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Mar 31, 2023

The week in investor relations: SEC calls for new resources to regulate crypto, Beaxy exchange shut down and Adani looks at private bond placement

Our pick of the IR stories from around the web you might have missed this week

– According to, SEC chair Gary Gensler testified on his agency’s fiscal year (FY) 2024 budget request before the House Appropriations Subcommittee on Financial Service and General Government. ‘I am pleased to support the president’s FY 2024 request of $2.436 bn for the SEC, to put us on a better track for the future,’ Gensler began. ‘The FY 2024 request seeks funding for an additional 170 positions, as well as full-year funding for those staff hired in FY 2023.’

Commenting on the regulation of crypto assets, Gensler told the subcommittee: ‘We’ve seen the Wild West of the crypto markets, rife with non-compliance, where investors have put hard-earned assets at risk in a highly speculative asset class. Rapid technological innovation in the financial markets has led to misconduct in emerging and new areas, not least in the crypto space. Addressing this requires new tools, expertise and resources.’

– Meanwhile, reported that crypto trading platform Beaxy officially closed its doors as the SEC charged the company and its founder, Artak Hamazaspyan, with operating an unregistered exchange and brokerage. The SEC also accused Beaxy Digital of illegally raising $8 mn in the offering of an unregistered security with its BXY token. The agency additionally noted Hamazaspyan ‘misappropriated at least $900,000 for personal use, including gambling.’

Windy took over the platform in 2019 after the founder misappropriated money, according to the SEC. Managers Nicholas Murphy and Randolph Bay Abbott maintained Beaxy for trading crypto assets ‘that were offered and sold as securities,’ the SEC said. The agency is also accusing them of violating securities law by operating an unregistered exchange, brokerage and clearing agency, though the platform was described as defunct in another SEC case last year.

– Adani Group executives met US investors, including BlackRock, Blackstone and Pacific Investment Management, as part of its plans to market privately placed bonds for some of its group companies, according to a report from The Economic Times. The conglomerate, led by billionaire Gautam Adani, is aiming to raise up to $1 bn in two tranches this year via such a route, said people with knowledge of the matter who declined to be named as they were not authorized to speak about it. The meetings were part of a global roadshow that reached US cities including New York, Boston, Los Angeles and San Francisco, as Adani sought to reassure international investors that the ports-to-power empire’s finances are under control. As much as $153 bn in combined market value was erased from company stocks following a January short-seller’s report.  

– Marathon Asset Management made around $30 mn in a few days because of a well-timed bet on Credit Suisse bonds, Bloomberg (paywall) reported. The hedge fund accumulated around $150 mn in bonds in the Swiss lender’s senior operating company at knock-down prices just days before Credit Suisse offered to buy them back at a high premium in a March 16 statement, according to a person with knowledge of the matter. The trade was an opportunistic move to capitalize on current bank disruption and the fund had no prior exposure to Credit Suisse bonds before buying the positions last week, the person said. 

– Also reported by Bloomberg, around 31,000 funds are about to have their ESG scores lowered at MSCI as the firm’s ratings unit works through a major overhaul of its methodology in response to feedback from market participants. Clients had voiced concerns about ‘an upward drift in ratings across the fund universe’, which is now being addressed, according to MSCI ESG research. The changes mean that only 0.2 percent of funds will have a AAA rating in the future, compared with roughly 20 percent now, according to MSCI estimates. The measures include giving managers of swap-based ETFs six months to provide data on their underlying index constituents, which MSCI will start using to generate ESG scores instead of collateral, it said.

– Lee Sang-Hyun, founder of South Korean activist fund Flashlight Capital Partners, has been pushing for the country’s largest tobacco producer KT&G to spin off its ginseng unit and appoint two renowned independent outside directors, according to the Financial Times (paywall). He thinks ginseng can be better marketed and attract more long-term investors as a stand-alone business. ‘KT&G is like a naked orphan on the street, ignored by passers-by,’ said Lee, who led Carlyle Group’s Korean business before starting his fund. ‘Usually, shareholders get angry when a company does something wrong. But in this case, we are angry because it is not doing anything to boost its value.’

KT&G has rebuffed the fund, which holds a 1 percent stake in the company. Lee’s proposals were voted down at the company’s general meeting earlier this week after failing to win over other shareholders, but he is not giving up.

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