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    F.D.I.C. Says Banks Need to Keep a Record of Their Fintech Customers

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    Banks holding customer funds for money management apps should keep track of customers’ identities and balances, the agency says.When a banking software company collapsed this spring, thousands of people keeping cash in online money management apps found themselves cut off from their own money for months. On Tuesday, the Federal Deposit Insurance Corporation proposed new rules designed to prevent that from happening again.Customers often choose to put money they would otherwise hold in a bank checking account into an online app. Some apps offer higher interest rates on deposits than traditional banks do, while others offer customers new saving and investing plans or small loans ahead of their paydays.But money that customers send to online financial companies almost always ends up in a brick-and-mortar bank — and sometimes it is pooled into a single account. Customers often do not know which bank has their money.Banks are under no obligation to keep track of the identity of fintech customers. The federal bank regulator’s proposal would require the banks to pay more attention.Traditional banks holding funds for fintech customers would have to know each person’s identity and keep daily tabs on their balances. They would have to make sure that, no matter what happened to the other companies in the chain linking customers to their funds, the banks had a record of those funds and could share their identities and balances with regulators.This change would also help if a bank at the end of one of those long chains of software companies were to fail, the regulators said on Tuesday. At present, it is hard for the F.D.I.C. to determine whose money is covered by the $250,000 deposit insurance guarantee.Senior F.D.I.C. officials said in a briefing held for journalists on Tuesday that while they had been contemplating such rules for years, the collapse this spring of Synapse Financial Technologies, which operated banking software for online lenders, provided a good real-world example of how customers could be harmed.When Synapse filed for bankruptcy and shut down its services, it said it had only $2 million in cash on hand. But customers who had funds at the online lenders Synapse supported were collectively cut off from $300 million of their own money. The F.D.I.C. said it had received more than 1,000 customer complaints related to Synapse since May.The banks that take deposits from fintech customers are often small institutions trying to grow. Their managers could complain about having to meet new record-keeping requirements. Regulators said on Tuesday that any new requirements would apply narrowly to banks taking the kinds of deposits that could get lost in a chain of software companies.There are other methods smaller banks use to swap deposits and increase their customers’ deposit insurance coverage that would not be affected by the new proposal, the regulators said.The proposal made Tuesday was the first step toward putting the new rules in place. Regulators now want banks and other members of the public to provide feedback to help shape it. More

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      Chicken Soup for the Soul Entertainment Files Chapter 11

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      The parent company of Redbox, which rents movies through kiosks, filed for Chapter 11 bankruptcy protection on Friday.Chicken Soup for the Soul Entertainment, the parent company of the movie rental company Redbox, which is known for its distinctive red kiosks, filed for Chapter 11 bankruptcy protection on Friday.In the filing, Chicken Soup listed debts of about $970 million, and total assets of about $414 million. It owes millions to entertainment and media companies, including Universal Studios, Sony Pictures and BBC Studios Americas, as well as some retailers, such as Walgreens and Walmart, according to court filings.Chicken Soup for the Soul was founded in 1993 by two motivational speakers, Jack Canfield and Mark Victor Hansen. The company’s inspirational book series, with titles like “From Lemons to Lemonade” and “Angels Among Us,” contains collections of stories for specific audiences, for example new mothers or cat lovers.Its original book, published more than 30 years ago, dispensed life advice and stories of overcoming obstacles with the hope that it would heal readers’ souls just as “chicken soup has a healing effect on the body of the ill.”The company, which has published more than 300 titles, has sold more than 500 million copies worldwide.Chicken Soup for the Soul Entertainment is separate from its book-publishing arm, which is unaffected by the bankruptcy filing. It was not immediately clear whether the Chapter 11 filing would affect the Redbox operation. The company declined to comment on Sunday.In 2022, Chicken Soup for the Soul Entertainment acquired Redbox, a business founded in 2002 and recognized for its bright red DVD rental kiosks outside supermarkets and pharmacies. Redbox has about 27,000 kiosks across the United States.William J. Rouhana Jr. became the company’s chief executive in 2008 and ran the company with his wife, Amy Newmark, the publisher and editor in chief of the book division.Mr. Rouhana tried to expand the company into different products, including a line of soups, which ultimately failed. He founded the entertainment division of Chicken Soup for the Soul in 2016.The company requested relief to pay its employees, which it has been unable to do “for the two-week period ending on June 14, 2024.” Chicken Soup for the Soul Entertainment has about 1,000 full- and part-time workers.The company reported $636 million in net income loss in 2023, compared with $111 million in 2022, according to a filing with the U.S. Securities and Exchange Commission. At the time that Chicken Soup for the Soul acquired Redbox, the movie rental company had more than $300 million in debt. More

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      A Swindled Immigrant Community in Brooklyn Gets a Housing Reprieve

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      One man wanted to find a home for his aging parents to retire. One young woman’s mother wanted to raise her family there. Three families wanted their children to go to good schools.The five-story building in Bay Ridge, Brooklyn, erected on the site of a former Lutheran church, seemed to be the right fit for Asian families with modest incomes — they watched the construction with anticipation in the tight-knit neighborhood with a thriving Asian community. The developer, Xi Hui Wu, was a local whom neighbors recognized from the bank and the grocery store, and his then-wife, Xiao Rong Yang, was known as a prominent real estate agent in the area.For the next several years, tenants moved in and paid hundreds of thousands of dollars to buy their apartments. Then in 2018, each unit received a thick envelope in the mail. Inside was a foreclosure notice, and the tenants came to a horrifying realization: It was all a sham.Promissory notes and handshakes were never going to turn into deeds. For years, Mr. Wu had failed to make payments to a lender. He owed millions of dollars to the bank. And he had never received authorization from the city to turn the building into condos.That could have been the end — 20 different households, $5 million lost between them, evicted by a bank. Mr. Wu’s whereabouts have been hard to pin down, with conflicting information among tenants and government officials as to whether he fled to China or remains in Brooklyn. (Neither Mr. Wu, nor his lawyer listed in court records, could be reached for comment.)But the tenants now stand to become homeowners when the building is eventually converted to co-ops, under a deal that will be announced at a news conference on Wednesday.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Adam Neumann Gives Up on Buying Back WeWork

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      The co-founder of the shared-office company, who stepped down under pressure before the firm went bankrupt, announced an audacious takeover bid earlier this year.Adam Neumann has officially admitted defeat in his quest to buy back WeWork, ending his bid to acquire the co-working company that he helped found in 2010 and built into a global enterprise valued at $47 billion before it fell into bankruptcy last year.“For several months, we tried to work constructively with WeWork to create a strategy that would allow it to thrive,” Mr. Neumann said in a statement to the DealBook newsletter. “Instead, the company looks to be emerging from bankruptcy with a plan that appears unrealistic and unlikely to succeed.”The writing was on the wall for weeks. Mr. Neumann stepped down as WeWork’s chief executive in 2019 under pressure from directors and investors, after the company failed to go public amid questions about its business model and corporate governance. It marked a stunning fall for Mr. Neumann, the company’s charismatic frontman.But in February, DealBook reported that Mr. Neumann was planning an audacious move to buy back the company.His new real estate company, Flow, which is backed by Andreessen Horowitz, the venture capital firm, offered more than $500 million. The plan was to buy WeWork or its assets, and inject bankruptcy financing to keep it afloat.But WeWork found a different lifeline. A U.S. bankruptcy judge last month approved a restructuring deal that essentially wiped out $4 billion in company debt. It also included $450 million in new funding from SoftBank, the Japanese technology investor that has backed WeWork from its early days, enabling it to exit Chapter 11 bankruptcy.WeWork has been busy renegotiating leases in an effort to shed $11 billion in rent obligations. The rise of hybrid work since the coronavirus pandemic has hit the commercial real estate sector hard. A surge in vacancies has helped companies like WeWork rework deals with landlords, but has also cast doubts over the growth potential of the shared-office business model. More

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      Giuliani Is Served Arizona Indictment Notice After His 80th Birthday Party

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      After trying to reach him for weeks, officials served him the notice as he left his 80th birthday party. He is expected to appear in court on Tuesday.Rudolph W. Giuliani was served with a notice of his indictment in the Arizona election interference case on Friday night, becoming the last of the 18 defendants to receive the notice after nearly a month of unsuccessful attempts by the authorities.The indictment against Mr. Giuliani, Donald J. Trump’s former personal lawyer, and others includes conspiracy, fraud and forgery charges related to their attempts to change the results of the 2020 election in the state in favor of Mr. Trump, according to prosecutors. Among the other defendants are Mark Meadows, the former White House chief of staff, along with all of the fake electors who acted on Mr. Trump’s behalf to keep him in power despite his defeat there.Richie Taylor, a spokesman for Kris Mayes, Arizona’s attorney general who brought the indictment, said that Mr. Giuliani was served on Friday night at around 11 p.m. in Palm Beach County, Fla., as he left his 80th birthday party. “The agents by no means disrupted his event. They waited to serve him outside as he left,” Mr. Taylor said.Mr. Giuliani’s spokesman, Ted Goodman, confirmed in a statement on Saturday that Mr. Giuliani was served “after the party, after guests had left and as he was walking to the car.”“He was unfazed and enjoyed an incredible evening with hundreds of people, from all walks of life, who love and respect him for his contributions to society,” Mr. Goodman said. “We look forward to full vindication soon.”Mr. Giuliani is expected to appear in court on Tuesday unless the court grants a delay, Mr. Taylor said. A trial in the Arizona election interference case has been tentatively set to start in mid-October.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Gov. Jim Justice Faces Heavy Business Debts as He Seeks Senate Seat

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      The Justice companies have long had a reputation for not paying their debts. But that may be catching up to them.Jim Justice, the businessman-turned-politician governor of West Virginia, has been pursued in court for years by banks, governments, business partners and former employees for millions of dollars in unmet obligations.And for a long time, Mr. Justice and his family’s companies have managed to stave off one threat after another with wily legal tactics notably at odds with the aw-shucks persona that has endeared him to so many West Virginians. On Tuesday, he is heavily favored to win the Republican Senate primary and cruise to victory in the general election, especially after the departure of the Democratic incumbent, Joe Manchin III.But now, as he wraps up his second term as governor and campaigns for a seat in the U.S. Senate, things are looking dicier. Much like Donald J. Trump, with whom he is often compared — with whom he often compares himself — Mr. Justice has faced a barrage of costly judgments and legal setbacks.And this time, there may be too many, some suspect, for Mr. Justice, 73, and his family to fend them all off. “It’s a simple matter of math,” said Steven New, a lawyer in Mr. Justice’s childhood hometown, Beckley, W.Va., who, like many lawyers in coal country, has tangled with Justice companies. Mr. Justice and his scores of businesses would be able to handle some of these potential multimillion-dollar judgments in isolation, Mr. New said. But “when you add it all up, and put the judgments together close in time, it would appear he doesn’t have enough,” he said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Adam Neumann Wants to Take Over WeWork

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      Adam Neumann, the co-working company’s onetime chief, has sought for months to buy the now-bankrupt business, but accuses its current leaders of stonewalling him.Lawyers for Adam Neumann accused WeWork of stonewalling his takeover approach.Shahar Azran/Getty ImagesWeWork’s founder is trying to buy it Adam Neumann shot to fame by turning WeWork into a cultural and business phenomenon, before being ousted from the work space operator in dramatic fashion.But for the past several months, he has been trying to buy the now-bankrupt business — with the help of the hedge fund mogul Dan Loeb, DealBook is the first to report.Neumann’s new real estate company Flow Global is pushing WeWork to consider its takeover approach, according to a letter his lawyers sent to WeWork’s advisers on Monday. Flow which has already raised $350 million from the venture capital firm Andreessen Horowitz, disclosed in the letter that Loeb’s Third Point would help finance a transaction. (Read the letter.)Flow has sought to buy WeWork or its assets, as well as provide bankruptcy financing to keep it afloat.But Flow’s lawyers accused WeWork of stonewalling for months. “We write to express our dismay with WeWork’s lack of engagement even to provide information to my clients in what is intended to be a value-maximizing transaction for all stakeholders,” wrote the lawyers led by Alex Spiro of Quinn Emanuel, who also represents Elon Musk and Jay-Z.It’s the latest twist for WeWork, which over its 14-year history became a symbol of venture capital excess. The company grew rapidly, becoming the biggest tenant in many major cities and attaining a paper valuation of $47 billion. And Neumann — backed by billions from the Japanese tech giant SoftBank — increasingly pitched it as a way to “elevate the world’s consciousness.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      What Happens to FTX Clawback Cases if the Company Repays Its Creditors?

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      Lawyers for the failed crypto exchange told a bankruptcy judge they expected to pay creditors in full.When the cryptocurrency exchange FTX declared bankruptcy about 15 months ago, it seemed few customers would recover much money or crypto from the platform. As John Ray III, who took over as chief executive during the bankruptcy, put it, “At the end of the day, we’re not going to be able to recover all the losses here.” He was countering Sam Bankman-Fried’s repeated claims that he could get every customer their money back.Well, it turns out, FTX lawyers told a bankruptcy judge this week that they expected to pay creditors in full, though they said it was not a guarantee and had not yet revealed their strategy.The surprise turn of events is raising serious questions about what happens next. Among them: What does this mean for the lawsuits FTX has filed in an attempt to claw back billions in assets that the company says it’s owed?Will the possibility that customers could be made whole be raised at Bankman-Fried’s sentencing? Will potential relief for customers help his appeal?Some clawback cases could become harder to win — or may be withdrawn. FTX’s restructuring lawyers have already filed about a dozen suits, including against Bankman-Fried’s parents, and they expect to file more clawback claims this year. Other high profile lawsuits include one against K5, an investment firm headed by Michael Kives, as well as Voyager Global.Some of the clawback cases involve allegations of fraud, but not all do. Before fraud claims are argued, there is typically a legal fight over whether a company was insolvent at the time of the investment or that the investment led to insolvency. If every FTX creditor stands to get 100 cents on the dollar, the clawback cases that don’t involve fraud wouldn’t serve much of a financial purpose and may be more difficult to argue, some lawyers say. “In theory, clawbacks may go away there,” said Eric Monzo, a partner at Morris James who focuses on bankruptcy claims.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Restaurateur, Political Donor, Tipster: The Many Roles of FTX’s Ryan Salame

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      The co-chief executive of an FTX unit who told regulators about wrongdoing at the exchange was a big Republican donor. He also bought restaurants.In Western Massachusetts, Ryan Salame was known as a local boy turned hometown hero who struck gold as a top executive at FTX, the now-collapsed cryptocurrency exchange, and used some of that wealth to buy a few small restaurants in the area.In Washington, D.C., Mr. Salame was hailed as a “budding Republican megadonor,” bankrolling candidates and political action committees, and establishing FTX’s presence as a crypto heavyweight invested in shaping the regulation of the nascent industry.Now, Mr. Salame has emerged as a central player in the scandal surrounding FTX after he told regulators in the Bahamas, where the exchange was based, that FTX was misappropriating billions in customer funds to prop up an allied crypto trading firm called Alameda Research.On Monday, Sam Bankman-Fried, the founder of FTX, was arrested in the Bahamas, accused of lying to investors, lenders and customers about the close financial dealings between FTX and Alameda, and committing fraud by using both companies as a “piggy bank.” Prosecutors said Mr. Bankman-Fried used customer funds to trade, buy expensive real estate, invest in other crypto firms, make political contributions and extend personal loans to executives.So far, Mr. Bankman-Fried, who is being held without bail in a Bahamas prison, is the only FTX executive charged with wrongdoing. But Damian Williams, the U.S. attorney for the Southern District of New York in Manhattan, said the investigation is continuing and prosecutors are not done charging individuals.Mr. Salame’s activities may be scrutinized, given that he was pivotal to FTX’s political influence operation along with Mr. Bankman-Fried. Mr. Salame, a former co-chief executive of FTX Digital Markets, the company’s subsidiary in the Bahamas, also received a $55 million personal loan from Alameda.Mr. Salame (pronounced Salem) did not return multiple requests for comment. His lawyer, Jason Linder at Mayer Brown, also did not return requests for comment.Born in Sandisfield, Mass., a town of just 1,000 people in the Berkshires, Mr. Salame worked briefly at the accounting giant EY. In 2019, he graduated from Georgetown University with a master’s in finance before landing a job at Alameda in Hong Kong. He later moved to FTX in the Bahamas, where he was a primary point of contact between the exchange and the local government.Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX, was arrested in the Bahamas on Monday.Mario Duncanson/Agence France-Presse — Getty ImagesMr. Salame was not in Mr. Bankman-Fried’s inner circle, but he was fiercely loyal to him, according to people familiar with the matter. Mr. Bankman-Fried and his closest advisers all shared a purported commitment to giving away most of the money they made under the banner of “effective altruism.”By contrast, Mr. Salame said at times that he was in crypto because it was a way to get rich, according to a person who knows him. He enjoyed expensive cars, flew on private jets and had a reputation for hard partying.What to Know About the Collapse of FTXCard 1 of 5What is FTX? More