Recent charges brought by the SEC against the former CFO of smart windows company View underscore the risks of improper financial reporting.

View is a manufacturer of smart windows that automatically change tint as light levels shift, helping lower heating and cooling costs. It went public in March 2021 after a $1.6 billion merger with a SPAC backed by Cantor Fitzgerald. Google, Amazon, and other boldface names used its windows in their buildings.

But in November 2021, View’s audit committee reported that the company had made material misstatements in its financial statements for fiscal years 2019, 2020, and 2021. Over the period of 2019–2021, the company disclosed warranty liabilities of $22–25 million, but the SEC later determined those numbers should be between $48 million and $53 million. View appears to have reported the cost of manufacturing replacement windows, the SEC said, but not the cost of installing and delivering them.

After the audit committee’s findings came out, shareholders filed lawsuits and CFO Vidul Prakash resigned. The company’s fortunes tumbled, and in 2022, it announced that it had “substantial doubt about the company’s ability to continue as a going concern.” Its share price stood at 12.8 cents in July 2023, Reuters reported.

Keep reading.—CV

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Is the regional banking crisis that fundamentally shook the sector earlier this year over? That’s the question as regional bank earnings roll out.

Honestly, it’s a mixed bag so far. Some of them look solid, though it’s still likely to be a bumpy ride ahead.

M&T Bank Corporation and Citizens Financial Group both topped estimates by charging higher interest rates, like many big banks, according to Reuters. First Horizon Corporation missed on revenue, Yahoo Finance reported, but its second-quarter profit grew from last year. US Bancorp beat revenue estimates, but its slim net interest margin dragged the stock down when it posted earnings. And PNC Financial posted mixed results, with an earnings beat and a revenue miss.

“For the regionals, the thought process was they were going to be pretty weak and they haven’t been so far,” Dennis Dick, market structure analyst at Triple D Trading, told Reuters, adding that concerns about withdrawals have been “better than expectations.”

But many of the underlying problems that fueled the initial regional banking crisis are still in play, experts stress. Think about what happened at Silicon Valley Bank: Rising interest rates caused its assets to lose value, particularly weakening low-interest loans and bonds, as Northwestern finance professor Gregor Matvos has pointed out. Now, both big and mid-sized lenders have been under pressure to pay higher rates for deposits.

All those factors are still issues—and new problems will further complicate the sector. Losses from the troubled commercial real estate market are set to put more pressure on regionals.

Continue reading.—NP

Last week, the FTC and DOJ jointly released a draft of new guidelines they will use to evaluate potential mergers and acquisitions (M&As). The document reflects the Biden administration’s tougher stance toward big business deals, particularly in the tech sector.

The guidelines include 13 principles the agencies will follow when scrutinizing deals. The principles stipulate that mergers may not “entrench or extend a dominant position,” eliminate competition between firms, increase concentration in an already concentrated market, or prevent new players from entering a market. The guidelines will be finalized following a 60-day public comment period.

The proposed rules reflect a return to pre-2010 guidelines on concentration, the Wall Street Journal reported, noting that they’d apply to deals that resulted in firms having a market share of 30% or more. The new guidance may give the FTC and DOJ, which have filed numerous antitrust actions since President Biden took office, more leeway to go after deals.

What’s different: New to the guidelines is a focus on labor. Deals should be scrutinized if they would result in reduced competition for workers, which could result in “lower wages or slow wage growth” or “worsen benefits or working conditions,” the guidelines say.

Continue reading.—CV

Today’s top finance reads.

Stat: 3%. That’s the International Monetary Fund revised forecast for global economic growth, up from 2.8% in April. The IMF’s upward revision shows an optimism towards the global economy despite continued uncertainty. (the New York Times)

Quote: “This contract sets a new standard in the labor movement and raises the bar for all workers.”—Teamsters General President Sean O’Brien on the new contract Teamsters signed with UPS, averting a strike. The five-year deal is worth a reported $30 billion and covers 330,000 drivers and sorters, though it still needs to be ratified by employees. (the Wall Street Journal)

Read: A lot of companies are posting better results than Wall Street expected this quarter. (Insider)

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