The daily business briefing: February 24, 2023
FTX's Sam Bankman-Fried faces more fraud indictments, Ozy Media CEO Carlos Watson is arrested on fraud charges, and more
Prosecutors file more fraud charges against FTX's Sam Bankman-Fried
Federal prosecutors on Thursday revealed that they had filed four new charges against FTX founder Sam Bankman-Fried related to the collapse of his cryptocurrency firm. The new charges include securities fraud and conspiracy fraud counts. U.S. Attorney Damian Williams said that even after the new indictment in Manhattan federal court, prosecutors were continuing to build their case against Bankman-Fried, whom they accuse of cheating thousands of investors out of billions of dollars' worth of digital assets. The new charges increased the possible prison sentence Bankman-Fried could get if convicted from 115 years to 155 years. "We are hard at work and will remain so until justice is done," Williams said. A Bankman-Fried spokesperson declined to comment.
Ozy Media founder Carlos Watson charged with fraud
FBI agents on Thursday arrested Carlos Watson, founder of troubled digital news start-up Ozy Media, on fraud charges. Prosecutors said in a court document that Ozy and Watson, 53, "engaged in a scheme to defraud Ozy's potential investors, potential acquirers, lenders and potential lenders" by misrepresenting the business' finances and audience size. Earlier this week, Ozy's former chief operating officer, Samir Rao, pleaded guilty to fraud charges. Ozy came under scrutiny after The New York Times reported that Rao had impersonated a YouTube executive in a fundraising call with Goldman Sachs, saying Ozy's content was a big success on the platform. Neither Watson nor Rao responded to requests for comment from the Times.
Hyundai shedding stake in subsidiary after child labor report
Hyundai Motor told shareholders in a Friday letter that it was shedding its controlling stake in an Alabama auto parts plant that Reuters reported last year had employed children as young as 12. CEO Jaehoon Chang said in the letter that the South Korean automaker had audited 29 direct suppliers in the state to make sure they were all "now in full compliance with underage labor laws," according to Reuters, which received a copy of the letter from Hyundai. Reuters reported after a 2022 investigation that several parts suppliers to Hyundai's massive Montgomery, Alabama, vehicle factory had underage migrant children working for them, making parts for U.S.-made cars and SUVs. One, SMART Alabama, is a subsidiary in which Hyundai holds a 72 percent stake.
Stock futures struggle ahead of inflation, consumer data
U.S. stock futures fell early Friday as investors awaited inflation and consumer data after the S&P 500 snapped a four-day losing streak. Futures tied to the S&P 500 and the Dow Jones Industrial Average were down 0.7 percent and 0.5 percent, respectively, at 6:45 a.m. ET. Nasdaq futures were down 0.9 percent. The S&P 500 and the Dow gained 0.5 percent and 0.3 percent on Thursday. The tech-heavy Nasdaq jumped 0.7 percent. The major U.S. averages were still on track to end the week with losses due to ongoing concerns the Federal Reserve might have to raise interest rates higher than expected to cool the economy and bring down inflation.
EV-maker Lucid's disappointing guidance rattles investors
Lucid Group's stock price plummeted early Thursday after the luxury electric-vehicle maker released a disappointing guidance for 2023, warning it would make fewer cars than Wall Street expected. Shares fell about 12 percent on Thursday, and were down 2.5 percent in pre-market trading early Friday. Lucid said Wednesday after the market closed that it planned to produce between 10,000 and 14,000 vehicles this year, far short of the 21,815 analysts projected, according to Visible Alpha. Lucid said it made 7,180 cars last year, although it only managed to deliver 4,369 of them. Analysts took that as a sign demand suffered due to aggressive price cuts by dominant rival Tesla.