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The Morning Risk Report: Justice Department Seeks as Much as $18.1 Billion From Purdue Pharma
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Federal prosecutors are investigating civil and criminal claims against Purdue Pharma.
PHOTO: JOHN MOORE/GETTY IMAGES
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Good morning. The Justice Department is seeking as much as $18.1 billion from bankrupt opioid maker Purdue Pharma, new filings show, a demand that could disrupt the company’s monthslong effort to reach a settlement with states and local communities that accuse it of helping fuel the opioid crisis.
The filings, made by the Justice Department in connection with Purdue’s bankruptcy case, also telegraph for the first time the nature and scope of yearslong criminal and civil investigations into the OxyContin maker.
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Federal prosecutors are investigating whether Purdue’s marketing and distribution of opioids violated criminal statutes including anti-kickback laws, misbranding under the Food, Drug and Cosmetic Act and conspiracy, according to the filings. On the civil side, they are looking at whether Purdue offered kickbacks to doctors and pharmacies to encourage them to prescribe and dispense more OxyContin, and whether the company transferred cash to hide money from creditors, the new filings show.
Purdue said Tuesday that the company is in discussions to resolve criminal and civil investigations with the Justice Department and had no further comment. The Justice Department declined to comment.
In the filings, the Justice Department valued its civil claims at $2.8 billion, which could be tripled under the law. In the event of criminal charges and a conviction, the government said it would seek a $6.2 billion fine and the forfeiture of potentially $3.5 billion more. The filings haven’t yet been made public but were viewed by The Wall Street Journal.
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From Risk & Compliance Journal
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Companies Should Bolster Blockchain Controls, COSO Says
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Companies should conduct thorough risk assessments and develop muscular internal controls to strengthen oversight of blockchain-technology projects, according to new guidance from the Committee of Sponsoring Organizations of the Treadway Commission.
The voluntary guidance is intended to guide boards, executives and auditors as they evaluate risks related to the use of blockchain in financial reporting, according to the organization, which advises companies on risk management and fraud deterrence.
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A consultant who used bribes to help two oil-services companies secure business with Brazilian state-owned Petróleo Brasileiro SA was fined and sentenced to probation. Zwi Skornicki pleaded guilty last year to helping pay bribes on behalf of TechnipFMC PLC and Keppel Offshore & Marine Ltd. On Tuesday, he was sentenced to 18 months of probation and ordered to pay a $50,000 fine, according to a spokesperson with the U.S. attorney’s office in Brooklyn, N.Y.
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Kodak Tower at the Eastman Kodak headquarters complex in Rochester, N.Y. PHOTO: MIKE BRADLEY/BLOOMBERG NEWS
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The Securities and Exchange Commission is investigating the circumstances around Eastman Kodak’s announcement of a $765 million government loan to make drugs at its U.S. factories, according to people familiar with the matter.
News of the loan last week caused Kodak’s shares to rise as high as $60, before falling to about $15 on Monday due to a dilution in the shares. Amid the heightened volatility, trading volume has surged. The price spike briefly produced a potential windfall for company executives who owned stock-option grants, some of which were granted on July 27, the day before the loan was officially announced.
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Google’s plan to buy health tracker Fitbit is facing monthslong delays after the European Union’s antitrust enforcer launched an in-depth inquiry, echoing recent concerns raised by Australian regulators.
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Anthony Levandowski, the engineer at the center of a yearslong legal battle between Google’s self-driving unit and Uber Technologies, was sentenced Tuesday to 18 months in prison on one count of stealing trade secrets. The judge in the case temporarily suspended the incarceration because of the coronavirus pandemic, Mr. Levandowski’s lawyer said.
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Futures-exchange operator CME Group agreed to pay a fine of up to $4 million to settle a long-running lawsuit with its regulator over accusations that former exchange employees leaked confidential trading information.
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Bayer said it swung to a net loss of €9.55 billion ($11.23 billion) in the second quarter on provisions for its multibillion-dollar settlement with plaintiffs alleging the company’s Roundup herbicides cause cancer, as the German firm slightly lowered its outlook due to the coronavirus pandemic.
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The White House withdrew Mike O’Rielly’s nomination for a new term on the Federal Communications Commission because of reservations he expressed about President Trump’s initiative to regulate how social-media platforms treat user-generated content, said people familiar with the matter.
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State agriculture officials are urging the U.S. Postal Service to stop delivering the mysterious seed packages that have been arriving in mailboxes across the country, mailings that federal officials believe are coming from China.
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Graham Ivan Clark, 17, appeared in court Saturday via a video monitor from jail. PHOTO: TAMPA BAY TIMES/ZUMA PRESS
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The Florida teenager at the center of the worst hack in Twitter’s history convinced a Twitter employee that he was a co-worker, according to prosecutors. The persuasion was a key leap forward during months of reconnaissance that ultimately granted the 17-year-old access to a host of Twitter accounts, including Barack Obama, Elon Musk and Kanye West, authorities allege.
In addition to his telephone persuasion, he seized control of a phone number through a technique called SIM-swapping, whereby a hacker convinces a carrier to assign a number to a new phone, said Hillsborough County, Fla., State Attorney Andrew Warren. He also set up several fake phishing pages, including one that resembled the company’s Okta login portal, a destination used for securely logging into company systems, according to Okta.
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The National Security Agency issued new guidance on Tuesday for military and intelligence-community personnel, warning about the risks of cellphone location tracking through apps, wireless networks and Bluetooth technology. The detailed warning from one of the nation’s top intelligence agencies is an acknowledgment that Silicon Valley’s practice of collecting and selling cellphone location information for advertising and marketing purposes poses a serious national-security risk to many inside the government.
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President Donald Trump has given ByteDance, parent of TikTok, until Sept. 15 to sell the app’s U.S. operations. U.S. developers fear that China, a country already largely closed to them, will become more so. PHOTO: ALEX PLAVEVSKI/EPA/SHUTTERSTOCK
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The Trump administration’s push for a sale of TikTok’s U.S. operations has poured fuel on tensions between Washington and Beijing, creating more uncertainty for U.S. app developers trying to break into China’s vast but largely closed digital market.
Microsoft’s public pursuit of the popular video-sharing app could calm nerves in both countries should a deal go through, digital trade experts and industry lobbyists say. But some fear Chinese retaliation against U.S. firms should negotiations fall apart.
Meanwhile, as the deal gets worked out, unfamiliar names such as byte and Triller have charged up the Apple App Store rankings because they offer short videos like those on TikTok.
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Beirut was hit by a powerful explosion at a warehouse in the city’s port Tuesday. The blast, which appeared to have been triggered by a fire, killed at least 100 people and left thousands more injured, the Red Cross said.
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The number of businesses seeking chapter 11 protection rose 52% in July from a year earlier as the coronavirus pandemic roiled the economy and upended businesses from coast to coast.
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Richard Branson’s Virgin Atlantic Airways filed for bankruptcy in the U.S. to put into effect a $1.5 billion rescue package designed to keep the airline solvent through the coronavirus pandemic and aid the billionaire’s broader efforts to stabilize his travel and tourism businesses.
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Investors are bracing for more defaults and disruptions in emerging markets after Argentina’s deal with creditors highlighted the pandemic’s stress on many developing economies.
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Businesses owned by Black people were hit especially hard by the coronavirus pandemic because of a combination of geography, limited reach of a key federal aid program and weaker ties to banks, a new report from the Federal Reserve Bank of New York finds.
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U.S. Daily Coronavirus Cases Inch Lower, Hitting About 45,000
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A member of the United Auto Workers executive board has resigned following an internal investigation. PHOTO: PAUL SANCYA/ASSOCIATED PRESS
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A top-ranking official at the United Auto Workers has resigned and the union said it has stopped its process of removing him following an internal investigation into allegations he sexually harassed subordinates.
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Ford plans to install Chief Operating Officer Jim Farley as its new CEO, putting the onus on the 58-year-old executive to produce the tangible results that eluded his predecessor Jim Hackett during a three-year run in the top job.
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An executive leading Walmart’s health-care ambitions is leaving the company, people familiar with the matter said, as the retailer navigates the operational complexity of the coronavirus pandemic.
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