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The Morning Risk Report: China Has to Approve TikTok-Oracle Deal Too, ByteDance Says
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Both U.S. and Chinese authorities will need to approve a deal between ByteDance and Oracle, the Chinese company said Thursday. PHOTO: GREG BAKER/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Good morning. TikTok owner ByteDance Ltd. and Oracle Corp. are waiting to learn whether President Trump will give his blessing to their deal, but another hurdle remains: Beijing still has to sign off too. Chinese authorities will have to approve the terms of the deal, Bytedance reiterated Thursday, illustrating the tricky path ahead for the deal, even if the Trump administration gives its assent.
The Chinese technology startup will have to go through standard regulatory approvals in China and the U.S., a spokesman for Beijing-based ByteDance confirmed. For deals similar to these, the parties involved typically have to overcome antimonopoly concerns by the governments of both countries. ByteDance also will face scrutiny from Chinese regulators if its artificial intelligence-driven content-recommendation engine—the algorithms widely acknowledged to be vital to its success—is found to fall under the scope of an updated technology export-control list.
[Continued below…]
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China’s ministries in charge of commerce and science and technology added such algorithms to an export-control list on Aug. 28. This means the social-media company may have to seek approval from local commerce authorities before exporting its technology overseas.
The need for Beijing to approve any transaction adds uncertainty to already-convoluted talks, with ByteDance having to straddle the wants of its investors as well as the demands of the administrations of President Trump and his Chinese counterpart, Xi Jinping. China and the U.S. are locked in a bitter war over trade and technology that has caught up ByteDance and other Chinese technology giants such as Tencent Holdings Ltd. and Huawei Technologies Co.
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Julius Baer in Advanced Discussions to Resolve FIFA Issue
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Julius Baer Gruppe AG said it is in advanced discussions to reach a resolution with the U.S. Justice Department related to the authority’s investigation into the FIFA soccer federation.
The Swiss private-banking group said the DOJ’s investigation concerned “alleged money laundering and corruption involving officials and affiliates of FIFA and associated sports media and marketing companies,” and a possible resolution could lead to the bank paying an amount in double-digit millions of U.S. dollars. The bank said it had been cooperating with U.S. authority on this matter since 2015.
The news comes after Switzerland’s market watchdog Finma criticized the bank in February in connection with money-laundering claims involving FIFA, ordering it to improve its efforts against money laundering.
—Kim Richters
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From Risk & Compliance Journal
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SEC Charges Former NS8 Chief With Defrauding Investors
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The Securities and Exchange Commission said it charged NS8 Inc.’s former chief executive with defrauding investors, alleging he falsely claimed millions in revenue and raised about $123 million in fraudulent offerings.
The regulator in its complaint alleged that from at least 2018 through June 2020, Adam Rogas, the Las Vegas-based technology company’s former chief executive, changed company bank statements to show customers paid millions of dollars and that those bank statements were used by the finance department for putting together the company’s financial statements.
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Lev Parnas, an associate of Rudy Giuliani, arriving for a hearing in Manhattan federal court in New York City in February. PHOTO: BRYAN R SMITH/REUTERS
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Federal prosecutors in Manhattan have filed new criminal charges against associates of Rudy Giuliani who were arrested in a campaign-finance case last fall, including fraud allegations related to a Florida fraud-insurance company founded by two of the men.
In a seven-count indictment unsealed in Manhattan federal court Thursday, prosecutors alleged that Lev Parnas—a Soviet-born businessman who worked with Mr. Giuliani to push for investigations that could benefit President Trump—duped potential investors in the company, Fraud Guarantee, by misrepresenting how much the company had raised and where the money was going.
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A House panel’s investigation into Boeing’s 737 MAX provides support for potential far-reaching changes to air-safety laws. But bickering on Capitol Hill, combined with a limited revamp already embraced by regulators, could derail the efforts.
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Elliott Management Corp.’s Travelport Worldwide Ltd. reached a restructuring agreement that unwinds a disputed $1 billion shareholder rescue package and ends a standoff with some of Wall Street’s biggest debt buyers, people familiar with the matter said.
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House Democrats delayed a vote to decriminalize marijuana at the federal level after an outcry from centrist lawmakers who want the caucus to keep the focus on coronavirus relief as the election looms.
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Auto-parts manufacturer Garrett Motion Inc. is preparing for a possible bankruptcy filing as tensions rise with former parent Honeywell International Inc. over asbestos injury payments and as sales have slumped during the Covid-19 pandemic, according to people familiar with the matter.
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Steven A. Cohen’s Point72 Asset Management reached a settlement with a female employee who sued the firm in 2018 alleging unfair pay practices and a pervasively sexist work environment.
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Deloitte said it is committed to deliver change that restores trust in the audit profession. PHOTO: REUTERS
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The U.K. accounting watchdog said it has fined Deloitte £15 million ($19.5 million) and sanctioned two former partners over past audits of British software company Autonomy Corporation PLC.
The Financial Reporting Council said Deloitte and former partners Richard Knights and Nigel Mercer were disciplined after an independent disciplinary tribunal found misconduct in relation to Autonomy audits between January 2009 and June 2011. The FRC tribunal found that Deloitte, Mr. Knights and to a lesser extent Mr. Mercer were culpable of serious and serial failures.
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Harbin plans to invest in building up GNC’s online sales, in addition to preserving some stores. PHOTO: MARK KAUZLARICH/BLOOMBERG NEWS
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Vitamin seller GNC Holdings Inc. won court approval to sell itself to its largest shareholder, China’s Harbin Pharmaceutical Group Co., despite national-security concerns raised by Sen. Marco Rubio. Judge Karen Owens signed off on the sale at a hearing in the U.S. Bankruptcy Court in Wilmington, Del.
Sen. Rubio (R., Fla.) called for the Committee on Foreign Investment in the U.S., or Cfius, to examine the sale to Harbin, warning it could give China access to data about U.S. consumers. On Thursday, GNC lawyer Caroline Reckler said the Cfius issues already have been addressed, beginning in 2018 when Harbin bought its 40% stake in the vitamin retailer, becoming its largest shareholder.
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A health worker injects a person during clinical trials for a Covid-19 vaccine. PHOTO: EVA MARIE UZCATEGUI/BLOOMBERG NEWS
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As the Trump administration pushes ahead with its Covid-19 vaccine distribution plans, state health authorities are expressing concerns that the government hasn’t resolved critical issues, complicating their efforts to deliver any shots that get cleared for use to those most in need.
Meanwhile, a debate over the safety and timing of a possible Covid-19 vaccine has become a flashpoint in the presidential campaign and within the Trump administration, as well as in a key Senate race that could determine control of the chamber next year. The fight also could have broad ramifications on the national discussion shaping people’s willingness to get a vaccine once it is available, with polls showing sharp differences between Democratic and Republican voters in their views on inoculations.
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The Federal Reserve will analyze large banks’ ability to withstand two coronavirus-related recession scenarios as part of a second round of stress tests later this year, the central bank said.
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Unlike an earlier round of stress tests this year, the Fed will release the results of the tests for each bank, rather than providing aggregate results for the group. That means investors and the public will have a better understanding of the health of each of the 33 lenders when it comes to lending through the downturn.
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Mark Zuckerberg, here on July 29, said Facebook plans to explore ways to preserve the company’s culture of openness and debate around its work. PHOTO: HOUSE JUDICIARY COMMITTEE/REUTERS
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Facebook is moving to curb internal debate around divisive political and social topics, Chief Executive Mark Zuckerberg said Thursday, after a spate of disputes and criticism that has fueled discord among staffers.
The steps will include delineating which parts of the company’s internal messaging platform are acceptable for such discussions, and careful moderation of the discussions when they occur, Mr. Zuckerberg told employees at a company meeting, according to a spokesman. Employees shouldn’t have to confront social issues in their day-to-day work unless they want to, the CEO said.
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A bankruptcy judge blasted Hertz Global Holdings Inc.’s plan to pay top managers up to $14.6 million in bonuses after they collected millions in additional bonuses days before the rental car company filed for bankruptcy.
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It isn’t the first time Southwest has dealt with an issue over its weight data. PHOTO: DOUGLAS R. CLIFFORD/ZUMA PRESS
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Southwest Airlines Co. temporarily grounded 115 planes, citing discrepancies in data on the jets’ weights.
The airline said it had found a 75-pound discrepancy between the weight data sent to its dispatch team and other weight records for the Boeing Co. 737-800 jets. Southwest said it had stopped flying the planes out of an abundance of caution to enter correct data into its system and reset the program.
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