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The Morning Risk Report: Consumer Lender Pays $21.7 Million Over Mexico Bribery Claims
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The SEC said a former World Acceptance Corp. subsidiary paid more than $4 million in bribes in an effort to make loans to government employees. PHOTO: ANDREW HARNIK/ASSOCIATED PRESS
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Good morning. World Acceptance Corp. agreed to pay $21.7 million to resolve claims that a former subsidiary in Mexico paid millions in bribes to that country’s government and union officials, the U.S. Securities and Exchange Commission said. The Greenville, S.C.-based consumer lender on Thursday entered into an administrative settlement with the SEC over the alleged violations of the U.S. Foriegn Corrupt Practices Act.
The former subsidiary, WAC de Mexico S.A. de C.V., paid more than $4 million in bribes in an effort to make loans to government employees and ensure they were repaid on time, according to the SEC. The bribes were deposited into bank accounts linked to the Mexican officials and distributed by an intermediary in the form of large bags of cash, the regulator said.
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The U.S. Department of Justice, which also investigated the matter, informed World Acceptance in a letter made public by the department Thursday that it had opted not to take action against the company, despite having found evidence of bribery.
“Having undertaken an extensive independent investigation led by our board and addressing these past issues, we emerge with a renewed focus on operating our business with integrity and in compliance with applicable laws and regulations,” Luke Umstetter, the company’s general counsel, said in a statement.
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The Capital One hack was one of the largest-ever data breaches of a big bank. PHOTO: JOHANNES EISELE/AGENCE FRANCE-PRESSE/GETTY IMAGES
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The Office of the Comptroller of the Currency fined Capital One Financial $80 million over a 2019 hack that compromised the personal information of about 106 million card customers and applicants—one of the largest-ever data breaches of a big bank.
The banking regulator said Capital One failed “to establish effective risk assessment processes” before transferring information-technology operations to the public cloud and “to correct the deficiencies in a timely manner.” Consent orders from the OCC and the Federal Reserve require the bank to make risk-management changes and beef up its cybersecurity defenses. The bank said it has already made many of the required changes.
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Wayne LaPierre has run the National Rifle Association for three decades. PHOTO: DANIEL ACKER/BLOOMBERG NEWS
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New York Attorney General Letitia James filed a lawsuit seeking to dissolve the National Rifle Association, alleging that insiders violated the state’s nonprofit laws by illegally diverting tens of millions of dollars from the group through excessive expenses and contracts that benefited relatives or close associates.
The extraordinary move against the nation’s largest gun-rights group comes after an 18-month investigation by Ms. James. As a nonprofit registered in New York since its founding in 1871, the NRA is regulated by the attorney general’s office. The NRA responded by filing a lawsuit in New York state court seeking an injunction against Ms. James, claiming she was targeting the organization for political reasons.
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President Trump issued a pair of executive orders that would impose new limits on Chinese social-media apps TikTok and WeChat, escalating tensions with Beijing and effectively setting a 45-day deadline for an American company to purchase TikTok’s U.S. operations.
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President Trump signed an executive order to help increase production of essential medicines, medical equipment and protective gear in the U.S. The order includes a “buy American” requirement for government agencies such as the Department of Health and Human Services, Department of Veterans Affairs and the Defense Department, said Peter Navarro, Mr. Trump’s trade adviser.
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Brian Hook, the State Department’s special envoy for Iran, is stepping down from his post, having overseen the Trump administration’s “maximum pressure” campaign that impoverished the country without drawing Tehran back to the nuclear negotiating table.
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President Trump placed tariffs on some Canadian aluminum, a little over a month after implementing the new U.S.-Mexico-Canada Agreement designed to lower trade barriers across North America. The White House justified the tariffs using a national security provision and argued that a depressed U.S. aluminum industry threatens U.S. national security.
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The Sheriff’s office of New York City is assuming new duties to control the spread of the coronavirus pandemic, including social-distancing enforcement and the operation of checkpoints, to ensure compliance with quarantine orders applying to out-of-state visitors.
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The Trump administration plan would require rule-making by the Securities and Exchange Commission, which ultimately oversees the auditing standards of companies whose shares are traded in the U.S. PHOTO: ANDREW HARRER/BLOOMBERG NEWS
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Chinese companies with shares traded on U.S. stock exchanges would be forced to give up their listings unless they comply with American audit requirements under a plan recommended Thursday by the Trump administration.
The proposal addresses a long-simmering dispute over U.S. regulators’ inability to inspect the financial audits of Chinese companies that sell shares in U.S. markets. It follows bipartisan legislation that passed the Senate in May, which would give Chinese companies that don’t comply three years to delist in the U.S. and find a new exchange.
Under the plan, Chinese firms that are already listed on the New York Stock Exchange and Nasdaq Stock Market would have to comply by 2022—or give up their listings on those exchanges. To comply, Chinese auditors would have to share their work papers with the Public Company Accounting Oversight Board.
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People waited in Midwest City, Okla., to speak with representatives of the Oklahoma Employment Security Commission about unemployment benefits. PHOTO: SUE OGROCKI/ASSOCIATED PRESS
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Filings for jobless benefits fell to their lowest level since the coronavirus hit the U.S. in March—a sign layoffs eased somewhat in a still struggling labor market—but remained at historically high levels for the 20th straight week. Initial unemployment claims fell by a seasonally adjusted 249,000 to 1.2 million for the week ended Aug. 1, the Labor Department said Thursday, well above the pre-pandemic record of 695,000 in 1982.
The number of newly reported coronavirus cases across the country remained short of highs seen in late July, but a drop in testing in some states could be masking the extent of the virus’s spread.
Meanwhile, the State Department lifted a nearly five-month-old advisory warning Americans against international travel, citing overall improvements in the global pandemic.
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Days after a massive explosion tore through parts of central Beirut, scores of people remain unaccounted for, sending relatives on frantic searches of hospitals, morgues and the badly damaged apartment blocks near the waterfront.
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At least 137 people have been confirmed dead and about 5,000 others were injured after fire ignited a cache of ammonium nitrate in a warehouse at the port. Among the missing: port workers, soldiers and firefighters who arrived to battle the blaze and were then engulfed by the ensuing explosion.
The disaster, and reports that the dangerous chemical had been kept at the port for years despite the risks, has fueled anger at the government and the rest of the tiny Mediterranean nation’s political elite, who were already the target of protests over corruption and ineptitude.
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Ben Meng cut ties with a real-estate developer on a high-profile hometown property project. PHOTO: MAX WHITTAKER/REUTERS
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California Public Employees’ Retirement System Investment Chief Ben Meng has resigned after about a year and a half in the position at the nation’s largest pension fund, according to the fund. Meanwhile, a prominent board member expressed disappointment over what she said was Mr. Meng’s failure to adhere to conflict-of-interest rules.
The California Fair Political Practices Commission on Tuesday received a complaint about Mr. Meng, according to spokesman Jay Wierenga. The FPPC investigates civil violations of laws concerning political campaign spending disclosures and public officials’ conflicts of interest. The agency will review the complaint to determine whether it is worthy of an investigation, Mr. Wierenga said. Mr. Meng is required to file an FPPC form—a statement of economic interest —listing his investments.
Mr. Meng was quoted in a Calpers news release saying “at this time it’s important for me to focus on my health and on my family and move on to the next chapter in my life.”
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ICE is betting that the cumbersome, often paper-based process of closing a mortgage deal will go digital in the coming decades. PHOTO: AL DRAGO/BLOOMBERG NEWS
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Intercontinental Exchange Inc., the owner of the New York Stock Exchange, said it would acquire mortgage-software firm Ellie Mae, a landmark bet by the exchange giant on the digitization of the U.S. mortgage industry.
The deal between Atlanta-based ICE and private-equity firm Thoma Bravo is valued at about $11 billion, including $9.25 billion in newly issued debt and $1.75 billion in stock. It is expected to close in the third or fourth quarter of 2020, pending regulatory approval.
Ellie Mae’s technology has been used to help automate the closing of millions of home loans. Based in Pleasanton, Calif., the firm handles the technology that underpins the entire home-loan origination process, and its services are used in particular by loan officers who work at nonbank mortgage lenders, analysts say.
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