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Inside opening statements at Sam Bankman-Fried’s criminal trial

The criminal trial of Sam Bankman-Fried, former cryptocurrency magnate, completed its second day on Wednesday. The prosecution and defense both gave opening statements and interviewed the first two witnesses, including a customer of FTX and Bankman-Fried’s former friend and ex-Alameda and FTX employee Adam Yedidia.

The prosecution painted Bankman-Fried as someone who knowingly committed fraud to achieve great wealth, power and influence. The defense countered that Bankman-Fried acted in good faith, never meant to commit fraud or steal, and basically got in over his head.

The prosecution: Bankman-Fried’s empire was ‘built on lies’

In his opening argument, just half past noon, prosecutor Thane Rhen began by painting a picture. “One year ago, Bankman-Fired was on top of the world.”

He arguably was.

Bankman-Fried was worth billions of dollars, living in a $35 million penthouse with friends and co-workers; he had two massive businesses, a crypto exchange, FTX and crypto hedge fund, Alameda Research (both of which have since gone bankrupt).

“He had wealth, he had power, he had influence,” Rhen said. “But all of it was built on lies.”

Rhen alleged that Bankman-Fried “took money he didn’t have” to build an empire. Rhen repeated several times, and loudly, that Bankman-Fried stole “billions of dollars” from FTX customers so he could spend the money on “lavish houses for himself, his parents, and his friends,” gain influence in Washington and meet celebrities.

UK producer insists it is sticking to net zero goals even as it ramps up output in its most lucrative business

At Shell’s first capital markets day under new chief executive Wael Sawan this summer, the UK energy group drew the ire of environmentalists for its plans to hold oil output steady rather than allowing it to decline.

But the meeting also underlined the company’s greater dependence on another carbon-emitting fuel, liquefied natural gas, with executives telling investors that boosting output from LNG assets was a “top priority” and outlining plans to invest $4bn a year in LNG projects until 2025.

Gas has become Shell’s biggest money-spinner. Its integrated gas division, which is dominated by LNG activities, was the largest contributor to group profits in four of the past five years and accounted for just over half the company’s $14.7bn in earnings in the first half of 2023.

The question is whether the fuel remains the right focus for a company that Sawan insists is sticking to a strategy launched by his predecessor Ben van Beurden to achieve net zero emissions by 2050 through a ramp-up in clean energy investment.

“They are moving further and further away from me being comfortable that they have a genuinely compelling view for what this business should look like in 25 years’ time,” said one top 20 shareholder.

Increasing LNG volumes was a “pragmatic” strategy for the current environment, the shareholder said, noting that demand for natural gas in a decarbonising world was likely to outlast demand for other fossil fuels, particularly as Europe weans itself off Russian gas and Asia seeks alternatives to coal.

But in the longer term, prioritising LNG over clean energy could be a risk, the shareholder added. “We would like Shell to be doing a lot more around developing and articulating and then committing to a genuinely compelling energy transition strategy.”

Other shareholders, particularly those based in the US, are more positive about Shell’s commitment to its most lucrative business, according to Oswald Clint, an analyst at Bernstein.

“Investors can see that the demand is there, it is most likely multi-decade, and if you’re the biggest player in the market, you own the space, why not add to it,” he said.

Shell’s focus on LNG dates back to the very start of the industry. The company shipped the first ever commercial cargo of the fuel from Algeria to the UK in 1964 and later that decade was instrumental in developing the Asian LNG market as a partner in Brunei LNG.

Before then gas was largely considered an unwanted byproduct of oil production and was usually flared on site. Shell’s especially large portfolio of oil-producing assets gave it a particular “problem” of what to do with associated gas, according to one former senior executive in Shell’s gas business.

The solution was to liquefy the gas by cooling it to -162C, which shrinks it to one six-hundredth of its original volume and renders it economic to ship the fuel around the globe.

The trade has grown from 100mn tonnes per year in 2000 to almost 400mn tonnes in 2022, making the market worth $450bn.

Last year Shell moved 66mn tonnes of LNG — 16.5 per cent of the global total and second only to state-owned QatarEnergy.

“It is the only upstream business where Shell has a very clear lead over the rest of the industry,” the former senior executive said.

Its LNG sales represent about 23 per cent of cash flow from operations, according to Citibank — more than for any other western energy major. At the investor day in June, it said it would increase those volumes by 20-30 per cent by 2030.

“Fundamentally, Sawan believes that LNG produces better returns than renewables,” said one former Shell executive who worked with Sawan for more than two decades.

The new CEO, who rose to prominence at the company through his work on gas projects in Qatar, grew up “through the gas business”, the former executive added. “He is a big believer in the business and also a big believer in the trading model.”

Shell’s LNG dominance is partly a result of its $54bn acquisition in 2016 of gas specialist BG Group, a significant producer and trader of LNG that bought the fuel from a wide range of suppliers across the world for resale. In 2015, before the BG deal completed, Shell sold 44mn tonnes of the fuel.

The acquisition, following the purchase two years earlier of a smaller LNG business from Spain’s Repsol, also gave Shell the revenue stream it needed to give up parts of its oil portfolio. The divestments included its Canadian oil sands business and its exploration activities in the Arctic — both of which had attracted intense criticism from environmental campaigners.

Shortly before stepping down, Van Beurden told the Financial Times last year that the acquisitions allowed him to do the oil sands deal, which he said would otherwise have been “too good of a cash engine to give up on”.

“We could forget about betting on the Arctic because we had a whole new LNG business to work with,” he said.

Today, the UK group has stakes in LNG projects from Australia and Nigeria to Trinidad and Tobago, and also trades millions of tonnes a year from other producers. Last year it produced 30mn tonnes and traded a further 36mn tonnes from other producers.

Shell argues that LNG has a key role to play in the energy transition. When burnt, the gas produces half the carbon dioxide of coal for the same amount of energy. On the same basis, it generates 30 per cent less carbon dioxide than oil.

Still, the fuel emits carbon, meaning Shell is likely to have to soften its existing emission reduction targets to reflect the increased investment in LNG when it updates its energy transition strategy in March, the top 20 shareholder said.

“I don’t think it’s really possible for them to hit the current targets and to do all the things that they’ve said they’re going to do in terms of the way they’re going to spend their capex budget,” the shareholder said.

Asked whether Shell could keep boosting LNG volumes and still meet its net zero targets, the company said the world would need “more LNG to enable a balanced energy transition” but that work needed to be done to lower the emissions associated with the fuel, citing as an example a green, synthetic version of the gas that is under development.

“Until that happens, accurately measuring and reporting emissions across the LNG value chain and using quality carbon credits to compensate for them is an important step towards addressing emissions,” said Steve Hill, executive vice-president of Shell Energy.

Michael Coffin, a former BP geologist who is now the head of oil, gas and mining at the think-tank Carbon Tracker, believes Shell should be moving away from fossil fuels altogether.

“Global society needs to accelerate the investment in renewable power to displace coal directly, rather than developing assets that increase society’s lock-in to fossil fuels,” he said.

However, rather than abandoning LNG more companies are trying to follow Shell’s lead.

“There are people nibbling at their heels,” said Bernstein’s Clint, noting that Equinor, ExxonMobil and Chevron were signing new LNG offtake agreements with producers.

Frank Harris, head of global LNG consulting at Wood Mackenzie, stressed that the size and diversity of Shell’s portfolio meant it retained a powerful position in the market. The company is able to offer customers fuel from multiple sources — either from contracts with other producers or from its own facilities.

“For some of the buyers, whether you’re European or Asian, doing a deal with somebody like Shell is pretty appealing,” Harris said. “When it’s running a portfolio of this size, pretty much within reason it can give you what you want.”

Nearly 7% of the population is projected to be on weight-loss drugs in 2035

You just started taking Ozempic. Will you still crave that bag of potato chips?

Big food companies and investors are watching as Ozempic and other similar weight-loss drugs flow to millions of people, upending America’s diet industry and raising new questions about how consumers will eat.

Executives at food manufacturers from Campbell Soup CPB 1.06%increase; green up pointing triangle to Conagra Brands CAG 0.00%increase; green up pointing triangle said they are fielding questions from investors about the drugs’ potential impact, as internal teams start to assess consumer behavior and brainstorm ways to respond.

The drugs, which suppress patients’ appetites, have exploded in popularity in the U.S., straining manufacturing capacity. Morgan Stanley has projected that 24 million people, or nearly 7% of the U.S. population, will be taking such medications in 2035.

Those people could cut their daily calorie consumption by as much as 30%, according to the firm, which surveyed over 300 patients. For a person on a 2,000-calorie diet, that could mean eliminating a one-ounce bag of salted potato chips, a bottle of soda and more each day.

Carolyn MacBain-Waldo said she is eating significantly less since she started taking Eli Lilly’s Mounjaro—her family orders from restaurants less often and their grocery bills have dropped by as much as 20%. The 50-year-old, who works as a senior director in retail, said the drug makes her feel full more quickly and that she is far less likely to overeat when stressed.

“I still have a fully stocked kitchen, there’s chips and pretzels in there,” MacBain-Waldo said. “I don’t find it tempting.”

Mark Clouse, chief executive of Campbell, which along with its namesake soups makes Goldfish crackers and Cape Cod potato chips, said he has been struck by the rapid rise of pharmaceutical companies behind the drugs.

“That’s a little bit of an ‘OK, wait a minute, something is going on here,’” Clouse said. Still, he said, he doesn’t buy the idea that the drugs will cut into food sales across the board.

Wall Street has been trying to project the drugs’ impact on sales for food and beverage makers, restaurants and grocery stores. Among food companies, snack and candy manufacturers such as Hershey HSY 0.88%increase; green up pointing triangle, Mondelez, Hostess TWNK 0.03%increase; green up pointing triangleand Campbell might be the most exposed, as patients cut back most on foods that are high in sugar and fat such as cookies and salty snacks, Morgan Stanley said. A Bernstein report said goods such as candy, where about one-third of sales are to people who consume the products at least once a day, could be most at risk.

Karyn Carlton, 47, who takes Mounjaro, said she doesn’t think about food all the time anymore and eats far fewer snacks.

“The other day I had a single jelly bean, which is unheard of for me,” she said, adding that she also recently ordered a kids’ meal from a fast-food restaurant and felt satiated.

The women said their doctors didn’t recommend specific diets while taking the drug.

The rise of Ozempic and other weight-loss drugs comes as sales growth is slowing for big food companies as consumers begin to balk at higher prices. Sales roared for food companies as consumers stocked pantries with major brands during the Covid-19 pandemic, and paid more for groceries when inflation took hold.

Now, concerns about companies’ growth prospects in the age of Ozempic are adding to worries over declining sales volumes, increasing pressure on food companies’ stock prices. The S&P 500 Packaged Food & Meat subindex has dropped 14% so far this year, while the S&P 500 has climbed 11%.

Nicholas Fereday, executive director of food and consumer trends for agricultural lender Rabobank, said the drugs pose a new threat to the packaged-food industry’s growth.

“If two-thirds of Americans are the target audience, it’s a huge thing,” Fereday said, referring to the portion of the U.S. population that is considered overweight.

Some Wall Street analysts and food-industry consultants said they don’t view Ozempic, made by Novo Nordisk, and other weight-loss drugs as a big risk for now. The drugs remain expensive and inaccessible to many Americans, they said, and widespread or long-term adoption isn’t guaranteed, with some people experiencing unpleasant side effects such as nausea and diarrhea. It is also still unclear which foods patients may opt to eat while taking the drugs, they said.

Many food executives said the drugs have gotten their attention, but that after navigating previous trends, from low-fat to low-carb diets, they aren’t panicking.

Conagra CEO Sean Connolly said that any significant drop in calorie consumption due to the drugs is a long way off. If they do gain traction, Connolly said, food companies could respond with new products, including smaller packaging sizes.

“Snacking tends to be one of the most profitable businesses in food,” Connolly said, and among the fastest-growing. “It’s not necessarily bad news.”

Bob Nolan, Conagra’s senior vice president of demand science, said his team began studying Ozempic and other drugs last fall. He said consumers aren’t discussing them on social media as much as other weight-loss programs such as the keto diet, though that could change once the drugs become available in pill form instead of as injections.

If patients are consuming fewer calories, Nolan said, they will turn to higher quality food, such as Conagra’s Healthy Choice and Marie Callender’s frozen meals, and Birds Eye frozen vegetables. “We have lots of products that will fit this already, but we’ll design new ones if we don’t,” he said.

Mondelez said it is expanding its “portion control” snacks, which are 200 calories or less and individually wrapped. The company also offers products such as gluten-free Oreos and Hu paleo-friendly chocolate bars for specific dietary needs. Campbell’s Clouse said it is too early to determine whether overall food consumption will decline as a result of the drugs, and that previous changes to American diets have created both challenges and opportunities.

Morgan Stanley’s survey found that patients taking weight-loss drugs ate more fruits, vegetables, poultry and fish, as well as weight-management products such as protein bars and nutritional shakes. The bank said packaged-food companies could adapt by changing their offerings.

MacBain-Waldo said she craves foods such as french fries less since starting Mounjaro, and eats more salads and protein. “I want to make sure I’m putting the right things in,” she said.

Mark Smucker, chief executive of Smucker, which recently agreed to pay $4.6 billion to acquire Twinkies maker Hostess, said the company is monitoring research on weight-loss drugs. “At this point, I still just feel very bullish that that sweet sort of instant reward that some folks are seeking is never really going to go away,” he said.

Responding to analysts’ questions in June, executives at Simply Good Foods Co., the maker of Atkins-branded food products, said the drugs are driving renewed interest in weight management and bringing consumers into pharmacies where its products are also sold. They said the company plans to market Atkins products to people who are on the drugs and are seeking more nutritious calories, as well as to patients coming off them, who are trying to keep weight off.

Geoff Tanner, who took over as Simply Good’s CEO in July, said the company had already begun work to find patients and market products directly to them.

“We think this is a wave and we’re going to catch it,” he said.

- The tsunami is expected to reach shore near the Izu Peninsula over the next hour or so.