WSJ : SEC Proposes New Disclosure Requirements for SPACs

SEC Proposes New Disclosure Requirements for SPACs
Blank-check firms accounted for majority of IPOs in 2021

WASHINGTON—Federal regulators proposed a bevy of new requirements for special-purpose acquisition companies, or SPACs, and their takeover targets amid widespread concern that the vehicles skirt important investor protections.

The Securities and Exchange Commission advanced a set of rules Wednesday that, if implemented, would make it harder for SPACs to raise money from investors and execute mergers. Its goal is to force the vehicles to meet similar regulatory standards as initial public offerings, though critics accused the agency of aiming to end their use altogether.

Also known as blank-check companies, SPACs became wildly popular on Wall Street in 2020 and 2021, when they accounted for the majority of U.S. initial public offerings. Like cryptocurrencies and meme stocks, critics saw them a symbol of the excesses that bubbled up in financial markets as governments and central banks pumped trillions of dollars of stimulus money into the economy to battle the Covid-19 pandemic.

SPACs function as pools of cash listed on a stock exchange that can be used by a sponsor to buy a private company. If acquired by a SPAC, the private company effectively gets access to everyday investors without providing the timely disclosures that a traditional IPO would involve. Existing rules also enable target companies to make lofty forecasts about their business prospects, something they wouldn’t be able to do in an IPO.

Wednesday’s proposal is part of SEC Chairman Gary Gensler’s wider push to rein in Wall Street through tougher regulation. He has recently backed rules that would place more regulatory scrutiny on privately held companies and increase public companies’ disclosures related to climate change.

The enthusiasm around SPACs has cooled so far this year amid regulatory scrutiny, tumbling share prices and missed projections. Dozens of companies that went public by employing that method—from a designer of all-electric school buses to a startup developing indoor farms in Appalachia—have missed their forecasts, often by substantial margins just months after they made them.

“They have on average been pretty costly and not performed up to the marketing,” Mr. Gensler, who was appointed by President Biden, told reporters Wednesday. “There’s an awful lot of fees in here for the sponsors. There’s an awful lot of fees for bankers and lawyers as well.”

He said the proposal would reduce the information advantages that SPAC insiders have over ordinary investors, as well as conflicts of interest, by demanding more disclosure and tightening rules governing marketing practices and underwriters.

The SEC’s three Democrats voted to open the proposal to public comments for at least 60 days, after which the agency could begin working to complete a rule.

Republican commissioner Hester Peirce voted against it, saying the proposal “seems designed to stop SPACs in their tracks” rather than imposing sensible disclosures that she would have supported. Ms. Peirce said regulators should instead try to make the traditional IPO process less cumbersome, something Republicans and some companies have long called for.

“The typical SPAC would not meet the proposal’s parameters without significant changes to its operations, economics and timeline,” Ms. Peirce said.

Under the proposal the SEC is considering, blank-check companies would have to disclose information about their sponsors’ compensation as well as the dilution that shareholders might suffer if an acquisition is completed. Current rules often allow SPAC insiders to multiply their initial investment even if the companies they take over struggle and ordinary shareholders lose money.

Companies acquired by SPACs, as well as their officers and directors, would become liable for misrepresentations or omissions in the merger documents that SPACs file with the SEC. That is because the proposal would make target companies “co-registrants” with the blank-check companies.

SPACs and their buyout targets would be required to disseminate the required information disclosures to investors at least 20 days before any vote by shareholders on whether to approve an acquisition.

The proposal would also tighten rules around the forward-looking projections that SPACs are currently allowed to tout without running afoul of the SEC, to address concern that the entities often woo investors with unrealistic growth forecasts.

“The idea is that parties to the transaction shouldn’t use overly optimistic language or over-promise future results in an effort to sell investors on the deal,” Mr. Gensler said.

While advocates of tougher Wall Street oversight are likely to welcome the SEC’s proposal, it may be coming too late to help the investors who already suffered losses after the peak of the SPAC frenzy.

SPACs have been around for decades—their predecessors were known as “blind pools” and associated with penny-stock fraud in the 1980s. Last year, those blank-check companies raised more than $160 billion, topping the total from all previous years combined, according to SPAC Research. Investor enthusiasm for fast-growing startups and their rosy projections in areas such as electric vehicles attracted piles of capital.

Many companies then hit business snags or technological delays, sending share prices tumbling. The SEC has investigated several SPAC deals, including those that took electric-vehicle makers Nikola Corp. and Lordstown Motors Corp. public. Nikola late last year agreed to pay $125 million to settle a regulatory investigation into allegedly misleading statements by its founder and one-time executive chairman Trevor Milton.

An exchange-traded fund tracking companies that went public this way has fallen about 30% in the past year. Several companies such as savings and investing app Acorns Grow Inc. that previously announced SPAC mergers eventually called them off as sentiment shifted. The prospect of tighter regulation has also cooled deal making in the space.

So far this year, blank-check companies have raised just $9.8 billion. There are still more than 600 SPACs seeking deals. Those that can’t find mergers within a deadline, typically two years, will have to return money to investors.

If completed in their current form, the proposed disclosure requirements would extend to existing SPACs that have yet to complete a merger, SEC officials said.

Bill Dooley, director of mergers and acquisitions at consulting firm Morrow Sodali Global LLC, criticized the SEC’s proposal, saying it would create major hurdles for SPAC sponsors and target companies.

“Enhanced disclosure in IPO applications and merger prospectuses will further reduce the stream of public companies coming to market, significantly, and increase the growing number of SPACs searching for targets,” Mr. Dooley said. “Investors, not the SEC, are responsible for due diligence and evaluation of a potential investment, and these rules are a wide-reaching bid to halt the SPAC market.”

>>> US Close Dow -0,19% S&P -0,63% Nasdaq -1,21% Russell -1,97% VIX 19.33 +2,28%

Closing Stock Market Summary

The S&P 500 fell 0.6% on Wednesday, as the market was pressured by profit-taking interest amid tempered hopes for a timely Russia-Ukraine ceasefire. The Nasdaq Composite (-1.2%) and Russell 2000 (-2.0%) posted steeper declines while the Dow Jones Industrial Average declined just 0.2%. 

Briefly, Russia refuted yesterday's reports that described a breakthrough in peace talks and appeared to redirect troops to eastern Ukraine to focus on the Donbas region. The news contributed to a rebound in oil prices ($107.67, +3.34, +3.2%), which were further aided by bullish inventory data out of the EIA. 

The news also functioned as an excuse for the stock market to cool off from a big rebound rally in which, entering the session, the S&P 500 was up 11.0% since March 14 and the Nasdaq Composite was up 16.5%. 

Losses were concentrated in the S&P 500 information technology (-1.4%), consumer discretionary (-1.5%), and financials (-0.7%) sectors. Conversely, the energy (+1.2%), utilities (+0.8%), health care (+0.2%), and consumer staples (+0.2%) sectors closed in positive territory. 

The financials sector was undercut by weakness in the bank stocks amid the compression in interest rates, which continued to signal concerns about a Fed policy mistake. The SPDR S&P Bank ETF (KBE 33.91, -1.07) dropped 3.1%. 

The 2-yr yield decreased two basis points to 2.33%, and the 10-yr yield decreased four basis points to 2.36%. The U.S. Dollar Index fell 0.6% to 97.85 amid relative strength in the euro (+0.6%) and yen (+0.9%). 

Looking at individual stocks, Micron (MU 79.16, -2.89, -3.5%) coughed up an early 5% gain despite reporting better-than-expected earnings results and guidance, while Five Below (FIVE 160.20, -11.19, -6.5%), Chewy (CHWY 42.79, -8.21, -16.1%), and RH (RH 334.28, -51.41, -13.3%) each provided disappointing guidance. 

Lululemon athletica (LULU 376.92, +32.95, +9.6%), on the other hand, stood out with a 10% gain on positive earnings results, upbeat guidance, and a $1 billion share repurchase announcement. 

Reviewing Wednesday's economic data:

  • The third estimate of Q4 GDP showed a downward revision to 6.9% (consensus 7.1%) from the second estimate of 7.0%. The GDP Price Deflator was left unrevised at 7.1% ( consensus 7.1%).
    • The key takeaway from the report is that the downward revision was owed to lower personal consumption expenditures and exports while private inventory investment was revised higher.
  • The ADP Employment Change report estimated that 455,000 jobs were added to private sector payrolls in March ( consensus 440,000). The increase in February was upwardly revised to 486,000 from 475,000.
  • The weekly MBA Mortgage Applications Index fell 6.8% following an 8.1% decline in the prior week.

Looking ahead, investors will receive Personal Income and Spending for February, PCE Prices for February, weekly Initial and Continuing Claims, and the Chicago PMI for March on Thursday.

  • S&P 500 -3.4% YTD
  • Dow Jones Industrial Average -3.1% YTD
  • Russell 2000 -6.9% YTD
  • Nasdaq Composite -7.7% YTD

NYT: The conventional wisdom is that Putin miscalculated

The conventional wisdom is that Vladimir Putin catastrophically miscalculated.

He thought Russian-speaking Ukrainians would welcome his troops. They didn’t. He thought he’d swiftly depose Volodymyr Zelensky’s government. He hasn’t. He thought he’d divide NATO. He’s united it. He thought he had sanction-proofed his economy. He’s wrecked it. He thought the Chinese would help him out. They’re hedging their bets. He thought his modernized military would make mincemeat of Ukrainian forces. The Ukrainians are making mincemeat of his, at least on some fronts.

Putin’s miscalculations raise questions about his strategic judgment and mental state. Who, if anyone, is advising him? Has he lost contact with reality? Is he physically unwell? Mentally? Condoleezza Rice warns: “He’s not in control of his emotions. Something is wrong.” Russia’s sieges of Mariupol and Kharkiv — two heavily Russian-speaking cities that Putin claims to be “liberating” from Ukrainian oppression — resemble what the Nazis did to Warsaw, and what Putin himself did to Grozny.

Several analysts have compared Putin to a cornered rat, more dangerous now that he’s no longer in control of events. They want to give him a safe way out of the predicament he allegedly created for himself. Hence the almost universal scorn poured on Joe Biden for saying in Poland, “For God’s sake, this man cannot remain in power.”

The conventional wisdom is entirely plausible. It has the benefit of vindicating the West’s strategy of supporting Ukraine defensively. And it tends toward the conclusion that the best outcome is one in which Putin finds some face-saving exit: additional Ukrainian territory, a Ukrainian pledge of neutrality, a lifting of some of the sanctions.

But what if the conventional wisdom is wrong? What if the West is only playing into Putin’s hands once again?

The possibility is suggested in a powerful reminiscence from The Times’s Carlotta Gall of her experience covering Russia’s siege of Grozny, during the first Chechen war in the mid-1990s. In the early phases of the war, motivated Chechen fighters wiped out a Russian armored brigade, stunning Moscow. The Russians regrouped and wiped out Grozny from afar, using artillery and air power.

Russia’s operating from the same playbook today. When Western military analysts argue that Putin can’t win militarily in Ukraine, what they really mean is that he can’t win clean. Since when has Putin ever played clean?

“There is a whole next stage to the Putin playbook, which is well known to the Chechens,” Gall writes. “As Russian troops gained control on the ground in Chechnya, they crushed any further dissent with arrests and filtration camps and by turning and empowering local protégés and collaborators.”

Suppose for a moment that Putin never intended to conquer all of Ukraine: that, from the beginning, his real targets were the energy riches of Ukraine’s east, which contain Europe’s second-largest known reserves of natural gas (after Norway’s).

Combine that with Russia’s previous territorial seizures in Crimea (which has huge offshore energy fields) and the eastern provinces of Luhansk and Donetsk (which contain part of an enormous shale-gas field), as well as Putin’s bid to control most or all of Ukraine’s coastline, and the shape of Putin’s ambitions become clear. He’s less interested in reuniting the Russian-speaking world than he is in securing Russia’s energy dominance.

“Under the guise of an invasion, Putin is executing an enormous heist,” said Canadian energy expert David Knight Legg. As for what’s left of a mostly landlocked Ukraine, it will likely become a welfare case for the West, which will help pick up the tab for resettling Ukraine’s refugees to new homes outside of Russian control. In time, a Viktor Orban-like figure could take Ukraine’s presidency, imitating the strongman-style of politics that Putin prefers in his neighbors.

If this analysis is right, then Putin doesn’t seem like the miscalculating loser his critics make him out to be.

It also makes sense of his strategy of targeting civilians. More than simply a way of compensating for the incompetence of Russian troops, the mass killing of civilians puts immense pressure on Zelensky to agree to the very things Putin has demanded all along: territorial concessions and Ukrainian neutrality. The West will also look for any opportunity to de-escalate, especially as we convince ourselves that a mentally unstable Putin is prepared to use nuclear weapons.

Within Russia, the war has already served Putin’s political purposes. Many in the professional middle class — the people most sympathetic to dissidents like Aleksei Navalny — have gone into self-imposed exile. The remnants of a free press have been shuttered, probably for good. To the extent that Russia’s military has embarrassed itself, it is more likely to lead to a well-aimed purge from above than a broad revolution from below. Russia’s new energy riches could eventually help it shake loose the grip of sanctions.

This alternative analysis of Putin’s performance could be wrong. Then again, in war, politics and life, it’s always wiser to treat your adversary as a canny fox, not a crazy fool.

FT : Eight oligarchs under sanctions hold ‘golden visas’ granted by UK governmen

Eight oligarchs under sanctions hold ‘golden visas’ granted by UK government
Calls for review of scheme to be published after revelations over penalised Russians’ use of investor route

Eight Russian oligarchs subject to sanction by the UK over their links to President Vladimir Putin since Russia’s invasion of Ukraine had been granted so-called golden visas, the government has revealed.

The Tier 1 “investor visa” route — which was abolished last month — in the past has attracted wealthy Russian and other international investors, who have resettled in the UK under the scheme.

To qualify for investor visas, people had to show they had at least £2mn to invest in the UK. The rules were tightened up in 2015 and checks on how applicants obtained their money were introduced.

In answer to a parliamentary question this week, Lady Williams of Trafford, a Home Office minister, disclosed that on 18 March eight oligarchs under UK sanctions “had been identified as holding or having held leave as a Tier 1 (investor) migrant or as a Tier 1 (investor) migrant dependent”.

The Home Office would not disclose the identities of the eight Russians. Parliament’s intelligence and security committee warned in 2020 that “the exploitation of the UK’s investor visa scheme” was a draw for many Russians seeking to enter the country.

It said Britain had provided “ideal mechanisms” for the recycling of illicit finance, adding it had become an international “laundromat” for offshore wealth.

In 2018, then home secretary Amber Rudd asked officials to review the basis on which more than 700 wealthy Russians were allowed to settle in the UK under the scheme. After years of delay, the government still has not published the review.

The government issued 798 investor visas in the 12 months to September 2021. Of these 82 were awarded to Russians.

Layla Moran, Liberal Democrat foreign affairs spokesperson, said: “For too long the government has rolled out the red carpet for Putin’s cronies. These people should never have been able to buy their way into the UK with ill-gotten wealth.”

Moran added: “We now need to know how many others who were given golden visas owe their wealth to Putin’s regime, and why the government hasn’t sanctioned them too.”

She urged ministers to “stop dragging their feet” and finally publish the review into the visa scheme.

Dr Susan Hawley, executive director of Spotlight on Corruption, a campaign group, said: “Once again we are seeing how the golden visa scheme made the UK vulnerable to national security threats and dirty money. Today’s revelations are likely to be just the tip of the iceberg.”

She echoed Moran’s calls for an urgent review of golden visas, adding: “[The government] also needs to be fully transparent about what action it has taken, how many visas it has revoked as a result of this review, and whether it has reviewed any citizenship granted.”

Wash Post : Inside Hunter Biden’s multimillion-dollar deals with a Chinese energ

Inside Hunter Biden’s multimillion-dollar deals with a Chinese energy company
A Washington Post review confirms key details and offers new documentation of Biden family interactions with Chinese executives

The deal was years in the making, the culmination of forging contacts, hosting dinners, of flights to and from China. But on Aug. 2, 2017, signatures were quickly affixed, one from Hunter Biden, the other from a Chinese executive named Gongwen Dong.

Within days, a new Cathay Bank account was created. Within a week, millions of dollars started to change hands.

Within a year, it would all begin to collapse.

While many aspects of Hunter Biden’s financial arrangement with CEFC China Energy have been previously reported and were included in a Republican-led Senate report from 2020, a Washington Post review confirmed many of the key details and found additional documents showing Biden family interactions with Chinese executives.

Over the course of 14 months, the Chinese energy conglomerate and its executives paid $4.8 million to entities controlled by Hunter Biden and his uncle, according to government records, court documents and newly disclosed bank statements, as well as emails contained on a copy of a laptop hard drive that purportedly once belonged to Hunter Biden.

The Post did not find evidence that Joe Biden personally benefited from or knew details about the transactions with CEFC, which took place after he had left the vice presidency and before he announced his intentions to run for the White House in 2020.

But the new documents — which include a signed copy of a $1 million legal retainer, emails related to the wire transfers, and $3.8 million in consulting fees that are confirmed in new bank records and agreements signed by Hunter Biden — illustrate the ways in which his family profited from relationships built over Joe Biden’s decades in public service.


Hunter Biden signed an agreement for a $1 million retainer to represent Patrick Ho, a CEFC official who would later be charged in the United States in connection with a multimillion-dollar scheme to bribe leaders from Chad and Uganda. Verified emails, and new banking records, show that the money was transferred to an account linked to Hunter Biden. (Courtesy of Office of Sen. Charles Grassley)
Hunter Biden’s overseas work has been the subject of heightened scrutiny. He has been under federal investigation as part of an inquiry into his taxes, with witnesses called before a grand jury as recently as last month. Federal prosecutors had been attempting to determine if he failed to account for income from China-related deals, The Post has previously reported, although it is unclear whether that is still a focus. Republicans, meanwhile, have pointed to the Biden family’s business deals in China, along with Hunter Biden’s past membership on the board of the Ukrainian energy firm Burisma, as potential conflicts of interest.

The CEFC deal became one of the most lucrative, if short-lived, foreign ventures Hunter Biden is known to have pursued. The Post review draws in part on an analysis of a copy said to be of the hard drive of a laptop computer that Hunter Biden purportedly dropped off at a Delaware repair shop and never came to collect. The laptop was turned over to the FBI in December 2019, according to documents reviewed by The Post, and a copy of the drive was obtained by Rudy Giuliani and other advisers to then-President Donald Trump a few months before the 2020 election.

After the New York Post began publishing reports on the contents of the laptop in October 2020, The Washington Post repeatedly asked Giuliani and Republican strategist Stephen K. Bannon for a copy of the data to review before the election, but the requests were rebuffed or ignored.

In June 2021, a copy was provided to The Post by Jack Maxey, an activist who received a copy from Giuliani in 2020, at a time when Maxey was working with Bannon and his “War Room” podcast.

The Post has explored the chain of custody, as well as the findings of forensic analyses of the data, in a separate story.

Here’s how The Post analyzed Hunter Biden’s laptop

Biden aides and some former U.S. intelligence officials have voiced concern that the device may have been manipulated by Russia to interfere in the campaign. On Capitol Hill, Democrats have dismissed earlier reports about Hunter Biden’s work in China as lacking credibility or being part of a Russian disinformation campaign. The Post analysis included forensic work by two outside experts who assessed the authenticity of numerous emails related to the CEFC matter. In addition, The Post found that financial documents on the copy of Hunter Biden’s purported laptop match documents and information found in other records, including newly disclosed bank documents obtained by Sen. Charles E. Grassley of Iowa, a senior Republican on the Senate Finance and Judiciary committees.

2 experts used email headers to determine veracity

The potential energy projects Hunter Biden discussed with CEFC never came to fruition.

Nonetheless, accounts linked to Hunter Biden received $3.8 million in payments from CEFC through consulting contracts, according to bank records and joint agreements reviewed by The Post.

Biden received an additional $1 million retainer, issued as part of an agreement to represent Patrick Ho, a CEFC official who would later be charged in the United States in connection with a multimillion-dollar scheme to bribe leaders from Chad and Uganda. That retainer agreement, in a newly uncovered document, contains the signatures of both Hunter Biden and Ho, who was later convicted and sentenced to three years in prison.

Hunter Biden, who has a law degree, was not accused of wrongdoing in that scheme and appeared to have little role representing Ho in the federal case. Ho, through his attorney in that case, declined to comment.

Hunter Biden and his attorney did not respond to numerous messages left over the past week. The White House declined to respond on the record but pointed to previous statements that Joe Biden “has never even considered being involved in business with his family, nor in any overseas business whatsoever.”


Vice President Joe Biden arrives on Air Force Two in Beijing with his son Hunter Biden, right, and his granddaughter Finnegan Biden in December 2013. (Ng Han Guan/AP)
Years of seeking business in China
Hunter Biden’s relationship with CEFC took root during a time of financial strain and turmoil for his family, according to court filings and Hunter Biden’s accounts. The Bidens were reeling from the May 2015 death of Hunter’s older brother, Beau, and Hunter was struggling with drug use.

“I was in the throes of addiction,” Hunter wrote in a memoir published last year.

During divorce proceedings with his wife Kathleen, a court filing in the case described “outstanding debts [that] are shocking and overwhelming,” with the couple carrying maxed-out credit cards, double mortgages on both properties they owned and a tax debt of $313,970. Three checks to their housekeeper had bounced, and they owed money to medical providers and therapists, according to a February 2017 filing in D.C. Superior Court.

An intermediary from CEFC initially reached out to Hunter Biden in December 2015 to set up a meeting between the then-vice president’s son and Ye Jianming, the founder and chairman of the Chinese firm, according to verified emails from a purported copy of the laptop hard drive reviewed by the outside experts for The Post.

Vuk Jeremic, a Serbian politician who had recently served as president of the United Nations General Assembly, wrote in an email to the younger Biden that he was hosting a small private dinner in Washington with Ye — whom he called “one of the 10 wealthiest Chinese businessmen” — and wanted Hunter to attend.

“He’s young and dynamic, with the top-level connections in his country,” Jeremic wrote in the Dec. 1, 2015, email.

Hunter Biden was unable to attend the dinner and Jeremic said in an email to The Post that while he knew both men, he was “not involved in their mutual introduction” and found out from media reports that the two had eventually connected.

CEFC, a massive oil and gas company founded in 2002, had financing from government development banks and ties to the Chinese Communist Party and the People’s Liberation Army, according to people who studied the firm. Ye’s official biography said he was once deputy secretary of the China Association for International Friendly Contact, an organization that a 2011 U.S. congressional report called “a front” for the People’s Liberation Army.

While CEFC was ostensibly private, experts on the Chinese economy say it is unlikely that it operated independently of the government.

The Chinese Embassy declined to comment on CEFC ties to the Chinese government or Hunter Biden’s involvement with the firm.

Shortly after Joe Biden left the vice presidency, Hunter Biden and Ye met over dinner in Miami.

The two discussed business opportunities for CEFC in the United States, including a $40 million joint venture to produce liquefied natural gas in Louisiana, according to a July 2019 New Yorker report based on extensive interviews with Hunter Biden.

That deal failed. But Ye Jianming was so pleased with his initial meeting with Hunter Biden that after dinner he sent a 2.8-carat diamond to Hunter Biden's hotel room with a card thanking him for the conversation, according to the New Yorker.

In divorce proceedings, Hunter’s wife would claim the diamond was worth $80,000. Hunter Biden told the New Yorker the value was closer to $10,000, that he gave the diamond to his associates, and that he doesn’t know what they did with it.

In the summer of 2017, Hunter Biden received a request from Ye that would foreshadow subsequent problems for CEFC. Ye said that a top CEFC associate, Patrick Ho, might be under investigation by U.S. law enforcement and he asked Hunter Biden for help. Hunter Biden told the New Yorker that he agreed to represent Ho and to try to figure out if he was under scrutiny by law enforcement.


Hunter Biden in August 2017 signed an agreement with Gongwen Dong, an executive at a Chinese energy conglomerate, to jointly pursue investments. The agreement, included with bank records provided to Sen. Charles E. Grassley (R-Iowa), stated that Hunter Biden would get a one-time retainer of $500,000 and would then receive a monthly stipend of $100,000, with his uncle James Biden getting $65,000 a month. (Courtesy of Office of Sen. Charles Grassley)
The execution of the bigger consulting deal between Hunter Biden and CEFC occurred rapidly in early August 2017.

The contract, signed on Aug. 2, 2017, stated that Hunter Biden would get a one-time retainer of $500,000 and would then receive a monthly stipend of $100,000, with his uncle James Biden getting $65,000 a month.

An unsigned copy of the agreement was found on the purported copy of Hunter Biden’s laptop hard drive. A signed copy was included with bank records provided to Grassley and reviewed by The Post. Under the 26-page agreement, they agreed to jointly pursue investments under a company named Hudson West III LLC.

The money began flowing almost immediately, with the first incoming wire of $5 million arriving on Aug. 8, 2017, according to documents found on the copy of Hunter Biden’s laptop and corroborated by identical bank statements that Grassley’s office obtained from Cathay Bank for an account jointly held by Hunter Biden and CEFC executives.

After expenses and personnel costs, the bulk of the money, about $4.8 million, was directed over a 14-month period, usually in increments of $165,000, to an account linked to Hunter Biden, the documents show. During that time period, about $1.4 million was transferred from Hunter’s account to Lion Hall Group, the consulting firm that James Biden ran, according to other government records reviewed by The Post.

“No comment,” James Biden said when reached on his cellphone and asked about the CEFC deal.

More red flags
A few weeks after he went into business with the CEFC executives in the fall of 2017, Hunter Biden requested changes to the fifth-floor office space he was renting at the House of Sweden, an airy building in Georgetown that is home to the Swedish Embassy and other offices.

On Sept. 21, 2017, Hunter Biden wrote to a building manager requesting new office signage to reflect a new family enterprise and a new business relationship: “The Biden Foundation and Hudson West (CEFC- US),” he wrote in emails to the property manager.

He also requested keys for his new office mates: his father, Joe; his mother, Jill; his uncle James; and the Chinese executive, Gongwen Dong.

As part of the request, he provided what he said was his father’s cellphone number, saying an office representative could use it to contact his new office mates.

Hunter Biden referred to Ye, the chairman of CEFC, as “my partner” and described Gongwen Dong as the “Chairman Ye CEFC emissary.”

The email exchanges that discuss Hunter Biden’s plan to open a Biden-CEFC office were included on the copy of his hard drive and were confirmed through public records released by the Swedish government to The Post. The contents of the records were first reported by the Swedish newspaper Dagens Nyheter.

“We are very excited and honored to welcome your new colleagues!” the manager wrote back to Hunter Biden.


Jeffrey Peck, the Biden Foundation board member most involved in details like setting up the office, said there was never any consideration of that location.

“I recall discussions about other possible spaces and the so-called House of Sweden was never on any lists,” Peck said. “There was never any thought — like zero thought or consideration — given to that building.”

A spokeswoman for the Swedish authority that oversees the property said that the four keys were made available, as requested, but that Hunter Biden never picked them up. The signboard on the door wasn’t changed, she said.

Around the time Hunter Biden was asking for changes to his office space, email exchanges with the property manager grew tense — with a reminder to Hunter Biden to stop violating office policies by bringing visitors in through a side entrance rather than signing them in at the front desk, where they go through metal detectors.

Hunter Biden responded angrily, saying that one was a homeless woman he could vouch for — and accused the office managers of racism because that woman is Black. He wrote that another guest was Lunden Roberts, a woman he described as “my youngest daughter’s basketball mentor.”

Within a year, Roberts would have a baby that Hunter denied was his until she filed a paternity suit and DNA testing confirmed it was his. They settled the case in March 2020 and court documents show he is paying an undisclosed amount in child support.

Roberts’s lawyer, Clint Lancaster, said his client had worked for Biden at the time of the House of Sweden incident. He said Roberts was called to testify for several hours before a grand jury in Wilmington, Del., in mid-February, an indication that the federal investigation of Hunter Biden remains active. Lancaster declined to comment on the nature of her testimony. The Justice Department and the Delaware U.S. attorney’s office also declined to comment.

Hunter Biden confirms he is under federal investigation

During the time the CEFC was active, funds were being transferred from Hunter Biden to his uncle, records show. All told, nearly $1.4 million went from Hunter’s company to one controlled by James Biden, according to a 2020 report produced by Grassley and fellow Republican Sen. Ron Johnson of Wisconsin. The transactions were identified as potential criminal activity, a designation meant to flag potential money laundering, political corruption or other financial crimes, according to a report from the Financial Crimes Enforcement Network at the Treasury Department that was reviewed by The Post.

When James and Sara Biden’s bank contacted them about the transactions, they would not provide supporting documentation to explain the activity and closed the account, according to records reviewed by The Post.

James Biden did not respond to a detailed list of questions about the financial transactions.

Meanwhile, CEFC executives were concerned about Justice Department inquiries into officials tied to the company. As would become clear later in court records, federal investigators had obtained a foreign intelligence surveillance warrant on Ho and were monitoring his communications.

On Sept. 18, 2017, Hunter Biden signed a two-page attorney engagement letter to represent Ho, with a $1 million retainer. The agreement specified that Hunter Biden was to provide “counsel to matters related to US law and advice pertaining to the hiring and legal analysis of any US Law Firm or Lawyer.” Ho signed the document four days later, on Sept. 22, 2017.

A signed copy of the two-page agreement was contained on the purported copy of Hunter Biden’s laptop drive, stored as an attachment to an email that did not contain sufficient data to be verified by The Post’s outside experts. But the bank records obtained by Grassley show $1 million was eventually deposited into an account associated with Hunter Biden, with a note describing the payment as “representation” of Ho.

On Nov. 18, a few weeks after Hunter Biden signed the agreement to represent Ho, his client was arrested by two FBI agents at JFK Airport. He was read his Miranda rights at 2 p.m.; nine minutes later, he called James Biden, according to police records.

James Biden told the New York Times in 2018 that he assumed Ho was looking for Hunter Biden, and he passed along contact information for his nephew.

Almost immediately after Ho’s arrest, according to verified emails, Edward Y. Kim, an attorney at Krieger Kim, was enlisted to represent Ho. Kim and Ho declined requests for comment.

During the trial, prosecutors alleged that Ho had bribed leaders in Chad and Uganda, aiming to obtain oil permits for CEFC. They also said Ho had offered CEFC as a resource in helping Iran evade oil sanctions.

The crash
Things fell apart quickly. Ho was in jail awaiting trial. Ye, the head of CEFC, had been detained in China in mid-February 2018 and hadn’t been heard from since. The reasons for the arrest were unclear, although Reuters reported that it was related to suspected economic crimes.

Ye could not be reached for comment, and the Chinese Embassy declined to comment on Ye’s arrest.

By March 2018, Hunter Biden’s uncle was seeking access to the $1 million retainer that he was owed for the Ho representation. James Biden on March 21, 2018, wrote to CEFC officials with “wiring instructions,” providing the address and routing numbers for how to transfer to the account linked to Hunter Biden.

“Received and will take care of this ASAP,” Mervyn Yan, one of the CEFC officials, wrote back in a verified email.

At 9:43 the next morning, the wire went through and was deposited in the account just as James Biden had instructed, with the routing number in his email matching the routing number received by the bank, according to bank records.

Hunter Biden began exchanging hostile messages with remaining executives, including Dong and Mervyn Yan. The two had questioned several of Hunter Biden’s business expenses, asking for receipts to back up the charges. Yan, in a verified email, wrote Biden that some of the expenses for which he sought reimbursement did not appear related to the Chinese energy company’s business, including, he wrote, “house in Sweden.”

Biden threatened to sue both Yan and Dong for balking at paying, claiming they had no right to question his expenses — and explaining that the House of Sweden was his D.C.-based office.

“I will bring suit in the Chancery Court in Delaware — which as you know is my home state and I am privileged to have worked with and know every judge in the chancery court,” he wrote on March 14, 2018.

“You cannot sue us for not paying incorrect expenses,” Dong wrote in response, according to a verified email.

Dong and Yan did not respond to requests for comment.

JiaQi Bao, an assistant with whom Hunter Biden had worked closely on CEFC business, wrote in a March 26, 2018, email that the company was being dissolved and she would lose her job — but that Hunter Biden should “take whatever money you can take, as long as the money is available to claim.”

“Take as much as possible, or figure out a way to spend them for your own benefit,” she wrote.

Bao did not respond to numerous phone and email messages.

Over the next six months, nearly $1.4 million was transferred to Hunter Biden’s account, according to bank records.

But troubles also loomed. Hunter Biden continued to battle addiction issues that created strains within his family, and his father began paying some of his bills. The younger Biden’s problems loomed large over his father’s decision to run for president, a campaign Joe Biden would announce formally in April 2019.

Hunter Biden’s personal battles would continue. But the business saga of CEFC would soon come to a close.

Yan signed a document on Nov. 2, 2018, dissolving Hudson West III LLC, the company that linked the Bidens to CEFC. Yan filed it with an office based in Dover, Del., less than an hour’s drive from the Biden family home.