007/2008

The bank survives the global financial crisis without needing a state bailout, unlike rival UBS.

2012

The group absorbs Clariden Leu and merges private banking and asset management into one division.

2013

The group buys Morgan Stanley’s wealth management businesses in Europe, the Middle East, and Africa.

2015

The group realigns under CEO Tidjane Thiam into three wealth management units supported by two investment banking divisions.

2020

In February, a scandal over the bank’s covert surveillance operations leads to Thiam’s departure.

In March, U.S. investment fund Archegos implodes, saddling Credit Suisse with a $5.5 billion loss.

The same month it has to freeze $10 billion in supply chain finance funds linked to insolvent British financier Greensill Capital, which it had marketed to clients as low-risk products.

2021

Antonio Horta-Osorio resigns as chairman less than nine months after joining the bank, after breaching COVID-19 quarantine rules. Alex Lehmann replaces him.

JULY 2022

The bank names restructuring expert Ulrich Koerner as CEO to replace Thomas Gottstein and announces another strategic review.

OCTOBER 2022

Announces a sweeping plan to refocus on banking for the wealthy, including a 4 billion Swiss franc ($4 billion) capital raising, a headcount reduction of 9,000 jobs by end-2025, and separating out its investment bank to create CS First Boston.

Saudi National Bank says it will buy shares giving it a stake of as much as 9.9%.

MARCH 2023

Credit Suisse’s 2022 annual report identifies “material weaknesses” in internal controls over financial reporting.

The bank also said customer outflows had stabilised but “had not yet reversed”.

The Swiss bank’s shares drop by as much as 30% after its largest shareholder Saudi National Bank said it could not provide more support because of regulatory constraints.

Credit Suisse secures a $54 billion lifeline from the Swiss central bank to shore up liquidity, the first major global bank to get emergency funding since the 2008 financial crisis.

The Swiss authorities provide assurances that Credit Suisse has met “the capital and liquidity requirements imposed on systemically important banks”.

At least four major banks, including Societe Generale SA and Deutsche Bank AG, restrict new trades involving Credit Suisse or its securities, according to five sources with direct knowledge of the matter.

After a frantic weekend of negotiations, UBS agrees to buy Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock and assume up to 5 billion francs in losses, in a deal engineered by Swiss authorities to avoid more market-shaking turmoil in global banking.

(Reporting by Michael Shields; Editing by Edmund Klamann, Alexander Smith, Frances Kerry and Louise Heavens)

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Explainer: What does the ICC arrest warrant mean for Putin?

by Reuters March 20, 2023
By Reuters

By Anthony Deutsch and Stephanie van den Berg

AMSTERDAM (Reuters) – Vladimir Putin may not see the inside of a cell in The Hague any time soon, but his war crimes arrest warrant could hurt his ability to travel freely and meet other world leaders, who may feel less inclined to speak to a wanted man.

Putin is just the third head of state to be indicted by the International Criminal Court while still in power. Following is a look at what the consequences could be for the Kremlin leader.

WHAT IS THE CASE?

The ICC accuses Putin of responsibility for the war crime of deporting Ukrainian children – at least hundreds, possibly more – to Russia.

The Kremlin was quick to dismiss the allegations and the Russian foreign minister said ICC decisions “have no meaning for our country, including from a legal point of view.”

TRAVEL ABROAD

The ICC’s 123 member states are obliged to detain and transfer Putin if he sets foot on their territory. Russia is not a member and neither are China, the United States or India, which is hosting a summit later this year of leaders of the G20 group of big economies, which includes Russia.

The world’s permanent war crimes court was created by the Rome Statute, a treaty ratified by all the EU states, as well as Australia, Brazil, Britain, Canada, Japan, Mexico, Switzerland, 33 African countries and 19 nations in the South Pacific.

Russia signed the Rome Statute in 2000, but withdrew its backing in 2016, after the ICC classified Moscow’s annexation of Ukraine’s Crimea Peninsula as an armed conflict.

“Putin is not stupid. He’s not going to travel abroad to a country where he might be arrested,” said assistant professor of history at the Utrecht University Iva Vukusic.

“He is not going to be able to travel pretty much anywhere else beyond the countries that are either clearly allies or at least somewhat aligned (with) Russia,” Vukusic said.

ICC’S PAST EXPERIENCE

Sudan’s former president Omar al-Bashir and Libya’s Muammar Gaddafi are the only other leaders to have been indicted by the ICC while serving as head of state. Charges against Gaddafi were terminated after he was overthrown and killed in 2011.

Bashir, indicted in 2009 for genocide in Darfur, remained in office for another decade until being toppled in a coup. He has since been prosecuted in Sudan for other crimes but has not been handed to the ICC.

While in office, he travelled to a number of Arab and African countries, including ICC member states Chad, Djibouti, Jordan, Kenya, Malawi, South Africa, and Uganda, which declined to detain him. The court rebuked those countries or referred them to the U.N. Security Council for non-compliance.

The ICC has tried one former head of state after he left office: former Ivorian President Laurent Gbagbo, who was acquitted of all charges in 2019 after a three-year trial.

Kenya’s President William Ruto and his predecessor Uhuru Kenyatta were both charged by the ICC before they were elected. The charges against both men have since been dropped. Kenyatta is the only leader to have appeared before the ICC while still serving in office.

OTHER COURTS

Apart from the ICC, several former leaders have been tried by other international courts. Among notable cases:

Slobodan Milosevic, former president of Serbia and Yugoslavia, became the first former head of state to appear before an international tribunal since World War Two when he was tried at a U.N. court for alleged crimes during the 1990s Balkan wars. He died in custody in 2006 before a verdict was reached.

Liberian former leader Charles Taylor was found guilty of war crimes in 2012 by the U.N.-backed Special Court for Sierra Leone in The Hague, the first former head of state to be convicted of war crimes by an international court since the Nuremberg trials of Nazi leaders after World War Two.

Former Kosovo President Hashim Thaci, one of Milosevic’s adversaries in the 1990s Balkan wars, left office after being indicted for war crimes by the Kosovo war crimes tribunal in The Hague. He is due to go on trial next month.

(Reporting by Anthony Deutsch, Stephanie van den Berg and Toby Sterling; Editing by Peter Graff)

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Sight deposits rise, indicating Credit Suisse took central bank liquidity

by Reuters March 20, 2023
By Reuters

ZURICH (Reuters) – Credit Suisse took a hefty chunk of liquidity from the Swiss National Bank last week, sight deposit data published by the central bank indicated on Monday.

Total deposits held by banks overnight rose to 515.1 billion Swiss francs ($554.35 billion) from 510.8 billion francs last week, the data said.

The figure was an average of the level of the last 7 days to the end of Thursday so would not include the full extent of liquidity taken by Credit Suisse.

Most of the increase is likely to be due to the massive injection of liquidity into Credit Suisse the SNB offered the embattled lender last week.

All Swiss banks hold sight deposit accounts with the SNB, althought the central bank does not break down the total holdings by institution.

The Swiss National Bank did immediately repond to requests for comment.

Credit Suisse said on Thursday it intended to borrow up to 50 billion Swiss francs from the Swiss National Bank in what it called “decisive action” to boost its liquidity.

UBS agreed to buy Credit Suisse on Sunday for 3 billion francs, in a deal that includes 100 billion Swiss francs ($108 billion) in liquidity assistance from the SNB.

($1 = 0.9292 Swiss francs)

(Reporting by John Revill; editing by John O’Donnell)

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US asks Supreme Court to uphold domestic violence gun law

by Reuters March 20, 2023
By Reuters

By Gram Slattery and Nate Raymond

WASHINGTON (Reuters) – The U.S. Justice Department has asked the Supreme Court to allow a federal law stand that makes it a crime for people under domestic violence restraining orders to own firearms.

In February, a three judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans declared that the ban was unconstitutional, saying it violated the Second Amendment to the U.S. Constitution, which protects the right to bear arms. It was the latest victory for gun rights advocates since a Supreme Court ruling last June granting a broad right for people to carry firearms outside the home.

The Supreme Court ruling announced a new test for assessing firearms laws, saying restrictions must be “consistent with this nation’s historical tradition of firearm regulation,” and not simply advance an important government interest.

The Justice Department’s petition to appeal the matter to the Supreme Court was posted on Twitter late on Friday by Jake Charles, a law professor at Pepperdine University with expertise on gun control issues. It can take several days for a petition to be posted to the public docket.

“More than a million acts of domestic violence occur in the United States every year, and the presence of a firearm increases the chance that violence will escalate to homicide,” the petition reads.

The Justice Department said it was pursuing the Supreme Court appeal on a “highly expedited schedule” so the justices could potentially take up the case before the current term ends.

In its decision, the 5th Circuit panel, which was comprised of three Republican-appointed judges, threw out the guilty plea and six-year prison sentence for Zackey Rahimi, who admitted to possessing guns found in his Kennedale, Texas, home after prosecutors said he participated in five shootings in Dec. 2020 and Jan. 2021.

Rahimi had been under a restraining order since Feb. 2020, following his alleged assault of a former girlfriend.

Neither the Justice Department, nor the federal public defender representing Rahimi immediately responded to requests for comment.

(Reporting by Gram Slattery and Nate Raymond; editing by Diane Craft)

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Goldman Sachs prepares claims trading for wiped-out Credit Suisse debt – Bloomberg News

by Reuters March 20, 2023
By Reuters

(Reuters) -Goldman Sachs Group Inc traders were preparing to take bids on claims against Credit Suisse Group’s riskiest bonds, Bloomberg News reported on Sunday, citing people familiar with the matter.

Clients were told in a message late Sunday that the New York-based bank would soon start trading claims in the so-called additional tier 1 bonds, or AT1s, according to the report.

The Swiss lender’s additional tier 1 shares with a nominal value of around 16 billion Swiss francs ($17.24 billion) will be written down completely after the Swiss government provided support for UBS’ takeover of Credit Suisse.

Goldman Sachs declined to comment.

(Reporting by Shubhendu Deshmukh in Bengaluru; Editing by Rashmi Aich)

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Investors punish UBS after Credit Suisse rescue, shares plummet

by Reuters March 20, 2023
By Reuters

By John Revill Amanda Cooper

LONDON/ZURICH (Reuters) -Shares in UBS plunged on Monday, heading for their biggest one-day fall since 2008 after its weekend rescue of ailing rival Credit Suisse ignited concerns among investors about the long-term benefits of the deal.

UBS, with a hefty backstop from Swiss authorities, agreed to buy Credit Suisse on Sunday for just a fraction of its market value in a package orchestrated by Swiss regulators.

The bank will pay 3 billion Swiss francs ($3.23 billion) for Credit Suisse and assume up to $5.4 billion in losses.

Shares in UBS fell by as much as 16% in early trading, the most since September 2008. They were last down 15% at 14.47 francs. Since the start of March alone, they’ve lost almost 30% in value, set for their largest monthly loss since September 1998.

Johann Scholtz, analyst at Morningstar, said the acquisition should ultimately benefit UBS.

“A week can be a very long time in financial markets. UBS acquiring Credit Suisse for 3 billion francs a week ago would have seemed like a terrific deal. Now the position is less clear,” he said.

“Credit Suisse likely experienced significant net outflows of client assets last week, eroding its revenue base. We, however, believe that UBS can extract value from the acquisition. It is in a much better position to execute a radical restructuring of Credit Suisse’s business than Credit Suisse was,” Scholtz added.

Credit Suisse shares slid by more than 60% to around 0.69 Swiss francs ($0.7417), while the value of its additional tier 1 (AT1) bonds – a type of bond issued by banks that make up the capital buffers regulators require them to hold – dropped as low as 1 cent on the dollar.

The Swiss regulator demanded Credit Suisse write down 16 billion Swiss francs worth of the debt to zero as part of the merger deal, angering bondholders.

A $1 billion AT1 bond with a coupon of 4.5% was bid as low as 1 cent on the dollar, Tradeweb pricing showed.

“The next few hours of trading will give us a better picture on whether the crisis is contained,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said.

“In theory, there is no reason for the Credit Suisse crisis to extend, as what triggered the last quake for Credit Suisse was a confidence crisis – which doesn’t concern UBS – a bank outside of the turmoil, with, in addition, ample liquidity and guarantee from the SNB (Swiss National Bank) and the government.”

At Friday’s close, Credit Suisse had a total market value of $8 billion. Just six months ago, it was worth $13 billion.

JPMorgan said that although UBS stood to gain in the longer-term from the deal, the writedown of the AT1 bonds would impact other European banks.

“We believe this AT1 write-down by a systemically important bank will have negative implications for the wider European Banks’ AT1 market as well as overall funding profile and Cost of Equity for the Banks,” JPMorgan strategists Kian Abouhossein and Amit Ranjan said in a note on Monday.

An index of European banking shares tanked on Monday, losing more than 4% as shares in the likes of Deutsche Bank, Commerzbank, Societe Generale and BNP Paribas dropped between 5.5-7.5%.

($1 = 0.9303 Swiss francs)

(Reporting by Amanda Cooper, Karin Strohecker, Yoruk Baceli and Simon Jessop in London, John Revill in Zurich and Gdansk newsroom; Editing by Kirsten Donovan)

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Wyoming governor signs law outlawing use of abortion pills

by Reuters March 20, 2023
By Reuters

By Dan Whitcomb and Steve Gorman

(Reuters) -Wyoming Governor Mark Gordon on Friday signed into law a bill outlawing the use or prescription of medication abortion pills that was passed by the state’s Republican-controlled legislature earlier this month. 

Gordon, a Republican, signed the law as a federal judge in Texas considers ordering a nationwide ban on the abortion pill mifepristone in response to a lawsuit by anti-abortion groups.

The crux of the two-page Wyoming bill is a provision making it illegal to “prescribe, dispense, distribute, sell or use any drug for the purpose of procuring or performing an abortion.”

So-called “morning-after” pills, prescription contraceptive medication used after sex but before a pregnancy can be confirmed, are exempted from the ban.

The measure also includes an exemption for any treatment necessary to protect a woman “from an imminent peril that substantially endangers her life or health,” as well as any treatment of a “natural miscarriage according to currently accepted medical guidelines.”

Violation of the ban is to be treated as a criminal misdemeanor, punishable by up to six months in jail and a fine of up to $9,000.

The measure stipulates that a woman “upon whom a chemical abortion is performed or attempted shall not be criminally prosecuted.”

The governor said he was also allowing enactment, without his signature, of a separate bill passed by state lawmakers to prohibit conventional abortion procedures except when necessary to protect the health and life of the mother, or in case of rape or incest.

Exception is also permitted to end a pregnancy if doctors determine there to be a lethal abnormality of the fetus.

Legal fights over abortion rights have ramped up in the United States following a Supreme Court ruling last year that overturned the landmark 1973 Roe v. Wade decision legalizing the procedure.

Gordon acknowledged that abortion rights proponents who have already challenged Wyoming’s “trigger” abortion ban that went into effect after the Roe v. Wade decision have filed suit to block the newly passed Wyoming ban preemptively.

The governor expressed concern that enactment of the new abortion ban could muddy the legal waters, creating a new obstacle to swift resolution of the matter by the courts.

(Reporting by Dan Whitcomb; additional reporting by Steve Gorman; Editing by Eric Beech)

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US states cannot block hazardous waste from Ohio derailment -EPA

by Reuters March 20, 2023
By Reuters

By David Shepardson

WASHINGTON (Reuters) -U.S. states cannot block shipments of hazardous waste from a Feb. 3 Ohio train derailment to licensed disposal sites, the head of the Environmental Protection Agency (EPA) said Friday.

EPA Administrator Michael Regan’s warning came after Oklahoma Governor Kevin Stitt said earlier this week he had blocked a shipment of hazardous waste from the derailment to a facility in his state.

The derailment of the Norfolk Southern operated train in East Palestine, Ohio, has shone a spotlight on railroad safety as residents worry about the health impacts of living near the toxic material.

Regan told reporters he sent letters to all states warning “any attempts to impede interstate shipments of hazardous waste threatens the integrity of the system.” He said the Oklahoma site has a permit to receive the waste.

The EPA said there are typically 97,000 shipments of hazardous waste in the U.S. per month and two-thirds may cross state lines.

Regan said he would hold Norfolk Southern accountable and demanded it enforce its contracts to dispose of contaminated materials from the site.

“EPA will take all actions to ensure the safe hazardous waste handing continues across this country,” he told reporters. “We expect Norfolk Southern to execute and implements its contracts and hold contractees accountable for receipt of this waste.”

Ohio Governor Mike DeWine praised the EPA statement for making clear states must accept shipments.

Both Regan and DeWine said there was nothing unusual about the material from the East Palestine derailment.

“It’s kind of crazy because what we’re sending from here is no worse than stuff they are taking every other day,” DeWine told reporters. “In fact, they are taking a lot worst stuff than we’re sending them.”

Regan said to date the railroad has excavated nearly half of contaminated soil from the tracks and transported 6.8 million gallons of liquid waste and 5,400 tons of solid waste. Regan estimated it would take another three months to complete the site cleanup.

“EPA ordered Norfolk Southern to clean up the mess it made — and no one should impede or prevent this cleanup as we return East Palestine to the beautiful community residents know it to be,” he said.

Norfolk Southern CEO Alan Shaw has said the railroad is fully committed to cleaning the site and will testify next week before the Senate Commerce Committee, his second appearance this month before senators.

Norfolk Southern said in a statement it shares “the EPA’s urgency to complete the remediation safely and thoroughly…. We will keep working until the job is done.”

On Tuesday, the state of Ohio sued Norfolk Southern over the derailment that released over a million gallons of hazardous materials and pollutants.

(Reporting by David ShepardsonEditing by Marguerita Choy, Josie Kao and Lincoln Feast.)

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Taiwan Feb export orders miss forecast, China a big drag

by Reuters March 20, 2023
By Reuters

TAIPEI (Reuters) – Taiwan’s export orders in February shrank for a sixth straight month, though at a slower pace, dragged down by China and as global demand continued to be squeezed by inflation and interest rate hikes.

The island’s export orders, a bellwether for global technology demand, fell 18.3% from a year earlier to $42.12 billion, the Ministry of Economic Affairs said on Monday.

February’s number was worse than analysts’ expectations for a 15.0% decline, and compared with January’s 19.3% slump.

“Export orders in February missed expectations mainly because demand for consumer electronics was far less than expected … mainly because electronics and telecom products did not meet expectations,” the ministry said.

Orders for telecoms products dropped 20.3% and electronic products fell 21.9% from a year earlier, it said.

Global economic growth momentum could be constrained in the coming months as inflation and interest rate pressures persist, as well as no signs of let-up in the Russia-Ukraine war, the ministry said.

However, that would be offset by demand for emerging technologies such as high-performance computing, artificial intelligence, cloud data centres and automotive electronics, it added.

Taiwan’s export-driven economy has been hit by slowing demand from China and the United States, its two biggest markets.

Taiwan’s February orders from China were 35.5% lower than a year earlier, versus a 45.9% drop in January.

Most economists now expect Taiwan’s central bank to keep the benchmark interest rate unchanged at its quarterly rate-setting meeting on Thursday.

The ministry added that it expected export orders this month to fall by 20.2% to 23.4% from a year earlier.

Taiwanese firms, such as Taiwan Semiconductor Manufacturing Co Ltd, are major suppliers to Apple Inc, Qualcomm Inc and other global tech companies.

Taiwan’s orders from the United States in February fell 12.6% from a year earlier, versus a 14.7% drop in January.

Export orders from Europe were down 13.1%, versus January’s gain of 18.3%. However, orders from Japan rose 5.5% year-on-year.

(Reporting by Faith Hung and Jeanny Kao; Editing by Ben Blanchard and Jacqueline Wong)

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Sam Bankman-Fried, U.S. prosecutors near new bail agreement

by Reuters March 20, 2023
By Reuters

By Jonathan Stempel

NEW YORK (Reuters) – Lawyers for Sam Bankman-Fried are nearing an agreement with U.S. prosecutors on revised bail conditions for the indicted FTX cryptocurrency exchange founder, who is trying to convince a skeptical judge he should remain free.

In a letter filed on Friday night in Manhattan federal court, Bankman-Fried’s lawyer Christian Everdell said both sides believed they were “close to a resolution”, and expect to formally propose new restrictions by next week.

Bankman-Fried, 31, faces a trial set for Oct. 2 on charges of stealing billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund, and making large illegal political donations to buy influence in Washington, D.C.

Bail talks occurred this week after U.S. District Judge Lewis Kaplan at a March 10 hearing renewed his concerns that Bankman-Fried’s electronic communications with others might exceed the bounds of his $250 million bail package.

Kaplan’s approval is needed to modify Bankman-Fried’s bail.

The former billionaire has pleaded not guilty to eight counts, and not yet been arraigned on four. He is living under house arrest with his parents in Palo Alto, California.

Prosecutors raised the specter of witness tampering in January after Bankman-Fried tried to contact John Ray, who became FTX’s chief executive when the company filed for bankruptcy in November, and an in-house lawyer.

Bankman-Fried’s lawyers have said their client was trying to help, not interfere.

At the March 10 hearing, prosecutors and defense lawyers proposed giving Bankman-Fried a flip phone with no internet capability and a basic laptop with limited functions.

That was too generous for Kaplan, who said Bankman-Fried was “inventive” and could conceivably “find a way around” the restrictions without being caught.

In Friday’s letter, Everdell also sought the judge’s permission to let Bankman-Fried in the meantime use a laptop to access some FTX materials.

Though the laptop would lack monitoring software or restrict Bankman-Fried’s internet access, a lawyer or paralegal would oversee his use and take the laptop away when Bankman-Fried finished with it, Everdell said.

The case is U.S. v. Bankman-Fried, U.S. District Court, Southern District of New York, No. 22-cr-00673.

(Reporting by Jonathan Stempel in New York; Editing by Sonali Paul)

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