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Middle East Conflict: Tepidness in the Stock Markets Amid Rising Oil and Dollar Prices

Conflicto en Medio Oriente y sus efectos

Throughout the year, the mantra of “geopolitical risks” has gained relevance as conflicts and international relations have become increasingly tense. The situation in the Middle East has worsened following Israel’s ground invasion of Lebanon and Iran’s response, increasing the likelihood of a regional-scale conflict. The markets’ reaction has been, for now, lukewarm. However, three asset classes have been impacted by this heightened tension: oil, gold, and the dollar.

“Geopolitics is once again a concern. Iran attacked Israel yesterday afternoon, immediately impacting oil, which bounced nearly 6% from the day’s lows. Stocks suffered (S&P -0.9% and Nasdaq -1.5%) and gold surged 1%,” highlighted Juan José del Valle, head of analysis at Activotrade SV. Some investment firms believe there is a tendency to think that conflicts in the Middle East have a limited impact on U.S. stocks unless there is a significant escalation. According to Michaela Huber, cross-asset strategist at Vontobel, and Mario Montagnani, senior strategist at Vontobel, the market reaction was expected, with a risk-aversion movement. Investors shifted from riskier equities to safer fixed-income assets.

“Additionally, the VIX index—the fear barometer of Wall Street—jumped 15% this Tuesday. Meanwhile, the yield on U.S. 10-year Treasury bonds, which stood at 3.78% on Monday, dropped to 3.73% on Tuesday. The U.S. stock market closed ‘modestly’ lower following Iran’s attack. The S&P fell by less than 1%—from record levels—while the Nasdaq dropped 1.5%, managing a slight recovery by the close. Futures moved from flat to modestly positive,” the Vontobel experts explained.

According to Banca March, U.S. markets took profits following the news of missile launches, favoring the more defensive side of the market—utilities, duration, the dollar, and gold. “The main reaction has come from oil prices, which recovered to levels above $74/barrel for the Brent reference. As tensions in the region rise, Brent continues to gain ground, reaching $74.8/barrel, accumulating a 3.9% increase for the week. Meanwhile, gold fell from the highs reached in yesterday’s session and is now trading at $2,649/ounce. After hitting new highs yesterday amid Iran’s attack, the precious metal is down 0.5% this morning, awaiting employment data on both sides of the Atlantic. In the currency market, the dollar continues to advance against the euro, regaining its role as a safe-haven asset amid the tensions between Israel and Iran,” they noted.

Regarding oil, Vontobel experts explained that this market always reacts nervously when Iran is involved, but in the longer term, the supply-demand interaction tends to take precedence. They added that before the attack, oil had been under downward pressure, and unless the situation worsens further, a crisis similar to that of 2022 seems unlikely. “Still, the combination of increased geopolitical tensions and the prospect of more Chinese stimulus makes oil more attractive than it was a few weeks ago. Yesterday’s attack marked the second direct Iranian attack on Israel this year, suggesting that the conflict may have entered a more serious phase. In April 2024, Iran also attacked Israel, but an early warning and the nature of the weapons used (drones and slower missiles) ensured that almost all projectiles were intercepted. This time, Iran gave much less notice and used mainly ballistic missiles (which travel faster and are, therefore, harder to intercept),” said Huber and Montagnani.

The Contrast Between Oil and Gold

For Carsten Menke, Head of Next Generation Research at Julius Baer, the most significant impact has been in the gold market, where geopolitics continues to drive prices. “While oil seems to barely react to the increasing tensions in the Middle East, they are further fueling the bullish sentiment in the gold market. This is despite the fact that, historically, gold’s record as a geopolitical hedge is quite poor. Nevertheless, gold’s fundamental outlook is strong, with increased demand as a safe-haven asset due to the anticipation of further interest rate cuts and a potential adverse outcome in the U.S. presidential elections. Stretched speculative positions carry short-term pullback risks, which we would, however, see as long-term buying opportunities,” Menke pointed out.

In his view, considering the escalation of the conflict in the Middle East, the contrast between the oil and gold markets could not be more evident. “While oil remains at relatively low levels, gold has reached new historical highs in recent days. First, this is due to market sentiment, which is very depressed in the case of oil and very euphoric in the case of gold. As an indication of this, net speculative long positions in gold futures—i.e., bets on rising prices by speculative market participants, minus bets on falling prices—are approaching record highs. Second, this is due to the fundamental context. Demand for gold as a safe-haven asset has increased again over the summer in anticipation of further interest rate cuts by the U.S. Federal Reserve and other central banks,” the Julius Baer expert added.

Given this, Menke warned that historical evidence suggests that, rather than being a geopolitical hedge, gold is more of an economic hedge, as long as geopolitical tensions have economic consequences, as was the case during the Second Oil Crisis of 1979/80. “This assessment is also supported by the First Gulf War of 1991, which did not lead to a lasting rise in gold prices. Therefore, for now, we see the current escalation of tensions in the Middle East as another element driving the bullish sentiment in the gold market. As previously mentioned, the path of least resistance is upward, and we maintain our constructive view. Stretched speculative positions carry short-term pullback risks, which we would, however, view as long-term buying opportunities,” he concluded.

Moody’s: We Still See Mexico With Investment Grade, but There Are Concerns

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Mexico is still considered an acceptable country to maintain its investment grade, but there are factors that concern rating agencies.

During the annual event “Moody’s Inside LatAm Mexico,” Renzo Merino, Moody’s sovereign analyst for Mexico, stated that a downgrade of the country’s rating, currently at “Baa2” with a stable outlook, is unlikely. Such a downgrade would require a scenario of greater macroeconomic weakness and institutional deterioration. However, there is indeed concern.

“Despite the judicial reform and other structural changes that will be implemented in the country, Moody’s continues to view Mexico with investment grade, but there are concerns and uncertainties due to fiscal deterioration, weak growth, and the pressure of supporting Pemex,” said the specialist.

“A sharp change in the rating is unlikely without a material shock that affects the credit profile. To put it in context, this only happened during the pandemic,” said the analyst.

In this regard, he added that for a loss of investment grade to occur, there would need to be significant institutional deterioration and weak macroeconomic prospects for the country.

According to the analyst, a year ago, the outlook for the country was still positive, as the arrival of foreign companies was expected to trigger greater investment and economic growth, driven by nearshoring.

“However, many of the investment announcements or projects have not materialized, while political concerns emerged after the presidential elections and the expected changes by the next administration,” he explained.

“In June, our expectation was that Mexico would defy historical trends because election years usually do not bode well in terms of growth. However, with nearshoring, we expected a growth trend of between 2.5% and 3% for the coming years,” said Renzo Merino.

Pemex, the Major Risk

On the other hand, Roxana Muñoz, a Moody’s analyst for Pemex, said that the company could require up to $20 billion in government support by 2026 due to its fragile financial situation.

As a result, the new government led by President Claudia Sheinbaum will face a fiscal puzzle, pressured by high support for Pemex and spending demands from social programs, Moody’s warned.

Muñoz explained that the oil company began and will end the current administration facing numerous challenges, as refineries continue to generate losses, fiscal pressures increase, and no short-term improvement is expected.

In an optimistic scenario, she added that the next administration could surprise with measures such as greater openness to private investment or new agreements with the union regarding pensions.

Moody’s thus clears up doubts at the start of a new administration in Mexico, this time led for the first time by a woman, Claudia Sheinbaum, and confirms that the country will retain its investment grade.

Winning, but Avoiding Losses: This Is How Asset Managers of Alternative Investments Should Think

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Private credit can be sensitive to defaults, but the key for asset managers is to consider the possibility of loss when making investment decisions, Toreigh Stuart, Head and Managing Director of Garrington Capital, told Funds Society.

“Any type of credit, whether public or private, can be susceptible to defaults; however, the risk of loss from such defaults lies in the investment philosophy behind issuing these loans,” Stuart explained.

The executive outlined Garrington Capital’s philosophy for mitigating losses in their loan portfolio, which starts with a mindset of “winning by avoiding losses.”

Stuart highlighted three key pillars to consider when investing in private credit:

1. Lending against the liquidation value of a company’s tangible assets.
2. Keeping loan durations short—Garrington’s portfolio averages less than one year.
3. Ensuring borrowers make cash interest payments rather than “payment-in-kind” to guarantee loan balances amortize instead of increasing.

However, private credit is not the only product within alternative investments. On the contrary, real estate, private equity, and other assets complement and diversify portfolios. According to Stuart, this is due to two main reasons: return potential and diversification benefits.

“Alternative investments become more attractive when the outlook for more traditional investments, such as equities and fixed income, is less clear, leading investors to seek other options,” Stuart commented, illustrating how the prolonged period of low-interest rates “pushed investors to seek alternative solutions for their fixed income allocations, such as private credit, among many other options.”

On the other hand, the only “free lunch” in the investment world is diversification, Stuart noted. By adding non-correlated investments to a portfolio, investors can benefit from better risk-adjusted returns.

“Although alternative investments are not foolproof and come with their own risk factors, many tend to derive returns from different sources, which allows for diversification benefits over time, especially compared to traditional investments in bonds and equities. This differentiated return stream that alternatives can provide is one of the key factors for including a long-term asset allocation to this class,” Stuart explained.

Alternatives and Inflation

An inflationary period presents challenges for companies. Input costs tend to rise, squeezing operating margins unless companies can pass these costs on to customers, and it is often accompanied by rising interest rates, which increase borrowing costs for companies—another hurdle.

Conversely, a deflationary environment tends to have the opposite effect and is generally positive for businesses, Stuart contrasted.

Regarding private credit, in an environment of rising interest rates and inflation, “private credit strategies tend to protect investors as their loans are typically floating rate, meaning that as interest rates rise, the returns these strategies offer to investors also increase,” the executive pointed out.

Furthermore, during a period of declining interest rates and inflation, most floating-rate loans tend to have a minimum rate when issued, thus protecting investors from the full extent of the decline, offering partial insulation.

Financial Education and Alternatives

According to Stuart, education is always a crucial factor for advancing in the fields of finance and portfolio management.

“The alternative asset investment landscape has evolved significantly, from individual investors to the most sophisticated institutions. Large institutions have been using alternative investments for decades, allocating more than 50% of their portfolios to these assets due to a deep understanding and comfort with them,” he explained.

However, when considering Latin America, Stuart noted, “there is still room for growth in awareness and education” around alternative assets in the region.

“There is great potential here, and it is essential for firms like Garrington to continue providing accessible and ongoing educational resources to support the region’s financial evolution,” he concluded.

2023 Was the Worst Year for Argentine Wage Earners in the Last Five Years

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“2023 Marks the Year of Greatest Loss in Purchasing Power Over the Last Five Years, declared Mercedes Bernardi, Senior Manager of New Business Development at Mercer Argentina, Uruguay, and Paraguay, during the Mercer Annual Forum, which brought together over 500 executives and HR leaders from Argentina’s top companies.

In this context, Bernardi conducted a thorough analysis of salary increases in 2024, stating, *’This year, although inflation is progressing at a slower pace than expected, it continues to bring compensation management into focus.’* She also noted that fewer instances of salary increases are anticipated in 2025 compared to this year: *’perhaps four versus six in 2024.’ She added, ‘Only 15% of companies report having a budget for 2025 salary increases.’

Bernardi concluded by forecasting a shift in dynamics for 2025: ‘With inflation declining, merit-based increases are gaining momentum.’

How is Argentina Faring in the Global Talent War?

Ricardo de Almeida, Regional Leader of Mercer Marsh Benefits for Latin America and the Caribbean, highlighted during a special panel that *’Argentina has a major advantage with its demographic bonus, a significant concern for other countries facing labor shortages, although,’ he warned, ‘the country is moving toward that reality within the next 25 to 30 years.’ As such, he emphasized that ‘Argentina needs to prepare for the talent war.’

Agustín de Estrada, Leader of Health & Benefits Consulting at Mercer Marsh Benefits, discussed the challenges of implementing well-being programs, focusing on emotional health in challenging environments. He shared key strategies for achieving the desired impact and, most importantly, sustaining it over time. He also provided an important statistic: ‘64% of companies are taking action to address workforce burnout.’

Guillermo Martin Barbosa, Team Leader of Well-being and Health at Santander Argentina, shared details of self-care programs, internal communication channels, and support communities developed by the company to focus on prevention and early warning tools. He also warned that ‘there has been an 18% increase in mental health issues among employees.’

During the panel on Argentina’s future, experts debated alongside Dolores Liendo, Sales Leader of Marsh McLennan, and Javier Tabakman, Partner and Latin America Career Leader at Mercer, about the current macroeconomic situation and its impact after the government change. Mariana Camino, CEO and President of ABECEB, noted that *’a process of macroeconomic order and normalization is underway, with some encouraging results.’* However, she emphasized that *’the economy has not grown in the last 12 years, and productivity has been affected since 2011. To exit the economic depression, growth needs to be restored, and investment policies must be prioritized. There is optimism for a stable and low-inflation 2025.’*

Regarding the recent labor reform announcement, José Luis Zapata, Partner in charge of the Labor Law Department at O’Farrell Law Firm, stated that *’the new regulatory framework will support employment recovery, as the current labor laws have not been modified in over 50 years and are now obsolete.’*

Rodrigo Solá Torino, Partner at Marval, O’Farrell Mairal, praised Argentina’s healthcare coverage, which is highly regarded regionally but pointed out the country’s significant shortcomings regarding the pension system. Tabakman concluded the discussion by commenting on the shift in the HR agenda: *’During the pandemic, the focus was on inflation and salary increases to ensure employees maintained their purchasing power. Today, the conversation revolves around productivity, acquiring new skills, and integrating AI into the workforce.’*

Generative AI and Other Trends in Human Resources for the Coming Years

Ivana Thornton, President of Mercer Argentina, Paraguay, and Uruguay, kicked off the first session, ‘The New Shape of Work,’ by stating, ‘Unlearning is the path to letting go of old beliefs, knowledge, habits, and behaviors to make room for new paradigms that open new possibilities. AI undoubtedly enhances our work and helps us be faster, more accurate, and efficient.’

Key topics discussed included the rise of generative AI in the workplace, the importance of companies focusing on creating a digital mindset, the growing relevance of change management in HR, and the increasing trend toward skill-based talent management as a key resource for business productivity and sustainability.

Matías Rosales, CEO of Marsh McLennan for Argentina and Uruguay, emphasized that ‘collaboration, teamwork, and continuous innovation are the keys to business success.’ Sebastián Otero, recently appointed Director of Mercer Marsh Benefits for Argentina and Uruguay, added, ‘As leaders, we have a significant responsibility to unlock human potential in this era of artificial intelligence.’

Viviana Cesareo, Senior Manager of Transformation and Talent Management at Mercer Argentina, Uruguay, and Paraguay, analyzed the impact of skills and AI on workforce planning and how HR can address the redesign of talent management processes by understanding current skills and identifying those necessary to face the new world. Fabiana Frattari, Head of HRBPs & Talent at Banco Galicia, reflected on the strategic evolution of talent, the new skills model required for each role, and the need to move away from traditional job descriptions: *’I prefer to talk more about a development map than a career path,’* she emphasized.

Later, María Marta Kenny, Head of Human Resources at IBM for Argentina, Uruguay, and Paraguay, shared her experience in transitioning the company to a skills-based talent management model, which has allowed it to adapt to the constant changes in the labor market, where skills become obsolete in increasingly shorter periods. She reflected on the importance of rethinking the approach to recruitment, learning, growth, and employee development.

In the second session, ‘People at the Center,’ Ángeles de Nicola, Senior Consultant in Mercer’s Health and Benefits area, explained how to design an employee value proposition and holistic well-being—encompassing physical, financial, and emotional aspects—by considering each employee’s experience. She stressed the importance of listening and being close to employees. Laura Barderi, Head of Payroll, Well-being, and Benefits at Movistar (Telefónica Hispam), affirmed that prepaid medical care and Christmas bonuses remain the most valued benefits by employees in their company.”

The Path Toward Lower Interest Rates in Mexico Is Uncertain

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Incerteza en las tasas de interés en México

While the market consensus anticipates that the Bank of Mexico (Banxico) will reduce interest rates in the coming months—a view shared by Bank of America (BofA)—the path remains uncertain.

Mexico’s headline inflation is still close to 5%, the labor market is tight, the peso has weakened, and inflation expectations remain above 3%. These factors, along with others, lead BofA to believe that the road to lower rates is not without risks.

“The direction is clear. The reasons for Banxico to cut rates are evident: core inflation is below 4%, the economy is weak, and the Federal Reserve has already started cutting rates. But there are risks, and the path is uncertain,” the institution stated in a report to its clients.

One risk, for example, is that Banxico may cut rates too quickly.

BofA anticipates that at the next meeting on September 26, Banxico will reduce its benchmark rate by 25 basis points, bringing it to 10.50%, with a decision that could be unanimous (5-0 in the votes of the board members) or possibly a 4-1 vote split.

The U.S. bank also expects Banxico to cut rates gradually but steadily for the rest of this year and into early next year, potentially accelerating the pace once there is more evidence of weaker growth.

“We expect the policy rate to be 10.00% by the end of 2024 and 8.25% by the end of 2025. However, we need to monitor Banxico’s pace of rate cuts closely, among other factors,” noted BofA experts.

BofA also warns of the risk that Banxico could cut rates by 50 basis points this week, bringing the policy rate to 10.25%, in response to the U.S. Federal Reserve, despite inflation still hovering around 5.0%.

Unanimous Consensus for Rate Cut

The Citibanamex survey, which has a long history and widely reflects the sentiment of Mexico’s analyst community, unanimously points to a rate cut by Banxico in the coming days.

The consensus expects a 25-basis-point cut to the interest rate, with most participants (28 out of 36) anticipating this move. However, six participants forecast a 50-basis-point cut in September, and two predict the next change will be a 25-basis-point cut, but not until November.

The median estimate for the interest rate at the end of 2024 has dropped from the previous survey to 10.00% from 10.25%, with a range of 9.50% to 10.50%. For the end of 2025, the median expectation also fell by 25 basis points, to 8.00% from 8.25%, with a wide range of 7.00% to 10.00%.

For the entire month of September, analysts estimate that headline inflation will be 4.7% annually. The consensus predicts a monthly inflation rate of 0.18% or an annual rate of 4.72%, lower than the 4.99% annual rate recorded in August.

Inflation expectations remained relatively stable. The median projection for headline inflation at the end of 2024 stood at 4.55%, slightly lower than the previous survey’s 4.60%, while the core inflation forecast remained at 3.90% annually.

In the Citibanamex survey, exchange rate estimates for 2024 have adjusted slightly upwards. The median projection for the exchange rate at the end of this year was revised to 19.57 pesos per dollar, from 19.50 pesos per dollar in the previous survey. For the end of 2025, the consensus estimate remained unchanged at 19.85 pesos per dollar.

Atlantia Wealth Management Strengthens Its Commercial Team In Switzerland

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Atlantia Wealth Management y su equipo comercial

Carmen Serrano has joined Atlantia Wealth Management in Switzerland as an Associate, where she will support the commercial and management teams in order to enhance the quality of service and advice to their clients.

The hiring of Carmen reaffirms the independent advisory firm’s commitment to growth, both in Spain and Latin America, where they foresee significant organic growth in the next 18 months, the firm explained to Funds Society.

Carmen Serrano began her career in the financial sector in 2017, having worked for the Bank of Spain and Deloitte (Spain) and more recently for Capital Vision (Switzerland). She holds a degree from Universidad Carlos III de Madrid, a master’s degree in auditing from ICADE, and another in financial advisory from Universidad Politécnica de Valencia.

“We feel fortunate to have Carmen join us. Her energy, passion, and creativity will help us continue achieving the company’s strategic objectives,” said the firm.

Atlantia is a Swiss multi-family office that recently entered Spain in the form of an EAFN to advise Spanish and Latin American families.

The firm was founded in 2021 by Juan Araujo, Alberto Gómez Justo, and Carlos García Práxedes, three equity partners who, after starting their careers at other companies, worked together at Banco Santander in Geneva for over 10 years. There, they covered the Latin American market in various regions, and in April 2021, they decided to establish their own advisory firm to provide comprehensive and independent services to their clients.

Assets Invested in ETFs Reached a New Record of $9.74 Trillion in the U.S.

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Assets invested in the U.S. ETF sector reached a new record of $9.74 trillion at the end of August, according to a report by ETFGI.

The sector recorded net inflows of $66.31 billion during the month of August, bringing year-to-date net inflows to a record $643.52 billion, surpassing July’s $9.49 trillion, according to the August 2024 report.

Additionally, assets have increased by 20.1% year-over-year in 2024, rising from $8.11 trillion at the end of 2023 to $9.74 trillion, marking 28 consecutive months of net inflows, the report adds.

“The S&P 500 index rose by 2.43% in August and is up 19.53% year-to-date in 2024. The developed markets index, excluding the U.S., increased by 2.78% in August and 11.13% in 2024. Israel (+7.47%) and Singapore (+5.59%) posted the largest gains among developed markets in August. The emerging markets index rose by 2.01% in August and 10.89% in 2024. Indonesia (+10.79%) and Thailand (+8.62%) recorded the highest increases among emerging markets in August,” said Deborah Fuhr, managing partner, founder, and owner of ETFGI.

In the U.S., the ETF sector had 3,669 products by the end of August, with assets worth $9.74 trillion from 337 providers listed on three exchanges.

On the fixed income side, ETFs saw net inflows of $25.61 billion in August, bringing year-to-date net inflows to $129.54 billion, exceeding the $109.87 billion in net inflows in 2023.

Commodity ETFs registered net inflows of $715.56 million in August, putting the year-to-date net outflows at $1.73 billion, lower than the $5.8 billion in net outflows for the same period in 2023.

Active ETFs attracted net inflows of $20.67 billion during the month, bringing year-to-date net inflows to $180.4 billion, significantly higher than the $74.2 billion in net inflows in 2023.

The substantial inflows can be attributed to the top 20 ETFs by new net assets, which collectively gathered $46.13 billion in August. The Vanguard S&P 500 ETF (VOO US) gathered $7.88 billion, the largest individual net inflow, the report explains.

Miami Is the City With the Highest Real Estate Bubble Risk, According to UBS

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Miami currently holds the highest bubble risk, according to this year’s edition of the UBS Global Real Estate Bubble Index.

Driven by the luxury market boom, prices in Miami have increased by nearly 50% in real terms since the end of 2019, with 7% of that rise occurring in the last four quarters, the report adds.

The U.S. homeownership market is becoming increasingly unaffordable, as the monthly mortgage payment as a percentage of household income is now much higher than during the peak of the 2006–2007 housing bubble.

In Los Angeles, real housing prices have barely increased since mid-2023. Due to the decline in economic competitiveness and the high cost of living, the population of Los Angeles County has been shrinking since 2016. As a result, rents have not kept pace with consumer prices, the study explains.

Despite its low affordability, New York housing prices have not corrected significantly. They are only 4% below 2019 levels and have even increased slightly in the last four quarters.

The Boston housing market has seen a 20% price increase since 2019, outpacing both the local rental market and income growth. However, the local economy has recently taken a hit, particularly due to layoffs in the tech and life sciences sectors, which could signal a shift in this trend.

Globally, real estate bubble risk has decreased in the cities analyzed. In addition to Miami, Tokyo and Zurich also saw their index rise.

However, cities like San Francisco, New York, and São Paulo present a low bubble risk.

The SEC Fines 11 Firms for Misuse of Their Communications

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The SEC announced charges against 12 firms, including broker-dealers, investment advisers, and a dual-registered broker-dealer and investment adviser, for widespread and prolonged failures in the maintenance and preservation of electronic communications, violating the recordkeeping provisions of federal securities laws, according to the regulator’s statement.

The firms admitted to the facts outlined in their respective SEC orders, acknowledged that their conduct violated the recordkeeping provisions of federal securities laws, agreed to pay combined civil penalties totaling $88,225,000, and have begun implementing improvements to their compliance policies and procedures to address these violations.

The sanctioned firms are as follows: Stifel, Nicolaus & Company, which agreed to pay a $35 million fine; Invesco Distributors, along with Invesco Advisers, with a $35 million fine; CIBC World Markets, along with CIBC Private Wealth Advisors, which will pay $12 million; Glazer Capital with $2 million; Intesa Sanpaolo IMI Securities with $1.5 million; Canaccord Genuity with $1.25 million; Regions Securities will pay $750,000; Alpaca Securities with $400,000; Focused Wealth Management agreed to pay $325,000, and Qatalyst Partners will not pay any fine.

“Today’s enforcement actions reflect the range of consequences that parties can face for violating the recordkeeping requirements of federal securities laws. Widespread and long-standing failures, especially when they potentially impede the Commission’s investor protection function by compromising a firm’s response to SEC subpoenas, can result in substantial civil penalties,” commented Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

The SEC’s investigations into all the firms, except Qatalyst, uncovered widespread and long-standing use of unapproved communication methods, known as “off-channel communications,” within these firms.

On the other hand, firms that self-report and otherwise cooperate with the SEC’s investigations may receive significantly reduced penalties. In this case, despite recordkeeping failures involving senior management communications that persisted even after the SEC’s first recordkeeping matters were announced in 2021, Qatalyst took significant compliance steps, self-reported, and remedied the situation, resulting in a no-penalty resolution.

As outlined in the SEC’s orders, the firms admitted that during the relevant periods, their personnel sent and received off-channel communications that should have been retained as required under securities laws. The failure to maintain and preserve these records deprived the SEC of key communications during its investigations.

Black Salmon Tokenizes Its First Real Estate Project With Fintech Wbuild in the U.S.

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(cedida) Proyecto de Black Salmon en St. Petersburg, en Tampa, Florida

With the goal of expanding access to real estate investment, U.S. real estate investment manager Black Salmon completed its first tokenization of a real estate project in Florida. The transaction, carried out through Chilean fintech Wbuild’s technology, was valued at nearly one million dollars.

According to a joint statement, the two firms partnered to distribute a share of one of Black Salmon’s projects: the development of a 23-story multifamily building located in the heart of St. Petersburg, in Tampa, Florida. The building is situated next to Tropicana Field Stadium and the area’s main commercial districts and entertainment zones.

The companies hailed the operation as a success. The tokenized share was sold in just one week, for a total of nearly one million dollars. This portion represents 10% of the total project, which has an estimated annual return of between 17% and 20%.

Tokenization allowed investors to acquire a token starting at $50,000. Without this technology, the minimum external investment would have been $500,000.

As a result of this success, Black Salmon—managing over $2.1 billion in assets (AUM)—is preparing to launch another project using this method. This second asset is located in the heart of the Medical District in Miami, Florida, and involves the construction of two multifamily buildings.

The tokenization of real estate assets has become a growing trend, allowing property ownership to be divided into small digital tokens, thereby lowering the investment amounts required to access this class of alternative assets.

Jorge Escobar, co-CEO of Black Salmon, highlighted the partnership with Wbuild. The fintech’s expertise, he said in the press release, “enables high-value real estate projects from the United States to be brought closer to Latin American investors.”

Daniel Pardo, CEO of Wbuild, emphasized that the partnership enables direct participation in high-quality investment opportunities. “More family offices, companies, and individuals will be able to access diversified and flexible investment portfolios through our platform,” he commented.

Wbuild offers real estate investments in the U.S., structured as tokens. According to Pardo, in an interview with Funds Society a few months ago, these tokenized assets function as “digital shares” of a company holding the real estate assets.