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The Morning Risk Report: Fintechs Need to Be Regulated More Like Banks, Says Report From Global Regulator Group
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Financial technology firms, such as Apple Pay, have grown in recent years and become important players in areas traditionally handled by banks. PHOTO: CHRIS RATCLIFFE/BLOOMBERG NEWS
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Good morning. Calls are growing louder to impose more stringent regulation on technology giants that spill over into financial services.
A paper published by the Bank for International Settlements, a consortium of central banks and financial regulators, said tech companies that play a critical role in payments and other areas should be subject to stricter regulatory scrutiny that considers issues beyond traditional market risks.
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Banks and insurers can be designated as systemically important. But regulations in most countries don’t address the “potential (possibly global) systemic impact of big-tech operations and of possible spillover effects to the financial sector and across all of the activities that big techs perform,” according to the report. Central banks should study the need for “specific safeguards” for big techs, the paper said.
Financial technology firms have grown in tremendous scale in recent years and have become important players in areas traditionally handled by banks, including processing payments through the financial system and providing credit to consumers and businesses. Payments company Square Inc. on Sunday announced its biggest deal ever to acquire Afterpay Ltd. in an all-stock deal worth around $29 billion.
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From Risk & Compliance Journal
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Neogen Discloses Iran Sanctions Probe
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Food-safety and veterinary-products company Neogen Corp. said it received an administrative subpoena from the U.S. Treasury Department’s sanctions enforcer related to business dealings involving parties located in Iran.
The Lansing, Mich.-based company, which disclosed the subpoena in its annual report filed with the U.S. Securities and Exchange Commission on Friday, said it received the subpoena from Treasury’s Office of Foreign Assets Control in March 2020.
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Allianz has been sued by institutional investors over the Structured Alpha funds.
PHOTO: CHARLES PLATIAU/REUTERS
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Allianz SE shares sank after the German financial giant said the Justice Department is investigating its hedge funds that caused investors significant losses during the pandemic-related market downturn early last year.
Allianz on Sunday said its future earnings could be materially hit by the current investigations, which include the DOJ’s inquiry as well as a probe launched by the U.S. Securities and Exchange Commission last year. The insurer said it couldn’t estimate the size of any potential fines and therefore hasn’t set aside provisions.
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Ernst & Young agreed to settle without admitting or denying misconduct. PHOTO: SIMON DAWSON/BLOOMBERG NEWS
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Ernst & Young LLP will pay $10 million to settle a regulatory investigation into allegations that it improperly obtained confidential information in pursuit of a contract to audit a public company’s books. The Securities and Exchange Commission also fined four accountants allegedly involved in the misconduct.
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President Biden’s looming decision about who should be the next Federal Reserve chairman is prompting reviews of the current chief’s record on bank regulation and how strict the postcrisis rulebook should be for Wall Street.
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A well-connected Turkish businessman currently sits in a Vienna jail, awaiting his fate in an extradition contest between the U.S. and Turkey. Both want him on charges of laundering proceeds from a U.S. renewable-energy tax credit fraud, and where he winds up could affect already strained relations between the U.S. and a NATO ally.
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Theranos Inc. patients: the emerging wild card in the trial of Elizabeth Holmes
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The New York state attorney general’s investigation into sexual-harassment allegations against Gov. Andrew Cuomo has entered its final stages and is expected to wrap up this month, people familiar with the inquiry said.
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China, the biggest source of new carbon emissions, plans to keep expanding coal-burning plants in the country. PHOTO: QILAI SHEN/BLOOMBERG NEWS
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Banks are cutting off funding for new coal-fueled power plants in poorer Asian countries, a move that could hasten the shift toward cleaner energy sources in some of the fastest-growing parts of the world.
Asian financiers provide the bulk of funding for new coal projects in countries such as Vietnam and Bangladesh, after U.S. and European lenders largely stopped greenlighting coal deals over carbon-emissions concerns.
But most key financiers in Japan and South Korea as well as some in China have signaled in recent months that they are planning to stop or slow the flow of money for projects outside their borders as their governments increasingly view overseas coal projects as risky investments.
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Shares of Tencent Holdings Ltd. and rivals plummeted Tuesday after a state-owned Chinese newspaper criticized online gaming as “opium for the mind,” fueling investor concerns that the companies’ popular games could be swept up into a broader regulatory crackdown.
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Some employees were excited to go back to the office, but surging Delta variant cases are reviving safety concerns. PHOTO: MARTHA ASENCIO RHINE/TAMPA BAY TIMES/ZUMA PRESS
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With scores of U.S. companies planning to return to offices in full force in a few weeks, workers are trying to make sense of changing face-mask guidelines and rising virus cases, along with new research about how easily the virus strain can be transmitted. The calculations and recalculations of risk are leaving many stressed, upset or simply in limbo.
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Junior bankers at Goldman Sachs Group Inc. are getting a big raise.
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With $5 crop tops and $15 full-length dresses, the Chinese apparel company Shein is winning over America’s younger shoppers and offering proof that a clothing company from China can build a brand with traction in the West. Third-party suppliers say Shein has a sophisticated supply chain where orders are distributed to thousands of factories in China, enabling Shein to pump out new products at low prices.
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