TheChek News Flow

Canoo is being investigated by the SEC

The investigation is broad, covering the Hennessy’s initial public offering and merger with Canoo, the company’s operations, business model, revenues, revenue strategy, customer agreements, earnings and other related topics, along with the recent departures of certain of the company’s officers, according to a quarterly earnings report posted Monday. Canoo learned of the investigation on April 29. Canoo’s share price fell more than 3% in after-hours trading following the release of its first-quarter earnings.

“The SEC has also informed the Company that the investigation does not mean that it has concluded that anyone has violated the law, and does not mean that it has a negative opinion of any person, entity or security. We intend to provide the requested information and cooperate fully with the SEC investigation,” Canoo noted in the regulatory filing. Canoo added that it does not consider the investigation or other lawsuits it is facing to be material to its business.

The SEC investigation follows a string of executive departures, a change to some of the core pieces of its business model, the loss of a key automotive partnership and at least one lawsuit brought by shareholders. And that’s just the activity since the first of the year.

Canoo started as Evelozcity in 2017, founded by former Faraday Future executives Stefan Krause and Ulrich Kranz. The company rebranded as Canoo in spring 2019 and debuted its first vehicle several months later. It was this first vehicle, as well as Canoo’s plan to offer it only as a subscription, that captured the attention of investors, companies and the media. Last year, Hyundai announced a partnership with Canoo to co-develop EVs, but that deal fell apart in early 2021 after the company changed its business model and decided to not offer engineering services to other automakers, according to comments made by the company’s chairman and now CEO Tony Aquila in a March investors’ call.

Canoo has sustained numerous executive departures, including co-founder and CEO Kranz, general counsel Andrew Wolstan, CFO Paul Balciunas and its head of powertrain development. Krause, who was the company’s first CEO, stepped down in August 2019. Last month, Canoo was also named as a defendant in two class-action complaints filed by shareholders.

Amid the executive exits and business pivots, the company has managed to narrow its quarterly losses despite an increase in R&D expenditures and no revenue. The company reported Monday a net loss of $15.2 million, or 7 cents a share, in the first quarter, compared to a loss of $30.9 million, or 37 cents a share, in the same period last year. The company said it ended the quarter with $641.9 million in cash and equivalents.

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At least 10 managing directors have said they plan to leave, mostly for rivals

Credit Suisse Group AG CS 0.57% is facing an exodus of senior investment bankers in the wake of a $5.5 billion loss tied to the meltdown of Archegos Capital Management.

At least 10 managing directors in the Swiss firm’s U.S. investment-banking division have internally disclosed plans to leave, most for rival firms, according to people familiar with the matter. Other bankers are considering their options, and more are expected to depart in the coming weeks.

Investments held by Archegos, a family investment vehicle for Bill Hwang, plummeted in late March, forcing Credit Suisse and other banks to sell large stock positions at losses. Credit Suisse lent more to Archegos relative to its size than others and was one of the last to exit the positions, The Wall Street Journal previously reported.

The debacle, coming on the heels of Credit Suisse’s involvement with the now-insolvent financing firm Greensill, forced the bank to cut its dividend and raise fresh capital from investors to shore up its balance sheet. The Swiss bank ousted top executives in the wake of the loss.

As information trickled out foreshadowing the big hit to the bank, competitors on Wall Street and recruiters began circling. The timing was fortuitous for the firm’s rivals, as recruiting typically ramps up after annual bonuses are paid early in the year.

Barclays PLC poached several bankers including telecom-and-media specialist Ihsan Essaid, who is leaving to become the British lender’s co-head of Americas mergers and acquisitions, as well as Tim Devine and David MacGown, who focus on financial institutions, and Kamal Ahmed, who will become global head of semiconductor coverage banking. Two other bankers in the financial-institutions group, Chris Eby and Nick Daly, are leaving for Goldman Sachs Group Inc. and Bank of America Corp. , respectively.

Perella Weinberg Partners hired industrial-company banker Christian Bradeen. News and information-services banker Simon Auerbach also departed, as did Jason Wortendyke, a transportation banker who is headed back to Citigroup Inc., where he will be global co-head of diversified industrials. Healthcare banker Leo Reif is joining Jefferies Financial Group Inc.

The full scope of the departures hasn’t been previously reported.

Many Credit Suisse bankers have been frustrated that the failure of the bank’s prime-brokerage unit, which caters to investors like Archegos, overshadowed an otherwise strong run for the investment bank, especially within capital markets and advisory.

The bank has advised on high-profile transactions lately including chip maker Advanced Micro Devices Inc.’s $35 billion purchase of rival Xilinx Inc. and the $21 billion acquisition of Speedway by the Japanese owner of the 7-Eleven convenience-store chain. In 2020, it was ranked sixth globally on Dealogic’s M&A league table.

Part of that is due to Credit Suisse’s dominance in the special-purpose acquisition company market, underwriting a higher dollar volume of such vehicles than any other bank last year, according to SPAC Research.

Adding to the frustration, some bankers feel Credit Suisse’s management has done little to quell concerns about the impact of the loss on compensation.

In April, Credit Suisse installed former Lloyds Banking Group PLC Chief Executive António Horta-Osório as chairman and Christian Meissner, a Bank of America and Goldman veteran, as head of the investment bank.

The firm has said it would scale back the prime-brokerage business and Mr. Horta-Osório has signaled that riskier business areas could be jettisoned. He also said the bank will review its culture, pay and incentives, with a focus on personal responsibility and accountability.

President Ariane de Rothschild sets out ambitions as Amundi’s chair Yves Perrier joins board

Edmond de Rothschild Group plans to double its assets under management and capitalise on the fallout from scandals such as Greensill Capital that ensnared wealthy investors, according to the firm’s president Ariane de Rothschild.

After several years of restructuring and upheaval, the Franco-Swiss private bank and asset manager is targeting acquisitions to help double its assets from the current SFr175bn ($194bn).

“We are looking at buying asset managers and private banks, or hiring smaller teams,” de Rothschild told the Financial Times in a rare interview. “The industry is fragmented with lots of smaller players out there and I think it’s important to try to consolidate. I would expect that we double the size of our assets under management in the next five years.”

De Rothschild oversees a family business that was created in 1953 by her father-in-law, Edmond de Rothschild, and encompasses wealth management, corporate finance, private equity and property. Over the past two years, Edmond de Rothschild Group consolidated all of its operations under the Swiss bank, which it then took private.

“We are starting to look at Asian markets and developing our presence in the Middle East,” said de Rothschild. “Within asset management our bias is towards private equity, real estate and infrastructure,” reflecting investors’ hunt for yield in a low-interest rate environment. 

Last year, Edmond de Rothschild Group’s assets dropped 3 per cent to SFr168bn, mainly because of unfavourable currency moves, but had bounced to SFr175bn by the end of the first quarter. For 2020, its net income climbed to SFr57m, up 4 per cent from 2019.

The financial services arm of the group faces a tough environment as Switzerland has lost its prized banking secrecy, while tighter regulations and low interest rates are squeezing fees.

In January, de Rothschild’s husband, Benjamin de Rothschild, died of a heart attack at the age of 57. He had already stepped back from the day-to-day running of the financial business that he inherited from his father, and was chair of the group’s holding company and focused on the family’s sailing sponsorships. 

The family’s non-financial businesses include philanthropic projects, the Four Seasons Hotel Megève, the Gitana fleet of racing boats, and its famous vineyards stretching from Argentina to New Zealand.

Edmond de Rothschild Group is also looking to take advantage of its low-risk approach to lure wealthy private clients, including those caught up in recent scandals such as the implosion of supply chain financing company Greensill.

More than 1,000 Credit Suisse customers, among them ultra-wealthy individuals in Europe and Asia who invested in the $10bn range of funds tied to Greensill, face losses.

“We, by definition, are low risk because it’s my duty to protect my clients’ money and it’s my duty to protect my family’s money,” said de Rothschild, declining to comment on Credit Suisse specifically. 

“Some of these high-profile recent cases reflect a lack of risk control or too high a risk appetite,” she added. “These types of blow-ups are regrettable overall for the financial industry because they give a really bad view of what it is about. Clients are highly sensitive to reputational risk.” 

De Rothschild was speaking as the Edmond de Rothschild Group announced a series of changes to its top ranks. 

Yves Perrier, a renowned dealmaker who built Amundi into the largest asset manager in Europe, will join its group and holding company board as a director next month. Perrier stepped down as chief executive of Amundi last week and became chair of the €1.7tn French group’s board. 

Meanwhile, Cynthia Tobiano, currently deputy chief executive of Edmond de Rothschild Group, will become chief executive of the group holding company and oversee all the family’s activities from the end of this year. 

Meanwhile, Vincent Taupin, chief executive of Edmond de Rothschild Group since April 2019, is retiring and will be replaced by François Pauly, who has been a non-executive director of the group for the past five years.