Investor Relations Week: California to sue Tesla, ESG not a strategy and ‘American day will start in Seoul’ after new trade deal
– According to Reuters, Tesla said the California Department of Fair Employment and Housing intends to take legal action against the company, alleging systematic racial discrimination and harassment. The lawsuit appears to focus on alleged misconduct at its factory in Fremont, Calif., between 2015 and 2019, Tesla said in a statement. The company said it will ask the court to stay the case once the state’s civil rights regulator files its lawsuit. Tesla said that despite multiple requests, the regulator has refused to provide the company with the specific allegations or the factual basis of its lawsuit. The department did not immediately respond to a Reuters request for comment.
– ESG-themed indices are “almost indistinguishable” from traditional benchmarks, says Institutional investor, citing research from Research Affiliates. Instead, it indicates that ESG is an investment preference. The top five ESG benchmarks “look a lot like the Russell 1000 Index” in terms of holdings, valuation and performance, the study found. The ESG indices have all placed huge bets on tech giants like Apple, Microsoft and Alphabet – just like the traditional benchmark. In fact, all of the top 10 holdings of the five ESG indices and the Russell 1000 are the same, except for Johnson & Johnson, Berkshire Hathaway and PayPal, according to the research.
– Asian investors can now buy and sell US stocks during Korean business hours in real time through a partnership between Samsung Securities and US over-the-counter trading platform operator Blue Ocean Technologies, reported Reuters. He quoted Brian Hyndman, chairman of Blue Ocean, as saying, “This is the first time in the history of US markets where Asia-Pacific investors are going to have the opportunity to trade US stocks ahead of US investors.” The American day will begin in Seoul.
– The BBC reported that oil giant BP has rejected calls for a windfall tax on energy companies’ windfall profits, arguing it would reduce investment in gas and renewables in the UK. BP reported a profit of $12.8 billion for 2021 after oil and gas prices surged in the second half. This has prompted calls for a one-off tax to help families struggling to pay their energy bills. Britain’s Labor Party said it was ‘only fair and just’ for energy companies making higher profits to pay more tax. But BP said: ‘In general, a windfall tax on UK oil and gas producers would not encourage investment in the production of UK gas resources.’
– The Guardian reported news that Nvidia’s takeover of British chipmaker Arm has collapsed due to insurmountable regulatory hurdles, with Arm apparently exploring an IPO as an alternative. The deal, which would have been the semiconductor industry’s largest, “had become bogged down in bureaucracy on both sides of the Atlantic and in China”, the newspaper said, and ran into opposition from industry players since its announcement in September 2020. the FinancialTimes (paywall) added that Arm’s owner, SoftBank, is seeking to list the company on Nasdaq rather than the UK. The newspaper said SoftBank’s plans had “sparked a furor in the UK at a time when the country is experiencing deep insecurities about its ability to retain homegrown tech champions.” Other legal issues have already cast a shadow over the company’s IPO plans, added the FT Friday morning.
– Buy now, pay later, the Affirm company was forced to release its results early after a deleted tweet was sent from its official Twitter account detailing some financial performance metrics. CNBC reported that the tweet, which said sales were up 77%, suggested Affirm would beat revenue expectations. Analysts polled by Refinitiv had expected a 61% rise and the news agency said the stock briefly rose 10% on that tweet. But when it was then forced to report quarterly results earlier, the company had missed analysts’ revenue estimates, sending the stock down 21%. Affirm, which went public in January 2021, said in another tweet that the inadvertent release of financial results was due to human error.
– Hedge funds and other activist investors would have to disclose large investments in U.S. public companies within five days under new disclosure rules proposed by the SEC, the SEC reported. FT – a move that would halve the time they currently have to amass a secret bet. The change would require funds to disclose a stake of 5% or more and change that disclosure more quickly if the stake changes significantly. The move is part of a larger effort to shine a light on what big private investors are doing. It will also be more difficult for activists to profit from secret participation.
– the the wall street journal (paid wall) reported that Peloton Interactive co-founder John Foley, who led the company for its 10-year history, is stepping down as CEO and will become executive chairman. Barry McCarthy, the former chief financial officer of Spotify Technology and Netflix, will become CEO and chairman and join Peloton’s board of directors. The company will also cut around 2,800 jobs, affecting 20% of its positions, to help cope with falling demand and mounting losses.
Activist investor Blackwells Capital recently called on Peloton to fire Foley and explore a sale of the business. He reiterated his call on Tuesday, saying Foley should leave the company rather than become executive chairman. “We are open to exploring any opportunity that could create value for Peloton shareholders,” Foley said in an interview ahead of Blackwells’ Tuesday publication. He declined to comment further.
– Companies will no longer be able to force employees and customers to participate in an arbitration process to address claims of sexual assault and harassment under legislation passed by the Senate, the WSJ reported. The legislation will now go to President Joe Biden’s office for his signature. The White House said in a statement earlier this month that Biden strongly supports the bill and wants to work with Congress to pass legislation dealing more broadly with mandatory arbitration, including on complaints about racial discrimination, wage disputes and labor practices.
Mandatory arbitration clauses prevent consumers and employees from bringing claims to court. Companies that include such clauses in their contracts say arbitration is more effective, but consumer advocates say the confidential system helps companies escape public liability.
– Korea’s fast-growing $200 billion fortune fund is “betting on the Metaverse and Silicon Valley start-ups”, according to the South China Morning Post. He reported that Korea Investment Corp (KIC) has nearly doubled in size over the past five years, after a slow start when it was established in 2005 to contribute to South Korea’s financial sector. KIC’s focus on US start-ups means it now plans to expand its San Francisco office as it explores investments in technology, healthcare and green businesses in Silicon Valley, as well as in artificial intelligence and alternative assets.