Credit Suisse Slugs SoftBank

Plus: At long last, Uber launches robotaxis ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

December 8, 2022

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TOGETHER WITH

Good morning.

On second thought, Sam Bankman-Fried can just stay in the Bahamas while Congress talks about him behind his back.

The fallen crypto prince will reportedly not be subpoenaed to appear before the House Financial Services Committee when it kicks off its investigation into his bankrupt exchange FTX, according to CNBC. During a bizarre recent Twitter interaction with committee chair Maxine Waters, after the veteran House member invited him to appear before her committee, SBF made it clear he didn’t feel like he’d be ready to testify about how he lost all those billions by January 13. And apparently, it now seems like he’ll have more time to continue… not being ready.

Morning Brief

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Credit Suisse is throwing the book at SoftBank.

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Uber finally cruises into the robotaxi market.

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Theranos’ Sunny Balwani follows Elizabeth Holmes to jail.

Investment Banking

Credit Suisse Nears $440 Million Suit Against SoftBank

Apparently, misery does not always like company.

About a year in the making, Credit Suisse is on the verge of being able to sue embattled Japanese private equity giant SoftBank for $440 million.

The Greensill Conflict

Credit Suisse has seen better days. Investors are pulling out, the firm is dramatically reorganizing and expects to lay off 9,000 employees by 2025, and the less said the better about its $5.5 billion loss after the crumbling of hedge fund Archegos Capital. SoftBank is…not doing better. Its own CEO Masayoshi Son personally owes the business $4.7 billion after numerous failed side deals, mostly in the company’s tech portfolio. It was also one of the biggest investors in WeWork, valuing the company at $47 billion before its planned 2019 IPO…remember how that went?

The strife between the two ignited last year with the collapse of finance firm Greensill Capital, which both firms were, of course, involved in. Greensill sold securitized loans to Credit Suisse and then imploded after taking on too few clients and too much debt (i.e. $4 billion from Britain’s Man of Steel Sunjeev Gupta.) When the company finally folded, it was unable to pay off Credit Suisse. The Zurich-based bank wants retribution and says SoftBank should be the one to pay up:

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Credit Suisse argues SoftBank maliciously restructured its relationship with construction company Katerra — a Greensill client — so that the Japanese conglomerate could take its money and run. Because of that, Katerra couldn’t pay an already-drowning Greensill, which in turn couldn’t pay Credit Suisse $440 million.

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A London judge said Wednesday Credit Suisse’s supply chain fund could be considered a “victim” in this case and that SoftBank could still defend itself before a formal suit can be issued.

“Those transactions are clearly transactions at an undervalue for which there is no commercial purpose,” Credit Suisse’s lawyer Sonia Tolaney said.

Getting Back to Basics: A possible $440 million is small potatoes compared to Credit Suisse’s other plans. With its investment banking division down the tubes, the Swiss lender has begun redirecting focus to its braided bread and butter of wealth management. On Tuesday, Bloomberg reported the company’s wealth unit is trying to entice rich clients with higher-yield notes and bonus deposit rates in a bid to quickly recoup as much as possible of the almost $90 billion recently pulled from the bank.

– Griffin Kelly

Autonomous Vehicles

Uber Launches Robotaxi Service

(Photo Credit: zombieite/Flickr)

Your driver is here, but they won’t be… driving.

Uber launched its first-ever robotaxi service Wednesday, allowing riders in Las Vegas to summon a self-driving car to shuttle them to their destination. For any of our readers who’ve seen the episode of Silicon Valley where a robotaxi inadvertently kidnaps a man, don’t fear — the cars will each come with a human “safety driver” in the front seat ready to take over if the car goes haywire.

Pedal to the Metal

Uber’s autonomous driving ambitions stretch back to around 2015, but the company was forced to slam the brakes three years later when one of its test vehicles fatally hit a woman in Arizona. The company sold its self-driving tech division to startup Aurora Innovation for $4 billion in 2020. Simultaneously Uber invested $400 million in Aurora and CEO Dara Khosrowshahi joined its board.

But that was when Uber’s business was hamstrung in the jaws of the early pandemic, more recently the company has enjoyed a surge in its share price as cooped-up riders hopped back into taxis while lockdowns faded into memory. Heck, maybe it’ll even turn a profit one of these days.

Still, Uber already has some serious competition in the robotaxi field:

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Ride-hailing rival Lyft launched a robotaxi service in Las Vegas in August and is even using the same company as Uber to provide its self-driving cars. Google-owned Waymo has been tentatively offering rides to vetted customers in Phoenix and San Francisco for years, and recently expanded to select parts of Los Angeles.

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Taxi services aren’t the only industry catching the self-driving bug, Swedish autonomous trucking startup Eindrive announced a $500 million fundraise on Wednesday. While Uber’s own self-driving truck division sputtered out of existence in 2018, the company did strike a deal with Waymo in 2020 to integrate its truck brokerage Uber Freight into Waymo’s autonomous trucking business.

Trouble Down Under: As complex as self-driving vehicle technology is, Uber might have enough to deal with monitoring the automated processes on its core product, the Uber app. Australia hit the rideshare giant with an embarrassing $14 million fine for warning users about non-existent cancellation fees between 2017 and 2021 and for using an algorithm that overestimated taxi fares until 2020. Uber said it has “proactively made changes to our platform based on the concerns raised with us”. Let’s hope they have a more pre-emptive approach to self-driving cars.

– Isobel Asher Hamilton

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Startups

Theranos COO Sunny Balwani Sentenced

This number two is about to do some real number one time.

Ramesh “Sunny” Balwani, former partner to Theranos founder and Emperor’s-New-Clothes icon Elizabeth Holmes, was sentenced on Wednesday to almost 13 years in prison for his role in the fraud, receiving more time than Holmes herself. Not so sunny after all.

Blood, Fraud, and Tears

Balwani was both Holmes’ romantic partner and COO as she grew Theranos into a company that managed to attain an estimated valuation of $9 billion. That huge valuation belied the fact that the tech Holmes and Balwani were touting, a home blood test which supposedly needed just one drop of blood to test for a host of illnesses, was about as medically sound as bleeding someone to balance their humors.

Holmes was convicted in January on four fraud-related charges, and in November was sentenced to eleven years in prison. Holmes appealed her conviction last week in a desperate attempt to avoid prison time, but is unlikely to succeed. Balwani’s future isn’t looking too sanguine either:

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Balwani’s lawyers argued that despite being convicted on numerous counts of fraud of his own, he did not start Theranos and was only complicit with Holmes. That apparently did not sway Judge Edward Davila who gave the former tech executive 155 months of jail time, significantly more than Holmes’ 135 months.

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“It’s tragic to look at the path of this case and realize that path has come full circle,” Judge Davila said while sentencing Balwani, before ordering him to surrender on March 15 and serve his time at a Federal low-security prison.

Never, ever getting back together: In other house-of-cards-that-came-crashing-down news the Financial Times reported Wednesday that crypto-Titanic FTX tried to seal a $100 million sponsorship deal with Taylor Swift, but it fell through this spring. Maybe she saw through Sam Bankman-Fried’s mastermind facade.

– Isobel Asher Hamilton and Thornton McEnery

Extra Upside

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Bob and weave: Kim K and Floyd Mayweather dodge a crypto scam lawsuit.

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Move over Musk: Louis Vuitton founder Bernard Arnault battles it out with Elon for richest person alive title.

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Withdrawing from your investments in the right order could help save you years worth of income in unnecessary taxes. The wrong order, on the other hand, just might take a (not so) healthy bite out of your retirement nest egg. Check out these 5 tips to withdraw from investment accounts wisely. Depending on how your gains are classified, the tax rate can vary – which is why it can be useful to meet with a financial advisor who can help you strategize a tax-optimized withdrawal sequence. Learn more here.

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