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Musk Sued, YES Bank Denies Window Dressing et al

Professor of Financial Economics and Part-time Value Investor, Transfin.
Sep 28, 2018 12:30 PM 3 min read
Editorial

Good evening reader,  

 

"What happens on Twitter, Stays on Twitter." Thank god that is NOT a saying. In case you had any doubts - just look at SEC, the US Securities watchdog, go after Elon Musk.

 

"Am considering taking Tesla private at $420. Funding secured." - Mr. Musk tweeted early August.

 

He did not have a transaction in line. Nor the funding. The $420 number was made up (click link to read the hilarious logic behind it). Tesla's shares jumped 10%...before crashing down. It’s hardly surprising the regulator took this to heart, now seeking to bar Mr. Musk from serving as an officer of any US public company.

 

This is not the first time Mr. Musk has taken Twitter lightly. He made a wisecrack on April Fool's Day joking Tesla went bankrupt during a difficult financial period. Stock tanked 7%. Hope he gets wiser now, treating his Tweets what they have become...written in stone(d).

 

With that being said, here's our End of Day Wrap Up, presenting today's Top 6 Business stories:

 

INDIA

 

IL&FS Financial Services defaults on loans of c. INR4.4bn; IL&FS Transportation Network's dim sum bond rises by a point on back of strong shareholder support.

IL&FS Financial Services (IFIN) has defaulted on loans of approximately INR4.4 billion. RBI has asked the firm to limit its group debt exposure in all of its entities, as IFIN's debt exposure to group entities close to 26% of its total credit exposure. However, IL&FS Transportation Network's (ITNL) dim sum bonds grew by a point to 49.1 today in expectation of support from shareholders at upcoming meetings. IL&FS’ biggest shareholder, LIC announced that it would ensure that the company doesn’t collapse.

 

YES Bank denies manipulation of its corporate accounts to conceal NPAs.

In a response to a query by the National Stock Exchange, YES Bank denied any manipulation of transactions to window dress its corporate accounts to hide any bad loans. The lender, as of June 30, had announced its gross NPA at 1.3% and net NPA at 0.59%.

 

Telecom and Financial companies in a dilemma after Supreme Court’s Aadhaar judgment.

Department of Telecom is set to meet with the Unique Identification Authority of India (UIDAI) over concerns of using Aadhaar-based biometric verification adopted by telecom houses. Telecom providers also noted that SC’s verdict would lead to delays in acquiring mobile connections. Financial companies have suspended the use of eKYC to collect customer information.

 

Jet Airways to monetize its stake in JetPrivilege to infuse funds into the company; reassures creditors.

Jet Airways has informed its lenders that it plans to sell stake in its loyalty program, JetPrivilege, to raise up to INR3500 crores for fresh infusion of money into the company. In case of delay to introduce funds, the airline will request a bridge loan from investors, according to a statement released by the airline.

 

US/INTERNATIONAL

 

US securities regulator sues Elon Musk for securities fraud on account of ‘misleading tweets’.

US Securities and Exchange Commission has accused Elon Musk of securities fraud and seeks his removal from the company after he tweeted about ‘taking his company private at $420’, in August. Investigations have been in process since. After the lawsuit became known, Musk released a statement ensuring that the company would remain public.

 

Fed Chairman Jerome Powell eases concerns of a potential recession in response to signals emanating from a flattening yield curve.

The bond market has seen meaningful narrowing in the short-term and long-term yield spread in recent times, driven largely by recent short-term rate hikes. In that context, there is some recessionary threat given that an inverted yield curve has historically led to a recession within a year or two over the past 50 years. Mr. Powell played down the concerns and said, "There’s no reason to think that the probability of a recession in the next year or two is at all elevated.”

 

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