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The Morning Risk Report: Tower Research to Pay $67 Million to Settle Spoofing Claims
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Tower Research agreed to pay a $67 million penalty and signed onto a deferred prosecution agreement with the Justice Department Wednesday. PHOTO: LIU JIE/ZUMA PRESS
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Good morning. High-speed trading firm Tower Research Capital LLC agreed to pay $67 million to settle regulatory allegations that its traders manipulated the price of stock-index futures, the biggest penalty ever imposed by the U.S. derivatives watchdog in such a case.
New York-based Tower, which has been one of the most active participants in equity and derivatives markets, also signed a deferred-prosecution agreement with the Justice Department, which has worked closely with the Commodity Futures Trading Commission on such cases.
[Continued below...]
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The resolution follows the guilty plea of two former traders at Tower who were involved in the scheme. Kamaldeep Gandhi and Krishna Mohan pleaded guilty to conspiracy to engage in wire fraud, commodities fraud and spoofing, while a grand jury indicted a third trader, Chinese citizen Yuchun “Bruce” Mao, on similar charges.
Messrs. Gandhi and Mohan are scheduled to be sentenced in February. Their lawyers didn’t immediately respond to messages seeking comment. Mr. Mao couldn’t be reached. Tower said it was “deeply disappointed” by the allegations and added that all three traders left the firm nearly six years ago.
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Corporate Compliance in a Disrupted World
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Digital disruption, shifting workplace norms and the rapidly changing state of world affairs have added new dimensions to corporate compliance. Join The Wall Street Journal in New York on Nov. 19 for a live discussion with chief compliance officers from leading companies about how their focus is changing. For details and to register, click here.
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From Risk & Compliance Journal
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The U.S. regulator for derivatives and commodities markets issued five whistleblower awards totaling about $15 million during the fiscal year 2019. PHOTO: STEPHEN VOSS FOR THE WALL STREET JOURNAL
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The number of tips to—and awards given out by—the Commodity Futures Trading Commission’s whistleblower program have fallen from records set last year, according to the regulator’s annual report to Congress.
The U.S. regulator for derivatives and commodities markets issued five whistleblower awards totaling about $15 million during the fiscal year 2019 ending in September, the report said. The total represents a decline from the full-year record total of about $75 million issued by the commission during the previous fiscal year, when five awards went to tipsters, including the largest award of $30 million, according to the commission.
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President Trump had been sued by New York state over the operations of the Donald J. Trump Foundation. PHOTO: PATRICK SEMANSKY/ASSOCIATED PRESS
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President Trump will personally pay $2 million to an array of charities as part of a settlement of a lawsuit accusing his now-defunct foundation of abusing its nonprofit status and helping his 2016 presidential campaign.
The ruling Thursday from New York State Supreme Court Justice Saliann Scarpulla found that an Iowa fundraiser Mr. Trump held during the 2016 presidential primary violated rules governing charities.
The decision helps resolve a lawsuit brought by the New York attorney general’s office against the president, his adult children and the Donald J. Trump Foundation. Late last year, the foundation agreed to dissolve under the supervision of a judge.
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The Commerce Department is coming under fire for putting off fixes to the way the government restricts the sale of U.S. technology overseas, with critics saying the delay could allow sensitive military tech to slip through to China.
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New York state tax officials are restoring a measure of secrecy for condo owners who buy units without disclosing their names publicly through limited-liability companies, in a reversal of a policy that drew fire from the real-estate industry. In September, the tax department stunned the real-estate industry by requiring that LLCs list the names and addresses of all individuals with ownership interests in condo deals and sales of one-to-four family homes across the state.
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Federal lawmakers are pressuring the White House to keep the heat on Chinese telecom companies over their unpaid bills to U.S. tech developers. In a letter to President Trump on Wednesday, Sens. James Inhofe (R., Okla.) and Roger Wicker (R., Miss.) said a number of Chinese companies that make wireless equipment have failed to pay licensing fees to U.S. companies that came up with cutting-edge technology.
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The Trump administration has taken the unusual step of suing drugmaker Gilead Sciences Inc. for allegedly infringing government-owned patents related to the use of medications to prevent transmission of HIV.
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Juul Labs said it was voluntarily stopping the sale of its mint-flavored e-cigarette refill pods, citing new government data on the flavor’s popularity among teens.
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Swedbank: Less Than 1% of Bank’s Profit Came From Baltic Portfolio
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Swedbank AB estimates that less than 1% of the bank's total profit between 2012 and 2018 emanated from its troubled Baltic nonresident portfolio.
The lender disclosed the estimate on Thursday after Chief Executive Jens Henriksson was interviewed by Swedish news show "Uppdrag Granskning" as a follow-up to previously aired programs about suspected money-laundering. Swedbank came under scrutiny in February after the TV show reported that billions of dollars of illicit funds may have passed through the bank's Estonian branch.
In April, Swedbank set up an anti-financial-crime unit within the bank and appointed law firm Clifford Chance to lead an internal investigation. Swedbank said this is expected to conclude during early 2020. Swedish and Estonian authorities are also investigating the bank and conclusions from their probes are expected to be finalized early next year.
—Dominic Chopping
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Lixion Avila, a senior hurricane specialist, working at Miami’s National Hurricane Center, a division of the NOAA/National Weather Service. PHOTO: JOE RAEDLE/GETTY IMAGES
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A top New York Fed official put a price tag on climate- and weather-related events and said financial firms need to take seriously the danger of climate change in their risk-management decisions.
“The U.S. economy has experienced more than $500 billion in direct losses over the last five years due to climate and weather-related events,” said Kevin Stiroh, an executive vice president at the New York Fed responsible for regulating banks. “Climate change has significant consequences for the U.S. economy and financial sector through slowing productivity growth, asset revaluations and sectoral reallocations of business activity,” he said.
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Rampant wildfires—and the precautionary blackouts that utilities including PG&E have instituted to try to prevent them—are reshaping life across the Golden State and transforming the state’s reputation. Some residents are questioning whether they should leave as a result.
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Beijing’s announcement Thursday that the U.S. and China have mutually agreed to roll back tariffs as part of a “phase one” trade accord lifted financial markets, but questions remained over how much ground—if any—the Trump administration had agreed to give. Neither the White House nor the U.S. trade representative issued a public response to China’s statement, and there were conflicting reports from within the Trump administration as to whether there was a firm commitment to reduce tariffs.
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Software maker Citrix Systems Inc. is reviewing whether it should permanently change its earnings date, following unsolicited feedback from analysts and investors after it moved its third-quarter earnings date. PHOTO: SMITH COLLECTION/GADO/GETTY IMAGES
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Deciding when to report financial performance increasingly involves a deliberate weighing of regulations, executive travel plans and the timing of competitors’ reports, all in an effort to maximize—or perhaps avoid—attention from analysts and investors.
“Investors are paying close attention to when companies release earnings,” said Sandy Peters, the head of financial reporting policy at the CFA Institute. “That’s something that CFOs and heads of investor relations should factor into their thought process.”
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A BHP nickel sulfate plant in Australia. PHOTO: MELANIE BURTON/REUTERS
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Global mining companies are re-examining how they pay their chief executives, aiming to diminish the impact of external factors—like swings in commodity prices—that can mask a leader’s true performance.
At issue are big bonuses linked to total shareholder returns that can swell or shrink depending on how a company’s share price performs. Miners—like companies in other sectors—say pay deals that rely too heavily on these bonuses can encourage risky behavior such as taking on big expansion projects or employing severe cost-cutting initiatives that, in some cases, take years to clean up.
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Teva Pharmaceuticals Industries Ltd. appointed a new finance chief who will be charged with managing the Israeli drug manufacturer’s high debt as it braces for potential costs associated with opioid litigation in the U.S.
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Gap said Chief Executive Art Peck will step down immediately and be replaced on a temporary basis by Robert Fisher, the son of the company’s founders.
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The allegations further highlight the shrinking space for criticism under de facto leader Crown Prince Mohammed bin Salman, above. PHOTO: ALEXEY NIKOLSKY/SPUTNIK/KREMLIN//SHUTTERSTOCK
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U.S. charges that Saudi Arabia used Twitter employees to illegally spy on social-media users are the latest allegations that authorities in the kingdom have used the platform’s popularity to crack down on critics.
Saudis once embraced Twitter as a platform for free expression in a country where the government controlled traditional media. But the U.S. Justice Department’s allegations on Wednesday further highlight the shrinking space for criticism under de facto leader Crown Prince Mohammed bin Salman.
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A UAW picketer outside GM’s Lordstown, Ohio, plant in September. PHOTO: KEITH SRAKOCIC/ASSOCIATED PRESS
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General Motors’s closed Lordstown, Ohio, assembly plant—which became a flashpoint for President Trump and unionized workers angry over the company’s factory closures—has a new owner.
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Warehouses are emerging as New York City’s hottest property type, with the pace of growth in sales of these e-commerce distribution centers exceeding those of office and apartment buildings this year.
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The owner of struggling retailer Sears said it will shut 96 more Sears or Kmart locations by February, as the country’s once dominant department store chain disappears from most American malls.
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The Hong Kong listing would come five years after Alibaba’s record-setting initial public offering in New York that raised $25 billion. PHOTO: BRENDAN MCDERMID/REUTERS
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Alibaba Group is aiming to raise $10 billion to $15 billion in a second listing in Hong Kong this month, according to people familiar with the matter, reviving the planned offering even as the city’s political climate remains unstable.
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The maker of LaCroix, beset by falling sales and increased competition, faces another threat: Coca-Cola is launching a new flavored seltzer brand with caffeinated options.
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Nielsen Holdings said it plans to spin off its market-analytics business that measures retail and consumer behavior following a strategic review as it faces rapidly changing consumer habits.
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