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Tag: Business/Consumer Services

  • Could Big Tech layoffs keep growing? Apple, Amazon, Facebook and Google may give hints in biggest week of earnings.

    Could Big Tech layoffs keep growing? Apple, Amazon, Facebook and Google may give hints in biggest week of earnings.

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    In the biggest week of the holiday-earnings season, Big Tech results will receive the spotlight amid thousands of layoffs that could only be the beginning.

    After tech stocks were decimated in 2022, investors will be looking for signs of a turnaround in holiday reports and potential forecasts for the year ahead from three of 2022’s top five market-value losers: Amazon.com Inc.
    AMZN,
    -0.66%    ,
    Apple Inc.
    AAPL,
    -0.63%
    and Meta Platforms Inc.
    META,
    -0.60%    .
    The other two stocks on that list — Microsoft Corp.
    MSFT,
    -1.38%
    and Tesla Inc.
    TSLA,
    -0.15%
    — reported last week, and Microsoft’s results in the wake of a mass-layoffs announcement did not bode well for its Big Tech brethren.

    See also: Microsoft could be the cloud sector’s ‘canary in the coal mine’

    Those companies — along with Google parent Alphabet Inc.
    GOOGL,
    -1.32%
    GOOG,
    -1.49%
    — will deliver results after finding themselves in unfamiliar territory: A backdrop of layoffs amid slowing demand for core products like digital ads, electronics and e-commerce, after a two-year pandemic surge and a two-decade-plus honeymoon with investors. Some analysts say the bottom hasn’t arrived, for either their finances or their workforces.

    The one Big Tech company that hasn’t taken a sword to its payroll is Apple, which also increased its staff the least among the group during the COVID-19 pandemic. Apple shed $846 billion from its market cap last year, and now reports after its core product was part of the smartphone industry’s worst year since 2013 and worst holiday-season decline on record. The iPhone maker could also face questions from Wall Street about changing up its product sourcing, which has relied heavily on China, a nation whose COVID-19 restrictions have constrained production of some phones.

    While the tech-industry layoffs have yet to hit Apple, some analysts say the company is unlikely to be spared, despite Chief Executive Tim Cook requesting and receiving a healthy cut to his compensation.

    “Similar to other big technology companies, we expect Apple to adjust its head count to reflect an increasingly challenging global macroeconomic environment,” D.A. Davidson analyst Tom Forte said in a research note Tuesday.

    Rivals that have already cut could face more if profit continues to fall along with revenue growth. Alphabet, for instance, is cutting 12,000 employees, but an activist investor has already said that is not enough considering how much the company grew during the pandemic, and the difficulties it now faces in the online-ad sector.

    Opinion: Microsoft’s big move in AI does not mean it will challenge Google in search

    Analysts have said Meta’s “darkest days” are still ahead, as it navigates a round of more than 11,000 layoffs, competition from TikTok and its early stumbles in the metaverse. While cutting, Chief Executive Mark Zuckerberg has promised to keep spending on metaverse development, even as the efforts slash the Facebook parent company’s previously healthy bottom line.

    “In 2023, we expect Meta to remain engulfed in arduous battles inside the Octagon,” Monness Crespi Hardt analyst Brian White said in a research note on Thursday. “In the long run, we believe Meta will benefit from the secular digital ad trend and innovate in the metaverse; however, regulatory scrutiny persists, internal headwinds remain, and we believe the darkest days of this downturn are ahead of us.”

    Full Facebook earnings preview: Meta’s ‘darkest days’ are ahead, but some analysts say ad sales are still on track

    Online retailer Amazon
    AMZN,
    -0.66%
    was the first Big Tech company to publicly declare cost-cutting was in order a year ago, and still coughed up $834 billion in market value in 2022. It kicked off 2023 with plans to lay off more than 18,000 workers as struggles continued throughout last year, when inflation siphoned away more consumer dollars toward essentials.

    Amazon’s own AWS cloud-infrastructure unit has helped to drive sales in years past, as businesses built out their tech infrastructures. But remarks and the outlook from Microsoft executives — the third-biggest market-cap loser of 2022, and a big barometer for tech spending overall — weren’t exactly encouraging for cloud growth: Executives there last week warned of “moderating consumption growth” for its own cloud business.

    For more: One company could determine whether U.S. corporate profits rise to a record in 2023

    “Sentiment was already bearish on AWS, with investors looking for slowing revenue over the next three quarters, largely confirmed after Microsoft earnings and conversations with industry checks,” Oppenheimer analyst Jason Helfstein said in a note on Wednesday. “Positively, we believe e-commerce revenue has stabilized, and margins should improve from organic scale and announced head-count reductions.”

    Layoffs are also starting to spread beyond Big Tech companies that grew fast during the pandemic in response to massive demand spikes. International Business Machines Corp.
    IBM,
    +0.76%
    confirmed plans for 3,900 layoffs as it reported earnings, despite already reducing its workforce by at least 20% during the pandemic.

    One sector to watch is semiconductors, where a chip shortage has turned into a glut: Chip-equipment maker Lam Research Corp.
    LRCX,
    +0.04%
    announced layoffs in the past week as Silicon Valley semiconductor giant Intel Corp.
    INTC,
    +0.27%
    displayed “astonishingly bad” results while laying off workers. When Intel rival Advanced Micro Devices Inc.
    AMD,
    -1.64%
    reports this week, it could determine whether there is any silver lining in the semiconductor storm.

    Earnings preview: AMD faces even more scrutiny after ‘astonishingly bad’ Intel outlook

    Wedbush analyst Daniel Ives said in a Sunday note that a common theme of this week’s Big Tech earnings will be that “tech layoffs will accelerate with more pain ahead to curb expenses,” though he added that “Apple will likely cut some costs around the edges, but we do not expect mass layoffs from Cupertino this week.”

    Big Tech earnings were a salve to other problems in the market for the past decade-plus, but with layoffs already under way and doubts about the path forward, don’t expect salvation from their results this week.

    This week in earnings

    For the week ahead, 107 S&P 500
    SPX,
    -0.19%
    companies, including six members of the Dow Jones Industrial Average
    DJIA,
    +0.18%    ,
    will report results, according to FactSet. While more Dow components reported last week, this will be the busiest week for S&P 500 holiday earnings of the season, FactSet senior earnings analyst John Butters confirmed to MarketWatch.

    Appliance-maker Whirlpool Corp.
    WHR,
    +1.18%
    reports on Monday, after it forecast fourth-quarter sales that were below expectations, following what it called a “one-off supply-chain disruption” and the pandemic home-renovation boom.

    On Tuesday, package-deliverer United Parcel Service Inc.
    UPS,
    -0.26%
    reports, amid questions about holiday-season demand. So does streaming service Spotify Technology,
    SPOT,
    -0.02%
    following its own layoffs and suggestions of possible price hikes, as well as McDonald’s Corp.
    MCD,
    -0.30%    ,
    amid concerns that rising prices are keeping people from dining out. Exxon Mobil Corp.
    XOM,
    -0.99%    ,
    Caterpillar Inc.
    CAT,
    -0.12%    ,
    Snap Inc.
    SNAP,
    +0.64%
    and Pfizer Inc.
    PFE,
    +0.72%
    also report Tuesday.

    Earnings outlook: McDonald’s earnings haven’t been hit by higher prices

    On Wednesday, T-Mobile US Inc.
    TMUS,
    +0.23%
    reports, in the wake of a data breach and wobbling cellphone demand. Coffee chain Starbucks Corp.
    SBUX,
    -0.58%
    reports on Thursday, with analysts likely to be zeroed in on U.S. demand and China’s reopening, after executives said they were confident that higher prices, along with enthusiasm from younger customers and for customizable drinks, could help them navigate any potholes in the economy.

    For the Big Tech companies, Thursday is also the big day: Apple, Amazon and Alphabet will report that afternoon, after Meta reports the prior day.

    The calls to put on your calendar

    WWE upheaval: World Wrestling Entertainment Inc.
    WWE,
    +0.91%
    reports earnings on Thursday, as Vince McMahon — who returned to the professional-wrestling organization this month following allegations of sexual misconduct — seeks a buyer or some other so-called “strategic alternative” for the company.

    Analysts have speculated how the company’s wrestling events and backlog of media content might be repurposed, with some entertaining the possibility of interest from Amazon or Netflix Inc.
    NFLX,
    -0.39%    .
    But WWE has struggled to develop story lines that stick with viewers, and has thinned its ranks of wrestlers.

    The Wall Street Journal this month reported that McMahon would pay a multimillion-dollar settlement to a former referee who accused him of raping her. Among the changes since McMahon returned was the departure of his daughter, who had been promoted to co-CEO after he stepped down from the role last year.

    There isn’t much clarity on whether Vince McMahon will be on Thursday’s earnings call, which was moved from the morning to the afternoon due to a scheduling conflict. But it should offer drama no matter who attends.

    The numbers to watch

    GM and Ford auto sales: Auto makers General Motors Co.
    GM,
    -2.00%
    and Ford Motor Co.
    F,
    -0.94%
    will issue results on Tuesday and Thursday respectively, amid signs of waning demand and rising interest rates that have made car loans more expensive. Despite falling new-vehicle sales in the third quarter, GM managed to keep its own sales higher, the AP noted.

    Mary Barry, GM’s chief executive, called out the popularity of vehicles like the Escalade, the Chevrolet Bolt EV and some pickups and SUVs during the auto maker’s third-quarter earnings call in October. During that quarter, GM said it completed and shipped nearly 75% of the unfinished vehicles held in its inventory in June. She said supply-chains were opening up again, but added that “short-term disruptions will continue to happen.”

    The auto makers report as they try to put a chip shortage and other production constraints behind them. But some forecasts call for 2022 auto sales, or sales volumes, to be the weakest in roughly a decade. Electric vehicle maker Tesla’s recent price cuts could also cut into GM’s and Ford’s own EV sales.

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  • Consumers spending falls at the end of 2022 and that’s not good news for the U.S. economy

    Consumers spending falls at the end of 2022 and that’s not good news for the U.S. economy

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    The numbers: Consumer spending fell 0.2% at the end of 2022, indicating the U.S. economy entered the new year with fading growth prospects and rising odds of recession.

    Analysts polled by The Wall Street Journal had forecast a 0.1% decline.

    Incomes rose 0.2% last month, the government said Friday, a bit faster than the rate of inflation.

    Key details: Americans spent less on gasoline in December after prices at the pump fell again. They also bought fewer new cars and trucks.

    While they purchased fewer goods last month, consumers spent more for services. Yet most of the money went to housing, medical care and transportation — necessities that Americans would prefer to spend less on.

    The U.S. savings rate rate, meanwhile, rose to 3.4% from 2.9% in the prior month. Savings had fallen late last year to the second lowest level on record going back to 1959.

    Households have dipped into their savings to support their spending habits because of high inflation. The so-called PCE price index is up 5% in the past year. And the better known consumer price index has risen 6.5% in the same span.

    Although inflation is slowing, prices are still rising faster than worker pay.

    Big picture:  Consumer spending, the main engine of the economy, sputtered toward the end of the year. Outlays also declined in November.

    High inflation ate into Americans’ budgets and rising interest rates made it more expensive to buy a car, home or other big-ticket items.

    Spending is unlikely to accelerate rapidly anytime soon, leaving the economy with weaker growth propects in 2023.

    The saving grace is a still-strong labor market that’s kept most Americans working — and earning a paycheck.

    Looking ahead: “A number of indicators are flashing red lights that a recession may be upon us,” said chief economist Bill Adams of Comerica. But “more data is needed to suss out whether the economy has definitively reached a turning point.”

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.08%
    and S&P 500
    SPX,
    +0.25%
    were set to open lower in Friday trades.

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  • Intel stock drops nearly 10% after earnings miss, execs predict quarterly loss as data-center market shrinks

    Intel stock drops nearly 10% after earnings miss, execs predict quarterly loss as data-center market shrinks

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    Intel Corp. shares dropped more than 9% in the extended session Thursday after the chip maker reported a big miss for the fourth quarter, forecast a loss for the first quarter, said the data-center market was contracting and that inventory digestion will gnaw at margins.

    Intel
    INTC,
    +1.31%
    executives forecast an adjusted loss of 15 cents a share on revenue of about $10.5 billion to $11.5 billion and adjusted gross margins of about 39% for the current quarter. Analysts surveyed by FactSet had estimated adjusted first-quarter earnings of 25 cents a share on revenue of $13.93 billion.

    Chief Executive Pat Gelsinger told analysts on a conference call he would not provide a 2023 forecast. Gelsinger restricted the outlook to the current quarter, citing macro uncertainties, a digestion of PC inventory that was “difficult” to forecast and a contracting data-center market. In the fourth quarter, AI group sales dropped 33% to $4.3 billion, while the Street expected revenue of $4.08 billion.

    “We expect Q1 server consumption [total addressable market] to decline both sequentially and year-over-year at an accelerated rate, with first-half 2023 server consumption TAM down year-on-year before returning to growth in the second half,” Gelsinger said.

    Chief Financial Officer David Zinsner told analysts that the company will institute an accounting change in the first quarter, where Intel will extend the useful life of their machinery to eight years from a current five years. Gelsinger said that Intel was going to “squeeze” its effective capacity.

    While Zinsner would not give a full-year outlook, he did say that continued inventory digestion should be weighted to the first half of the year.

    Pressed on how Intel could get back to the 51% to 53% margins range he promised a year ago, Zinsner said a “significant inventory burn” on PC inventory would hit gross margins by 400 basis points in the first quarter. Gross margins for the fourth quarter dropped to 43.8% from 55.8% a year ago, and from 45.9% in the third quarter.

    Intel reported a fourth-quarter loss of $664 million, or 16 cents a share, versus net income of $4.62 billion, or $1.13 a share, in the year-ago period. After adjusting for restructuring charges and other items, Intel reported earnings of 10 cents a share, compared with $1.13 a share from a year ago.

    Revenue declined to $14.04 billion from $20.52 billion in the year-ago quarter, for a 10th straight quarter of year-over-year declines.

    Analysts surveyed by FactSet estimated earnings of 21 cents a share on revenue of $14.49 billion, based on Intel’s forecast of 20 cents a share on about $14 billion to $15 billion.

    Intel shares fell 9% in after-hours trading, after closing the regular session up 1.3% at $30.09. Other chip stocks also declined, including top rival Advanced Micro Devices Inc.
    AMD,
    +0.33%    ,
    which saw shares drop more than 3% in after-hours trading, and Nvidia Corp.
    NVDA,
    +2.48%    ,
    which declined 2%.

    Breaking down divisions: Client-computing sales fell 36% to $6.6 billion from a year ago; “network and edge” sales slipped 1% to $2.1 billion; and foundry services revenue rose 30% to $319 million.

    Analysts surveyed by FactSet expected revenue from client computing to come in at $7.36 billion; “network and edge” revenue of $2.23 billion; and foundry services revenue of $199.1 million.

    Over the past 12 months, Intel stock has fallen 43%. Over the same period, the Dow Jones Industrial Average 
    DJIA,
    +0.61%
     — which counts Intel as a component — has slipped 1%, the PHLX Semiconductor Index 
    SOX,
    +1.63%
     has dropped 13%, the S&P 500 index 
    SPX,
    +1.10%
     has declined 7%, and the tech-heavy Nasdaq Composite Index 
    COMP,
    +6.59%
     has dropped 15%.

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  • U.S. stocks climb as GDP report shows economy taking Fed’s rate hikes in stride

    U.S. stocks climb as GDP report shows economy taking Fed’s rate hikes in stride

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    U.S. stocks opened higher on Thursday as optimism over Tesla’s earnings results and a stronger-than-expected GDP report left investors in a better mood following Wednesday’s intraday selloff.

    How are stocks trading
    • The S&P 500
      SPX,
      +0.40%
      rose by 34 points, or 0.8%, to 4,049.

    • Dow Jones Industrial Average
      DJIA,
      +0.05%
      gained 145 points, or 0.4%, to 33,889.

    • Nasdaq Composite
      COMP,
      +0.89%
      advanced 174 points, or 1.5%, to 11,487.

    The Dow Jones Industrial Average finished Wednesday’s session up 10 points after falling roughly 400 points at the lows earlier in the session. The S&P 500 finished little-changed after erasing its early losses, while the Nasdaq ended lower.

    What’s driving markets

    Stocks opened higher after a flurry of economic data including a fourth quarter GDP report that came in stronger than expected, but the focus was on the latest batch of earnings, which helped to revive investors’ optimism following disappointing guidance from Microsoft Corp.
    MSFT,
    +1.35%
    earlier in the week.

    The economy grew at a robust 2.9% annual pace to close out 2022, according to the first estimate of fourth quarter GDP, released Thursday morning — the latest sign that the U.S. economy is holding up well despite the Federal Reserve’s aggressive interest-rate hikes.

    “Thursday’s GDP report suggests that the economy is relatively strong even in the face of aggressive measures by the Federal Reserve to calm inflation,” said Carol Schleif, chief investment officer, BMO Family Office, in emailed commentary.

    Stocks rose after the data were released as investors found solace in the latest signs that a soft landing for the U.S. economy — a scenario where growth slows, but a recession is avoided — remains possible, or even likely.

    “This is a bit of a relief rally,” said Christopher Zook, chairman and chief investment officer of CAZ Investments.

    However, corporate earnings and guidance are still the primary concern for investors, along with expectations about when the Federal Reserve will cut interest rates, Zook said.

    The labor market also showed signs of strength despite more reports of layoffs in the tech, finance and media spaces, as the number of Americans filing for unemployment benefits fell to their lowest level since April. Investors also digested durable goods orders for December. New home sales for December will be published at 10 a.m. ET.

    Investors also celebrated a surge in Tesla Inc.
    TSLA,
    +9.64%
    shares premarket after the firm released well-received results that showed record quarterly profits.

    Disappointing guidance from technology behemoth Microsoft had clobbered stocks on Wednesday as traders worried it signaled not just difficulties for the sector but also broadly worsening economic conditions.

    However, before the end of Wednesday’s session, Microsoft shares had recovered most of their 4.5% loss and the S&P 500 finished the session almost exactly where it began, according to data from FactSet.

    As for the Federal Reserve, the central bank is expected to slow the pace of interest rate hikes when it next week raises its policy rate by 25 basis points to a range of 4.5% to 4.75%.

    Companies announcing results on Thursday include: McDonald’s
    MCD,
    -0.28%    ,
    Intel
    INTC,
    -0.34%    ,
    Comcast
    CMCSA,
    +0.86%    ,
    Visa
    V,
    +0.15%    ,
    Dow
    DOW,
    -1.16%    ,
    Whirl pool
    WHR,
    -0.91%    ,
    Western Digital
    WDC,
    +3.72%
    and Northrop Grumman
    NOC,
    -0.90%    .

    Companies in focus

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  • Facebook to allow Trump back on platform after 2-year ban

    Facebook to allow Trump back on platform after 2-year ban

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    Facebook parent Meta Platforms Inc. META will restore former President Donald Trump’s Facebook and Instagram accounts after the social-media platform banned him in the wake of the Jan. 6 riot at the U.S. Capitol in 2021.

    The reinstatement of those accounts is set to happen “in the coming weeks,” Nick Clegg, Meta’s president of global affairs, said in a statement late Wednesday.

    “As…

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  • 6 cheap stocks that famed value-fund manager Bill Nygren says can help you beat the market

    6 cheap stocks that famed value-fund manager Bill Nygren says can help you beat the market

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    These are tricky times in the stock market, so it pays to look to the best stock-fund managers for guidance on how to behave now. Veteran value investor Bill Nygren belongs in this camp, because the Oakmark Fund OAKMX he co-manages consistently and substantially outperforms its peers. 

    That isn’t easy, considering how many fund managers fail to do so. Nygren’s fund beats its Morningstar large-cap value index and category by more than four percentage points annualized over the past three years. It also outperforms at five and…

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  • Microsoft Posts Earnings Beat On Solid Cloud Results, But Guidance Disappoints

    Microsoft Posts Earnings Beat On Solid Cloud Results, But Guidance Disappoints

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    Microsoft


    posted better-than-expected results for the December quarter, driven by strength in cloud computing. But the strong results were tempered by disappointing guidance for the March quarter.

    While the company saw weakness in its PC software business, Microsoft (ticker: MSFT) posted solid results in cloud computing and enterprise applications. In particular, the Azure public cloud business beat Wall Street growth estimates, which is a relief to investors nervous about the outlook for corporate IT spending.

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  • Russia-Ukraine war leaves Doomsday Clock closest to ‘crisis’ hour of midnight in report’s 76-year history

    Russia-Ukraine war leaves Doomsday Clock closest to ‘crisis’ hour of midnight in report’s 76-year history

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    The world is in greater danger in 2023 than it has been at any moment over the past seven decades, warns a leading panel of scientists and security experts.

    The illegal Russian-Ukraine conflict and its risk that nuclear weapons could be used was a primary, but not exclusive, catalyst in bumping forward the hands on the symbolic measure known as the “Doomsday Clock.”

    The…

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  • 3M to Cut 2,500 Manufacturing Jobs >MMM

    3M to Cut 2,500 Manufacturing Jobs >MMM

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    By Colin Kellaher

    3M Co. on Tuesday said it plans to cut about 2,500 manufacturing jobs around the world, as the conglomerate braces for macroeconomic challenges this year.
    

    The St. Paul, Minn., company said the job cuts, which are based on what it is seeing in its end markets, are needed to align with adjusted production volumes.
    

    

    3M joins a raft U.S. companies that are slashing staff at the start of the year amid waning demand and weaker revenue.
    

    3M, which has about 95,000 employees according to data from FactSet, said it expects to book a pretax restructuring charge of $75 million to $100 million in the first quarter.
    

    Write to Colin Kellaher at colin.kellaher@wsj.com
    

    

    

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  • 
		
		
    
			
    Feds poised to file another antitrust suit against Google this week: report
    
			
    Feds poised to file another antitrust suit against Google this week: report
    
			
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    The U.S. Justice Department is preparing to sue Alphabet Inc. in the coming days over its dominance in the online ad market, according to a report late Monday.
    

    Citing sources familiar with the matter, Bloomberg News reported the antitrust suit is expected to be filed in federal court before the end of this week, and as soon as Tuesday.
    

    

    The pending filing has been rumored for months, after the Justice Department reportedly rejected concessions offered by Google last summer. A Google spokesperson declined to comment Monday.
    

    Google dominates the online ad market, earning more than one-quarter of U.S. digital-advertising revenue, according to estimates from research firm Insider Intelligence Inc.
    

    It would be the second antitrust suit filed by the Justice Department against Google parent Alphabet. In October 2020, the DOJ accused Google of being “a monopolist in the general search services, search advertising, and general search text advertising markets.” In a 2020 blog post, Google called that suit “deeply flawed” and said people use Google because they choose to, not because they are forced to. That case is set for trial in the fall.
    

    Alphabet faces a number of other lawsuits targeting its business practices, including a $16.3 billion class-action suit filed in the U.K. in November accusing the tech giant of reaping “super profits” at the expense of thousands of smaller companies. Google called that lawsuit “speculative and opportunistic.”
    

    Alphabet’s Class A shares
    
        GOOGL,
    
        +1.81%
    
       are down 24% over the past 12 months while its Class C shares
    
        GOOG,
    
        +1.94%
    
       have fallen about 22%, compared to the S&P 500’s
    
        SPX,
    
        +1.19%
    
       9% dip over the past year. Both classes of Alphabet shares dipped nearly 1% in after-hours trading Monday after the Bloomberg report was published.
    

    

    

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  • 
		
		
    
			
    Genius Group sees 2023 revenue of $48 million to $52 million, up 27% from 2022; stock jumps 15% premarket
    
			
    Genius Group sees 2023 revenue of $48 million to $52 million, up 27% from 2022; stock jumps 15% premarket
    
			
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    Genius Group Ltd.
    
        GNS,
    
        +8.95%    ,
    
       a Singapore-based education company, set guidance for 2023 on Monday, saying it expects revenue of $48 million to $52 million, up 37% from its 2022 proforma guidance. The company, which captured headlines last week when it said it had appointed a former F.B.I. director to lead a task force investigating alleged illegal trading in its stock that it first disclosed in early January, said it expects the number of students attending its entrepreneur-training courses to climb to 5.7 million to 6.0 million, up 30% from 2022. The company expects to achieve adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, of $500,000 to $1.0 million. “In 2023 we are expecting Genius Group to continue our strong growth trajectory, and we are focused on managing our costs and achieving positive EBITDA,” Chief Executive Roger Hamilton said in a statement. The stock jumped 15% premarket. On Thursday, the stock soared a record 290% in heavy volume. Hamilton told MarketWatch on Friday about the company’s plan to go after people or groups that have been engaging in naked short selling of its stock. 
    

    

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  • 
		
		
    
			
    Genius Group stock rallies more than 200% after it appoints former F.B.I. director to investigate alleged naked short selling
    
			
    Genius Group stock rallies more than 200% after it appoints former F.B.I. director to investigate alleged naked short selling
    
			
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    The stock of a Singapore-based ed-tech and education company called Genius Group Ltd. rallied more than 200% on Thursday, after it said it appointed a former F.B.I. director to lead a task force investigating alleged illegal trading in its stock that it first disclosed in early January.  
    

    The stock was last up 264% to mark its biggest-ever one-day percentage gain. Volume of 197.76 million shares traded  crushed the 65-day average of just 634,17.  Genius Group
    
        GNS,
    
        +290.29%
    
       also said it would issue a special dividend to shareholders to help expose the wrongdoing and is considering a dual listing that would make illegal naked short selling more difficult.
    

    

     The task force will be led by Timothy Murphy, a former deputy director of the F.B.I. who is also on the board. It will include Richard Berman, also a Genius Group Director and chair of the company’s Audit Committee, and Roger Hamilton, the chief executive officer of Genius Group. 
    

    “The company has been in communication with government regulatory authorities and is sharing information with these authorities to assist them,” the company said in a statement.
    

    Genius Group said it has proof from Warshaw Burstein LLP and Christian Levine Law Group, with tracking from Share Intel, that certain individual and/or companies sold but failed to deliver a “significant” amount of its shares as part of a scheme seeking to artificially depress the stock price. 
    

    It will now explore legal action and will hold an extraordinary general meeting in the coming weeks to get shareholder approval for its planned actions.
    

    On the Genius website, Hamilton explains what the company, which went public in 2022, thinks happened. 
    

    Genius’ IPO priced at $6 a share in April of 2022, he wrote in a blog. The company, which aims to develop an entrepreneur education system, then completed five acquisitions of education companies to build out its portfolio and reported more than 60% growth in its last earnings report.
    

    Analysts at Diamond Equity assigned it an $11.28 stock price target, while Zacks assigned it a $19.20 stock price target. 
    

    “By all measures, we believed we were doing all the right things to justify a rising share price,” said Hamilton.
    

    The company then announced two funding rounds totaling $40 million to grow its balance sheet to more than $60 million, yet its stock fell to under 40 cents, or less than 25% of the cash raised and less than 20% of its net assets.
    

    “This didn’t happen gradually,” the executive wrote. “It happened in two month intervals from our IPO, in June, August, October and December. Each time, over a period of a few days, massive selling volume that was a multiple of our float (As most of our shares are on lock up, only around 4 million are tradeable) was sold into the market, making our share price drop by 50% or more.”
    

    The company has since drawn on Wes Christian, a short-selling litigator from Christian Levine Law Group, who has helped it understand how naked short selling works, and then Share Intel helped find the proof that that’s what has happened. 
    

    Individuals or groups get together and sell shares in a target company that they don’t own, with the aim of getting the share price to fall 50% in a short period. They use small-cap firms that have low buying volume, allowing them to scare off buyers.
    

    “The broker doesn’t bother to find shares to borrow,” said Hamilton. “They simply sell shares they don’t have and after a few days book them as FTDs (failure to deliver) or hide them as long sales instead of short sales. The people who bought the shares have no idea they bought a fake share, and suddenly there’s plenty more shares in the market than there should be.”
    

    If these groups sell 6 million shares from $12 to $6 each, and then buy back over two months at under $6, they double their money. That allows them to make up to $30 million out of thin air. They can then repeat the whole process a few months later. 
    

     “If they don’t buy back all the shares, they simply leave them as FTDs or hide them in offshore accounts,” he wrote. “At no point do they need to put up any cash to make this happen, as they’re making money from the moment they start selling fake shares.”
    

    The ultimate goal is to push a company into bankruptcy, where the equity will be wiped out, meaning they never have to cover the short position on the fake shares. 
    

    By issuing a special dividend, Genius is hoping to find who is responsible, as all brokers are forced to disclose to the Depository Trust & Clearing Corp. (DTCC) how many shares their clients hold and how many dividends will be paid. Theoretically, that should expose the oversold shares and dishonest brokers will be forced to cover their position, said Hamilton.
    

    In practice, dishonest brokers will not declare the fake shares and just pay the dividend out of their own pockets. 
    

    “If you issue a dividend that isn’t straight cash—such as a spinoff of a company so you are issuing shares, or a blockchain based asset, then the brokers can’t do that are a forced to either cover or be exposed,” he wrote.
    

    

    

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  • 
		
		
    
			
    Households earning $100,000 or more are cutting back more aggressively on spending. What’s going on?
    
			
    Households earning $100,000 or more are cutting back more aggressively on spending. What’s going on?
    
			
     [ad_1]
    

    

    We want to hear from readers who have stories to share about the effects of increasing costs and a changing economy. If you’d like to share your experience, write to readerstories@marketwatch.com. Please include your name and the best way to reach you. A reporter may be in touch.
    

    Higher-earning households are feeling the inflationary pinch.
    

    Consumer spending slowed and household finances weakened across all income levels last month. But households earning $100,000 a year or more reported shaving more off their spending than less well-off households did, according to a report released this week by Morning Consult, a decision intelligence company.
    

    

    The report also found that real monthly spending among U.S. adults fell by 4.3% from November to December. Even so, 21.3% of U.S. adults said their monthly expenses exceeded their monthly income in December, up from 19.2% in November. 
    

    On average, households earning $100,000 a year or more said they spent about 10% less in real terms in December than they did the previous month. Households earning $50,000 to $99,999 and those earning less than $50,000 a year, meanwhile, reported that they cut their monthly spending bills by no more than 5% on average. 
    

    Across the board, households are cutting back on recreation, alcohol, vehicle insurance, and other services in December, while spending more on hotels, gas and airfares, the report found.
    

    

    

    
      
    

    

    One theory on the spending cutbacks: Higher earners typically have more discretionary income, and likely have decided to exercise more fiscal caution after seven interest-rate hikes by the Federal Reserve last year. (On Wednesday, St. Louis Fed President James Bullard told The Wall Street Journal in a live-streamed interview that the Federal Reserve should not “stall” on raising its benchmark rates until they are above 5%.)
    

    The Morning Consult report did cite inflationary pressures. “Heightened budgetary pressures brought on by persistently high inflation are forcing trade-offs for consumers, leading to reallocation across categories,” it said. “For instance, as food grew more expensive over the past year, U.S. households accommodated an increase in grocery purchases by spending less at restaurants.”
    

    Earlier last year, higher-income households led consumer spending  in the face of rising prices, said Kayla Bruun, an economic analyst with Morning Consult and co-author of the report. But household income, even for those earning six-figure incomes, has not been growing fast enough to keep up with inflation, she said.
    

    “They probably started to realize, ‘Hey, I can’t keep buying the same basket of goods each month and expect to continue adding to my savings,’” Bruun told MarketWatch. 
    

    

    

    
        
      
    
      
    

    

    At the same time, recent layoffs in the higher-earning tech and financial sectors may also have affected sentiment among wealthier households, Bruun said. 
    

    The tech and financial sectors felt the impact of rising interest rates and economic headwinds, she added. Goldman Sachs
    
        GS,
    
        -0.25%
    
       and BlackRock
    
        BLK,
    
        -1.53%
    
       said earlier this month they were cutting jobs. Microsoft Corp.
    
        MSFT,
    
        -2.14%
    
       confirmed plans on Wednesday to lay off some 10,000 workers, equivalent to around 5% of the company’s global workforce. 
    

    Before Microsoft’s announcement, data compiled by the Layoffs.fyi website estimated that more than 25,000 global tech-sector employees have been laid off in the first few weeks of 2023. Last year, approximately 60,000 people in the tech industry were laid off, according to Challenger, Gray & Christmas. 
    

    Still, there has been some good news: Inflation eased in December for the sixth consecutive month: The annual rate of inflation fell to 6.5% from 7.1% in November after reaching a four-decade-high of 9.1% last summer. 
    

    Also read: 
    

    Microsoft will lay off 10,000 workers. If you get fired from your tech job, what should be your next move?
    

    Inflation hit rural, Hispanic, and Black people harder for one key reason
    

    High medical costs made more Americans delay care last year
    

    

    

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  • 
		
		
    
			
    Alibaba, XPeng, Goldman Sachs, and More Stock Market Movers Tuesday
    
			
    Alibaba, XPeng, Goldman Sachs, and More Stock Market Movers Tuesday
    
			
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    This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
    

    https://www.barrons.com/articles/stock-market-movers-alibaba-xpeng-goldman-morgan-stanley-51673625139
    

    

    

    

    

    

    

    

      

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  • 
		
		
    
			
    Tanking Biotech Stocks Will Mean a Big Year for Deals. Who Could Benefit.
    
			
    Tanking Biotech Stocks Will Mean a Big Year for Deals. Who Could Benefit.
    
			
     [ad_1]
    

    

    Nearly two years after biotechnology stocks began to tumble, executives at small and midsize companies in the space are finally accepting that share prices aren’t bouncing back anytime soon.
    

    With reality setting in, it’s a buyer’s market for companies looking for acquisitions and partnerships, according to many of the pharmaceutical and medical technology executives who gathered at this year’s
    
        
    
          
    
            J.P. Morgan
    
          
    
        
    
       healthcare investor conference, which wrapped up in San Francisco on Thursday.
    

    

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  • 
		
		
    
			
    Dow closes up more than 100 points as earnings season begins, stocks book best week of gains in 2 months
    
			
    Dow closes up more than 100 points as earnings season begins, stocks book best week of gains in 2 months
    
			
     [ad_1]
    

    

    U.S. stocks finished higher Friday, as investors weighed a flurry of bank earnings results for the fourth quarter and fresh data on consumer sentiment and inflation expectations.  
    

    All three major benchmarks also booked their best weekly percentage gains since Nov. 11, according to Dow Jones Market Data.
    

    

    How stock indexes traded
    

      

    • 
      The Dow Jones Industrial Average
      
        DJIA,
      
        +0.33%
      
       rose 112.64 points, or 0.3%, to close at  34,302.61.
      

      • 

    • 
      The S&P 500
      
        SPX,
      
        +0.40%
      
       added 15.92 points, or 0.4%, to finish at 3,999.09.
      

      • 

    • 
      The Nasdaq Composite
      
        COMP,
      
        -1.10%
      
       gained 78.05 points, or 0.7%, to end at 11,079.16.
      

      • 

    

    For the week, the Dow rose 2%, the S&P 500 advanced 2.7% and the Nasdaq gained 4.8% gain. 
    

    Read: Goldman Sachs sees these ‘prospective’ total returns across assets in 2023
    

    What drove markets
    

    Major stock indexes posted their best week of gains in two months on Friday after companies began reporting their fourth-quarter results, with big banks kicking off the earnings season. 
    

    No big surprises have come from the banks’ earnings results so far, with Bank of America Corp. and JPMorgan Chase & Co. indicating a potentially mild recession this year, according to Anthony Saglimbene, chief market strategist at Ameriprise Financial. 
    

    “I think the base case for most of the market right now is that we’re going to see a mild recession,” Saglimbene said in a phone interview Friday. “I don’t think anything that was said across bank earnings today surprised investors.”
    

    Typically, the release of megabank earnings marks the unofficial start of the U.S. earnings reporting season, and market analysts will be watching closely this quarter for indications of how America’s largest companies are bracing for an expected economic downturn driven by higher interest rates. 
    

    JPMorgan
    
        JPM,
    
        +2.52%    ,
    
       Bank of America
    
        BAC,
    
        +2.20%    ,
    
       Wells Fargo & Co.
    
        WFC,
    
        +3.25%
    
       and Citigroup
    
        C,
    
        +1.69%
    
       were among banks that reported their fourth-quarter earnings Friday. JPMorgan was the top performer in the Dow Jones Industrial Average, with its shares closing 2.5% higher, FactSet data show.
    

    Read: JPMorgan, Wells Fargo, Bank of America and Citi beat earnings expectations, but worries about ‘headwinds’ remain
    

    Earnings will continue to be a “big focus” for markets this month, according to Saglimbene. “Analysts took down estimates pretty aggressively in the fourth quarter,” he said. “So the bar is pretty low for companies. We’ll see if they can hurdle past that.”
    

    In U.S. economic data released Friday, the University of Michigan consumer sentiment index climbed in January to its highest level in nine months, as expectations for the rate of inflation one year out moderated.
    

    “Signs that inflation has peaked and is moderating slowly kind of eases some of the anxiety that we’re going to see runaway inflation this year,” said Saglimbene.
    

    A reading from the consumer-price index on Thursday showed U.S. inflation fell in December. Many investors are expecting that the Federal Reserve will slow its pace of interest rate hikes this year as the cost of living has cooled. 
    

    Read: Inflation slows again and clears path for slower Fed rate hikes
    

    Stocks on Thursday pushed higher after St. Louis Federal Reserve Bank President James Bullard said the probability of a soft landing for the economy has increased due to “encouraging” inflation data.
    

    Read: Why the stock market isn’t impressed with the first monthly decline in consumer prices in more than 2 years
    

    Steve Sosnick, chief strategist at Interactive Brokers, said by phone Friday that he still favors consumer-staples stocks and companies with “more steady streams than more cyclical streams” of income. “If you’re looking at an economy that’s likely to slow down, it’s really hard for me to think that somehow ‘the cyclicals’ will be immune from the economic cycle,” he said. 
    

    Read: Why earnings season could be a ‘market-moving event’
    

    Companies in focus
    

      

    • 
      JPMorgan
      
        JPM,
      
        +2.52%
      
       shares gained 2.5% after reporting fourth-quarter earnings and revenue before the bell that topped Wall Street expectations. The bank said a mild recession is now the “central case.” 
      

      • 

    • 
      Wells Fargo
      
        WFC,
      
        +3.25%
      
       shares rose 3.3% after reporting falling profits, as it was hit by a recent settlement and the need to build reserves. 
      

      • 

    • 
      Bank of America
      
        BAC,
      
        +2.20%
      
       shares gained 2.2% after reporting earnings per share of 85 cents last quarter, above the 77 cents a share expected by analysts. Revenue also beat expectations. However, the bank’s net interest income fell slightly below expectations despite jumping interest rates. 
      

      • 

    • 
      Delta Air Lines Inc.
      
        DAL,
      
        -3.54%
      
       reported fourth-quarter profit and revenue before the bell that beat expectations. Shares of the airline fell 3.5%.
      

      • 

    • 
      Tesla Inc. 
      
        TSLA,
      
        -0.94%
      
       shares fell after the company cut prices in the U.S. and Europe again, according to listings on the company’s website Thursday night. Tesla finished down 0.9%.
      

      • 

    • 
      Shares of UnitedHealth Group Inc.
      
        UNH,
      
        -1.23%
      
        dropped 1.2% after the health-insurance giant shared its results.
      

      • 

    • 
      BlackRock Inc.
      
        BLK,
      
        +0.00%
      
       shares closed about flat after the asset-management giant reported a decline in fourth-quarter results. 
      

      • 

    

    —Barbara Kollmeyer contributed to this article.
    

    

    

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  • 
		
		
    
			
    Tesla is a ‘soft landing’ stock, says Goldman Sachs. Here are its picks for a gentle economic landing and stocks for a recession.
    
			
    Tesla is a ‘soft landing’ stock, says Goldman Sachs. Here are its picks for a gentle economic landing and stocks for a recession.
    
			
     [ad_1]
    

    Pour one out for the beleaguered economists, who for once got an important indicator, the consumer price index, right on the nose, after CPI fell 0.1% in December, while core prices rose 0.3%. 
    

    “The 2021 surge in durable goods demand normalized, and the resulting collapse in durable goods price inflation was stunningly fast,” says Paul Donovan, chief economist of UBS Global Wealth Management.
    

    

    

    

    
      
    

    

    “The commodity wave of inflation is fading, and that leaves the profit margin expansion in focus,” he adds. What a good time for earnings season to be upon us, and what do you know, it is, kicking off with the banking sector on Friday before broadening out next week.
    

    Strategists at Goldman Sachs have a new note out, saying that the market is pricing in a soft landing even though the trend of earnings revisions points to a hard landing. 
    

    They’re not that optimistic — even in the soft-landing scenario, the team led by David Kostin say the S&P 500
    
        SPX,
    
        +0.40%
    
       will end the year right around current levels, at 4,000. But they identify 46 stocks that could benefit — profitable, cyclical companies that are trading at price-to-earnings valuations below their 10-year median, among other factors.
    

    One name jumps out: Tesla
    
        TSLA,
    
        -0.94%    ,
    
       which trades at 22 times forward earnings versus the 10-year median of 117 times. But the other 45 names are less flashy, ranging from Capital One
    
        COF,
    
        +1.81%
    
       and Carlyle Group
    
        CG,
    
        +0.54%    ,
    
       to a host of industrials including 3M
    
        MMM,
    
        +0.12%    ,
    
       Parker-Hannifan
    
        PH,
    
        +0.73%
    
       and Otis Worldwide
    
        OTIS,
    
        +0.42%    .
    
       As a whole, these typically $10 billion companies are trading at 12 times earnings, versus 17 times usually.
    

    In the hard landing scenario, S&P 500 profit margins would shrink by 125 basis points, to 10.9% — about in line with the median peak-to-trough decline during the eight recessions since 1970, which has been 132 basis points. Consensus expectations are for a 26 basis-point margin decline.
    

    

    

    
        
      
    
      
    

    

    The Goldman team also have a 36 stock screen for a hard landing — profitable companies in defensive industries with a positive dividend yield. They’re typically food, beverage and tobacco companies as well as software and services companies — including Costco Wholesale
    
        COST,
    
        +0.58%    ,
    
       Kroger
    
        KR,
    
        -0.99%    ,
    
       Altria
    
        MO,
    
        +0.48%    ,
    
       Tyson Foods
    
        TSN,
    
        +0.23%    ,
    
       Microsoft
    
        MSFT,
    
        +0.30%    ,
    
       MasterCard
    
        MA,
    
        -1.13%
    
       and Visa
    
        V,
    
        -0.25%    .
    
       As a whole, these $37 billion companies are trading at 22 times earnings vs. a historical 24 times.
    

    The market
    

    

    

    
        
      
    
      
    

    

    After a 2.3% advance for the S&P 500
    
        SPX,
    
        +0.40%
    
       over the last three sessions, U.S. stock futures
    
        ES00,
    
        +0.39%
    

            NQ00,
    
        +0.58%
    
       declined on Friday.
    

    The yield on the Japanese 10-year bond
    
        TMBMKJP-10Y,
    
        0.511%
    
       exceeded 0.5%, the Bank of Japan’s yield cap, ahead of next week’s rate decision , prompting a second day of aggressive bond purchases from the central bank.
    

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
    

    The buzz
    

    Fourth-quarter earnings were rolling out from Bank of America
    
        BAC,
    
        +2.20%    ,
    
       JPMorgan Chase
    
        JPM,
    
        +2.52%    ,
    
       Citigroup
    
        C,
    
        +1.69%
    
       and Wells Fargo
    
        WFC,
    
        +3.25%    ,
    
       and outside of banks, Delta Air Lines
    
        DAL,
    
        -3.54%    ,
    
       BlackRock
    
        BLK,
    
        +0.00%
    
       and UnitedHealth
    
        UNH,
    
        -1.23%    .
      
    

    JPMorgan shares slumped after forecast-beating earnings, though investment bank revenue came in light of estimates. Delta shares also declined after topping earnings estimates. 
    

    Tesla
    
        TSLA,
    
        -0.94%
    
       cut prices of Model 3 and Model Y vehicles in the U.S. and elsewhere by up to 20%. The electric vehicle maker stock dropped 6%.
    

    Virgin Galactic
    
        SPCE,
    
        +12.34%
    
       surged after saying it’s on track to launch space-tourism flights in the second quarter.
    

    Apple
    
        AAPL,
    
        +1.01%
    
       says CEO Tim Cook requested, and received, a pay cut after investor criticism.
    

    The University of Michigan’s consumer-sentiment index is due at 10 a.m. Eastern, and Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker are due to speak.
    

    Tyler Winklevoss said charges by the Securities and Exchange Commission brought about Gemini Trust for allegedly offering unregistered securities were “super lame” as it seeks to unfreeze $900 million in investor assets.
    

    Best of the web
    

    There’s a bull market in swearing on corporate earnings calls.
    

    The West is now preparing to send tanks to Ukraine in what could be another escalation of its conflict with Russia, which on Friday claimed victory in the eastern town of Soledar.
    

    A look back at photos of Lisa Marie Presley, who died at age 54.
    

    Top tickers
    

    Here were the most active stock-market tickers as of 6 a.m. Eastern.
    

    

    

      Ticker
    
    		

      Security name
    
    		

    

    

        BBBY,
    
        -30.15%    
          		

      Bed Bath & Beyond
    
    		

    

    

        TSLA,
    
        -0.94%    
          		

      Tesla
    
    		

    

    

        GME,
    
        -0.68%    
          		

      GameStop
    
    		

    

    

        AMC,
    
        +0.80%    
          		

      AMC Entertainment
    
    		

    

    

        MULN,
    
        -8.59%    
          		

      Mullen Automotive
    
    		

    

    

        NIO,
    
        -0.08%    
          		

      Nio
    
    		

    

    

        APE,
    
        -2.56%    
          		

      AMC Entertainment preferreds
    
    		

    

    

        AAPL,
    
        +1.01%    
          		

      Apple
    
    		

    

    

        SPCE,
    
        +12.34%    
          		

      Virgin Galactic
    
    		

    

    

        AMZN,
    
        +2.99%    
          		

      Amazon.com
    
    		

    

    

    Random reads
    

    Like a scene out of “Stranger Things” — there’s uproar after new restrictions on the Hasbro
    
        HAS,
    
        +0.21%
    
       game Dungeons & Dragons.
    

    Starting next month, Starbucks
    
        SBUX,
    
        +1.30%
    
       rewards will be less generous for most items, though iced coffee will be easier to get.
    

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
    

    Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton. 
    

    

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    Consumer sentiment jumps to 9-month high as inflation ebbs and stocks rebound
    
			
    Consumer sentiment jumps to 9-month high as inflation ebbs and stocks rebound
    
			
     [ad_1]
    

    

    The numbers: A survey of consumer sentiment rose to 64.6 in January and hit a nine-month high, reflecting easing worries about inflation and Americans’ greater confidence in their own finances.
    

    The index increased from a revised 59.7 in December, the University of Michigan said.
    

    

    Consumer sentiment is still weak, though. The index is well off a Coronavirus-era peak of 88.3 in April 2021 and a pre-pandemic high of 101. 
    

    Key details: A gauge that measures what consumers think about their financial situation — and the current health of the economy — climbed to 68.6 last month. One year ago, the index stood at 72.
    

    Another measure that asks about expectations for the next six months moved up to 62 from 59.9 in the prior month. It’s also just a few notches below year-ago levels.
    

    Americans viewed inflation as less of a threat. They expected the inflation rate in the next year to average about 4%, down from 4.4% in the prior month.
    

    In the longer run, consumers said they see inflation falling toward 3% — above the Federal Reserve’s 2% target. Top Fed officials pay close attention to inflation expectations because they could be a harbinger of future price trends.     
    

    The current 12-month rate of inflation is 6.5%, based on the consumer-price index. It’s fallen from a peak of 9.1% last summer.
    

    Big picture:  Cheaper gas, rebounding stock prices and ebbing inflation have given Americans more reason for hope.
    

    Yet rising interest rates and the threat of recession are leaving Americans on edge. The Fed is rapidly lifting rates to tame high inflation, but its get-tough approach has also increased the odds of a recession. 
    

    Looking ahead: “While that is the highest reading in nine months,” said U.S. economist Andrew Hunter at Capital Economics, the relatively low reading suggests “consumers remain unusually downbeat.”
    

    Market reaction: The Dow Jones Industrial Average
    
        DJIA,
    
        +0.33%
    
       and S&P 500
    
        SPX,
    
        +0.40%
    
       fell slightly in Friday trades.
    

    

    

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  • 
		
		
    
			
    Genesis, Winklevoss twins’ Gemini crypto venture charged by SEC with selling unregistered securities
    
			
    Genesis, Winklevoss twins’ Gemini crypto venture charged by SEC with selling unregistered securities
    
			
     [ad_1]
    

    

    U.S. securities regulators on Thursday charged Genesis Global Capital and crypto exchange Gemini Trust Co. with offering and selling of unregistered securities to retail investors, bypassing  disclosures and other requirements aimed at protecting market participants.  
    

    Genesis and Gemini raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors through unregistered offers, using a crypto asset-lending program called Gemini Earn, the Securities and Exchange Commission said.
    

    

    The complaint seeks the return of any “ill-gotten gains” plus interest, and any civil penalties, the SEC said.
    

    The SEC is also investigating whether other securities-law violations were committed and whether there are other companies or people relating to the alleged misconduct.
    

    Twins Tyler and Cameron Winklevoss are the founders of Gemini. The crypto exchange was sued late last year by investors alleging that the company sold interest-bearing accounts without registering them as securities, also through the Gemini Earn program.
    

    Also read: Gemini’s Cameron Winklevoss accuses crypto exec Barry Silbert of ‘bad faith’ stalling over frozen funds
    

    The Winklevoss twins were early champions of cryptocurrencies, using the money and fame they won in legal wrangling with Facebook parent Meta Platforms Inc.
    
        META,
    
        +2.87%
    
       and Meta’s founder Mark Zuckerberg over their role in creating the social-media giant to launch Gemini. 
    

    According to the SEC complaint, the Gemini Earn agreement between Genesis, part of a subsidiary of Digital Currency Group, and Gemini started in December 2020.  
    

    Gemini customers, including U.S. retail investors, were to have an opportunity to loan their crypto assets to Genesis in exchange for Genesis’ promise to pay a high interest rate. 
    

    Gemini deducted agent fees that were as high as 4.29%, the SEC alleges.
    

    “Genesis then exercised its discretion in how to use investors’ crypto assets to generate revenue and pay interest to Gemini Earn investors,” the SEC said. 
    

    By November, however, Genesis announced it would not allow the Gemini Earn investors to withdraw their crypto assets because of a liquidity crunch following volatility in the crypto market after FTX’s bankruptcy filing, the SEC said.
    

    At the time, Genesis held about $900 million in investor assets from 340,000 Gemini Earn investors, the SEC said. Gemini ended the Gemini Earn program earlier this month. 
    

    “As of today, the Gemini Earn retail investors have still not been able to withdraw their crypto assets,” the SEC said in a statement. 
    

    “We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors,” SEC Chair Gary Gensler said in a statement. 
    

    The charges “build on previous actions to make clear to the marketplace and the investing public that crypto-lending platforms and other intermediaries need to comply with our time-tested securities laws,” Gensler said. 
    

    The SEC’s complaint was filed in the U.S. District Court for the Southern District of New York. 
    

    

    

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