Bloomberg

Alameda to Repay $200 Million in Crypto to Bankrupt Voyager

(Bloomberg) — Crypto billionaire Sam Bankman-Fried’s Alameda Research will return about $200 million worth of Bitcoin and Ether it had borrowed from insolvent Voyager Digital Ltd., according to a court filing from Voyager. 

The agreement to return the crypto was unveiled after Voyager’s request to have the loan to Alameda repaid was granted by a New York bankruptcy court, according to a separate filing late Monday.

Alameda, the trading firm co-founded by Bankman-Fried, will pay about 6,553 Bitcoins toward principal and accrued fees and about 51,000 Ether by Sept. 30, the filing showed. 

Read about the close relationship between Alameda, Voyager 

Voyager, which is in the process of auctioning off its assets, will return the collateral tied to the loan, including 4.65 million FTT and 63.75 million SRM tokens, the filing showed. Alameda had tweeted in July that it was “happy to return the Voyager loan” and get its collateral back. 

Crypto exchange FTX, also run by Bankman-Fried, and Alameda in July announced plans to buy Voyager, but the embattled crypto broker dismissed it as a “low-ball” offer.  

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Kavak Signs $810 Million Financing Deals With Global Banks

(Bloomberg) — Kavak, Latin America’s biggest startup, signed structured financing agreements with HSBC Holdings Plc, Goldman Sachs Group Inc and Banco Santander SA worth $810 million as it looks to expand operations amid a downturn in the tech industry.

Specifically, HSBC will provide $675 million of financing to purchase Kavak’s current and future loan portfolio in Mexico while Goldman Sachs and Santander will provide loans backed by assets including warehouses and cars worth a combined $135 million, chief financial officer Moises Flores said in an interview at the company’s Mexico City offices.

Kavak, which has built a digital platform to allow customers to buy and sell used cars while financing the operations, was last valued at about $8.7 billion in a funding round that concluded in September 2021. Kavak is negotiating more debt financing deals with banks and could raise a total $1.2 billion this year, including the amount announced on Tuesday, Flores said. 

Flores declined to disclose the terms of the loans but said the financing was cheaper than what’s available in the market and did not carry prohibitive covenants in a sign of the banks’ faith in their business.

“This is the Ferrari of debt,” Flores said. “This is the kind of thing that you achieve when you’re public and you’ve been in the market for many years, and we’re doing this many years ahead of that.”

The Mexico City-based firm is funded for at least 36 months and it may turn its first profitable month in Mexico in December or January, he said. The discussions with banks began about 18 months ago, long before liquidity tightened for startups, Flores said. 

Technology startups around the world have found themselves under increasing pressure to turn a profit as investors recoil from risky ventures. Companies are now turning to bank financing as rising interest rates around the world depress valuations and increase the cost of funding.

The company currently has around 30,000 loans and a loan book of $200 million, Flores said. Kavak is seeking to set up loans similar to the HSBC facility in other markets, he said. 

Kavak expanded operations to Colombia, Chile and Peru as well as Turkey since late last year, building on its operations in Mexico, Brazil and Argentina. 

“We are in a very strong financial position,” he said. “We can ensure infinite runway, if we wanted to, we’ll just have to pace the growth.”

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Indonesia Passes Data Privacy Law to Halt Rush of Breaches

(Bloomberg) — Indonesian legislators passed a new law to offer consumers better protection against data breaches that have intensified over the past two years.   

The new legislation will hold data operators liable for up to five years in jail and a maximum fine of 5 billion rupiah ($334,000) for leaking or misusing private information. The deliberation of the bill was held up for more than a year. 

“This marks a new era in the management of personal data in Indonesia, especially in digital,” Communications and Information Minister Johnny G. Plate said on Tuesday after the plenary session to legislate the new law. 

READ MORE: Indonesia Set to Pass New Data Privacy Law After Spate of Leaks

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JPMorgan Sees ‘Very Little’ Demand for Crypto as Payment Tool

(Bloomberg) — Demand for cryptocurrencies as a payment method has drastically declined over the past six months, according to Takis Georgakopoulos, global head of payments at JPMorgan Chase & Co.

“We saw a lot of demand for our clients, let’s say up until six months ago,” Georgakopoulos said in a Bloomberg Television interview on Tuesday. “We see very little right now” but the bank will still support clients who want to use that method, he said.

Cryptocurrencies are plowing through a downturn that has erased some $2 trillion in market value in less than a year and slashed volumes on many exchanges. High-profile digital-asset companies have also been pushed into bankruptcy. 

Still, JPMorgan is betting on the growth of tokenized assets and has over the years increasingly embraced the sector. It recently became one of the key backers of London-based digital-asset startup Ownera, and in May experimented with using blockchain for collateral settlements. 

Cryptocurrencies are also becoming “larger and larger” in the gaming sector, Georgakopoulos said. This applies to both traditional gaming and the metaverse, where there are many new opportunities, he said.

Firms such as Block Inc., which is run by Jack Dorsey, are among the highest profile to embrace the potential for crypto as a means of payments despite the volatility in digital tokens. Block’s latest quarterly results showed that revenue collected through Bitcoin transactions fell 34% to $1.79 billion.

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Ether’s Outlook Darkens in Charts Capturing Hangover After the Merge

(Bloomberg) — The fanfare over a revamp of the Ethereum blockchain is still echoing across the cryptoverse but that’s doing little to stem a slide in Ether.

The network’s native token is down 10% since the most commercially important digital ledger last week implemented an upgrade to slash energy use.

The second-largest virtual coin had rallied from mid-June on hype around the software update known as the Merge, but that’s fizzling now the shift is done. It’s down some 63% this year, a bruising period for cryptocurrencies.

Crypto and many other assets are also quivering ahead of what’s likely to be another big Federal Reserve interest-rate hike on Wednesday.

The selloff in Ether is bringing technical patterns into play that hint at more downside risk. Digital-token prices were little changed on Tuesday, with Ether around $1,350 and Bitcoin just above $19,000 as of 1:10 p.m. in Tokyo. 

Regressing

Ether has dropped below the second standard deviation of a regression channel drawn from its June lows. The study suggests that this brings a retreat to the third standard deviation — a level of about $1,250 — into play. If that support fails, the next marker is $1,000.

Creaking

The price of Ether of late clustered around $1,800 for a notable period of time, indicated by the horizontal bars below, which capture how much time the token spent at particular levels. That, in effect, became a ceiling it struggled to break, and it has since dropped below a zone of support around $1,340. For technical analysts, the breach of support raises the risk of more falls.

Betting

Options data from Deribit show a high number of outstanding Ether put and call contracts — so-called open interest — at strikes of $1,000 and $2,000 respectively for end-September expiry. That suggests those levels define a trading range for Ether. 

Meanwhile, bulls looking for a glimmer of hope might take solace from the so-called maximum pain point implied by the options bets.

This is part of a controversial theory that says options writers — often financial professionals — make more money than options buyers. The argument is that an asset’s price will move toward the level where options writers make the most profit — that is, where the greatest number of options expire as worthless for buyers. Deribit data puts this maximum pain point around $1,600.

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Apple Will Hike App Store Prices from Europe to Asia Next Month

(Bloomberg) — Apple Inc. unveiled major increases to its price tiers on apps and in-app purchases from Europe to Asia, protecting its margins as major currencies tumble against the US dollar.

Customers in nations that use the euro as well as those in Sweden, Japan, South Korea, Chile, Egypt, Malaysia, Pakistan and Vietnam will all see price hikes as early as Oct. 5, the company said in a message to developers. The move in Vietnam also reflects new local regulations around tax collection, Apple said, without elaborating on why it’s raising prices elsewhere.

The strong dollar may be a key driver. In Japan, prices are rising by roughly 30%, a significant hike that follows the yen’s dramatic weakening this year. Apple earlier this summer raised prices across its Mac, iPhone and iPad ranges to account for the currency disparity. The euro has suffered a similar fate, now trading at near parity against the US dollar and showing signs of further weakness ahead.

“It is not the first time Apple is adjusting App Store prices, but this hike is a pretty hefty one,” said Tokyo-based analyst Serkan Toto of Kantan Games. “It’s inevitable the price adjustment will be felt by app and game developers in the markets affected. People might be more hesitant to make in-app purchases now than ever, and developers might be forced to get more creative in terms of pricing in the future.”

App developers have already raised prices over the past year, an independent study showed. The average price of in-app purchases rose 40% in July from the same month of 2021, consultancy Apptopia estimated. Apple’s new framework will allow developers to keep existing subscribers of any subscription services they offer at current price levels, the company said.

The App Store is a major driver of revenue for the Cupertino, California-based company. Apple, whose iPhone 14 went on sale this month around the globe, reported revenue from services that narrowly missed estimates in the June quarter. Chief Executive Officer Tim Cook acknowledged in an interview with Bloomberg Television’s Emily Chang that the company was dealing with “some softness” and a slower economy, but said he expects revenue to pick up again in the fourth quarter.

Though it’s faring better than some tech peers, Apple has grown more cautious as it confronts a sputtering economy. The iPhone maker is planning to slow hiring and spending for some teams in 2023, Bloomberg News has reported.

(Updates with analyst comment in fourth paragraph)

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Transcript ‘In Trust’ Episode 4: The Guardianship

(Bloomberg) — This is the transcript for the fourth episode of Bloomberg and iHeart investigative podcast “In Trust.” Learn more and subscribe to “In Trust” on iHeart, Apple or Spotify. 

Our transcripts are generated by a combination of software and human editors, and may contain slight differences between the text and audio. Please confirm in audio before quoting in print. 

Episode Four: The Guardianship 

Billie Ponca I’ve got you on speaker, I have a young woman here and she is doing a story… 

Rachel Adams-Heard Last time I was in Pawhuska, I met a woman named Billie Ponca. I had heard of Billie. She used to work at the White Hair Memorial, the Osage research and learning center. 

And while we were talking, I told Billie I was trying to find someone who knew an Osage man named Myron Bangs Jr. Billie hopped on the phone. Started calling friends, relatives.

Billie Ponca And his name was Myron Bangs. B-A-N-G-S. And he sued his guardian.

Rachel Adams-Heard I was curious about Myron because the Drummond brothers were his guardians, some of the White men the U.S. government had put in charge of the finances of Osages and other Native Americans. In total the three Drummond brothers were guardians to at least 10 Osages — children and adults — and in 1941, the United States sued them over how they handled Myron’s affairs.

Voice on telephone: “Myron Bangs…”

Billie Ponca Yeah, if they’ve ever heard of him. 

Voice: Okay. Alright.

Billie Ponca Have them spread the word, I need to know who he is. Of course he’s deceased and gone for quite some time… 

Rachel Adams-Heard I found the lawsuit in the National Archives. Myron had commissioned a private audit on his accounts, and sent what he learned to the government. He left behind a ton of documents with his lawyer.

Other than Myron Bangs Jr.’s records, there isn’t a whole lot in the archives about the Drummond brothers’ guardianships. The official records are under seal in the Osage County Courthouse, so this is one of the most complete looks inside a guardianship that I’ve seen. 

When I’ve asked members of the Drummond family today about the three brothers — Fred Gentner, Cecil and Jack — and whether anyone knew anything about their guardianships, they either told me they didn’t know the brothers were guardians, or if they did, they had always heard it was because their ancestors were trustworthy.

There’s a moment in the tapes with Jack Drummond and his biographer Terry, where Jack brings up guardianships.

It’s in the middle of an unrelated conversation, after Terry asks Jack about his relationship with his brothers.

Terry Hammons You seem to, as a boy, have been friendlier with Cecil than with Gentner. Is that so? Would that be true?Jack Drummond Yes. Gentner — see, Gentner was always jealous of me. Cecil didn’t used to be. Cecil just loved land…

Rachel Adams-Heard He’s griping about his brother Fred Gentner again. Remember, Jack was mad he didn’t get that bonus after he made a huge profit at the store. He was also mad his brother ended up with control of the store once their dad died. Jack lays all this out to Terry, all his frustrations with Fred Gentner, then he says… 

Jack Drummond I wouldn’t want this said or repeated, never bring it up in anything you write, but Gentner was a hypocrite. He was very selfish and he was the administrator of my father’s estate, and somehow he ended up with the big end of it. Of course, he set out seven shares. But then he dealt with the Indians. Of course, he made a lot of money off the Indians. He was administrator of the estates, he was guardian for several Indians, handled all their money. And all the money that ever passed through Gentner Drummond’s hands, some of it stuck to them — stuck to his hands. 

Rachel Adams-Heard Stuck to his hands. Jack seemed to say his brother Fred Gentner had been up to something. And what I learned from Myron Bangs Jr. was that Jack wasn’t alone in thinking so. One of Fred Gentner’s wards thought so, too. And at one point, so did the United States government.

This is “In Trust.” 

I’m Rachel Adams-Heard. 

Rachel Adams-Heard Myron Bangs Jr.’s lawsuit was filed in the 1940s. But to understand what led to it, you have to know that the Drummonds’ involvement with his family starts way earlier. Back when Myron was a baby, not long after the 1906 allotment. 

Myron was born just a little too late to have a headright in his name. His mother, father and older brother got them, as well as land. But right after the allotment act, Myron’s father, Myron Bangs Sr., and his infant brother, Percy, both died. Myron’s mom, Lucy, was left to raise him on her own. 

Frederick Drummond — the Scottish immigrant who ran the store — he handled Myron Sr. and Percy’s estates, which passed their land and headrights to Myron Jr. and Lucy. This made them both incredibly wealthy. 

But when Myron was 12 years old, his mom became sick. The records say she had tuberculosis. And all of a sudden, a lot of men became very interested in her affairs. 

There was a man named Robert Whitecloud, who married Lucy, right when her health took a turn. Not long after, she went to New Mexico, hoping the dry air would help her symptoms. That’s when a second man took an interest. His name was Bright Roddy. He followed her to New Mexico, all the way from Pawhuska. He wanted to write her will.

By February 1921, Lucy was back in Hominy. That’s when a third man got involved. It was another Drummond — Fred Gentner, who by now had taken over the store. He wanted to write Lucy a different will. According to probate testimony, Fred Gentner visited her every day, while she was so sick she couldn’t get out of bed. 

Lucy died a few weeks later, on February 24, 1921. At just 13 years old, Myron had lost his entire family. 

The Hominy Trading Company was Lucy’s undertaker, just like it was for a lot of other Osages who lived in Hominy. And Fred Gentner became executor of her will — the one he wrote for her. 

Three estates — Myron Sr.’s, Percy’s and Lucy’s — all handled by the Drummonds. And then a guardianship, of Myron Bangs Jr.

Myron Red Eagle He was orphaned. And all his folks and his grandfather, grandmother, his mother and his dad, his aunt and uncle, whatever, they all died. And that’s why he came into all that money. 

Rachel Adams-Heard This is Myron Red Eagle. His name was on a business card Billie Ponca gave me when she was trying to help me track down someone who knew Myron Bangs Jr. 

Myron Red Eagle I’m a cousin of Myron Bangs Jr. I live here in Pawhuska.

Rachel Adams-Heard Myron’s on the Osage Minerals Council, the elected officials who oversee the Osage Mineral Estate. When I sat in that big room with Everett Waller, asking about non-Osage headright holders, I was just inches away from where Myron sits whenever there’s a meeting. 

Myron Red Eagle I think they named me after him because I kind of look like him. That’s what my mom used to say. “He looks like my brother Myron,” she used to say.Rachel Adams-Heard So this is a picture I found of him at the Oklahoma Historical Society. Myron Red Eagle Yeah, that’s him.Rachel Adams-Heard Do you think you look like him? Myron Red Eagle Yeah, In a way I do. Yeah.  Rachel Adams-Heard What features do you see?Myron Red Eagle Probably a smile, yeah. 

Rachel Adams-Heard For what it’s worth, I see it too. Myron Red Eagle has a big smile. I saw it a lot as he told me about his cousin. 

Myron Red Eagle He’d give me a dollar every time he came to the house. He just gave everybody a dollar — and they were silver dollars in those days, you know. 

Rachel Adams-Heard By the time Myron Red Eagle met Myron Bangs Jr., Myron Bangs Jr. was in his 40s. 

Myron Red Eagle He had airplanes. He could fly airplanes. He was smart, he wasn’t no dumb guy. He knew how to fly a plane. I don’t know what the restrictions were in those days but he had is own plane. There was a story about it — in those days they had what they call feast, big feasts, you know. And they had to start a fire, but they couldn’t get it started. And uncle Myron flew into the field and he came in there and he said, “What’s going on?” You know, they were all talking Osage and they were trying to start this fire. He said, “Give me that thing!” He grabbed one and he stuck it one time and got a spark. Got a spark and started it just like that. And he said “Okay, I’m going to go back to Tulsa. I’ll be back later,” he got in his plane, took off. He got the fire started. I got a kick out of that.

Rachel Adams-Heard The Drummond brothers’ guardianship of Myron Bangs Jr. started when he was just a child, but it lasted well into his adulthood. Because even though he was educated, could fly an airplane, served in the Army, the U.S. government considered him incompetent. Said he couldn’t control his own money, and kept the Drummond brothers in charge instead. 

A lot of Myron’s personal records are in an archive in Oklahoma City, at the Oklahoma Historical Society. There are boxes of old handwritten letters, postcards and telegrams from Myron’s travels. His honorable discharge from the Army. Even an old datebook of his, maroon, embossed with “Jr.” on the front in gold. The week he got married, it’s full of reminders to pick up pants from the dry cleaner and check in about the marriage license. Looking at all this, I felt like I got a little peek into what Myron might have been like as a person. Intelligent. Persistent. A bit sarcastic at times. And later, when he became a husband and father, doting and pretty religious.

In that archive there are also boxes and boxes of legal records, because this collection belonged to Myron’s lawyer, a man named Paul Comstock. And when I met with Myron Red Eagle, I showed some of these records to him. They’re old, some handwritten, kind of hard to read.

Myron Red Eagle “We have had so much trouble with our guardian that we do not want our land leased into either his or any of his employees…”

Rachel Adams-Heard This is a letter Myron Bangs Jr. wrote directly to the commissioner of Indian Affairs — the head of the whole agency — right before he hired Paul Comstock. He was in his 20s, and Myron, he had a few choice words for the US government about his guardian, Fred Gentner Drummond. He titles the letter “One example in the Osage” and then starts describing exactly the kind of scheme you might find in the “Gray Book” — that report from the ’50s that listed so many guardianships gone wrong. 

Myron said Fred Gentner was leasing his land to Horace Burkhart — a nephew of William Hale, the one allegedly behind a lot of the murders during the Reign of Terror. But Myron said Horace wasn’t actually using the land; Fred Gentner was. And, according to this letter, Fred Gentner was trying to discount the rent for himself and charge Myron for a barn and a fence that he had put up. Myron told the commissioner that Fred Gentner was perfectly capable of paying the full price. He ran the Hominy Trading Company, after all. Myron wrote, “Stand incognito in his place of business for one hour and ascertain the prices that he charges the Indians.”

Myron Red Eagle I remember mom saying a lot of times he was always fighting against the system, you know, that’s what it was right there. He was always fighting. He was trying to get something going. He had found enough evidence to do it, you know, according to that. He was trying to get everybody’s attention, evidently. He wasn’t the only one, there was a lot of people in that same situation. 

Rachel Adams-Heard Myron Jr. said he had written to the Osage Agency in Pawhuska that oversaw guardianships. They apparently didn’t do much. He was fed up. He wanted someone, anyone, in the U.S. government to care. 

Myron Red Eagle In other words, they went along with the guardian, you know, that’s what they did. They didn’t really take up for uncle Myron, they just passed the buck and give it to him. “Let’s let the guardian make the decision.” And if he makes the decision there’s nothing uncle Myron can do.

Rachel Adams-Heard  So Myron was complaining to the agency about his guardian and the agency was telling him to go back to his guardian with his complaints?

Myron Red Eagle Yeah, yeah, exactly what it means. Okay: “Mr. Springer tries to discourage us in taking an interest in our affair, Mr. Dabble,” or Dibble or whatever it is, “is the only in the Pawhuska Osage Agency that seems to take any interest in our affairs.” Man it’s hard to read, isn’t it? 

Rachel Adams-Heard Yeah, sorry. This one’s tough.

Myron Red Eagle Yeah.

Rachel Adams-Heard Yeah, I mean—

Myron Red Eagle You see the point though. It was crooked. Even the agency was crooked; the Bureau of Indian Affairs, they were crooked. They didn’t want to mess with it. They knew that the guardian would get whatever we wanted and they just went along with it. 

Rachel Adams-Heard In this letter that Myron sent to the commissioner of Indian Affairs, he says, “We are writing to you personally because we cannot get action elsewhere.”

A couple weeks later, Myron wrote the Osage Agency again. He said he wanted his guardian removed — that he preferred the agency have control of his finances, not Fred Gentner. 

And yet, as far as I could tell, the Office of Indian Affairs didn’t step in.

So Myron took matters into his own hands. He hired Comstock at the end of 1934 and, a few months later, Fred Gentner resigned as his guardian. Myron and Comstock had enlisted a team of accountants in Tulsa to conduct an audit of his account.

The accountants came back with a five-page report. The word “Confidential” is written on the front. They offer a disclaimer of sorts at the beginning: They say there wasn’t any standard way that guardians submitted receipts, so it would have been “almost impossible” for the U.S. government to conduct any sort of accurate review of how the Drummond brothers were handling Myron’s money. 

Basically, this was the first time anyone was really doing a deep dive on whether any of these guardians were doing a good job, and it was only because Myron had personally gone out and hired them. 

But even without a lot of those receipts, the auditors filled five pages with discrepancies or issues they found after combing through Myron’s affairs. 

According to this, Fred Gentner was leasing out land that Myron wasn’t getting paid for, and he was making loans to people from Myron’s funds that were in default for years before Fred Gentner did anything about it. 

Another example stood out to me. Fred Gentner Drummond apparently sold some of Myron’s property to a man named Hugh Nelson. He got Myron $1,000 for the land. But, a few months later, Fred Gentner bought the same piece of land back, paying $7,000 of Myron’s money. According to the audit, Myron was left with the same piece of land, but he was out $6,000.

It’s only after the audit Myron commissioned that the federal government took an interest in his complaints. A US attorney used one of the examples in the report and sued the Drummonds in 1941. The lawsuit is filed in federal court, in the Northern District of Oklahoma — The United States of America v. Fred G. Drummond, R.C. Drummond, and Alfred A. Drummond. 

I showed it to Myron Red Eagle. 

Myron Red Eagle “R.C. Drummond, the guardian of the said Myron Bangs Jr., and Fred G. Drummond conspired and devised a scheme to defraud the said Myron Bangs Jr., in the following manner…”

Rachel Adams-Heard The case named all three brothers because even though Fred Gentner was calling all the shots, Cecil was the one who was technically listed as Myron’s guardian. Jack Drummond was involved, too. In order to be a guardian, you needed a surety bond — basically, a promise from someone else that if you didn’t act in the best interests of your ward, or took advantage of your position, they’d be on the hook, too. A lot of times these bonds came from banks, but in Myron Jr.’s guardianship, the bond was issued by Jack Drummond. So all three brothers had a hand in controlling Myron Jr.’s affairs, and all three brothers were sued by the federal government. 

Out of everything in the audit, the US focused on one specific land dispute, from when Myron Jr. was 13.

When Lucy Bangs died, Fred Gentner, who was acting as Myron Jr.’s guardian, transferred a piece of land into Myron Jr.’s name. He paid himself $3,732.99 from Myron’s account. The US thought this transaction showed fraud because what the auditors found was the land Fred Gentner sold to Myron Jr., it already belonged to Myron Jr. It was Lucy’s, and when she died, it passed to Myron Jr. The US was arguing that there was no reason for Fred Gentner to sell it to him.

Myron Red Eagle “It is further alleged that R.C. Drummond, the guardian of this ward, had allowed the said Fred G. Drummond to draw checks upon the funds of said ward to incur claims against this ward and generally assume and conduct the affairs and official authority of such guardianship, without authority of law and contrary to the statutes of Oklahoma.” Yeah, that was illegal. He couldn’t do that. 

Rachel Adams-Heard The Drummond brothers had a drastically different version of events, one a federal judge agreed with. They argued that this was all part of a well-orchestrated plan — a plan Lucy was in on. According to the brothers, they were just trying to keep Lucy’s husband of less than a year — Robert Whitecloud — from getting her land after she died. And the $3,732.99 that Fred Gentner paid himself from Myron Jr.’s account — that was just to cover a debt Lucy owed him from before she died.

The judge who presided over this case was actually the same one who gave William Hale a life sentence, Judge Kennamer. And what Kennamer said in his order in this case was that there wasn’t any evidence the Drummonds cheated or defrauded Myron Bangs Jr. He said the Drummond brothers had in fact helped Myron by getting him land that he would have had to share with Robert Whitecloud. The money Fred Gentner paid himself was an “irregular” way to settle a debt, Kennamer wrote, but Fred Gentner was just acting in accordance with Lucy’s will — the one Fred Gentner wrote and executed. 

Judge Kennamer said the county court had signed off on all this and the superintendent of the Osage Agency had full knowledge of it. 

I’m not sure why the US didn’t include any of the other transactions that came up in the audit Myron commissioned. Maybe Fred Gentner had information that explained a lot of the questionable transactions. When Fred Gentner resigned, Paul Comstock filed a bunch of objections to the guardian’s final report. The county court overruled those objections, and the Osage Agency signed off on it.

But I’m not sure the auditors found everything. Because while I was going through Jack Drummond’s financial records, I found something else. 

Rachel Adams-Heard  This one’s kind of interesting. This was actually part of the Drummond personal collection. Myron Red Eagle Oh yeah? 

This piece of paper is unlike a lot of the other records in Jack Drummond’s collection. Most of those were formal, written to business colleagues or bankers. But this one, it’s written more like notes from a conversation between two brothers. The top says, “Gentner Drummond told A.A.D.” — the initials for Jack’s given name, Alfred Alexander. Below it, there’s a list, numbered 1 through 10. Each a description of some sort of transaction. 

Rachel Adams-Heard It’s number two, the one about Myron. Myron Red Eagle Okay, Myron Bangs, G-D-N.Rachel Adams-Heard Guardian.Myron Red Eagle Guardian. “$15,000 used in payment Bill Hale land repaid by A.A.D.” 

Rachel Adams-Heard Jack writes, “Myron Bangs’ guardian. $15,000 used in payment — Bill Hale land repaid by A.A.D.”

Fifteen thousand dollars, that the Drummonds borrowed from Myron Bangs Jr., to buy Bill Hale’s land. Land that belonged to the mastermind of the Osage murders. Land he sold before he went to prison.

I had read in Jack’s biography that the Drummonds bought Bill Hale’s ranch. It was that single reference to the Reign of Terror. It read: “Bill Hale, a local rancher, had to sell his land because he was going to prison for conspiring to murder most of an Osage Indian family so their headrights would devolve to his nephew.” 

Despite the auditors and the lawyers, no one ever noticed that the Drummonds seemed to have bought this land with Myron’s money. Or if they did, they never said anything. This note was the first I had seen of it. 

When the Drummonds bought Bill Hale’s land in 1926, Myron Bangs was 18 years old. Part of the land included 315 acres that Hale had gotten from an Osage man named George Bigheart, five years before Bigheart mysteriously died in what is now one of the most well-known examples of an unsolved murder during the Reign of Terror.

And what this note written by Jack seemed to say was that Osage money — Myron’s money — helped the Drummonds buy it from Hale. 

I’ve looked into what happened to this land after the Drummonds bought it. It turns out, a lot of the Bill Hale ranch they bought in partnership with another big ranching family in Osage County, the Mullendores. Eventually, the Drummond brothers sold their interest in the land to the Mullendores. Today, it’s owned by a bunch of different people and ranching incorporations, including one affiliated with the Mormon Church.

By the time Fred Gentner resigned as his guardian, on January 3, 1935, Myron Bangs Jr. was 28 years old. He had spent most of his life under the Drummonds’ financial control. And that whole time, Fred Gentner was collecting a fee for doing it. More than $15,000 over the course of Myron’s guardianship — something like a quarter million dollars in today’s money. 

In 1938, after more than two decades of Osage guardianships like Myron Jr.’s, the acting secretary of Interior sent a letter to the head of the Osage Agency. He said a series of audits the government had conducted on Osage guardianships showed that many of these guardians were profiting directly or indirectly off their wards. He wrote that it was a generally accepted rule of law that guardians shouldn’t have business dealings with their wards — that it was against public policy. He told the superintendent to make a copy of the letter and send it to all the existing guardians and their lawyers.

Meanwhile, Myron wasn’t stopping at his own guardians. In 1939, he wrote a letter to Paul Comstock asking for his help with a young Osage man named Otis Penn. Myron said he told Otis about Paul’s “honesty and ability” to help him in the past. According to Myron, Otis wanted an audit of his account. He didn’t know who was leasing his land, where his money was being invested. Myron thought Paul Comstock would be able to help him out.  

After reading this letter, I looked into Otis Penn’s guardianship. Otis was an orphan, too. He had been under guardianship since he was just a kid, just like Myron. His guardian was Fred L. Shedd — the man who worked in the Drummonds’ store.

At one point, Fred L. Shedd was leasing Otis’s land to Cecil Drummond and Hugh Nelson — the same Hugh Nelson who had bought and sold Myron’s land through Fred Gentner and apparently made $6,000 dollars. So Hugh Nelson was also in business with the Drummonds, leasing land in partnership with Cecil through Fred L. Shedd. At one point, it seems Cecil and Hugh Nelson weren’t paying rent. In 1930, the Department of Interior threatened to sue them if they didn’t pay $200 in rent on 640 acres of Otis’s land they were leasing. 

And just like Fred Gentner loaned out Myron’s money, Fred L. Shedd loaned money from Otis Penn’s account. He lent Cecil Drummond $6,000.

All these records revealed so much about the inner workings of an Osage guardianship. And it was all because one Osage man, Myron Bangs Jr., hired a lawyer he trusted. A lawyer who kept his files and donated them, so that decades later we can see what one of these guardianships really looked like. 

Myron Red Eagle They knew how to get around people, you know — I’m not saying that the offspring are that way — but they managed to buy the land. You know they weren’t the only ones, there were other people that bought land too, you know. But the Drummonds just happened to be the one family that got the most of it. And our people, they weren’t dumb, you know, they weren’t ignorant at all. But things like that went on that was beyond their control.

Rachel Adams-Heard Everything that happened between Myron Bangs and the Drummond brothers was because the United States considered Myron “incompetent.” Even though he had his pilot’s license. He was formally educated. He was writing letters to federal officials at the Department of Interior, begging them to look into his guardianship. In one note, scrawled in pencil, Paul Comstock wrote to someone: “If you considered Myron so childish and incompetent, why did you write him those comprehensive and detailed letters which are in evidence?”

Myron Red Eagle It’s kind of an irony about it… The Drummonds in Hominy were kind of like, if an Indian person or Osage Indian needed money, they were always there to give it to them. You know, they always had money. And if they needed credit at the store — you know, the Pioneer Store, whatever they own down there — they would give them credit. And they just thought they were good people. You know? 

Rachel Adams-Heard  As Myron Red Eagle and I looked over these documents, Myron told me this wasn’t the only time his family had crossed paths with the Drummond brothers. Some time in the ’50s, his mom wanted to buy a house in Pawhuska. It’s actually the one Myron lives in today. 

Myron Red Eagle My mom had a little bit of land left and dad wanted to move up here because he had to drive back and forth to Pawhuska all the time, you know, sign things. And she said, “Well, I’ll just sell a bit of land and see if we can find a house in Pawhuska.” So they went looking for a home and they found one out here. So she went to Cecil Drummond, the old man. He’s a real big guy. But they all walked in and he said, “Well, Virgie, what do you want? What do you want,” you know. And she said, “Cecil, they got a house in Pawhuska. I’d like to have it.” And he said, “Well, what do you got?” She said, “Well I have about 40 acres over here across the road.” And he said, “Alright, you give me that land and I’ll buy you that house.” That’s how it worked. They traded. So, and it was an auction. So there’s about four or five different families were wanting that home.

And it started out at $5,000 — and that was a lot of money in the ’50s, you know? And they went up to $6,000 and Mr. Drummond raised his hand — and he had big cowboy hat on — raised his hand, $6,000, $7,000, he raised his hand.  He just kept going up. They couldn’t outbid him.

Rachel Adams-Heard So he really wanted that 40 acres?Myron Red Eagle He wanted that 40 acres and he said “Virgie, whatever you want, I’ll get it for you.” He outbid everybody. I still live in that house today. Rachel Adams-Heard Do you ever wish you had the 40 acres of land back?Myron Red Eagle No, no, it’s gone. It’s gone. They don’t sell their land.

Rachel Adams-Heard As Myron and I spoke, we talked about members of the Drummond family today. The descendants of Cecil and Fred Gentner and Jack. Myron told me he knows a few of them, gets along with some of them.  

Myron Red Eagle Yeah, it’s a big family. It’s a big family. Times change, you know. Be that as it may, like that phrase says, we can’t do nothing about the past. The past is gone. What happened then, it’s all in the past, you know. It’s just too bad that happened the way — it kind of irks me in a way, but I don’t think it irked me as much as it did my folks and other people of that generation. 

Rachel Adams-Heard The grass is so pretty like how the gold contrasts with the blue sky. 

Even after Myron spent years fighting the Drummonds, a lot of his land still ended up in their hands. A non-Osage wife of one of Myron’s relatives inherited some land after he died. In the’ 80s, she sold it to a Drummond. This section I drove out to, it’s part of the 80 acres of Percy’s land now owned by Drummond Ranch LLC.

So this is Percy Bangs original allotment. Today it’s owned by Drummond Ranch LLC and that Drummond entity is owned by Gentner Drummond and he is the one who’s running for Oklahoma attorney general. So this is all his ranch now. It’s a very large ranch. Much larger than just Percy’s original allotment.

We’ll be right back.

Rachel Adams-Heard Good morning. 

Voice: How can I help you? 

Rachel Adams-Heard We’re with Bloomberg. We have an interview with Gentner Drummond.

Voice: Yes, you’re welcome to go on into the boardroom…

I went to interview Gentner last January. At that point, I was just beginning to put together what these records all meant. No one from back then is still alive today. But I was curious what their descendants thought of all this. If they had any other information that I wasn’t finding in the archives. 

Gentner Drummond Good morning! 

Rachel Adams-Heard Good morning. Hi, I’m Rachel.

Gentner Drummond Gentner. 

Rachel Adams-Heard  Gentner owns Blue Sky Bank and several U.S. Cellular stores. He still owns the Pioneer Store building in Hominy. He’s been practicing law in and around Osage County for a long time. When we talked, Gentner hadn’t yet won the Republican primary for attorney general. 

So talk to me about the attorney general race. Why are you running. 

Gentner Drummond Well, when I was about 12, my great-grandfather sat me down and said, “You’re the oldest of 65 of my great-grandchildren. And none of them are going to do more than you. You’re going to — you’re the oldest, and so you need to just aim as high as you can and be as straight as you can and be as successful as you can. And I think it’s appropriate that when your family has grown, that you serve in state government.” It wasn’t lost on me as a 12-year-old. I mean, I took very serious my role as the oldest of that generation and the leader of my clan. And now my children are all grown and established in the communities that they live and I have the time and the opportunity to run for a statewide office. 

Rachel Adams-Heard And that was Cecil who told you this? 

Gentner Drummond Yes.

Rachel Adams-Heard So do you remember where that conversation was? 

Gentner Drummond We were driving in his car. He drove — at that point in his life he would drive around the county all day long, checking on his sons’ and grandsons’ operations and his brothers’ and cousins’ operations. And he loved to drive in his big Cadillac and smoke a cigar. And he liked company. I think that day I was driving him …Rachel Adams-Heard At 12?Gentner Drummond  Yes, at 12. I was driving him around the county and he was telling me as we were passing pastures, the heritage of the land and who owned it and when we purchased it and then talking about my role as the eldest of the family. Rachel Adams-Heard Do you think about that conversation, often? Gentner Drummond A lot of the conversations from parents, grandparents, great-grandparents have been very impactful on me. 

Rachel Adams-Heard One of the things Gentner’s run on is a commitment to work more with tribal nations in Oklahoma. He talked about that when we met.

Gentner Drummond Our governor, for some reason, just can’t see it in himself to act rationally. And so he’s driven a wedge between the Native American tribes in the state of Oklahoma and I think that I can undo that. I’m very respectful of their sovereignty and can foster a relationship such that we can figure our way forward.

Rachel Adams-Heard Gentner also holds the title to about 26,000 acres of ranch land in Osage County — more than anyone else in the extended Drummond family.

Gentner Drummond The base of my cattle ranch, Cecil purchased, was passed down to my grandfather Gent — Gentner Drummond. He has some of that original land, and some of that was passed to my father, Leslie. And then some of that was passed down. In my instance, I did not take any inheritance from anyone. I bought all of my land from siblings and other neighbors. 

Rachel Adams-Heard When did you personally first get involved in ranching and what led you there?

Gentner Drummond It’s an interesting segue into your question because a Native, a neighbor of our ranch, who was also Native American, liked me and didn’t necessarily like my father. But as a 14 year-old, she approached me to acquire her ranch. And I was 14 and had no money and was a minor. She arranged for me to become emancipated and enter into a contract to buy her 3,500-acre ranch. So that’s when I began as a landowner in the Osage and effectively a rancher.

Rachel Adams-Heard And why did you have to become emancipated?

Gentner Drummond Because you can’t enter into a contract until you’re 18. You’re not an adult until you’re 18. So for a 14-year-old to enter into a contract, I had to go to court and the court had to deem me competent to become emancipated, to enter into the transaction. I can remember it clearly. The judge called me back into his chambers with my attorney and asked me many questions that judges — now, I realize, as a lawyer, ask to determine competency. You know, where were you born? Where do you live? Who’s the president? Who’s the governor? Who’s the vice president? What are you studying? What do you want to do? What’s the purpose of this? Why are you doing — do you understand the consequences of entering into a contract and signing a mortgage and becoming obligated? How are you going to make the payments? Things like that.

Rachel Adams-Heard And how are you going to make the payments at 14?

Gentner Drummond Lease the land back to my father.

Rachel Adams-Heard When I met with Gentner, I had already learned his great-grandfather, Cecil — and Cecil’s two brothers, Fred Gentner and Jack — they had all been guardians. Gentner told me he hadn’t known that before we talked. I brought with me some of the archival records I found, including the Myron Bangs Jr. lawsuit.

Rachel Adams-Heard I’m curious if the name Myron Bangs Jr. means anything to you. If you’ve heard it before.Gentner Drummond I’ve not heard Myron Bangs but I’ve heard of the … I know the Bangs family. Yes. Rachel Adams-Heard How do you know them? Gentner Drummond Just know the name. I know they’re one of the Osage families. Looks like my great-grandfather and his two brothers were sued by the United States. And I’m unaware of this lawsuit.

Rachel Adams-Heard I told Gentner I didn’t expect him to read the whole lawsuit while we were sitting there. During that first meeting I mostly wanted to share what I had learned so far. I also brought him the note from Jack Drummond’s records, with that line about the Bill Hale land. 

Rachel Adams-Heard And then this is actually a personal communication. It says “Gentner Drummond told A.A.D.”  But it looks to me, and I would be curious what you see from this, that $15,000 was used from Myron Bangs’ account for the Bill Hale land. And it says it was repaid. So it just looks like it was borrowed from that account. I’m curious did — do you know where the Bill Hale Ranch was? And did you guys know that you bought that ranch?Gentner Drummond Now, the Gentner referenced is Fred Gentner, so he’s not my direct lineage. So I don’t know the Bill Hale land. I assume A.A.D. is Alfred Alexander Drummond. It looks like basically somebody’s notes involved multiple transactions.Rachel Adams-Heard  Yeah, the one the one that stood out to me was the second one, just given the lawsuit.Gentner Drummond Yeah, Myron Bangs guardianship $15,000 used in payment of Bill Hale land. Yeah, it looks — I mean it could be that somebody was borrowing from the ward’s account to buy land and then pay it back. And if that was the case, that would have been inappropriate. If a guardian borrows money from a ward’s account, facially that’s inappropriate. It’s unethical. In this instance, it looks like it’s an accounting of, hey, this was borrowed, it was repaid. And maybe back then it was permissible, but it’s not permissible today.Rachel Adams-Heard  So obviously, I’m not expecting, you know, like a statement on any of this. I want you to have time and tell me what you see, because I’m not a lawyer. So I would love to kind of hear what you think of all this. But have you heard any of this before? I mean, you didn’t know that… Gentner Drummond No.Rachel Adams-Heard …Cecil and his brothers were guardians, right? Gentner Drummond I did not. Rachel Adams-Heard What do you associate with the word “guardian?”Gentner Drummond Well, there’s a lot of good reasons for guardianships and there are multiple guardianships in Osage County today. Typically, it’s somebody who’s infirm, either mentally or physically. There’s a lot of guardianships over physically infirm people, a lot of voluntary guardianships. Now, back in the day, back in the ‘20s and ‘30s and ‘40s, the law looked on Native Americans less favorably, as though they were infirm. And the use of guardianships was more frequent then than it is today. And clearly, I think, in hindsight they were inappropriately used. Now, a lot of these Osages were not educated and didn’t understand the American way of business. And so guardianships were used to protect them from unscrupulous actions.  

Rachel Adams-Heard The lawsuit I brought Gentner was 95 pages, and I brought some other documents too, so I wanted to give him time to read all of them before we talked again. But before I left, I asked Gentner how he was feeling about all this — his ancestors’ guardianships, that they were named in this lawsuit.

Rachel Adams-Heard Does it challenge what you’ve been told about your family?Gentner Drummond Oh, I’m a realist. I mean, we only pass along the good stories. We don’t pass along the bad stories, typically. So it would not surprise me at all if there’s bad stories out there. But those would not have been the subject matter of the family lore passed down.Rachel Adams-Heard Do you want to know those bad stories?Gentner Drummond I’m on notice and I will inquire. I — Yes, I would like to know that. So I’ll look into it and happy to visit with you some more.

Rachel Adams-Heard Okay, just a second… Can you hear me? Gentner Drummond I can. 

Rachel Adams-Heard The next time I talked to Gentner was after he had read through the Myron Bangs Jr. lawsuit — the case the federal government brought, the Drummond brothers’ response and then the judge’s order. 

Rachel Adams-Heard So you said you had had a chance to read through that?Gentner Drummond Yes, Rachel, I’ve read the the litigation that you left me. I don’t have it in front of me, I’m in DC right now. But I did read through the allegations by the government that alleged that the Drummonds acted inappropriately, malfeasant and the like. But yet the court found that they were not malfeasant or exploitative of their roles as guardian and trustee. There’s an order, a final adjudication, that finds them … rules in favor of the Drummonds and against the government.

So I mean, certainly, if your agenda is “Let’s make White people look bad,” then yeah go for it. I mean, I think you’ve got all sorts of allegations. When you read the complaint by the government, you know, it’s like, “Oh my god, I can’t believe that my forebears were so horrible,” but then when I read the response and then I see the court’s final adjudication I’m like, “Well, okay, yeah, they’re guilty of being really good men that did the right thing to help this woman.” Rachel Adams-Heard I mean, are you interested in seeing some of these other… Gentner Drummond No, I’m happy …. I mean, listen, I’m intellectually intrigued with the historical record. And to the extent that my family was a bad actor, I’d like to know that. I mean truly, I would like to know that. Rachel Adams-Heard Yeah, and I mean, to be to be totally transparent with you, we’ve heard from some people who have allegations against your family, and our job here is to see what’s true and what’s not. Gentner Drummond And I did not mean — well, I didn’t mean to push you gently in your chest. Because if your objective is simply just to paint all Whites bad, then you’re going to do that regardless of my input. But if your objective is to parse through the historical record to determine if there were bad actors — and there certainly were — and if there were good actors — and I believe there certainly were — and be fair to the record, I’m game to continue to participate and look at documents and visit with you. I am the eldest of my generation. I am manifestly interested in that historical record that you have spent significant effort to ascertain. I’ve not gone to that effort that you have. 

But I do think, in defense of the system, the federal judiciary also was not corrupt at the time, and the federal judiciary looked at this. And it was acutely concerned about the exploitation of anybody — White, brown or Black — in a guardianship capacity. So, you know, the fact that the federal court ruled in favor of the Drummonds tells me that all acts of the Drummonds were appropriate.Rachel Adams-Heard I mean, the Department of Interior has since acknowledged that the guardianship program was extraordinarily flawed, no?Gentner Drummond Oh, I think that it was probably flawed. I mean, the whole system was flawed back then.Rachel Adams-Heard But you view the federal government’s role in this as sound?Gentner Drummond Well, I think the federal government would have handed my forebears’ heads on a platter had it determined that they had embezzled or misappropriated funds. Rachel Adams-Heard And do you have any any qualms about benefiting from that system at all — I mean, the guardianships and the executorships?Gentner Drummond I don’t know that I would say that I’ve benefited indirectly or directly from any of those things. Rachel Adams-Heard Why is that? Gentner Drummond I don’t see any indirect or direct benefit, where Gentner Drummond benefited from the guardianship system.Rachel Adams-Heard I mean, what about the Drummond land itself?Gentner Drummond Well, that was purchased from natives and non-natives. And if it were from a native that was in a status of incompetency, then it had Bureau of Indian Affairs or its predecessor’s approval.Rachel Adams-Heard So if there are hard feelings today, then it kind of lies at the feet of the federal government?Gentner Drummond Well, of course there’s going to be hard feelings today, because the 20th-, 21st-century Osage looks around and goes, why do we only own 6% of our original landholdings? And you know, the same could be said of the Carnegie heirs. Why are they not lavishly multi-millionaires? Well, something happened in between those four or five generations and they’ve lost some of it. Not all Rockefellers are multi-millionaires. And there are some very well-off Osages. But they had to assimilate, right? And that’s anathema to a lot of traditional Osages. They don’t like that word. They don’t like assimilation.

Rachel Adams-Heard I mean, would you like assimilation if that were your culture and people? Gentner Drummond Well we did. We came from Scotland and Germany and we assimilated into the American way.Rachel Adams-Heard But isn’t that the difference though? You guys came here. They were already here. Gentner Drummond No, clearly, that goes back to the Jacksonian genocides. It was forced assimilation. Um, but I think that there is a significant effort by the government — which is of the people, of which I’m one — that wants to recognize and honor, and build up the heritage of the Native Americans in Oklahoma. I’m one of those. I’m a big proponent for that. You may not get all the Osages agreeing with you, but you can talk to the Choctaws and the Chickasaws, the Cherokees with whom I work on a weekly basis.

Rachel Adams-Heard I asked Gentner again what he thought about one of the other documents I left him. That memo from Jack Drummond, with the one line that seemed to say the Drummond brothers borrowed money from Myron Bangs Jr. to buy the Bill Hale land. 

Gentner Drummond I mean, I read those notes. But I mean I’m a trained litigator and seeing disparate notes without getting testimony or other sources, I mean you can read it either way. So he does have notes and they do appear cryptic. I mean it was hard to follow, exactly what he’s doing and, I mean, are there terms of art being used? Or are these shorthand for other terms? I didn’t put a lot of stock in the notes that were transcribed by Jack Drummond. 

Rachel Adams-Heard Since that conversation, Gentner’s won the Republican nomination for attorney general. His only challenger in the general election is Libertarian Lynda Steele. 

I’ve also continued to send documents to Gentner. He’s said he’s proud of his family history and that, from what he can tell, they did what they could to help Osages in the ways that were available at the time. 

There was one other document I shared with Gentner. Written by someone within the federal government back then who was concerned that the Drummond brothers might be abusing their power — and not just in Myron Bangs Jr.’s case. 

His name was Louis Stivers. He was the tribal attorney for the Osage Nation in the ’30s. This was a US government position meant to look out for Osage legal interests.  And in this letter, he objects to Fred Gentner becoming the executor of yet another Osage estate. 

Stivers says the will in this case is valid. That’s not why he was objecting. 

Stivers was objecting because of the person named as executor. He said Fred Gentner and his brothers were part of an “association.” 

According to Stivers, it worked like this: Along with at least five other White men in Osage County, the Drummond brothers would use their positions as guardians and administrators to extend each other loans from their Osage wards’ accounts and approve each other’s claims against Osage estates. 

Stivers then lists a series of examples where he saw this play out, including one of Fred L. Shedd’s guardianships, and the Drummonds’ guardianship of Myron Bangs Jr. Cases where I could see firsthand how the Drummond brothers made Osage money work for themselves. 

But there were other names in this letter from Stivers that I hadn’t seen yet. And when I started looking into what happened with those Osage families, I found a story that took me beyond deeds and mortgages. A story that I had hoped I wouldn’t run into. 

That’s next time on “In Trust.”

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

Geely-Backed Smart Car Firm Ecarx Said to Seek Hong Kong Listing After US Deal

(Bloomberg) — Smart car technology company ECARX Holdings Inc. is exploring going public in Hong Kong once it has completed the planned US listing via a merger with a blank-check company, according to people with knowledge of the matter.

The firm, backed by Chinese billionaire Li Shufu and his Zhejiang Geely Holding Group Co., hasn’t decided whether it will raise funds via the Hong Kong listing as considerations are at an early stage, the people said. A listing outside the US could help ECARX hedge any potential delisting risks, one of the people said.

In May, ECARX agreed to combine with COVA Acquisition Corp., a special purpose acquisition company, in a deal that would value the merged entity at about $3.8 billion. If the transaction proceeds, it could be the largest Chinese listing in the US following Didi Global Inc.’s spectacular failure.

ECARX and COVA are still aiming to complete the merger by the end of this year or early 2023, pending US regulatory approvals, said one of the people, asking not to be identified as the information is private. Deliberations are ongoing and there could be delays, the people added.

A representative for ECARX declined to comment, while a representative for COVA didn’t immediately respond to requests for comment.

Many US-listed Chinese companies are trading in Hong Kong as a decades-long standoff between the two superpowers over access to audit documents could lead to delisting of about 200 firms from New York exchanges. Beijing and Washington last month reached a preliminary deal to allow American officials to review audit documents of Chinese businesses that trade in the US, a first step toward potentially resolving their disputes.

ECARX’s blank-check deal is part of Li’s efforts to raise billions of dollars through selling stakes in his businesses at home and abroad, as technologies such as electric vehicles and autonomous driving reach critical mass and spur enormous shifts in the automobile universe. Two other Geely-backed companies — EV maker Zeekr Intelligent Technology Ltd. and ride-hailing firm Cao Cao Mobility — are weighing initial public offerings in Hong Kong, Bloomberg News has reported.

Founded in 2017 by Li and his associates, ECARX is an automotive-intelligence technology firm whose products include an autonomous driving system and vehicle central computing systems, according to its website. The company has more than 2,000 employees in China and Europe. Geely Automobile Holdings Ltd. invested $50 million in the firm for a 1.5% stake last September.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

Smart Car Firm Backed by Geely Billionaire Explores Hong Kong Listing After US SPAC Deal

(Bloomberg) — Smart car technology company ECARX Holdings Inc. is exploring going public in Hong Kong once it has completed the planned US listing via a merger with a blank-check company, according to people with knowledge of the matter.

The firm, backed by Chinese billionaire Li Shufu and his Zhejiang Geely Holding Group Co., hasn’t decided whether it will raise funds via the Hong Kong listing as considerations are at an early stage, the people said. A listing outside the US could help ECARX hedge any potential delisting risks, one of the people said.

In May, ECARX agreed to combine with COVA Acquisition Corp., a special purpose acquisition company, in a deal that would value the merged entity at about $3.8 billion. If the transaction proceeds, it could be the largest Chinese listing in the US following Didi Global Inc.’s spectacular failure.

ECARX and COVA are still aiming to complete the merger by the end of this year or early 2023, pending US regulatory approvals, said one of the people, asking not to be identified as the information is private. Deliberations are ongoing and there could be delays, the people added.

A representative for ECARX declined to comment, while a representative for COVA didn’t immediately respond to requests for comment.

Many US-listed Chinese companies are trading in Hong Kong as a decades-long standoff between the two superpowers over access to audit documents could lead to delisting of about 200 firms from New York exchanges. Beijing and Washington last month reached a preliminary deal to allow American officials to review audit documents of Chinese businesses that trade in the US, a first step toward potentially resolving their disputes.

ECARX’s blank-check deal is part of Li’s efforts to raise billions of dollars through selling stakes in his businesses at home and abroad, as technologies such as electric vehicles and autonomous driving reach critical mass and spur enormous shifts in the automobile universe. Two other Geely-backed companies — EV maker Zeekr Intelligent Technology Ltd. and ride-hailing firm Cao Cao Mobility — are weighing initial public offerings in Hong Kong, Bloomberg News has reported.

Founded in 2017 by Li and his associates, ECARX is an automotive-intelligence technology firm whose products include an autonomous driving system and vehicle central computing systems, according to its website. The company has more than 2,000 employees in China and Europe. Geely Automobile Holdings Ltd. invested $50 million in the firm for a 1.5% stake last September.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

Asia Stocks Gauge Gains for First Time in Six Days: Markets Wrap

(Bloomberg) — Stocks climbed in Asia following a rebound in the final hour of New York trading as investors shifted positions ahead of a flurry of central bank decisions this week led by the Federal Reserve.

MSCI Inc.’s Asia-Pacific equity index advanced for the first time in six days, paced by tech stocks in Hong Kong, where the benchmark Hang Seng Index rose more than 1%. Japan’s Nikkei 225 earlier jumped by around the same amount after traders returned from a holiday. S&P 500 and Nasdaq 100 futures edged higher.

Treasury 10-year yields hovered near 3.5% while yields on the more policy-sensitive two-year rate hit the highest since 2007 and are poised to crack above 4%, amid fears that an overtightening of monetary settings raises the odds of a hard landing.

 Investors are on tenterhooks as they await policy decisions that are expected to bring hefty rate hikes from the US, UK and Sweden. Decisions are also due in Japan, Switzerland, Indonesia, Norway and the Philippines, among others.

The dollar was little changed below recent highs, while the yen was held comfortably below the key 145 level. The yuan was on the weak side of 7 versus the dollar.

Traders are betting the Fed will hike by 75 basis points Wednesday, signal rates are heading above 4% and will then pause. The long hold strategy is rooted in the idea the central bank would avoid the disastrous stop-go policy of the 1970s that allowed inflation to get out of hand. 

“We recognize that after this week’s hike the funds rate will be placed  comfortably into  ‘restrictive’ territory,” Kevin Cummins, the chief US economist at NatWest Markets, wrote in a note. “It seems reasonable that officials will continue to err on the side of doing too much rather than too little and keep front-loading.”

Swap contracts that forecast rates over the next two years now peak around 4.5% in March 2023 — a full point higher than was expected after the last meeting in July.

Strategists at JPMorgan Chase & Co. estimate the Fed will increase rates to 4.25% by early next year. “We expect central bank tightening and a fading of supply chain pressures to moderate job growth and core inflation. In turn, we anticipate this will allow the Fed and other central banks to pause in 1H23,” strategists including Marko Kolanovic and Nikolaos Panigirtzoglou wrote in a note on Monday.

In China, banks kept their main lending rates unchanged after the central bank paused its monetary easing and defended a weakening yuan.

In a time-tested harbinger of an economic downturn, short-term US rates have exceeded yields on longer maturities for months. The MLIV Pulse survey, which drew 737 responses, showed that the bulk of contributors expect a deeper inversion. Some see it reaching levels last seen in the early 1980s, when Paul Volcker ratcheted up borrowing costs to break the back of hyperinflation.

Elsewhere, Bitcoin struggled to return to $20,000 level. Oil slipped below $86 per barrel and gold was steady.

Will the Nasdaq 100 Stock Index hit 10,000 or 14,000 first? This week’s MLIV Pulse survey focuses on technology. It’s brief and we don’t collect your name or any contact information. Please click here to share your views.

Key events this week:

  • US housing starts, Tuesday
  • EIA crude oil inventory report, Wednesday
  • US existing home sales, Wednesday
  • Federal Reserve decision, followed by a news conference with Chair Jerome Powell, Wednesday
  • Bank of Japan monetary policy decision, Thursday
  • The Bank of England interest rate decision, Thursday
  • US Conference Board leading index, initial jobless claims, Thursday

Some of the main moves in markets:

Stocks

  • S&P 500 futures increased 0.2% as of 12:32 p.m. in Tokyo. The S&P 500 rose 0.7%
  • Nasdaq 100 futures gained 0.2%. The Nasdaq 100 climbed 0.8%
  • Japan’s Topix index climbed 0.3%
  • South Korea’s Kospi index added 0.3%
  • Hong Kong’s Hang Seng Index rose 1.3%
  • China’s Shanghai Composite Index increased 0.5%
  • Australia’s S&P/ASX 200 Index surged 1.2%
  • Euro Stoxx 50 futures gained 0.3%

Currencies

  • The Bloomberg Dollar Spot Index was steady
  • The euro rose 0.1% to $1.0033
  • The Japanese yen was up 0.1% to 143.15 per dollar
  • The offshore yuan was at 7.0091 per dollar, down 0.1%

Bonds

  • The yield on 10-year Treasuries dropped two basis points to 3.47%
  • Australia’s 10-year yield fell four basis points to 3.64%

Commodities

  • West Texas Intermediate crude climbed 0.1% to $85.80 a barrel
  • Gold was at at $1,677.33 an ounce

More stories like this are available on bloomberg.com

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