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The Morning Risk Report: EU Moves Closer to Creating U.S.-Style Magnitsky Act
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The European Union’s new foreign-policy chief, Josep Borrell, said in Brussels on Monday there was a ‘strong consensus’ that a human-rights regime should be launched. PHOTO: STEPHANIE LECOCQ/SHUTTERSTOCK
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Good morning. European Union foreign ministers advanced plans to create a new human-rights sanctions regime that could closely mirror the U.S. Magnitsky Act and spark fresh tensions with Moscow.
The ministers agreed that EU officials should start drafting new legislation that could be used to target government officials or other individuals involved in human-rights abuses around the world. A final decision must still be taken by EU member states once the framework is drawn up, a process that could take months amid concerns by some member states, EU diplomats said.
[Continued below…]
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The U.S. Magnitsky Act, which was signed into law by the U.S. in 2012, initially targeted human-rights abusers in Russia with travel bans and asset freezes. The act was named after Sergei Magnitsky, a lawyer hired by a Western investment firm who died in a Moscow prison after alleging mistreatment.
The U.S. Treasury on Monday levied sanctions on six former or current foreign government officials and their networks in Europe, Asia and Latin America for alleged corruption and human-rights abuses. A total of 17 individuals and 29 entities were added to the U.S. blacklist, the Treasury said. As of Monday, the Treasury has designated at least 170 individuals and entities under the Magnitsky Act.
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From Risk & Compliance Journal
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Where Do SARs Go When They Are Filed?
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WASHINGTON—For banks, filing suspicious activity reports can be a mysterious process. Once they’re sent, it’s hard for compliance staff to know what law-enforcement officials are doing with the information.
“Please don’t think it goes unaddressed—it does,” Stacey Ivie, a detective in Alexandria, Va., told attendees of a financial crimes enforcement conference hosted Monday by the American Bankers Association and the American Bar Association.
Ms. Ivie, a member of a SAR review team in Virginia, said it is important to develop points of contact among law enforcement and to write the reports so that officials who aren’t industry experts can understand them.
Start with a strong headline and make it clear and concise, she said. Explain what’s normal and what’s not. Include contact information for bank employees to call for more information.
If a bank receives a subpoena related to a SAR, it should reach out to the listed law enforcement contact with questions about the requested information, said David Rybicki, a deputy assistant attorney general for the U.S. Justice Department’s criminal division. “Sometimes the law enforcement organization may not get the phraseology completely right,” he said.
—Dylan Tokar
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Jefferies has agreed to pay nearly $4 million to resolve accusations it mishandled transactions involving foreign companies’ shares. PHOTO: RICHARD DREW/ASSOCIATED PRESS
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Jefferies has agreed to pay nearly $4 million to resolve accusations it mishandled transactions involving foreign companies’ shares and failed to properly supervise securities-lending workers.
The latest actions, which were handled administratively by the Securities and Exchange Commission, are part of a wide-ranging probe of misconduct in the market. The SEC accused Jefferies of borrowing “pre-released” American depositary receipts from other brokers that it should have known weren’t backed by foreign shares.
ADRs are certificates that represent shares in a foreign company held in custody at a depositary bank. Jefferies declined to comment.
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The lucrative Pentagon cloud-computing deal was awarded to Microsoft over Amazon.com. PHOTO: STAFF/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Amazon said President Trump exerted “improper pressure” on the Pentagon to keep a lucrative cloud-computing deal from going to his perceived enemy, company founder Jeffrey Bezos.
In a complaint filed in the U.S. Court of Federal Claims in Washington, Amazon said the president “launched repeated public and behind-the-scenes attacks” on the contract and the company to steer the contract away from Amazon and Mr. Bezos, according to the complaint, which was made public Monday.
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The Securities and Exchange Commission has reached a settlement with former U.S. Rep. Christopher Collins, in connection with an insider-trading case involving his son and an Australian biotechnology company. Mr. Collins has agreed to be permanently barred from acting as an officer or director of any public company, the SEC said.
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A stalemate between the U.S. and other members of the World Trade Organization, including the European Union and China, stands to cripple the organization’s top court, threatening the global body’s survival. At stake are international rules negotiated over five decades by the U.S. and Europe to boost global trade.
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A federal judge told lawyers fighting over T-Mobile US Inc.’s more than $26 billion bid for Sprint to skip their customary opening arguments so they could start questioning witnesses, a sign he is seeking a speedy trial.
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A California woman has agreed to plead guilty to a criminal charge alleging she had someone take online classes for her son so he could graduate from Georgetown University, the newest parent to be charged in connection to the sprawling college-admissions cheating scheme led by admitted mastermind William “Rick” Singer.
Also...
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SEC Planning More Changes to Auditor-Independence Rules
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U.S. Securities and Exchange Commission Chairman Jay Clayton said Monday that he expects to further change rules governing auditor independence in the next year, the latest move to re-evaluate the close relationship between companies and external auditors.
The office of the regulator’s chief accountant is weighing whether to propose rule changes in an effort to make companies’ capital accumulation easier and to protect investors, the SEC has said. The agency included a proposal to amend certain provisions of the auditor independence rules as part of a biannual short-term agenda of planned rule making by federal agencies published in November.
Independence should be at the front of audit committee members’ minds, Mr. Clayton said at a conference hosted by the American Institute of Certified Public Accountants. “I think that’s just a question that the audit committee should be asking themselves on a fairly regular basis,” he said.
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Companies increasingly talk about being climate positive, but they disagree on what that means and how to measure it—a problem business leaders plan to start hashing out this week.
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Steam and ash spewed from the crater after its explosion. Volcanologists had noted an uptick in volcanic activity ahead of the eruption.HANDOUT/AGENCE FRANCE-PRESSE/GETTY IMAGES
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At least five people died, and eight more were missing and feared dead, after a volcano erupted on a New Zealand island just as tourists trekked to the crater’s edge Monday.
Images captured by a hazard-monitoring camera on White Island appear to show people near the smoking crater seconds before the volcano erupted. Police said most of the people on the island were from Royal Caribbean International’s Ovation of the Seas cruise ship, comprising one crew member and 37 tourists.
Monday’s disaster illustrates the dangers that tourists face when getting close to volcanoes, given that experts don’t know when they might erupt.
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Investment firm Tiger Global Management slashed its valuation of e-cigarette startup Juul Labs to $19 billion, a sign of a broader reassessment investors are making of several onetime Silicon Valley darlings.
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Fannie Mae and Freddie Mac are pulling back on some mortgages meant to make homeownership more affordable, their latest effort to rein in risk at the behest of their regulator.
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A Huawei store in Beijing. The U.S. has blacklisted Chinese companies such as giant Huawei Technologies Co. PHOTO: NG HAN GUAN/ASSOCIATED PRESS
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China has introduced a sweeping policy to swap the foreign technology products the government uses with indigenous ones, people familiar with the matter said, doubling down on efforts to decouple its technology sector from the U.S. amid the trade war. Chinese government agencies and critical infrastructure providers such as telecom operators and power grids must start allocating a certain ratio of information technology procurement contracts to domestic suppliers, the people said.
The initiative, introduced last year but not made public, comes amid trade tensions between Washington and Beijing and the U.S. blacklisting of Chinese companies such as the giant smartphone maker Huawei Technologies. China’s attempts to ease its reliance on U.S. technology are also driven by a fear of backdoors into its operations, analysts say.
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Samir Assaf, HSBC’s longtime global banking and markets chief executive, will leave his job in March and become chairman of corporate and institutional banking. PHOTO: SIMON DAWSON/BLOOMBERG NEWS
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HSBC Holdings pruned its top ranks and announced new hires as part of a strategic revamp, with three of its most senior executives set to retire or move into other roles. The reshuffle comes after the bank’s board ousted CEO John Flint in August after just 18 months in the role, in what Chairman Mark Tucker said was a needed leadership change to address worsening conditions in HSBC’s two home markets.
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Away, an online seller of luggage that investors valued at $1.4 billion this year, said Chief Executive Steph Korey is stepping down from the post. Ms. Korey will become executive chairman of the New York startup. Stuart Haselden, formerly chief operating officer at Lululemon Athletica, will succeed her as CEO. The news comes after an article in the Verge last week criticized Ms. Korey’s management style, citing several former employees unhappy with the work environment. Ms. Korey apologized in a statement on Twitter last week.
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Swedbank AB announced a new executive team and a series of organizational changes as it seeks to regain trust amid a money-laundering probe while also creating a simpler and clearer decision-making structure to facilitate its strategy. As part of the changes, the number of group management members falls to 14 from 17, it said.
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The factory floor at Pioneer Service Inc.
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College-educated workers are taking over the American factory floor. New manufacturing jobs that require more advanced skills are driving up the education level of factory workers who in past generations could get by without higher education, an analysis of federal data by The Wall Street Journal found.
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PG&E expects to take a fourth-quarter charge of $4.9 billion in connection with a new $13.5 billion deal to settle claims from wildfire victims, the company disclosed in a securities filing. The new charge, which PG&E expects to take by year’s end, would raise the company’s total recorded fire-related charges to over $25 billion.
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Kylie Jenner’s cosmetics brand started selling in Ulta Beauty stores last year. PHOTO: DAVID DEE DELGADO/GETTY IMAGES
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American shoppers will buy almost anything online. But when it comes to household mainstays, from razors to tampons, the old-fashioned store still beckons. That reality is hitting some of the world’s biggest consumer-products companies, which collectively have invested billions of dollars in startups in recent years that sold directly to consumers.
More than three years after Unilever, the European giant behind Dove soap and Axe body sprays, paid $1 billion to buy Dollar Shave Club, the razor subscription service still isn’t making money, according to people familiar with the matter. Procter & Gamble Chief Executive David Taylor said his company is still figuring out how to turn recently acquired online brands into profitable businesses.
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NortonLifeLock Inc., the $16 billion consumer-software company, has attracted deal interest from a handful of companies including rival McAfee, people familiar with the matter said.
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Deutsche Bank said it is making progress cutting costs and stabilizing businesses weakened from revenue declines in its effort to convince investors that an ambitious five-month-old reorganization is on track.
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