Category: Banking News

Goldman Sachs Lays Off 3,200 Employees and Cuts Salaries

Goldman Sachs Layoffs
Market News: Goldman Sachs layoffs exceed more than 3,000 employees.

Goldman Sachs said on Jan. 17 it had laid off around 3,200 employees as part of a headcount reduction, per Reuters.

The bank said its board had awarded Chief Executive David Solomon compensation of $25 million for his work in 2022, compared with $35 million the previous year.

This comes to a reduction of approximately one third.

Morgan Stanley also paid less to Chief Executive James Gorman, though only by 10%. 

Bank of America, one of the largest banks in the U.S. and one of is preparing to trim its workforce in an effort to cut expenses over fears of a looming recession.  

Recession 2023

bank of america
Bank of America recession news | Goldman Sachs lays off 3,200 people.

Bank of America said in December it is expecting a recession to hit the U.S by the first quarter of 2023.

There is a major slowdown happening says CEO Brian Moynihan.

Economists are now expecting a volatile market to persist in 2023.

A recession may be coming in the first quarter of 2023, according to forecasts by Bank of America (BofA) economists.

“A recession is very likely in the U.S.,” BoFa wrote in its Year Ahead 2023 report. The bank points out that this recession can last through the third quarter of 2023.

There’s no official definition of a recession, but many economists define it as a period of two consecutive quarters of negative economic growth or gross domestic product (GDP) decline – a drop that’s already been seen in 2022, says FOX Business.

More than half or 56% of Americans believe the country is in a recession, according to a recent poll by YouGovAmerica and The Economist. 

“There is a slowdown happening, there is no question about it. We are expecting a fairly weak economy throughout the entire year,” said Wells Fargo CEO Charlie Scharf.

Additional source(s): Reuters.

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Market News Today: Goldman Sachs lays off 3,200 people – Goldman Sachs Layoffs.

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DOJ Attempts to Weed Out Crime with 75% Reduction in Fines

Market News: DOJ Offers 75% Reduction in Fines to Companies that Admit Crime.
Market News: DOJ Offers 75% Reduction in Fines to Companies that Admit Crime.

[Bloomberg] The Justice Department will recommend as much as a 75% reduction in fines for companies that voluntarily report wrongdoing to the government and fully cooperate with investigations.

Even companies that don’t voluntarily disclose wrongdoing but still fully cooperate with investigations could still get a 50% reduction off the low end of the guidelines for fines, the head of the department’s criminal division said Tuesday.

“The policy is sending an undeniable message: come forward, cooperate, and remediate,” Assistant Attorney General Kenneth Polite said in a speech at Georgetown University Law Center.

Polite made it clear that cooperators seeking declination will be held to a higher standard than your average or even gold-standard cooperator — the cooperation must be “truly extraordinary.” 

The Justice Department will distinguish extraordinary cooperation by assessing the immediacy, consistency, degree, and impact of the cooperation.

Prosecutors will expect companies to cooperate immediately, consistently tell the truth, and hand over evidence that the DOJ otherwise would not be likely to obtain, such as quick access to electronic device images, audio/video recordings, trial testimony, and other kinds of cooperation that “produces results.”

The policy also covers corporations conducting business internationally, as the changes will apply to all corporate matters handled by the Criminal Division, including all Foreign Corrupt Practices Act (FCPA) cases nationwide.

Notably, the new policy is the third in a trilogy of Department of Justice memoranda addressing the prosecution of corporate misconduct and setting forth revised policies concerning the effect of cooperation by companies that have engaged in wrongdoing.

Years of Ongoing Investigations

The new policy was announced to further Deputy Attorney General Lisa Monaco’s October 2021 memorandum directing the creation of a Corporate Crime Advisory Group within the Department to recommend guidance concerning, in part, the nature of a company’s dealings with the government required to receive cooperation credit in resolving company misconduct, and to consider revisions and reforms to the Department’s approach to corporate crime prosecution.

The new policy also follows less than five months after the issuance of a memorandum further clarifying the Department of Justice’s policy against seeking a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and timely and properly remediated the conduct at issue in the absence of aggravating factors and directing all department components, including the 93 U.S. Attorney’s Offices across the country, to review its policies on corporate voluntary self-disclosure and ensure it has a publicly available written policy.

At the same time, the September 2022 memorandum emphasized DOJ’s commitment to “strong corporate criminal enforcement.”

Polite likely had these pronouncements in mind as he concluded his speech. He entreated corporations to “come forward, cooperate, and remediate,” and to join the Department of Justice as allies in the fight against crime.12 But he also warned: “Failing to take these steps, a company runs the risk of increasing its criminal exposure and monetary penalties.”

Related Article: Citadel Under Investigation by DOJ

Source(s): Bloomberg.

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Citi, Goldman, Extend AMC’s Covenant Waiver to 2024: What it Means

AMC Covenant Waiver
Market News Today: Banks extend AMC’s covenant waiver to 2024.

CEO Adam Aron said Citi, Goldman Sachs, and Credit Suisse have extended AMC’s covenant waiver to March 31st of 2024.

“This is a reflection of AMC’s recovery being well under way… a vote of confidence in AMC by our banks that we much welcome. Thank you Citi, Goldman, and Credit Suisse”, said AMC Entertainment (NYSE:AMC) CEO Adam Aron on Wednesday.

So, what exactly is a covenant waiver extension and what does this mean for AMC Entertainment?

What is a Covenant Waiver?

A covenant waiver is when a lender temporarily forgives a borrower’s breach of a loan covenant.

In AMC’s case, the lenders are Citi, Goldman Sachs, and Credit Suisse.

Debt covenants are restrictions that lenders (creditors, debt holders, investors) put on lending agreements to limit the actions of the borrower (debtor), AMC Entertainment.

In other words, debt covenants are agreements between a company (AMC) and its lenders (Citi, Goldman, Credit Suisse) that the company will operate within certain rules set by the lenders.

Should a borrower violate a covenant, such as not maintaining a certain interest coverage ratio or engaging in unpermitted business activities, it may constitute a loan default, per The Balance.

Financial Covenants Explained

Covenant requirements are conditions the borrower must regularly meet throughout the term to demonstrate their creditworthiness to the lender.

Lenders frequently use certain financial tests that serve as indicators of the borrower’s repayment ability.

Failure to meet these tests violates the covenant and constitutes loan default.

In AMC Entertainment’s case, lenders have waived, or forgiven AMC’s breach of contract, per their loan covenant and extended it to March 31st 2024.

What Does This Mean for AMC Entertainment?

AMC News Today.
AMC News today.

For AMC Entertainment, a covenant waiver will allow the business to run operations under its debt contracts with Citi, Goldman Sachs, and Credit Suisse until 2024.

If the company fails to meet its debt obligations, or financial covenant requirements, then the loans are subject to default.

This puts AMC Entertainment in a tricky position in terms of what they can and cannot do or say.

Which also explains why the CEO cannot raise awareness of the manipulative shorting of the company stock.

It’s very likely that speaking out on such topics may violate these covenant agreements.

Some retail investors have scrutinized Adam Aron for not speaking out on naked shorts like other CEO’s are doing today.

But this news may provide shareholders with more perspective on why that is.

Is AMC Entertainment Being Held Hostage by Lenders?

Citigroup currently holds call options representing 0 of underlying shares valued at $0 USD and put options representing 55,000 of underlying shares valued at $383,000 USD.

Source: Fintel.

The bank has been selling shares while playing put options in order to profit from the drops they’re triggering in the market.

As of November 7th, 2022, Citigroup has dropped AMC’s price target from $3.13 per share to $1.20 per share and used the media to promote the price target.

Just a month prior to Citi’s price hit, Credit Suisse said in October AMC shares are worth less than $1.

The banks are making their money which means it’s going to be up to the company and shareholders to prove the Wall Street short thesis wrong.

But I’m interested in hearing your thoughts.

Leave a comment down below.

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The Fed is Currently Investigating Goldman Sachs

Market News: The Fed launches an investigation into Goldman Sachs.
The Fed launches an investigation into Goldman Sachs | Goldman Sachs under investigation.

The U.S. Federal Reserve is probing whether Goldman Sachs Group Inc’s consumer business had appropriate safeguards in place as the bank ramped up lending, the Wall Street Journal reported on Friday, citing people familiar with the matter.

Shares of the investment bank were down nearly 3% at $341.08 in afternoon trade.

The central bank is concerned the Wall Street giant did not have proper monitoring and control systems inside Marcus, its consumer unit, as it grew larger, the report said.

The probe, which grew out of a standard Fed review of the business in 2021 and intensified into an investigation last year, is also examining instances of customer harm and whether they were properly resolved, the report added.

“The Federal Reserve is our primary federal bank regulator and we do not comment on the accuracy or inaccuracy of matters relating to discussions with them,” a Goldman spokesperson told Reuters.

Bloomberg News reported in September that the bank’s Marcus unit was facing a Fed review.

The probe would add to troubles for Goldman, which is executing a strategic pivot that includes refocusing on its core trading and investment banking business after losing money in its consumer banking venture.

“Another investigation into the consumer business makes Goldman’s foray into consumer look even worse, and can reduce management credibility, particularly given so many statements about GS’ ability to manage risk and build best-in-class platforms,” said Mike Mayo, banking analyst at Wells Fargo, in a note.

“The investigation, along with poor disclosure and other regulatory investigations, will increase the risk associated with owning GS and its cost of capital.”

Goldman’s credit card business is also being investigated by the Consumer Financial Protection Bureau (CFPB), the bank disclosed last year.

Source(s): Reuters.

Hedge Fund Investigations: Citadel Securities

Fed investigates Goldman Sachs, Citadel, and others in 2022 sweep.
Fed investigates Goldman Sachs, Citadel, and others in 2022 sweep.

Bloomberg confirmed in 2022 that Citadel Securities was one of the hedge funds under investigation by the Department of Justice.

Regulators took Morgan Stanely and several other hedge funds to court after several subpoenas were sent out earlier in the year.

Predatorial short selling strategies were exposed by the AMC and GME stock communities after the ‘meme stock’ frenzy fiasco in 2021.

Both these stocks’ share prices have been suppressed by dark pool trading, naked short selling, spoofing, and through OTC trading.

The hedge fund was being investigated after subpoenas were sent to numerous hedge funds and banks who might be connected.

Morgan Stanley and Goldman Sachs are two of the banks that were also ordered to court.

Among Citadel is a hedge fund by the name of Element according to the Bloomberg report.

Also Read: Citadel’s Ken Griffin Sues IRS for Leaking Financial Data

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