Gapping down
In reaction to disappointing earnings/guidance:
- LEVI -5.6%
M&A news:
- ALL -2.6% (to acquire NGHC for $34.50 per share)
Other news:
- HQY -7.1% (commences underwritten public offering of $250 mln of shares of common stock)
- ETNB -7% (prices offering of 2,649,600 shares of its common stock at $27.50 per share)
- ARGO -4.8% (prices offering of 6,000,000 Depositary Shares, each of which represents a 1/1000th interest in a share of the Company's newly designated 7.00% Resettable Fixed Rate Perpetual Non-Cumulative Preference Shares, Series A)
- ASND -3.1% (prices offering of 4,225,352 ADSs at $142.00 per ADS)
- VIR -1.9% (prices of 7,142,857 shares of its common stock at $42.00 per share)
- INSG -1.5% (files for $80 mln convertible offering by selling stockholders and shares issuable upon conversion)
- FB -0.6% (NY Times reports that co failed to win over group running ad boycott)
Analyst comments:
- NOK -3.2% (downgraded to Neutral from Overweight at JP Morgan)
- NBR -2.8% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
- HUBS -1.6% (downgraded to Neutral from Buy at Mizuho)
- VSTO -1.6% (downgraded to Neutral from Buy at B. Riley FBR)
Gapping up
In reaction to strong earnings/guidance:
- CMBM +26.7% (raises guidance), SMPL +9.2%, LMNX +9.2% (guidance), GNMK +7.5% (guides Q2 revs above consensus), AA +4.2% (better than expected pre-announcement), SGH +2.8%
M&A news:
- NGHC +65.7% (to be acquired by Allstate (ALL) for $34.50 per share)
- SYNA +5.9% (to acquire Broadcom's (AVGO) wireless IoT connectivity unit for $250 mln in cash)
- DOCU +4.4% (acquires Liveoak Technologies for $38 mln in stock)
- KKR +2.8% (to acquire Global Atlantic Financial Group Limited)
Other news:
- NNVC +48.8% (reports that safety and tolerability of anti-Coronavirus drug candidates observed in an animal model further advances NanoViricides' SARS-CoV-2 therapeutics program)
- VBIV +21.1% (extends momentum from +21% move on Tues)
- CNCE +12.1% (receives FDA Breakthrough Therapy Designation for CTP-543 for the Treatment of Alopecia Areata)
- FTI +11% (signs contract with Assiut National Oil)
- BIIB +7.3% (Biogen and Eisai Co. Ltd complete the submission of a Biologics License Application to the FDA for the approval of aducanumab)
- ABEO +6.8% (restarts patient enrollment in its Phase 3 VIITAL study of EB-101 for the treatment of recessive dystrophic epidermolysis bullosa)
- CLNE +5.4% (partners with CVX on Adopt-a-Port)
- VVV +3.7% (provides preliminary June performance results)
- VFF +3.5% (executed a definitive agreement with DutchCanGrow to become one of six equal shareholders in DCG owning just under 16% each, with a seventh shareholder owning 5%)
- CORR +3.3% (says it's actively evaluating opportunities to deploy cash)
- NXTC +2.2% (announces the initiation of a Phase 1/2 clinical trial for NC410)
- BCLI +2.2% (to host webinar discussing NurOwn Phase 2 Alzheimer's Disease Program today at 8:15am ET)
- SCM +1.1% (provides Q2 update)
Analyst comments:
- NKLA +7.4% (upgraded to Overweight from Neutral at JP Morgan)
- BTAI +3.5% (target raised to $120 at H.C. Wainwright)
- HRI +3% (upgraded to Buy from Neutral at BofA Securities)
- KSS +2.8% (upgraded to Buy from Neutral at BofA Securities)
- DEO +2.4% (upgraded to Buy from Neutral at Bryan Garnier)
- CAT +1.1% (upgraded to Neutral from Underperform at BofA Securities)
- RIO +0.9% (upgraded to Sector Perform from Underperform at RBC Capital Mkts)
Early premarket gappers
- Gapping up:
- VBIV +14.3%, GNMK +12.3%, FTI +9.4%, CLNE +8.1%, NXTC +7.3%, SYNA +4.9%, DOCU +4%, VVV +3.7%, CORR +3.2%, SGH +2.8%, BCLI +1.4%, SCM +1.1%, GNL +0.8%, PCRX +0.7%
- Gapping down:
- LEVI -5.5%, ARGO -4.8%, ETNB -3.5%, ASND -1.6%, VIR -1.4%, ALL -1.3%, KKR -0.9%, AKRO -0.8%, FB -0.5%, INSG -0.5%
Trump’s Niece Mary Says She Leaked Family Documents to the New York Times
‘I had to take Donald down,’ Mary L. Trump writes in coming memoir
Mary L. Trump, President Trump’s niece, leaked critical financial documents about the Trump family to the New York Times in 2017 in an effort to damage the president, she wrote in a coming book that tells a bitter story about the president’s upbringing and family dynamics.
In her memoir, Ms. Trump said she decided to share the documents—some related to a decades-old dispute within the family over her grandfather’s estate—because of her concerns regarding the policies of the president.
“I had to take Donald down,” Ms. Trump wrote in “Too Much and Never Enough: How My Family Created The World’s Most Dangerous Man,” a copy of which was obtained by The Wall Street Journal. The book will be published on July 14 by Simon & Schuster, the book-publishing arm of ViacomCBS Inc.
“I grabbed copies of my grandfather’s wills, floppy disks with all of the depositions from the lawsuit, and some of my grandfather’s bank records—all of which I was legally entitled to as part of the lawsuit—and stuffed them into my bags,” she wrote.
Ms. Trump gave them to a reporter for the Times, who in turn handed her “a burner phone so we could communicate more securely going forward. We weren’t taking any chances.” Ms. Trump wrote that she later provided additional documents to Times reporters.
That information contributed to a lengthy article that the Times published in October 2018 providing an account of the Trump family’s business activities.
The Times won a 2019 Pulitzer Prize for explanatory reporting for “an exhaustive 18-month investigation of President Donald Trump’s finances that debunked his claims of self-made wealth and revealed a business empire riddled with tax dodges,” according to the citation.
Ms. Trump is the daughter of the late Frederick Trump Jr., the oldest son of real-estate magnate Fred Trump and the brother of Donald Trump and three other siblings. Fred Trump died in 1999, and his surviving spouse, Mary Anne Trump, in 2000.
In her memoir, Ms. Trump describes a complex set of relationships between the elder Fred Trump and his sons. She recalled the father shouting at Fred Trump Jr. in front of a group of employees: “Donald is worth ten of you.” Donald Trump was in high school at the time, she wrote.
“Mary Trump and her book’s publisher may claim to be acting in the public interest, but this book is clearly in the author’s own financial self-interest,” White House spokeswoman Sarah Matthews said Tuesday. “President Trump has been in office for over three years working on behalf of the American people—why speak out now?”
Ms. Matthews said the president describes his relationship with his father as “warm” and “loving.”
Ms. Trump cast a harsh light on the Trump family’s relationship with her father. Ms. Trump wrote that when her father suffered a heart attack at age 42 after years of drinking and smoking, nobody from the family accompanied him to the hospital. Donald Trump, she wrote, went to the movies. Fred Trump Jr. died that evening.
Senior White House adviser Kellyanne Conway told reporters Tuesday the president is always privately complimentary of his brother and was strongly affected by his death.
Mr. Trump has often invoked his brother’s alcoholism to explain why he doesn’t drink. “He would constantly tell me, don’t drink. ... He would say it over and over and over again,” the president said in 2017.
Ms. Trump, who has a doctorate in clinical psychology, wrote that President Trump’s “pathologies are so complex and his behaviors so often inexplicable that coming up with an accurate and comprehensive diagnosis would require a full battery of psychological and neuropsychological tests that he’ll never sit for.”
Ms. Conway suggested Tuesday that the president’s niece was out of her depth. “He’s not her patient, he’s her uncle,” she said.
In the book, Ms. Trump says President Trump cheated on a crucial college entrance test. He hired a “smart kid with a reputation for being a good test taker, to take his SATs for him,” she wrote. “That was much easier to pull off in the days before photo IDs and computerized records. Donald, who never lacked for funds, paid his buddy well.”
Ms. Matthews, the White House spokeswoman, said: “The absurd SAT allegation is completely false.”
Mr. Trump has often bragged about attending University of Pennsylvania’s Wharton business school program as an undergraduate, calling the school “super genius stuff.”
Last year, longtime Trump lawyer Michael Cohen testified before Congress that Mr. Trump had directed him to threaten the president’s high school, colleges and the College Board not to release his grades or SAT scores. Mr. Cohen showed the committee copies of the letter he said he sent at the president’s direction.
A spokesman for Fordham University, which Mr. Trump attended for two years before transferring to Wharton, at the time confirmed that a Trump aide had called during the 2016 campaign to confirm the university wouldn’t release any of his records.
Mr. Cohen is serving a three-year sentence in home confinement after pleading guilty to charges including campaign-finance violations.
Earlier this month, President Trump’s brother Robert S. Trump filed a lawsuit in Dutchess County, N.Y., asking the court to block Simon & Schuster from releasing Ms. Trump’s memoir. He alleged the book included details that, if published, would violate a confidentiality agreement signed by Ms. Trump years ago. The contract had been part of the financial settlement that stemmed from the familial inheritance dispute.
A New York judge issued a temporary injunction against Ms. Trump and the publisher. At the time, Simon & Schuster said 75,000 copies of the book had already been printed and thousands had been shipped to sellers.
But on Friday, an appellate judge reversed course in a late-night decision and overturned the restraining order against the company.
“Unlike Ms. Trump, S&S has not agreed to surrender or relinquish any of its First Amendment rights,” Justice Alan D. Scheinkman wrote in the six-page order. He noted that the company wasn’t acting as an agent of Ms. Trump, who is scheduled to appear in the Dutchess County court later this week for additional arguments on whether the temporary injunction against her should continue.
The legal Ping-Pong match intensified Monday, when Simon & Schuster announced plans to move up the book’s release day to July 14.
The Inside Story of Why Mary Trump Wrote a Tell-All Memoir
President Trump’s niece was a family outcast. Her new book casts a cold light on the relatives she describes as dysfunctional.
For most of her life, Mary L. Trump was shunted aside by her own family.
Her uncle, President Trump, for years looked down on her father — his own brother, Fred Trump Jr., an alcoholic who died when she was a teen.
Her grandfather, Fred Trump Sr., hated her mother, whom he blamed for Fred Trump Jr.’s drinking, court papers say. Her aunt, the president’s sister, once accused Ms. Trump and her brother in a legal deposition of being “absentee grandchildren.”
Even when Ms. Trump shared Christmas with her family, her grandfather was often annoyed by what he took to be her disrespectful nature. Her crime, court papers say: She showed up wearing a baggy sweater.
Ms. Trump’s status as an outcast culminated in 1999 when Fred Trump Sr. died, and she discovered that she and her brother had been cut out of his will, depriving them of what they believed was their rightful share of untold millions. A dispute over the will devolved into a court fight, its details shielded by a confidentiality agreement that Ms. Trump has adhered to for nearly 20 years.
Now, however, the story of that fight — and other new allegations — has been thrust into the spotlight with the publication of Ms. Trump’s memoir, a copy of which The New York Times obtained on Tuesday. The book, along with a number of court documents that have never been reported, sheds new light on a decades-long saga of greed, betrayal and internecine squabbles, laying out what Ms. Trump has described as her family’s legacy of darkness and dysfunction.
Her book, “Too Much and Never Enough: How My Family Created the World’s Most Dangerous Man,” which is set to be released next week, has ended up in court itself: The Trump family has sought to stop its publication. Ms. Trump has countered that the secrecy provision that has kept her silent until now is unenforceable and based on financial fraud.
The book makes a number of allegations that Ms. Trump depicts as family secrets, among them a claim that a young Donald Trump paid someone to take his SAT, the standardized test used for college admissions. It also alleges that Mr. Trump’s sister, Maryanne Trump Barry, a former federal judge, considered him “a clown” who had “no principles” and that the Trump family left Fred Trump Jr. unattended at a hospital on the night that he died.
In her book, Ms. Trump seeks to explain how Donald Trump’s position in one of New York’s wealthiest and most infamous real-estate empires helped him acquire what Ms. Trump has referred to as “twisted behaviors” — attributes like seeing other people in “monetary terms” and practicing “cheating as a way of life.”
Ms. Trump, a clinical psychologist, calls her grandfather — the president’s father, Fred Trump Sr. — a “sociopath” who damaged his children. His father’s behavior, she concludes, led the president to adopt bullying and other aggressive behaviors to mask his own insecurities.
While several close associates of Mr. Trump have published exposés of him and his time in office, Mary Trump, who is 55 and lives on Long Island in New York, is the first member of the family to have broken ranks by writing a book.
Sarah Matthews, a White House spokeswoman, said Tuesday that the book was in Ms. Trump’s “own financial self-interest.” She said the president has described his relationship with his father in warm terms and called the allegation about the SAT “completely false.”
A lawyer for Mr. Trump’s family, Charles Harder, did not respond to an email seeking comment.
John Barrengos, one of Ms. Trump’s oldest friends, said that he believed the book was her response to a family that she feels tried to silence her and an attempt to shed light on her uncle, whose politics she strongly opposes.
“I think trying to tell the story as she sees it is a way of again claiming her voice not just in the construct of the family, but in the context of what our country is going through,” Mr. Barrengos said.
A turbulent family
The seeds of Ms. Trump’s alienation began before she was born, with her father’s relationship to his family, and continued through her childhood before bursting open when her grandfather died, according to her book and court documents, some of which remain under seal.
Ms. Trump and her brother, Fred Trump III, were the only children of Fred Trump Jr., the oldest sibling of Donald Trump, and Linda Clapp Trump, a onetime flight attendant who did not win her father-in-law’s approval.
Fred Trump Jr. was not inclined to the family real-estate business, so Donald Trump stepped into the role of his father’s successor. The eldest Trump sibling became a pilot and struggled with alcoholism.
In her book, Ms. Trump writes that her uncle Donald watched her grandfather mock her father, learned from the ridicule to become Fred Sr.’s favorite son and joined in it. Donald Trump told his brother, referring to his career as a pilot: “Dad’s right about you: You’re nothing but a glorified bus driver.”
For a child of one of New York’s most successful families, Ms. Trump had a turbulent upbringing. Her father was clashing with his own father and younger brother, she writes, drinking and smoking heavily. They lived in a drafty apartment in Highlander Hall, a Trump building in Queens, and at one point she was hospitalized with pneumonia.
Her father started to spiral downward. He had tried to buy a house but could not get a mortgage. “Our family was effectively trapped in that run-down apartment in Jamaica,” she wrote. “At 29 years old, my father was running out of things to lose.”
On one occasion, young Mary woke up to her father laughing while aiming a gun at her screaming mother’s face, she wrote in her book. By 1970, her mother told her father to leave, and he would never live with them again. They divorced in 1971. Fred Trump Jr. died of a heart attack in 1981 at age 42.
His children, who had already been given $400,000 each in trust by their grandfather, inherited a 20 percent stake their father had been granted in Trump apartment buildings in Brooklyn and Queens, several ground leases and other revenue-producing businesses.
Long after their father’s death, Mary Trump and her brother continued attending family events, including a Mike Tyson fight in Atlantic City with Donald Trump, their grandfather’s birthday party at Peter Luger Steak House, Ivanka Trump’s eighth birthday party and weddings, holidays and visits with their grandmother.
Still, they remained at the edges of the family. Fred Trump Sr. never liked Linda Trump, according to testimony in a battle over his will, and worried that any money left to his two grandchildren would end up in her hands.
“He had a tremendous dislike for their mother,” Donald Trump said of his father in a deposition obtained by The Times. “He felt the mother was the cause of Fred’s difficulty.”
Fred Trump Sr. also looked down on Mary Trump and her brother because of what he perceived as a poor work ethic fostered by inheriting their father’s money, according to testimony in the will dispute by John Walter, Donald Trump’s cousin.
“He knew what Fred III was doing,” Mr. Walter testified. “He knew what Mary was doing. He knew what their father had done before them.” Fred Trump III, Mr. Walter said, was “not working hard enough.”
Although Mr. Walter said that Mr. Trump Sr. did not expect Mary Trump, as a woman, to work in construction, he did not think either of the children was fulfilling their potential.
A fight over inheritance
When Fred Trump Sr.’s will was revised in 1991, he left $202,000 to each grandchild, including Mary Trump and Fred Trump III. The bulk of the Trump fortune would pass to his four living children. His other grandchildren stood to eventually inherit their parents’ portion. But Mary Trump and Fred Trump III — without their knowledge — were cut out of a 20 percent share of their grandfather’s estate that they might have received had their father lived.
“This is tantamount to disinheriting them,” an adviser told the Trump patriarch in a memo before the will was finalized. “You may wish to increase their participation in your estate to avoid ill will in the future.”
After Fred Trump Sr. died on June 25, 1999, Mary Trump and Fred Trump III learned that they had been cut out. Nine months later, they contested the will in court in New York, arguing that their grandfather had been suffering from dementia and that his children had manipulated him to influence the way the will was written.
A week after they went to court, a Trump family company cut off health insurance to Mary Trump, her mother, brother and her brother’s family, including Fred III’s 9-month-old son William, who had suffered from seizure disorders and would be diagnosed with cerebral palsy. Donald Trump acknowledged the termination of the insurance was related to the fight over his father’s will.
“When [Fred III] sued us, we said, ‘Why should we give him medical coverage?’” he told The Daily News at the time. Mary Trump told the newspaper that by contesting the will she was fighting for their father to be recognized. “He existed, he lived, he was their oldest son. And William is my father’s grandson,” she said.
Litigation over the will and the health insurance became the vehicles for the Trumps to hurl insults and raise grievances that had hung in the air for years.
In an affidavit in a lawsuit over the health insurance, Mary Trump said that at a meeting at the Drake Hotel, her uncle Robert tried to persuade her and her brother to accept the will’s terms, mentioning how much had been spent on William’s medical care. They interpreted the statement as a threat to terminate the insurance if they fought the will.
Robert Trump, in his own affidavit, called William’s 24-hour nurses “highly paid babysitters.”
Fred III said he was shocked that his family would trivialize his son’s medical care.
“My loving aunts and uncles, in an expression of their undying concern for William, were more than willing to jeopardize his care in order to punish me and my sister,” he said in his affidavit.
Those aunts and uncles had not visited William at a hospital a short cab ride from their Manhattan apartments, though in a restaurant Donald Trump “yelled across the tables that he had heard my child was sick,” Fred III later said.
‘Absentee grandchildren’
The fight over the will was equally bitter.
“They live like kings and queens,” Donald Trump said of his niece and nephew in his deposition. “This is not two people left out in the gutter.”
Maryanne Trump Barry, for her part, testified there was “no relationship” between Mary and Fred III and her father, calling them “absentee grandchildren,” even as she acknowledged that they had attended Christmas at her parents’ house and other family events.
“They often came and left very early,” she said. “On each time they came Freddy was never wearing a tie, which drove my father bananas, and Mary was in pants and a baggy sweater, which drove him bananas as well.”
Mary Trump, in response, gave her lawyer a long list of the events they had attended.
In her book, Ms. Trump accuses Robert Trump of telling her and her brother during the will battle that if they did not settle, the family would bankrupt one of the companies in which they had inherited a stake and saddle the two of them with the bill.
Ms. Barry and Robert Trump did not respond to requests for comment.
The Trumps settled their disputes in April 2001, court records show. As part of the deal, Mary and Fred III received an undisclosed cash settlement, and they agreed to turn over the 20 percent stake in Trump assets they had inherited from their father, including seven apartment complexes, ground leases and stakes in a public housing complex and in the company Robert Trump had purportedly threatened to bankrupt.
After The Times reported on the family’s questionable valuations of its real-estate assets in 2018, Mary Trump concluded that she and her brother were duped in the settlement, she has claimed in the run-up to publishing her book.
Even as the court fight over the will was starting to be resolved, Ms. Trump tried to establish her own life.
After working on a master’s degree in English at Columbia University, she switched directions and in 2001 started taking psychology courses at Adelphi University, not far from her home. In 2003, she earned a master’s degree, and by the end of the decade had finished her doctoral studies, writing a dissertation that examined the qualities that made people vulnerable to being stalked by their partners.
Around the same time, she entered into a romantic relationship. Ms. Trump and her partner raised a daughter before separating several years later.
When her uncle Donald announced that he was running for president in June 2015, Ms. Trump did not take it seriously, assuming, she wrote, that he “simply wanted the free publicity for his brand.” Throughout the campaign, which was marked by scandals like the release of the “Access Hollywood” tape, Ms. Trump did not speak out, fearing that her voice would not be heard and that her views would make no difference, she wrote in the book.
She stayed in touch with her aunt, Ms. Barry, whom she quotes as saying about the presidential race, “He’s a clown — this will never happen,” during one of their regular lunches in 2015. Ms. Barry was particularly baffled by support for her brother among evangelical Christians, according to the book.
On election night, however, Ms. Trump took to Twitter, writing, “Worst night of my life.” She also wrote: “We should be judged harshly,” adding, “I grieve for our country.”
Ms. Trump has grown apart from the brother with whom she had been aligned in the family conflict years ago. While she has chosen to speak out against the family, he has taken a different path, nurturing a relationship with their uncle. In a statement released through the Trump family last month, Mr. Trump III distanced himself from his sister’s book and said their legal settlement had been generous and his son well-provided for.
EU hopes hydrogen is more than just hype
Brussels wants to ramp up production of clean hydrogen to help meet climate goals
Brussels is trying to find ways to fill in the missing piece in its long journey towards climate neutrality: the mass production of hydrogen. But it is not without controversy.
The European Commission will unveil on Wednesday afternoon the latest leg of its “hydrogen strategy” and “hydrogen alliance” — a two-pronged attempt to bring together private business and EU money to massively scale up Europe’s hydrogen supply.
For Brussels, and a number of influential member states like Germany, hydrogen will play a pivotal part in the push to decarbonise European industry and help the EU hit its goal to become carbon-neutral by 2050. But as the Brussels Briefing has written before, powering up hydrogen is not without its perils.
Compared to other renewables, hydrogen production is relatively expensive and makes up only a tiny proportion of the EU’s energy mix. And, as the commission itself admits, a vast proportion of current hydrogen production is done through “dirty” methods that use electricity powered by fossil fuels.
Brussels wants to change all that with ambitious targets on the production of “green hydrogen” — code for using methods that don’t require the use of fossil fuels. According to a leaked version of the commission’s plan, seen by the Brussels Briefing, the commission wants the EU to produce 1m tonnes of clean hydrogen by 2024, ramping up to 10m tonnes by 2030.
Green groups will be combing through the strategy to make sure it is not used as a cover to pump more investment into the EU’s controversial natural gas infrastructure. Gas is seen as a “transition” fuel on the route to full decarbonisation and its infrastructure can also be retrofitted for the production of hydrogen. But natural gas critics say Europe’s governments are better off spending their resources on fully renewable sources instead.
Kadri Simson, EU energy commissioner, told the FT that Brussels was determined to boost only “renewable hydrogen, in line with our Green Deal strategy and climate-neutrality commitment.”
“We need to bring down the cost of clean hydrogen quickly, by increasing the electrolyser capacity and the share of renewable energy in Europe.”
The push will be welcomed by Europe’s industrial giants — in sectors like steel and chemicals — where hydrogen is still the only real “green” alternative to fossil fuel power. But the hydrogen hype is also based in part on hopes that the fuel can also compete in the lucrative clean cars market, where battery-powered technology has raced ahead of the rest.
Deutsche Bank fined for Jeffrey Epstein ‘compliance failures’
New York regulator imposes £150m penalty over dealings with sex offender as well as Danske Estonia and FBME
Deutsche Bank has agreed to pay a $150m fine for compliance failures in its dealings with Jeffrey Epstein, the late disgraced financier, as well as Danske Bank Estonia and FBME Bank.
The German lender processed millions of dollars of potentially suspicious transactions by Epstein, a registered sex offender, including payments to alleged co-conspirators, to Russian models, and $800,000 in suspicious cash withdrawals, the New York State Department of Financial Services said on Tuesday.
“Despite knowing Mr Epstein’s terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions,” Linda Lacewell, the superintendent of financial services, said in a statement.
The settlement marked the first enforcement action against a bank for its dealings with Epstein, who was convicted in 2008 of soliciting sex from a minor and subsequently arrested last year on federal charges of sex trafficking underage girls. He died in jail in August last year while awaiting trial, in what was ruled a suicide.
It is also the latest monetary penalty for Deutsche, which has paid billions of dollars in fines and settlements for a number of misconduct issues over the past decade, in an attempt to shed its reputation for high-risk relationships and poor compliance controls.
“Onboarding [Mr Epstein] as a client in 2013 was a critical mistake and should never have happened,” Deutsche’s chief executive Christian Sewing said in an internal memo to staff seen by the Financial Times. “Our reputation is our most valuable asset and we deeply regret [the] association.”
The consent order agreed by Deutsche revealed new details about Epstein’s finances, such as a trust known as “The Butterfly Trust”, whose beneficiaries included alleged co-conspirators and “a number of women with eastern European surnames”.
Epstein sent more than 120 wires amounting to $2.65m to the trust’s beneficiaries for “hotel expenses, tuition, and rent,” according to the consent order, which also detailed apparent settlement payments of more than $7m and legal expenses of more than $6m.
In addition, the bank allowed an unnamed attorney for Epstein to withdraw about $800,000 in cash between 2013 and 2017 on the justification that it was needed for travel, tipping and expenses, the New York financial regulator said.
The regulator also outlined a series of “procedural failures, mistakes, and sloppiness” in Deutsche’s handling of more than 40 accounts opened by Epstein between 2013 and 2018, when the bank terminated the relationship following renewed press scrutiny of the financier’s crimes.
Deutsche had previously continued its relationship with Epstein despite questions about his conduct. In January 2015, two Deutsche employees had met with Epstein and questioned him about reports of his sex crimes that had re-emerged in the press. The employees “appeared to be satisfied by Mr Epstein’s response,” according to the regulator, but Deutsche had said it had no contemporary record of the substance of the meeting.
Also that month, the bank’s reputational risk committee in the US met to fully assess the Epstein relationship. The committee did not take minutes, and the additional conditions it imposed had little effect as not all members of the team handling Epstein were told, the regulator said.
Tuesday’s settlement, which credited Deutsche’s “exemplary co-operation”, also said the German lender had “failed to take appropriate action” to prevent Danske Bank Estonia executing billions of dollars in suspicious transactions through accounts in New York.
Between 2007 and 2015, Deutsche acted as a correspondent bank for Danske’s Estonian branch, which is suspected of laundering €200bn out of money from former Soviet states.
During that time, Germany’s largest lender cleared more than €160bn for Danske’s tiny Estonian branch.
Deutsche quit its role clearing dollars for Danske’s Estonian branch in 2015 after its internal controls started to flag a rising amount of suspicious transactions, which the bank reported to authorities.
The regulator said Deutsche had similarly failed to act on red flags in its relationship with FBME in Cyprus. FBME was sanctioned by the US in 2015 over money laundering concerns.
Deutsche acknowledged deficiencies in its relationship with Danske and FBME but said “there was no intentional effort by anyone within the bank to facilitate unlawful activity”.
“We have invested almost $1bn in improving our training, controls and operational processes, and have increased our anti-financial crime team to more than 1,500 people,” the bank added. “Our transformation and strengthening continues.”
Lansdowne to shut $2.8bn hedge fund after weak returns
Developed Markets strategy known for bet against Northern Rock during financial crisis
Lansdowne Partners, one of Europe’s oldest and best-known hedge fund managers, is planning to shut its flagship hedge fund after a long period of poor performance.
The Mayfair-based firm, once regarded as the gold standard of equity investing, will close its $2.8bn Developed Markets fund run by Peter Davies and Jonathon Regis because of difficulties uncovering wagers on falling stock prices, according to a person familiar with the plans.
"It is much harder to see opportunities in the short book, either in terms of generating specific value or as a hedging offset to the long investments," Lansdowne said in a letter to investors. The firm declined to comment beyond the letter.
The Developed Markets strategy, which managed more than $12bn in assets five years ago, is known for a well-timed bet against Northern Rock during the financial crisis and some large gains in the period that followed.
However, performance has lagged in recent years. The fund lost 23 per cent during the first six months of 2020, as its long positions in airline stocks were hard hit by the coronavirus pandemic.
The Financial Times reported last year that the fund’s short bets had not beaten the market in aggregate since 2008, reflecting how some managers had struggled to make money from their short positions amid an environment of central bank easing that had pushed asset prices higher.
Lansdowne’s Developed Market fund was also hit by bullish bets on UK stocks, having bet the UK economy was “structurally in a very good position”. Meanwhile, it has been negative on US equities, which have on average fared better than European stocks this year. Hedge funds on average are down 1.1 per cent in the first six months of this year, according to data group Hedge Fund Research.
The fund gained only about 1 per cent in last year’s bull market, and suffered losses in two of the three previous years, according to investors. It underestimated the impact of Brexit on UK stocks, for instance on a long-held position in Lloyds Banking Group.
Lansdowne’s publicity-shy managers Mr Davies and Mr Regis have become very positive on the outlook for betting on rising stock prices, and believe excessive short-term reactions to coronavirus by investors have created large valuation opportunities, the person said.
The closure of the Developed Markets fund was first reported by Institutional Investor. Clients will be able to pull their cash out, or invest in either an existing long-only version of the strategy or a new fund called LDM Opportunities that Lansdowne is launching to invest in early-stage companies.
Lansdowne was founded in 1998 by Steven Heinz and Paul Ruddock.