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The Morning Risk Report: How the Justice Department Incentivizes Companies to Invest in Compliance
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If a company has a strong compliance program, it should be given special consideration, says Matt Miner, the deputy assistant attorney general overseeing the Justice Department's criminal division. PHOTO: U.S. JUSTICE DEPARTMENT
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Good morning. The U.S. Justice Department in recent years has expanded beyond its primary mission—to investigate and prosecute—into a role that’s more about explaining what measures companies can take to avoid criminal investigations in the first place.
The department has created special programs and guidance designed to encourage companies to build systems that prevent employees from paying bribes or committing other crimes. It has also trained prosecutors on the intricacies of corporate compliance, and how to tell if a company’s program is the real deal.
[Continued below...]
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Yet some chief compliance officers are still skeptical that the department has the expertise or resources to meaningfully assess the work they do—or a genuine interest in crediting companies for it if they run afoul of the law.
Matt Miner, a deputy assistant attorney general overseeing the Justice Department’s criminal division, wants to convince them otherwise. He spoke with Risk & Compliance Journal's Dylan Tokar about how the department is incentivizing companies to invest in compliance, and why those that do should be given special consideration.
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Holiday Schedule for The Morning Risk Report
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The Morning Risk Report will not be published for the remainder of the week. We will be back on Dec. 30. Happy holidays!
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Auto maker said it is cooperating the investigation and declined further comment PHOTO: LUCY NICHOLSON/REUTERS
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The Securities and Exchange Commission has opened an investigation into German luxury car maker BMW, a company spokesman said on Monday.
The SEC is looking into BMW's sales practices in the U.S. to determine whether the Munich-based auto maker engaged in a technique known as sales punching, according to people familiar with the matter.
Sales punching occurs when a company boosts sales figures by having dealers register cars as sold when the vehicles actually are still on car lots.
“We have been contacted by the SEC and will cooperate fully with their investigation,” the spokesman told The Wall Street Journal, declining to elaborate.
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Last fall, as Igor Fruman and Lev Parnas barnstormed Ukraine on behalf of President Trump’s personal lawyer, cajoling officials to investigate Joe Biden and his son, the two Florida businessmen were also pursuing a side effort to cash in on the country’s dire need for natural gas. The men had no experience in the energy sector. But with the Trump administration pushing to export U.S. natural gas, Messrs. Parnas and Fruman sensed an opportunity to leverage their connections to the president’s attorney, Rudy Giuliani, and other power brokers in the U.S. and Ukraine.
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Sharp movements in the British pound shortly before the release of U.K. economic data have dissipated since the government curtailed officials’ access to nonpublic information, according to a new academic study. In early 2017, The Wall Street Journal reported on a pattern of unusual movements in the pound and U.K. government bond futures in the minutes or hours before the release of sensitive economic reports. The phenomenon, shown in an analysis by Alexander Kurov, a finance professor at West Virginia University, suggested that some market participants were trading with early knowledge of the official statistics.
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China will cut import tariffs for frozen pork, pharmaceuticals and some high-tech components starting from Jan. 1, a move that comes as Beijing and Washington try to complete a phase-one trade deal.
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Lev Parnas and Igor Fruman leveraged their ties to seek a natural gas deal with Naftogaz. Their business plan, which was ultimately unsuccessful, ran in parallel with their efforts to prompt an investigation of Hunter Biden.
Also...
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PHOTO: PHOTO: GETTY IMAGES/ISTOCKPHOTO
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Regulators and investors are focusing more attention on how private-equity firms value assets they own, making the valuation process more complicated and costly.
Private-equity firms are spending more time and money making sure their valuations are reasonable, up-to-date and consistent. Although their efforts mean investors get more accurate information, they also put a heavier operational burden on firms’ deal teams and back-office staff, and can come with increased costs for investors.
The heightened scrutiny has prompted more firms to turn to outside valuation consultants or third-party service providers for help. It has also created a growing ecosystem of different technologies and service providers focused in part or wholly on valuations.
The Securities and Exchange Commission now regularly questions firms’ valuation methods during exams, looking for inconsistencies in how values are assigned.
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Finance chiefs who spent the past decade brainstorming how to avoid the brunt of the so-called Cadillac tax can close their spreadsheets and exhale. President Trump on Friday signed a nearly $1.4 trillion spending package to fund the government that included the tax’s repeal as a policy provision.
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Boeing CEO Dennis Muilenburg on Capitol Hill in October. PHOTO: ANDREW HARNIK/ASSOCIATED PRESS
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Boeing ousted CEO Dennis Muilenburg as it struggles with an extended crisis caused by two fatal crashes of its 737 MAX jetliner and friction with regulators over returning the grounded planes to service.
The aerospace giant said David Calhoun, a longtime Boeing director with deep ties to the aviation and private-equity industries, will become CEO next month. He was named chairman in October in a boardroom shake-up.
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Todd Combs, one of Warren Buffett’s top lieutenants, is set to become chief executive of Berkshire Hathaway’s car insurer Geico on Jan. 1, the company said Monday.
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An advisory agreement between Deutsche Bank and Cerberus Capital Management is expected to end at the end of this year, people familiar with the matter said, terminating an unusual relationship that drew both praise and criticism. The arrangement made New York private-equity firm Cerberus both a paid adviser to and a top shareholder in the German lender. Cerberus holds 3% of Deutsche Bank shares through an entity controlled by the firm's co-founder and co-chief executive, Stephen Feinberg.
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Credit Suisse directors said the surveillance was “unacceptable and completely inappropriate.” PHOTO: ARND WIEGMANN/REUTERS
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Credit Suisse Monday confirmed a second episode of bank-mandated spying on senior executives this year, deepening scrutiny of the Swiss bank’s surveillance practices and decision-making by top management.
In a statement, the bank blamed former Chief Operating Officer Pierre-Olivier Bouée for ordering a third party to spy on Peter Goerke in February. Soon after he was tailed, Mr. Goerke was removed from the bank’s executive board and gave up his job as global head of human resources to become a senior adviser.
Swiss regulator Finma said over the weekend it will appoint an independent auditor to investigate Credit Suisse’s surveillance activities and handling of electronic communications. One question surrounding the spying debacles is how text messages and other communications happened off archived bank networks or otherwise escaped monitoring.
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TikTok currently doesn’t have a headquarters, although its main office, which runs U.S. operations, is in Los Angeles. PHOTO: LIONEL BONAVENTURE/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Bytedance is considering setting up a global headquarters for its hit video-sharing app TikTok outside of China, part of its ongoing efforts to shake off its Chinese image, people familiar with the company said.
Singapore is one city being considered, the people said. Other possible locations include London and Dublin, with no U.S. cities on the shortlist, one person said. TikTok currently doesn’t have a headquarters, although its most-senior executive is based in Shanghai and its main office, which runs U.S. operations, is in Los Angeles.
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