Alternative Assets ETPs as an option in the face of a potential recession

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Inflation uncertainty has risen sharply worldwide since the onset of the COVID-19 pandemic, a situation that worsened in 2021 with increased demand and a tightening supply of goods and services. In 2022, the war in Ukraine further boosted inflation, making it difficult for investors to make decisions.

In such a period, alternative assets could be a tool to obtain greater diversification, decrease volatility and obtain better portfolio returns. All this without the need to go to the stock market.

According to Blackrock, there are two main types of alternative investments. The first consists of vehicles that invest in non-traditional assets, such as real estate and private equity. The second involves strategies that invest in traditional assets through non-traditional methods, such as short selling and leverage.

The alternative asset industry is on a growing trend. Hence, portfolio managers see it as a pillar of the modern investment landscape, supported by assets under management (or AUM) being at record levels, accompanied by investor interest.

According to Prequin, from 2015 to the end of 2021, assets under management (AUM) across all alternative asset classes increased at a CAGR of 10.7%. At the end of 2015, AUM stood at US$7.23 tn, rising to US$13.32 tn by the end of 2021, and we expect AUM growth to accelerate to 11.7% and reach US$23 tn in 2026.

For Forbes, 2023 promises that alternative investments will finally gain a daily place within investors seeking broader diversification portfolios.

In 2023, portfolio managers are targeting a more significant allocation in alternative assets due to their low correlation to the secondary market, which could mitigate inflation-induced volatility and potential recession and boost returns more than stocks and dividends alone.

How to distribute alternative assets effectively?

Initially, alternative investments were exclusive to experienced accredited investors. However, tools provided through asset securitization programs allow the distribution of alternative investment strategies quickly, efficiently, and simply.

By securitizing these alternative assets, an ETP (Exchange Traded Product) type investment vehicle is structured and issued, converting any underlying asset into a listed and “Euroclearable” security, which facilitates reaching a more extensive investor base, simplifying subscriptions and broadening distribution.

Repackaging an alternative asset into an ETP currently represents one of the most successful solutions for launching and growing private investment funds, real estate funds, and hedge funds of various sizes. Leading real estate fund managers such as Participant Capital, Black Salmon, and Driftwood Capital use these investment vehicles, or ETPs, to raise international capital for alternative investments.

Main advantages of ETPs for distributing alternative assets

Any alternative asset fund manager can benefit from this option to increase the distribution of their investment strategies. In addition, this type of investment vehicle allows you to customize your strategy thanks to its flexibility: it can be applied to a wide variety of financial assets. A “Eurocleable” financial security is put into circulation, providing the investment vehicle with the appropriate infrastructure to obtain standardization, market transparency, and international reach.

In summary, the advantages offered by an ETP include the following:

  1. Set up an Irish special-purpose vehicle (SPV) for exclusive use by real estate projects, hedge funds, or any private fund.
  2. Offer equity and debt-based investment instruments through a Euroclear listed security.
  3. Increase distribution to a broader investor base.
  4. Price dissemination through Bloomberg and other world-leading brands such as Reuters and Six Financial.
  5. Facilitate access to global private banking, financial advisors, and broker-dealers through their investment platforms and custodians.

Companies such as FlexFunds, based in Miami and with an international presence in Latin America and Europe, offer specialized solutions in structuring and launching ETPs through its asset securitization program.

For more information about FlexFunds’ solutions, contact us at info@flexfunds.com or visit www.flexfunds.com

Emilio Veiga Gil, Executive Vice President, FlexFunds

Dynasty Financial Partners Closes Minority Private Capital Raise to Fuel the Growth of Its Offering to Clients

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Dynasty Financial Partners (“Dynasty”) announced the company has closed a minority private capital raise, adding Abry Partners (“Abry”) and The Charles Schwab Corporation (“Schwab”) as new minority investors. Several of Dynasty’s existing investors and directors of the board have invested additional capital alongside Abry and Schwab in the round.

Additionally, several firms in the Dynasty Network have invested in Dynasty as part of an ‘equity swap’ program that has been launched concurrent with the round.

Dynasty’s Network of clients own and operate independent RIAs that leverage Dynasty’s integrated technology, services and business solutions, robust turnkey asset management program (TAMP), and capital solutions. This integrated platform model provides synthetic scale that allows Dynasty-powered RIAs to be independent but not alone.

Dynasty intends to use some of this capital to make meaningful investments in technology and technology integrations, the addition of services to its Core Services offering, the further buildout of its TAMP and investment solutions offering, and the addition of intellectual capital and key talent.

The company also plans to invest in the growth of Dynasty Capital Strategies, making further equity investments in its network of clients and making capital available for inorganic growth. The company will also explore select opportunities for corporate development and M&A that would accelerate growth, add capabilities, and increase margin in various areas of the business. A portion of the investment round will be used to fund secondary transactions to provide liquidity to long-time shareholders and founders of Dynasty.

As previously announced in September of this year, Dynasty closed a $50 million credit facility from RBC Capital Markets, UMB Bank, J.P. Morgan, Citibank, and Goldman Sachs Bank that provides access to additional growth capital.

Concurrent with this capital raise, Dynasty has executed minority equity investments in many of its RIA clients. Most of these clients received Dynasty equity in exchange for their equity in a ‘swap’ transaction.

As a result, the Dynasty Network stands stronger and more aligned than ever, with many members of the network having an equity interest in the success of Dynasty and the Network.

“After evaluating the state of the public markets, our board decided to have a handful of conversations with potential private investors. Having been afforded the luxuries of optionality and time, there were two requirements that were atop my list as we went through the process – partnership and alignment,” said Dynasty’s President and CEO, Shirl Penney.

Given the equity capital raise, Dynasty will file a request to withdraw its Registration Statement on Form S-1, initially filed with the SEC on January 19, 2022 and subsequently amended.

Abry Partners is a Boston-based private equity firm with an over 30-year track record of sector-focused investments, having completed more than $90 billion of leveraged transactions. Abry has deep experience within financial services and the wealth management sector, including recent successful investments in Beacon Pointe and Millennium Trust Company.

James Scola, Partner, and Michael Cummings, Principal, led the transaction for Abry. As part of the minority investment, James Scola will be joining Dynasty’s board.

“When looking at the RIA space and the growing ecosystem around it, Dynasty was one of the select brands we had been following for some time. We are thrilled to have the opportunity to invest in the leading wealth technology and integrated services platform in the RIA space and are looking forward to putting all of Abry’s resources behind the growth of the firm and its clients,” said James Scola, Partner at Abry.

Schwab serves as the custodian for over half of the $72 billion in assets under advisement in the Dynasty Network. Schwab and Dynasty have long brought complementary strengths to their joint clients with Schwab’s expertise in the independent advisor ecosystem and Dynasty’s leading technology and services platform for independent business-owner advisors.

“As advocates for independent advisors, we are thrilled to invest in a firm that shares our values of empowering advisors with the technology, tools, and resources they need to build even stronger businesses. We could not be more excited for the ongoing growth that is occurring in the RIA ecosystem and are proud to be leaders in the space,” said Bernie Clark, Head of Schwab Advisor Services.

Dynasty will continue to grow its relationships with other strategic partners in the space, including the other major custodians serving the RIA ecosystem.

“At a time when many businesses in the space are forced to hunker down and play defense, dragged down by leverage and rising interest rates, Dynasty is positioned to charge onto the offensive with fresh, friendly capital, a fortress balance sheet, and favorable margins. Despite market volatility, the ‘Era of Independence’ continues to experience tailwinds as Dynasty positions to invest and continue executing on behalf of its clients and investors,” added Justin Weinkle, Dynasty’s CFO.

Goldman Sachs & Co. LLC acted as exclusive financial advisor and Sullivan & Cromwell LLP acted as exclusive legal advisor to Dynasty on the transaction.

Biodiversity: why investors should care

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Photo courtesyGabriel Micheli, Senior Investment Manager at Pictet Asset Management

The past 30 years have seen a bigger improvement in human prosperity than all of the past centuries combined. We have built more roads, buildings and machines than ever before. More people are living longer and healthier lives and access to education has never been better.

The average GDP per capita has grown 15-fold since 1820. More than 95 per cent of newborns now make it to their 15th birthday, compared with just one in three in the 19th century.[1]

However, such progress has come at a great cost. As humanity has thrived, nature has suffered.

Humans are driving animal and plant species to extinction and destroying their habitats to feed and house an ever-increasing population. An influential UN report warns that up to one million animal and plant species are at imminent risk of extinction.[2]

Data shows that, in the 1992-2014 period, the amount of capital goods – such as roads, machines, buildings, factories and ports – generated per person doubled. Over the same timeframe, however, the world’s stock of natural capital – water, soil and minerals – per person declined by nearly 40 per cent.[3]

Policymakers now consider biodiversity protection as urgent a priority as halting global warming.

The UN COP15 biodiversity summit in Montreal in December is expected to unveil ground-breaking targets to protect nature. Ahead of the landmark event, world leaders meeting in Egypt for the COP27 climate conference in November recognised nature’s role as a key solution to fighting global warming.

According to the draft agreement, the Montreal Accord will commit signatories to restore at least 20 per cent of degraded ecosystems, protect at least 30 per cent of the world’s sea and land areas and reduce pesticides by at least two-thirds.

Once these targets become national policy, policymakers and regulators could quickly establish a framework for biodiversity protection and disclosure, with the Paris Accord and net zero as the template.

Biodiversity finance: a burgeoning market

Intensifying political and regulatory efforts are a step in the right direction. But policymakers cannot turn the tide on their own. Businesses and investors must also do more to place the world on a path to sustainable growth.

As stewards of capital, investors are uniquely positioned to help build an economy that works with, rather than against, nature.

They can play a crucial role by helping to shift capital flows away from businesses and projects that degrade the natural environment and towards nature-positive solutions.

Historically, biodiversity finance has tended to focus on raising money for conservation activities within a philanthropic framework.  More recently, however, a market for biodiversity and natural capital investment has been steadily growing, including securities that explicitly aim to minimise biodiversity loss and capitalise on the potential for long-term capital growth.

There have been high-profile launches of funds investing in companies specialised in biodiversity restoration and ecosystem services in the past couple of years, with nine out of eleven such funds having debuted since 2020. Assets under management in this group have more than doubled to USD1.3 billion from just USD525 million at the start of the decade.[4]

Funds investing in biodiversity and natural capital aim to help embed more sustainable and regenerative business practices across a whole value chain, involving industries such as agriculture, forestry, IT, fishery, materials, real estate, consumer discretionary and staples, utilities and pharmaceuticals.

The Food and Land Use Coalition estimates that efforts to transform current food and land use in favour of regenerative and circular practices have the potential to create a biodiversity market worth USD4.5 trillion by 2030.[5]

Nature-positive transition
The finance industry must add its heft to the global effort to reduce the damage, while also enhancing nature’s recovery. One influential research initiative geared to helping this endeavour is the Finance to Revive Biodiversity (FinBio) research programme, which is overseen by the Stockholm Resilience Centre at the Stockholm University.

The four-year research programme, of which Pictet Asset Management is a founding partner, aims to develop valuable research that should help the finance industry transform current practices, which reward growth at the expense of biodiversity, to a new model which accurately captures – and attaches an economic value to – the nature-positive quality of a business.

The initiative brings together a diverse consortium of academic and financial-sector partners, including the UN Principles for Responsible Investment, the Finance for Biodiversity Foundation and Oxford University.[6]

Nature has always been the economy’s most important asset. It is time the finance industry recognised that.

 

For the latest research on biodiversity and why it is a financial risk you cannot ignore, click here. 

 

Notes

[1] Our World in Data

[2] IPBES

[3] Source: Managi and Kumar (2018) Note: Produced capital refers to roads, ports, cables, buildings, machines, equipment and other physical infrastructures. Human capital refers to education and longevity. Natural capital is calculated with renewable and non-renewable resources including agricultural land, forests as sources of timber, fisheries, minerals and fossil fuels

[4] Broadridge and Pictet Asset Management, data as of 31.07.2022

[5] https://www.foodandlandusecoalition.org/wp-content/uploads/2019/09/FOLU-GrowingBetter-GlobalReport.pdf

 

 

 

Some Conclusions From Markets Behaviour in October

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U.S. equities rebounded in October, with the S&P recording its second-best monthly performance for the year. This month saw the kickoff of Q3 earnings with over half of the S&P 500 companies having reported through 10/28. Takeaways from the first few weeks of earnings included FX headwinds, continued supply chain disruptions, still-elevated raw materials costs and fears of a weakening macro backdrop. However, credit card companies and banks reiterated that consumer spending continued to show signs of resilience despite surging inflation.

Several catalysts will be in focus as potential drivers to push markets higher before year-end, such as an inflection point in the Russia-Ukraine war, U.S. midterm elections or inflation data indicating that prices are no longer rising.

Performance in the Merger Arbitrage space in October was driven by the closing of several deals, most notably Elon Musk’s $44 billion acquisition of Twitter, Berkshire Hathaway’s $12 billion acquisition of Alleghany, and Vista Equity’s $8bn acquisition of Avalara.  The strategy also benefitted from a bump in consideration in two transactions. Philip Morris raised its offer for Swedish Match from SEK 106 to SEK 116 per share in order to secure enough shareholder support to complete the transaction. Additionally, Flagstar Bancorp shareholders received an increase in terms of $2.50 per share, which was paid as a special dividend, as they awaited the final regulatory approvals needed to complete the merger with New York Community Bancorp.

For the convertibles market, the fourth quarter on a positive note after a very negative year. Sentiment was quite low coming into earnings season and the result has been generally positive. We had numerous holdings outperform significantly after beating what were admittedly low expectations. We also had a few surprises to the downside as some companies guided cautiously. Premium expansion as stocks moved lower helped limit some of the downside we saw relative to the underlying equities. This is a key attribute of convertibles as it helps to provide asymmetrical returns.

incMTY Celebrated its Tenth Edition with More Than $300 Million in Investment Announcements

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This year, incMTY, the entrepreneurship festival promoted by the Tecnológico de Monterrey, successfully concluded its tenth anniversary. In this edition, the ecosystem of Mexico and Latin America interacted and developed opportunities through the in-person attendance of more than five thousand people and another 5,000 more who attended the event virtually, reaching 10 thousand people.

incMTY has become the most important economic vehicle in Latin America for the generation of business opportunities. Proof of this was that this year the festival broke its own record by presenting and announcing more than 300 million dollars in venture capital investment. Likewise, new projects were presented by the Government of Nuevo León, the private sector and renowned international companies, with more than 2.6 billion dollars in direct foreign investment.

More than 300 national and international speakers; 50 venture capital and corporate venture capital firms participated in the ‘Founders & Investors Summit and Corporate Innovation and Venturing Forum’; key players from more than 20 countries representing the ‘quintuple helix’ (entrepreneurs, investors, academia, governments and IP) with 406 activities; and on demand content hosted on the Whova App (available until December 9).

Rogelio de los Santos, president of Tec’s Eugenio Garza Lagüera Entrepreneurship Institute, commented that “there is much to build and contribute to the world, but incMTY today is already a powerful platform where opportunities and innovation multiply”.

Presentation and investment announcements at incMTY 2022:

  • Government of the State of Nuevo León and Invest Monterrey: US$2.6 billion. Samuel García Sepúlveda announced this figure as part of the impact of foreign investment. Likewise, through the Ministry of Labor and the Directorate of the State Employment Service, he earmarked 1 million pesos for companies located in Nuevo León, with the aim of promoting responsible entrepreneurship with a focus on generating new jobs.
  • Daikin Industries: 300 million dollars. The number 1 Japanese air conditioning company in the world recently announced this amount of investment in Mexico. In addition, starting in 2022 Daikin, along with INCmty, work for innovation in the HVAC industry (Heating, Ventilation and Air Conditioning, for its acronym in English). Through the entrepreneurship challenge ‘incMTY Disruptair Challenge’, 70 disruptive projects participated and these are the three winning teams: SolarX (first place), Flair (second place) and Bono (third place).
  • Proeza Ventures: US$50 million. The Proeza group’s capital fund announced that it will invest in 15 startups related to mobility issues. Its mission is to discover visionary entrepreneurs and build startups that transform the mobility industry to create a more sustainable world.
  • German Society for International Cooperation (GIZ): US$15 million for the Catalyst – Climate Fund.
    Nekko Capital: US$10 million, a venture capital fund based in Barcelona, Spain aimed at early-stage companies, announced its ‘Seed Capital Fund’.
  • 99 Startups: $1.1 million. This venture capital fund that seeks to finance pre-seed and seed stage startups, announced its participation in an investment round in Cuéntame, a platform with artificial intelligence that provides the appropriate wellness resource for each person and three family members, according to their stress level and time of life; with this they will seek to consolidate their presence in Mexico, Colombia and Chile.
  • Alaya Capital: US$1 million. The venture capital fund of entrepreneurs for entrepreneurs located in Chile, is about to raise its third fund and expects to reach US$80 million to invest approximately US$1 million in at least 25 startups that are in the regional scaling stage. It has funded companies such as Betterfly, Lemon and SixClovers.
  • Municipality of Monterrey: 5 million pesos. Luis Donaldo Colosio Riojas, Municipal President of Monterrey, launched the first Municipal Fund for Technology-Based Entrepreneurship.
  • During the festival, a collaboration signing and launch of the Kuikmatch-Alianza del Pacífico platform took place, for 100 thousand dollars equity-free, destined to promote the science and technology-based ventures winners of its call for proposals.

incMTY’s most impressive capital raises:

  • Betterfly, considered the first Latin American “social” unicorn, exhibited at incMTY how it raised $125 million in a Series C investment round.
  • During the Founder & Investor Summit, emphasis was placed on the $100 million investment in SparkCognition, where Dalus Capital participated as a partner of March Capital for the growth of this company, a world leader in artificial intelligence for industrial applications.
  • Yaydoo, the ‘B2B paytech’, announced its $20.4 million capital raise and merger with PayStand to serve all SMBs in the Americas. As of today, its valuation exceeds $2 million.
  • Mercado Libre Fund, which invests in technology companies, typically in Series A and B rounds, announced during incMTY $20 million in the Elenas platform.
  • Autolab, an auto parts and repair platform, announced raising $6.5 million in a Seed+ round of equity and debt led by Bullpen Capital, with participation from Proeza Ventures.
  • Orchata, a Mexican startup led by its founder, Luis Mario García, offers the promise of “we deliver your groceries to your door in 15 minutes” and to begin its expansion it raised US$4 million in an initial round in which Y Combinator, JAM Fund, FJ Labs, Venture Friends, Ivesto and Foundation Capital stood out as investors.
  • Nowports, a Regia-based company and the first LogiTech unicorn in Latin America, detailed during incMTY about its valuation with its Series C milestone led by SoftBank Latin America Fund.
    Calii, the Mexican startup that connects fruit and vegetable producers directly with homes, restaurants and retailers, mentioned raising $22.5 million in capital.

The Denominator Effect Prevails in the Rise of Alternatives by AFOREs

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Assets under management of the AFOREs in 2022 have had a drop of $13.9B to September, closing the month at $241.0B. Back in December 2021 they were at $254.9B according to CONSAR information.  This represents a 5.4% drop. Some AFOREs experienced a 10% reduction of their assets, while in the extreme case there is one that managed to achieve a slight increase of at least 1%. In the previous year, assets grew 7% on average.

All AFOREs increased their percentage of investment in alternatives in percentages ranging from 0.4% to 2.9%, with an average growth of 1.4%. 

Between December 2021 and September 2022 there is an increase of $2.5B in alternative investments, bringing these investments to $19.6B which means an increase from 6.7% to 8.1% as a percentage of investment between December 2021 and September 2022. According to our own estimates, 2.6% are international investments and 5.5% are local at market value.

The decline in local and international equity investments accumulated during the year largely explains this drop in assets under management. Between December 2021 and September 2022, local equities dropped 0.2% of their weight in the portfolio from 6.5% to 6.3% and investments in international equities dropped from 14.4% to 11.2%, which is a drop in the portfolio of 3.2%.

This increase in the percentage invested in alternatives and decrease in the percentages of local and international equities is called the denominator effect.  The denominator effect refers to the value of an investor’s private equity portfolio exceeding his or her allocation due to a decrease in the value of other elements of the investment portfolio.

 

In 2022 the issuance of vehicles seeking global investments in the fund of funds sector continues to dominate. Between January and September 5 CKDs and 57 CERPIs emerged signifying new commitments for $7B of which only 6% have been called which have a market value of $426M according to proprietary information.

 

With these new issues in only four years the CERPIs are about to reach the number of CKDs (128 CKDs vs. 136 CERPIs) and the same happens with the committed resources ($23.6B in CKDs vs. $21.1B in CERPIs) with the difference that 77% of the commitments have been called in CKDs and only 27% in CERPIs. It should be considered that the first CKD was issued 13 years ago.

In the new 2022 pipeline there are only 3 CKDs and 2 CERPIs where the amounts are expected to continue to dominate in CERPIs. BIVA brings 4 of the issues and BMV 1. As for the sectors two are located in funds of funds and one in infrastructure, real estate and debt respectively.

In the composition of the AFOREs’ portfolios, the drop in assets and the increase in the weight of alternative investments will cause investments in this asset class to take a break in general terms, where the doubt is the time for recovery in equities with a recession at the door to cause the opposite effect.

Column by Arturo Hanono

VIS with DWS: Methods to manage currency risk in the portfolio

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Photo courtesy

The continued rise in strength of the U.S. dollar is having profound impacts on the global market. Forecasting spot currencies is never easy, and Investors need to understand how to evaluate whether they should hedge their currency risk in the international markets. In an upcoming Virtual Investment Summit on November 29 at 10:30 am (ET), DWS will bring these issues to the table.

Topics to be discussed include:

  • Portfolio strategies for a strong dollar
  • Learn how to implement a simple FX hedging strategy that may lower volatility, deliver positive carry income, and differentiate your practice in the process
  • Myths and misperceptions uncovered about costs, correlations, and carry
  • The challenges involved in predicting spot currency returns and central bank activity

To register as an attendee to this event click on this link

Host: Aiviel Sanchez, Latin America Coverage, DWS

Aiviel Sanchez is a senior relationship manager at DWS working primarily with institutional and other similar investors in Latin America. He has nearly two decades of financial services experience, having joined DWS in 2018 after previously being head of institutional sales-Chile at BlackRock and before that UBS and JPMorgan. Aiviel earned a BA in Finance from the University of Puerto Rico.

Speaker 1: Dean Allen, Passive Investment Specialist-U.S. Offshore, DWSXtrackers

Dean Allen joined DWS in 2021 with more than 14 years of relevant Passive and ETF experience. Prior to joining the firm he was responsible for wirehouse, private bank, IBD, and RIA clients in U.S. Offshore (UCITS ETFs and mutual funds) at Vanguard. Prior to that Dean was head of product management and ETF capital markets for Vanguard Investments Canada, based in Toronto, as well as having other roles relating to ETFs and distribution in international markets and U.S. businesses. He earned a BS in Finance from the University of Maryland.

Speaker 2: Jason Chen, DWS Research House

Jason Chen is a senior research analyst in the DWS Research House, the firm’s intellectual capital and analytics group focused on market analysis and thought leadership. He has been with DWS since 2018 and prior to his current role was a U.S. product strategist. Before joining the firm Jason focused primarily on multi-asset portfolio management and investment research when he worked at JPMorgan. He earned his BBA in Economics and International Business from Temple University.

Franklin Templeton Completes Acquisition of Alcentra

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Franklin Resources, Inc., a global investment management organization operating as Franklin Templeton, announced the completion of its acquisition of BNY Alcentra Group Holdings, Inc. (together with its subsidiaries, “Alcentra”) from The Bank of New York Mellon Corporation (“BNY Mellon”).

Alcentra is an European credit and private debt managers with $35 billion in assets under management as of September 30, 2022 and has global expertise in senior secured loans, high yield bonds, private credit, structured credit, special situations and multi-strategy credit strategies.

With this closing, Franklin Templeton’s U.S. alternative credit specialist investment manager, Benefit Street Partners (“BSP”), expands its capabilities and presence in Europe, nearly doubling its AUM to $75 billion globally, and increases the breadth and scale of Franklin Templeton’s alternative asset strategies to $260 billion in aggregate, as of September 30, 2022.

Alternative asset management is a priority for the firm, as investors are allocating more capital across the full spectrum of strategies.

In addition to alternative credit through BSP and Alcentra, Franklin Templeton’s alternative asset strategies include specialist investment managers focused on private real estate through Clarion Partners, global secondary private equity and co-investments via Lexington Partners, hedge fund strategies via K2 Advisors and venture capital through Franklin Venture Partners.

Founded in 2002, Alcentra employs a disciplined, value-oriented approach to evaluating individual investments and constructing portfolios across its investment strategies on behalf of more than 500 institutional investors. Alcentra’s dedicated and highly experienced team is based in its London headquarters, as well as in New York and Boston.

In connection with this transaction, there will be no change to Alcentra’s brand in Europe or Alcentra’s investment strategies.

M&G Appoints Andrea Rossi as Chief Executive Officer

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Photo courtesyAndrea Rossi, CEO y director ejecutivo de M&G

M&G plc (“M&G”), the leading international savings and investment business, announces the appointment of Andrea Rossi as its next Chief Executive and Executive Director. Rossi will take up his new position on 10 October 2022, succeeding John Foley who, in April 2022, announced his intention to retire after seven years in the role.

John will step down as CEO and Executive Director on 10 October 2022, but will remain at M&G in an advisory capacity until 31 December 2022 in order to ensure an orderly transition.

Rossi has a 22 year track record in the global insurance and asset management sectors, mainly through his time at AXA Group. He was CEO of AXA Investment Managers and a member of the Group Executive Committee of AXA Group for six years.

Edward Braham, Chair of M&G, said: “Throughout what was a thorough and exacting recruitment process, Andrea impressed us with his appreciation of the unique capabilities of M&G, his strong focus on growing M&G, delivering results for shareholders and his commitment to sustainability.”

Andrea also held senior roles at AXA’s insurance business across Europe and internationally. Under his leadership of AXA Investment Managers, assets under management increased by 55% to €800bn ($775bn) and AUM from external clients more than doubled. This growth was driven by a clear focus on systematically identifying and addressing client needs and through a transformation of underlying systems and processes. Most recently, Andrea has been a senior adviser to Boston Consulting Group.

He will step down from this role following his appointment at M&G. He is also the co-founder of Resustain, a firm focussed on reducing the carbon intensity of commercial property, where he will remain as a Non-Executive Director.

Andrea Rossi, CEO-elect said: “I have long admired M&G given its history, excellent investment strategies and savings solutions. I am honoured to have been selected as its next CEO and look forward to driving growth in the business while at the same time improving its efficiency to better serve client needs. There is an excellent team at M&G and I’m excited at the prospect of working with them to take the business forward.”

The appointment has been approved by the PRA and FCA.

SEC Charges 16 Wall Street Firms with Widespread Recordkeeping Failures

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The Securities and Exchange Commission announced charges against 15 broker-dealers and one affiliated investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications.

The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined penalties of more than $1.1 billion, and have begun implementing improvements to their compliance policies and procedures to settle these matters.

“Finance, ultimately, depends on trust. By failing to honor their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust,” said SEC Chair Gary Gensler.

The SEC staff’s investigation uncovered pervasive off-channel communications. The firms cooperated with the investigation by gathering communications from the personal devices of a sample of the firms’ personnel. These personnel included senior and junior investment bankers and debt and equity traders.

From January 2018 through September 2021, the firms’ employees routinely communicated about business matters using text messaging applications on their personal devices. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws.

By failing to maintain and preserve required records relating to their businesses, the firms’ actions likely deprived the Commission of these off-channel communications in various Commission investigations. The failings occurred across all of the 16 firms and involved employees at multiple levels of authority, including supervisors and senior executives.

  • The following eight firms (and five affiliates) have agreed to pay penalties of $125 million each:
    • Barclays Capital Inc.;
    • BofA Securities Inc. together with Merrill Lynch, Pierce, Fenner & Smith Inc.;
    • Citigroup Global Markets Inc.;
    • Credit Suisse Securities (USA) LLC;
    • Deutsche Bank Securities Inc. together with DWS Distributors Inc. and DWS Investment Management Americas, Inc.;
    • Goldman Sachs & Co. LLC;
    • Morgan Stanley & Co. LLC together with Morgan Stanley Smith Barney LLC; and
    • UBS Securities LLC together with UBS Financial Services Inc.
  • The following two firms have agreed to pay penalties of $50 million each:
    • Jefferies LLC; and
    • Nomura Securities International, Inc.
  • Cantor Fitzgerald & Co. has agreed to pay a $10 million penalty.

Each of the 15 broker-dealers was charged with violating certain recordkeeping provisions of the Securities Exchange Act of 1934 and with failing reasonably to supervise with a view to preventing and detecting those violations. DWS Investment Management Americas, Inc., the investment adviser, was charged with violating certain recordkeeping provisions of the Investment Advisers of 1940 and with failing reasonably to supervise with a view to preventing and detecting those violations.

In addition to the significant financial penalties, each of the firms was ordered to cease and desist from future violations of the relevant recordkeeping provisions and were censured.

The firms also agreed to retain compliance consultants to, among other things, conduct comprehensive reviews of their policies and procedures relating to the retention of electronic communications found on personal devices and their respective frameworks for addressing non-compliance by their employees with those policies and procedures.