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(Bloomberg) — Troubled Philippine telecoms giant PLDT Inc. finally halted a days-long stock rout as it vowed to cooperate with an investigation into the more than $800 million of unaccounted spending that it disclosed last week.

Shares of the country’s largest phone company by revenue climbed 5% on Wednesday in Manila, helped also by comments from the head of the stock exchange that there was no fraudulent trading in PLDT shares before it revealed the unrecorded spending. 

It’s a welcome reprieve for the almost a century-old firm after shares lost about a fifth of their value in a record drop on Monday. But questions remain about why the spending was undocumented. 

While the company denies that there were any fraudulent activities, the issue raises concerns about its corporate governance practices and may make investors wary about the broader $228 billion Philippine stock market.

PLDT flagged 48 billion pesos ($871 million) in undocumented spending over four years from 2019 on Friday, describing it as a “budget overrun” and “elevated capex spend.” The Securities and Exchange Commission, the Philippine regulator, said that it was starting an inquiry into the disclosure and the sharp decline in the share price before it.

The stock fell as much as 20% on Monday before closing 19% lower.

Philippine Stock Exchange President Ramon Monzon said earlier Wednesday that there were no fraudulent activities in the trading of PLDT shares, according to local media ABS-CBN News. Monzon later said in a statement that the bourse has issued a “show cause” letter to PLDT to clarify its Dec. 16 announcement and is reviewing transactions on PLDT shares from November up to last Friday.

In its statement, PLDT also said that its disclosure last week wasn’t made sooner because it “needed time to conduct its investigation of the contracts and expenditures involved as well as to meet its major vendors for reconciliation of outstanding amounts and project status.” 

It added that its business and outlook continue to remain healthy. The amount of unaccounted spending is almost equivalent to PLDT’s combined 2020 and 2021 net income. It’s also more than twice the 21.5 billion pesos of cash and cash equivalents that PLDT had at the end of last quarter. 

PLDT held a two-hour briefing for investors and analysts Wednesday during which executives including PLDT Chairman Manuel Pangilinan and President Alfredo Panlilio gave few clarifying details on how the undocumented expenditures occurred and why they went unreported for so long, according to two attendees who asked not to be named discussing a private meeting. 

PLDT communications head Cathy Yang said she cannot disclose details from the briefing while Pangilinan and Panlilio did not immediately respond to mobile phone messages seeking comment. 

PLDT has a large base of foreign investors, but has the second-lowest percentage of independent directors among the 30 firms in the country’s benchmark stock index. Its shareholders include Japan’s Nippon Telegraph & Telephone Corp. and First Pacific Co., the Hong Kong-based investment firm chaired by Indonesian billionaire Anthoni Salim. Vanguard Group Inc. and BlackRock Inc. are among the asset managers that hold the stock, according to data compiled by Bloomberg.

At least two brokers have already weighed in to support the company, with Morgan Stanley saying much of the undocumented spending has already been priced in. Local firm COL Financial Group Inc. upgraded PLDT to buy from hold, saying the selloff appears to be overdone. 

Pangilinan, 76, who was also president and CEO of the company until June 2021, stunned the Philippines in 1998 when he engineered a 30 billion peso takeover of PLDT. He later merged it with Smart Communications Inc., a mobile phone startup he funded through First Pacific.

Pangilinan said earlier that four PLDT officials including heads of finance, procurement and networks have been suspended with pay pending investigation, the Philippine Daily Inquirer reported, without naming the officials.

PLDT on Wednesday said Chief Financial Officer Anabelle Chua is on paid leave, and hasn’t been suspended to allow the company to conduct an independent investigation” on what it calls elevated capital spending.

–With assistance from Ditas Lopez and Andreo Calonzo.

(Adds details throughout)

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(Bloomberg) — The Treasury Department’s top official for financial markets and stability expressed little urgency over the federal government’s need to prepare for the potential launch of a digital US dollar.

Regulators need to examine whether a central bank digital currency — or CBDC — would actually improve the speed or cost of real time interbank payments, which the Federal Reserve is aiming to introduce in 2023, said Nellie Liang, undersecretary for domestic finance at the Treasury.

Asked whether a digital dollar would help defend the primacy of the dollar in international commerce or as a reserve currency, she was even clearer.

“My view is our global leadership doesn’t come from our technology,” she said in an interview at Bloomberg News’s Washington office Monday. “It comes from our governance system, the rules that govern our financial markets, our rule of law and the safety and soundness of our institutions.” 

No Current Need

If after five or more years many countries have introduced a CBDC, she added, that might become a factor in pushing the US to adopt one. But she emphasized the US government’s study of a potential CBDC was mainly to be prepared for a need that didn’t currently exist.

In a September report, the Treasury “set out a very deliberate, forward path for considering CBDC so that the Fed would be in a position to issue one if it decided it wanted to,” she said.

The Fed in January published a white paper on central bank digital currency, without committing to issuing one. Such a move, it said, would have to be made jointly with Congress and the executive branch. 

“The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law,” the white paper said.

Views on the Fed’s Board of Governors vary. Governor Christopher Waller has emerged as a central bank digital currency skeptic, while Vice Chair Lael Brainard has cast the issue in light of a more efficient payment system that could benefit the under-banked and global economic strategy.

Fed Chair Jerome Powell has shown no urgency to decide the matter soon.

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(Bloomberg) — Elon Musk, Twitter Inc.’s new owner and until recently the world’s richest person, has spent most of the past two months pouring his time, energy and finances into the highest-profile social network on the internet. But finally, Musk seems to be running out of gas.

On Tuesday evening, he announced plans to find someone else to run the company. He was adhering to the results of his own Twitter poll, which showed almost 58% of voters wanted him to step down. 

During the 12-hour window that the poll stayed open, Musk tweeted relentlessly, coming across like a man worn down and skeptical that the company he paid $44 billion for just two months ago can even sustain operations.  

“The question is not finding a CEO,” he wrote shortly after the poll started Sunday afternoon. “The question is finding a CEO who can keep Twitter alive.” When Lex Fridman, the popular AI researcher and podcaster, offered to run Twitter on Musk’s behalf, the CEO replied that Fridman “must like pain a lot.”

“One catch: you have to invest your life savings in Twitter and it has been in the fast lane to bankruptcy since May,” he added. “Still want the job?”

Musk joined Twitter Spaces, the company’s live audio service, after confirming that he would step aside and explained the financial squeeze. He said Twitter had been facing negative cash flow of about $3 billion next year because of its spending plans and interest payments, which is why he spent the past few weeks “cutting costs like crazy.” Now he said the company should be able to get to roughly cash flow breakeven next year.  “This will be difficult,” he said.

Musk has tweeted incessantly during his tenure, taking the news cycle with him. He picked fights with the media and leaked his own employees’ private messages and emails; he sparred with Apple Inc., reinstated former President Donald Trump’s account based on the results of a Twitter poll, and recently started discussing the possibility of his own assassination. Musk has a knack for becoming Twitter’s main topic of discussion, even when he doesn’t intend to be, like when he was booed at comedian Dave Chapelle’s show in San Francisco earlier this month. 

If Twitter’s user growth has increased since Musk took over in late October, a claim he often repeats, it’s easy to assume people are there to see what Musk does next. The result is akin to Trump’s presidency — but even Trump took a day off to play golf every now and then.

Running Twitter is a uniquely pressured job, involving making decisions critical to global political discourse in one moment, and making a call on  the product vision in the next moment. Former CEO Dick Costolo once equated it to “dog years” – a single year running Twitter was like working seven years at the helm of some other company, he said.

Under Musk, though, time feels even more compressed, with chaos sparked all day, and on evenings and weekends. In the short time Musk has controlled the company, almost everything he’s decided has spurred intense debate, often resulting in his reversal of those same controversial decisions. Those who have worked with him these past two months describe a leader who is impulsive, erratic, and ultimately ill-prepared for the challenges Twitter provides, which include dealing with internet speech and a user base whose power users spend much of their time writing and commenting about the company itself. Despite months to prepare for the eventuality that he would ultimately own Twitter, Musk showed up largely without a plan, they say.

That much is evident when you examine Musk’s approach to Twitter’s business, which was profitable at the beginning of the year but somehow losing $4 million per day by early November, Musk claims. Musk’s own antics have scared off Twitter’s advertisers; he has tweeted misinformation, posted masturbation jokes, and bungled Twitter’s verification program by enabling imposter accounts to pose as major brands.

Add in the debt that Musk took out to buy the company — resulting in $1.2 billion in estimated annual payments for Twitter — and the company may indeed be in the “fast lane to bankruptcy,” as Musk has called it.

Part of the problem may be that Musk just doesn’t have the time needed to run a company with as many problems as Twitter. “We are seeing somebody who is a technological genius who is at the end of his tether — he’s overstretched,” said Jeffrey Sonnenfeld, a professor of leadership studies and management at Yale who has followed Musk’s career closely. Prior CEO Jack Dorsey attracted activist investor attention for holding two jobs. Musk, by contrast, has at least three, and several other time-sucking hobbies. 

Tesla Inc., by far his most valuable holding, has suffered mightily. Its shares have tumbled by more than 60% this year, including an 8.1% drop on Tuesday.

Musk has been both impulsive and self-destructive during his short time in charge of Twitter, Sonnenfeld added, a combination that has led to a loss of trust among advertisers. Musk’s response has been to distract people from Twitter’s problems, a skill he’s mastered at his other companies where he makes all kinds of promises that go unfulfilled but leave people optimistic that things will soon improve. “From flame throwers to leaf blowers, he’s in the business of distraction,” Sonnenfeld said. “With Twitter, he’s flailing about worse than ever, like a wounded animal in the corner.” 

While Musk’s role as CEO has created all kinds of uncertainty for Twitter, so too does his decision to step down. It’s possible that Twitter will find a more predictable and stable chief executive who can woo back scared advertisers and roll out thoughtful content policies that took more than a couple of hours to compile. The whole point of taking Twitter private was to allow the company to make changes without the pressures that come from Wall Street. Perhaps the same could be said about avoiding the scrutiny that comes with having a CEO who is also one of the most famous and polarizing people in the world.

Finding the right leader will be key, though, and Musk’s tweets about possible bankruptcy suggest Twitter doesn’t have a ton of time to figure it out. Some of Musk’s supporters believe the poll was all just part of his master plan, though Musk himself suggested otherwise. “No one wants the job who can actually keep Twitter alive,” he tweeted Sunday. “There is no successor.”

For Twitter, where the employee base has been decimated, the prospect of a “mystery” CEO may be just as confounding as leaving Musk in charge. While Musk has learned the hard way that running Twitter is an infuriating task, he’s also made the company as buzzy as it’s ever been. With Musk in charge, Twitter at least has that going for it.

That will likely continue. Musk says he’ll stay on to help Twitter with software and servers, “as soon as I can find someone foolish enough to take the job” at the top.

–With assistance from Ashlee Vance and Vlad Savov.

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(Bloomberg) — Sam Bankman-Fried might not have expected that his time in the Bahamas would include days spent inside of a jail cell. The former FTX chief executive and his inner circle at the crypto exchange and related firm Alameda Research relocated operations to the Bahamas from Hong Kong in late 2021.

The Nassau-based employees and executives seemed to enjoy a lavish island lifestyle — think yachts and penthouses with ocean views. How much of that lifestyle was funded improperly is at the center of allegations and charges filed by authorities including the US Department of Justice, the Securities and Exchange Commission and the CFTC. The DOJ alleges, among other things, that SBF misappropriated customer deposits. And there’s a brewing fight between officials in the US and local regulators in the Bahamas over just who is in charge of what. 

Bloomberg reporters Zeke Faux and Carly Wanna join this episode.

Subscribe to the Bloomberg Crypto Newsletter at https://bloom.bg/cryptonewsletter 

This podcast is produced by the Bloomberg Crypto Podcast team: Supervising producer: Vicki Vergolina, Senior Producer: Janet Babin, Producers: Sharon Beriro and Muhammad Farouk, Associate Producers: Mo Andam and Ty Butler. Sound Design/Engineer:  Desta Wondirad.

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(Bloomberg) — Royal Philips NV said tests on its recalled sleep apnea devices showed the products are unlikely to result in “an appreciable harm” to the health of patients, expressing a degree of confidence that sent shares higher.

Tests show emissions from degraded foam aren’t expected to cause long-term health consequences for patients whose DreamStation devices haven’t been exposed to ozone cleaning, the Netherlands-based health company said in a Wednesday statement on its recalled ventilator devices.

Philips shares gained as much as 5.5%, the most since Nov. 11, and were trading 3.2% higher at 12.802 euros as of 10:04 a.m. local time. They are still down more than 60% so far this year.

Philips CEO Starts Tenure by Cutting 4,000 Jobs Amid Recall Woes

Philips initiated its first recall of potentially faulty sleep apnea products in June 2021, with the US Food & Drug Administration also labeling those as a Class 1 issue. The company has made cumulative financial provisions of around €885 million ($940 million) for the recall of affected devices and has warned it might need to increase the money it sets aside as user lawsuits progress.

ING analyst Marc Hesselink said that while the results don’t take away from the litigation risk, the test outcomes lower the risk of very high claims per patient. 

Testing has shown emissions are “within safety limit,” Philips Chief Executive Roy Jakobs said in a phone interview. That is very “encouraging and reassuring news” for the patients, he said.

Philips expects that next year the litigation process will “get more clearer” in due course, Jakobs added. “Today’s update will feed into that process.”

The FDA is still considering the data provided by the company and Philips acknowledged that the health authority may reach different conclusions.

–With assistance from Cagan Koc.

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(Bloomberg) — Core Scientific Inc., one of the largest miners of Bitcoin, became the latest crypto company to file for bankruptcy as the industry reckons with a plunge in digital asset prices. 

The Austin, Texas-based company filed its bankruptcy petition in Southern District of Texas, court papers show. It listed assets and liabilities of $1 billion to $10 billion each, respectively. 

Core Scientific said in a regulatory filing in October that a slump in Bitcoin prices, high electricity costs, increased competition, and litigation with the bankrupt Celsius Network LLC had impacted its performance and liquidity. In July, Core Scientific entered into a $100 million common stock purchase agreement with B. Riley Principal Capital II. 

A slew of crypto companies have sought bankruptcy protection this year as slumping token prices continue to weigh on the sector. Compute North Holdings Inc., a provider of data services for miners and blockchain companies, filed for bankruptcy in September, while crypto broker Voyager Digital Ltd. sought court protection in July.

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(Bloomberg) — Cathie Wood ramped up purchases of Tesla Inc. shares in the fourth quarter even as concerns over Chief Executive Officer Elon Musk’s ability to manage businesses rise, potentially signifying her faith in the billionaire and electric vehicles. 

Tesla shares rose as much as 2.4% in US premarket trading on Wednesday following Wood’s purchases. The stock was also boosted after Musk confirmed that he would resign as chief of Twitter Inc. once a replacement was found, alleviating investor worries that the CEO is spending too much time on the social media company.

Exchange traded funds backed by Ark Investment Management LLC purchased slightly more than 445,000 shares of the electric vehicle maker since Oct. 3, when they started their latest buying streak, according to Ark trading data compiled by Bloomberg. This is the first quarter in seven that Ark has net acquired Tesla shares. 

Ark’s purchases in the final quarter-to-date work out to around $88 million based on Tesla’s average trading price from Oct. 3 to Dec. 20. Even so, Tesla’s weight in the firm’s flagship fund has dropped to third rank from the pole position it had before October thanks to a 61% plunge in its share price this year, poised for its worst annual return ever. 

Musk has been in the spotlight due to growing criticism of his involvement in Twitter as well as rising concerns from investors who have been vocal about the need for a governance change at the electric vehicle maker. Longtime investor Ross Gerber, CEO of Gerber Kawasaki Wealth Management, recently tweeted about a perceived lack of leadership at Tesla and said it’s “time for a shakeup.” 

Wood’s flagship Ark Innovation ETF is down 66% for the year compared to a 32% decline in the Nasdaq 100 Index as historical tightening by the Federal Reserve and global recession fears have continued to batter growth stocks.

–With assistance from Kit Rees.

(Adds US premarket trading in the second paragraph.)

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(Bloomberg) — Rakuten Group Inc.’s long-term rating was cut deeper into junk territory by S&P Global Ratings.

The Japanese e-commerce giant was lowered to BB from BB+, according to the rating company. 

The group’s nonfinancial unit “is likely to continue to book deeply negative free operating cash flow (FOCF) in the coming year or so because of slow improvement in its mobile business,” S&P said in a statement. 

The rating assessor placed the e-commerce company on credit watch in September. Most of Rakuten’s yen bonds had fallen to multi-year lows in recent weeks before rebounding, amid concerns about the company’s earnings and its ability to raise non-debt funds in the near future.

The rating cut underscores Rakuten’s struggle to raise financing as the market seeks further developments on the company’s plan to list its banking subsidiary and brokerage unit. The downgrade was widely expected, as S&P warned in October it may do so if it believed Rakuten could not execute a considerable amount of nondebt financing within 2022.

Billionaire Hiroshi Mikitani’s company posted a net loss of 258 billion yen ($2 billion) in the nine months ended September, compared with 104 billion yen in net losses in the same period previous year as the mobile division weighed heavily on its bottom line. 

The firm raised $500 million from two-year dollar notes in November, with a whopping yield of 12%, in a rare junk bond offering in the country. Rakuten Card, its credit card subsidiary, sold 50 billion yen of five-year notes to Japanese retail investors earlier this month.

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(Bloomberg) — Reserve Bank of India Governor Shaktikanta Das warned that failing to regulate cryptocurrencies could ignite the next financial crisis and urged the adoption of a new e-Rupee for digital banking needs.

“Cryptocurrency has certain huge inherent risks for our macroeconomic and financial stability,” Das said at an event on Wednesday in Mumbai, pointing to the implosion of FTX as an example. “If cryptos grow, mark my words, the next financial crisis will come.”

Das said a main concern for the RBI is that cryptocurrencies don’t have any underlying value. “It is a 100% speculative activity,” he added. 

Das’s comments come in light of the global cryptocurrency meltdown that led to billions of dollars being wiped out. India’s central bank has refused to recognize private cryptocurrencies and repeatedly issued warnings against trading in them.

Globally, more central banks will embrace digital currencies as they shun private cryptocurrencies, Das said. India’s central bank tested its own digital currency for retail usage earlier this month.

NOTE: India Starts Testing Digital Rupee for Retail Usage

Speaking at the Business Standard BFSI Insight Summit, Das said it’s in everyone’s interest to cool high prices in the economy, and that the government and central bank are “serious about controlling inflation.” He said monetary policy isn’t driven by politics or upcoming national elections, which are scheduled for 2024. Instead, the RBI is “only looking at inflation and growth.”

In the monetary policy review earlier this month, the central bank increased the key rate 35 basis points, the smallest bump in months. Since May, the RBI has raised its policy rate by 225 points to bring stubbornly high inflation within a target band of 2%-6%.

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(Bloomberg) — Elon Musk confirmed he will step down as chief executive officer of Twitter Inc. after finding a successor, though he plans to retain control over the company’s engineering teams.

Since taking over in October, Musk has overseen the firings or departures of roughly 5,000 of Twitter’s 7,500 employees. He’s said he plans to emphasize Twitter’s engineering as owner, and it’s hard to tell what’s left of other operations, such as legal and finance after the departures.

The billionaire executive embarked on a search for a new CEO, according to a person familiar with the search, after losing a straw poll he posted on the social media site that asked whether he should relinquish his role as head of the company.

Musk’s Twitter Legal Woes Widen With FTC Probe, Police Questions

More than 10 million votes, or 57.5%, were in favor of Musk stepping down, according to results that came in Monday morning. Musk committed to abide by the results when he launched the survey, but a day later he had tweeted more than a dozen times without directly addressing the outcome. The search for a new CEO could be drawn out and take time to yield results, said the person, who asked for anonymity discussing a private matter.

Musk has been almost single-handedly running Twitter since he bought it in October for $44 billion. He said early on that he didn’t plan to stay permanently as CEO and he has surrounded himself with a few trusted people, some of whom have suggested they’d be ready to take on what Musk calls a thankless task. “No one wants the job who can actually keep Twitter alive. There is no successor,” Musk tweeted earlier this week. 

Musk also said during a Twitter Spaces hosted late Tuesday that the platform was on course to hit $3 billion of negative cash flow, prior to the recent round of severe cost-cutting.

Among those who have remained in Musk’s inner circle are Jason Calacanis, an investor and podcaster, and former PayPal Holdings Inc. exec David Sacks. The two were part of Musk’s war room in the days after the deal closed and people familiar with the situation said they were given internal accounts and helped make decisions about who would keep their jobs. Both have been making public suggestions for Twitter’s business strategy. 

Calacanis kept his ideas for monetizing Twitter coming, advocating on Tuesday for features including a “poll analytics” link where information on Twitter poll results would be broken down by voter attribute, such as country and number of Twitter followers. Such insights are “well worth paying for,” he tweeted. On Monday, he talked up Twitter’s new business branding efforts.

Read about some of the potential candidates for Twitter CEO job

Sacks also retweeted a notification about Twitter Business on Monday, a new program that lets businesses identify their brands and key employees on Twitter. Sacks added the logo for Craft Ventures, the venture firm he runs, to the side of his name. In a reference to Musk’s poll about whether he should stay on as Twitter’s CEO, Sacks suggested that other CEOs run the same type of poll.

In one of his first tweets after the closing of the survey, Musk said Twitter will restrict voting on major policy decisions to paying Twitter Blue subscribers. The service, which costs $8 a month, had attracted about 140,000 subscribers as of Nov. 15, the New York Times has reported.

Calacanis didn’t respond to an emailed request about whether he and Musk had discussed the CEO role. A spokeswoman for Sacks declined to comment.

CNBC’s David Faber reported earlier on Musk’s search for a new CEO. Faber reported that Musk’s search has been ongoing and started before the Twitter poll emerged.

Musk’s dramatic stunt, asking the public about his leadership capabilities, came shortly after he attended the World Cup final match in Qatar, triggering a wave of trending topics such as “VOTE YES” and “CEO of Twitter.” 

Musk has warned that Twitter is at risk of bankruptcy and instituted a “hardcore” work environment for the remaining workers after a drastic cutback in staff. In his less than two months at the helm, he has spooked advertisers, alienated Twitter’s most ardent creators and turned the service from a reflection of the news of the day into the main topic.

After losing the initial poll, Musk, who’s also CEO of Tesla Inc., retweeted promotional material for the car company and for Twitter’s Blue for Business service. He also responded to an article about rival Toyota Motor Corp.’s criticism of electric vehicles with a simple “Wow.”

The stock of Tesla, by far Musk’s most valuable holding, has plummeted since the Twitter acquisition and critics have argued he’s spending too much time on the social media company. The shares fell 8.1% at the close in New York.

–With assistance from Sarah McBride.

(Updates with additional context, Twitter spaces in paragraph six.)

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