Good morning. BlackRock notched a significant win in its yearslong effort to put the responsible investing controversy behind it, after Texas on Tuesday removed the asset manager from the list of companies that it accuses of boycotting the oil and gas industry.

Texas pension funds and state investment accounts can once again do business with the world’s largest asset manager, ending a nearly three-year blacklist from the largest state that has sought to punish Wall Street firms for their climate policies. 

• The background: Texas comptroller Glenn Hegar cited BlackRock’s withdrawal from two climate organizations and shift away from “policies that ignore the critical need for fossil fuel-based energy” as reasons for taking it off the blacklist, which had been in effect since August 2022. 

• Pushback: Investing firms and Wall Street banks provoked a backlash from activists and oil-producing states after warning about climate risk and rolling out products that considered environmental factors. BlackRock Chief Executive Larry Fink was once one of the loudest voices on those issues, writing in 2020 that “climate risk is investment risk.” BlackRock’s inclusion on the list led to some state entities pulling billions in funds managed by BlackRock.

• The takeaway: Signs are growing that BlackRock is putting that controversy in the rearview mirror. The Texas-blacklist escape comes a few months after it settled a lawsuit brought by the state of Tennessee. BlackRock and other Wall Street firms remain on blacklists in Oklahoma and Indiana. 

CrowdStrike cooperating with federal probes into July software outage.

CrowdStrike said it is cooperating with federal authorities in connection with an incident last July, in which a bug in the company’s software knocked millions of computers offline.

The cybersecurity firm said the Justice Department and the Securities and Exchange Commission have requested information related to the incident and other matters, according to a Wednesday filing with the SEC.

SEC weighing changes to foreign company disclosure requirements.

The Securities and Exchange Commission is weighing changes to how it defines foreign companies trading on U.S. exchanges, reports Risk Journal's Max Fillion.

The makeup of so-called foreign private issuers—which are exempted from some SEC filing requirements—has changed drastically since 2003, the agency said Wednesday as it opened up a 90-day public comment period on potential changes.

In announcing the review, SEC Chairman Paul Atkins said the regulator must ensure U.S. companies aren’t “competitively disadvantaged” by regulatory requirements.

• Established by the National Football League and Major League Baseball players unions, OneTeam produced a licensing windfall. But federal agents are probing whether some of the money it generated for players was siphoned off by union executives.
   
• A rising number of lawsuits accuse household brands of misleading consumers when they said their products were made in the United States.
   
• Former celebrity lawyer Thomas Girardi, one of the attorneys whose pollution case inspired the “Erin Brockovich” film, was sentenced to more than seven years in prison for embezzling tens of millions of dollars from his clients.
   
• Reddit is suing AI startup Anthropic for using the online discussion site’s data without a licensing agreement, a new front in the battle over how artificial-intelligence companies train their models.
   
• A U.S. appeals court has upheld the conviction of an Iranian-American businessman for “willfully” violating trade sanctions against Iran by sending heavy construction equipment overseas for reexport without a license.
   
• The European Union has banned all air carriers certified in Tanzania and Suriname from operating in European airspace over serious safety deficiencies identified by aviation experts, the European Commission said Tuesday.

U.S. services-sector activity unexpectedly contracts as tariffs raise uncertainty.

Activity among U.S. services firms sank unexpectedly in May, pointing to mounting uncertainty and price pressures for businesses prompted by President Trump’s tariff policies.

The Institute for Supply Management said Wednesday that its purchasing managers’ index for services providers fell to 49.9 in May, from 51.6 in April, in contrast to the small rise to 52.1 expected by economists polled by The Wall Street Journal.

• Tariff Threat Is Real, but Globalization ‘Too Big to Fail,’ DHL Executive Says
• Canada to Hold Off on Retaliating in Response to Higher U.S. Metals Tariffs

Trump megabill would expand deficits by $2.4 trillion, CBO estimates.

President Trump’s tax-and-spending megabill would increase budget deficits by $2.4 trillion over the next decade, compared with doing nothing, according to a Congressional Budget Office estimate released Wednesday.

The number underlines Republicans’ challenge in selling the measure as fiscally sound. The GOP-controlled House passed the legislation last month, and the CBO score was released just as Republican senators are making demands with additional price tags that will test party leaders’ ability to cobble together a version that can get to Trump’s desk quickly.

• Government Contractors Temper Outlooks as White House Seeks Spending Cuts
• Trump Administration Threatens to Pull Funding for California High-Speed Rail

• Iran’s supreme leader effectively rejected a U.S. proposal that allows temporary uranium enrichment in the country before ending it completely, forcing the White House to reconsider its approach as tensions mount over Iran’s nuclear program.
   
• President Trump said Wednesday that Russian President Vladimir Putin told him he would have to respond to Ukraine’s recent attack, dampening the prospects for immediate peace between Moscow and Kyiv.
   
• The Trump administration is redirecting a key antidrone technology earmarked for Ukraine to American forces, a move that reflects the Pentagon’s waning commitment to Kyiv’s defense.
   
• Four major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks.
   
• Even before deadly shootings near a Gaza humanitarian aid site this week, Boston Consulting Group had misgivings about its involvement in the American-Israeli project, according to people familiar with the firm’s work.
   
• Mexican state-owned oil company Petroleos Mexicanos said it expects to save around $185 million in administrative costs this year with layoffs of non-union staff as part of the company’s restructuring into a vertically integrated company following changes in Mexican laws.
   
• Global investment in clean-energy technology and infrastructure is set to double that of fossil fuels this year despite geopolitical and market turmoil, according to a report on the sector by the International Energy Agency.
   
• The U.K.’s statistics agency said it has identified an error affecting calculations of consumer-price inflation, raising new questions about the reliability of its data amid similar concerns in the U.S.

• President Trump on Wednesday signed a sweeping travel ban on 12 countries, largely in the Middle East and Africa, and introduced more-limited travel restrictions on seven others, reintroducing a controversial immigration policy that came to define the early days of his first term.
   
• Prospective parents using IVF will soon be able to rank embryos using genetic and other information in the hopes of extending the longevity of their offspring, according to the 25-year-old entrepreneur behind Nucleus Genomics, a DNA testing and analysis company.
   
• The Trump administration attacked Columbia University’s accreditation, arguing the school is in violation of federal antidiscrimination laws.
   
• Higher-income Americans, looking to stretch their dollars, have turned to the five-and-dimes.

Follow us on X at @WSJRisk. Send tips to our reporters Mengqi Sun at mengqi.sun@wsj.com, Richard Vanderford at richard.vanderford@wsj.com and Max Fillion at max.fillion@dowjones.com. 

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