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The Morning Risk Report: SEC’s Waiver Policy Gives Companies More Certainty
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The SEC’s new policy doesn’t substantively change its decision-making process on waivers, but it may make it easier for companies to enter into settlements. PHOTO: JONATHAN ERNST/REUTERS
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Good morning. A recent shift in a Securities and Exchange Commission policy could give companies facing allegations of wrongdoing more certainty about the potential consequences of a settlement with the agency, lawyers tell Risk & Compliance Journal’s Dylan Tokar.
SEC Chairman Jay Clayton this month said the agency will notify companies about the decision to grant a so-called disqualification waiver when it approves or denies a settlement.
[Continued below…]
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Under securities law, a company can be automatically disqualified from a range of business activities if it is subject to an SEC enforcement action—unless it receives a waiver from the agency. In most cases, the SEC’s commissioners vote on whether to grant a waiver after receiving a recommendation from the agency’s staff. If the commission does deny a waiver, a company will have five days to decide whether to withdraw from the settlement, Mr. Clayton said in a public statement on July 3.
The new policy doesn’t substantively change the SEC’s decision-making process on waivers, but it may make it easier for companies to enter into settlement agreements, said David Kornblau, a securities enforcement lawyer at Covington & Burling LLP. “It allows the companies to make those decisions in a much more certain and rational way,” he said.
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From Risk & Compliance Journal
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The logo of Société Générale SA on the bank's headquarters in Paris. PHOTO: CHRISTOPHE SIMON/AGENCE FRANCE-PRESSE/GETTY IMAGES
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The grandchildren of the founders of a Cuban bank sued French bank Société Générale SA under a newly revived provision of a U.S. law that permits legal action by U.S. citizens or entities against companies doing business on property confiscated by the Cuban government. The lawsuit, filed last week in federal court in Florida, is among the latest since the U.S. lifted the suspension of a provision of the 1996 Helms-Burton Act.
Javier Lopez, a partner at law firm Kozyak Tropin & Throckmorton PA in Miami who serves as one of the lawyers representing the 14 grandchildren in the case, tells Risk & Compliance Journal’s Mengqi Sun that his clients are seeking $792 million in damages from Société Générale.
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Facebook said its digital money would never compete with national currencies or undermine the role of central banks. PHOTO: DADO RUVIC/REUTERS
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Facebook Inc. said its Libra cryptocurrency would be regulated by Switzerland’s financial watchdog, adding the digital money would never compete with national currencies or undermine the role of central banks. But the Trump administration raised national security concerns about the plan as a chorus of U.S. and international officials voiced resistance to the tech giant operating its own digital money.
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European foreign ministers said the 2015 nuclear deal with Iran can still be saved, despite recent U.S. and Iranian threats to further undermine the agreement. Since the start of July, Iran has breached two limits in the 2015 deal on its stockpile of low-enriched uranium and the level at which it enriches uranium. Enriched uranium can be used as fissile material in a nuclear weapon.
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A federal judge cut down by $55 million a verdict tying Bayer AG ’s Roundup weedkiller to cancer, as the company continues to battle thousands of similar claims throughout the U.S. The ruling comes in the case of Northern California resident Edwin Hardeman, who won a more than $80 million jury verdict in a case linking his non-Hodgkin lymphoma to yearslong Roundup use. His March trial was the second of three that Bayer has lost over the safety of Roundup, a product it acquired last year through its purchase of Monsanto Co.
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Nomura Securities International Inc. agreed to pay customers $25 million after the U.S. Securities and Exchange Commission said bond traders at the investment bank inflated its profit on the sale of commercial and residential mortgage-backed securities. Nomura traders made false and misleading statements about prices at which Nomura had bought securities, the profit the firm would receive on customers’ potential trades and the current owners of the securities, the SEC said.
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Former South African President Jacob Zuma defended himself in his first appearance at a corruption commission, denouncing more than two decades of allegations against him as an elaborate smear concocted by foreign intelligence agencies and remnants of the country’s old apartheid-era security services. Mr. Zuma has long denied allegations he abused state business for the gain of family and friends.
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Master perfumer Steve Nicoll at an International Flavors & Fragrances Inc. lab in New Jersey. The company’s security team reviews employees’ identity credentials when they switch jobs internally, a process that can take time. PHOTO: SASHA MASLOV FOR THE WALL STREET JOURNAL
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The Philippines is binding its telecommunications future to China’s. The country got its first taste of next-generation 5G services in late June with gear supplied by Huawei Technologies Co. This month, a new carrier backed by state-owned China Telecommunications Corp. will begin rolling out a network. The moves are a blow to the U.S., which has in recent months pushed allies to shun Huawei. U.S. officials contend Chinese companies could be compelled to conduct espionage for Beijing.
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Hackers often attack company networks using compromised login information, a challenge for cybersecurity leaders who want to protect data and systems while allowing employees the access they need. Experts say the solution is secure yet flexible identity-management tools and practices—but figuring out what’s best isn’t easy. Recommendations include regular and thorough review of individual employees’ access to sensitive data and the use of tools to quickly revoke credentials.
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A Unilever factory in Valinhos, Brazil. The plant, which makes products including Dove soap and ice cream, was the site of a test by Unilever and Microsoft of a technology project to create a "digital twin" of the inner workings that uses artificial intelligence and other analytics. PHOTO: UNILEVER
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Consumer-goods giant Unilever PLC is building virtual versions of its factories, using data streaming from sensor-equipped machines to create digital models that can track physical conditions and enable testing of operational changes. The “digital twin” strategy uses machine learning and artificial intelligence to analyze torrents of information from connected devices, and is aimed at making production more efficient and flexible.
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Furniture company IKEA is closing its only manufacturing site in the U.S., shifting the operations to Europe where it says production costs are lower. The company’s Danville, Va., facility will be closing in December, resulting in about 300 job cuts. The plant, which opened in 2008, produces wooden shelves and storage units sold in IKEA stores in the U.S. and Canada.
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Citigroup’s global consumer business performed well, but its corporate business was less robust, according to WSJ’s Heard on the Street. PHOTO: MARK KAUZLARICH/BLOOMBERG NEWS
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Citigroup’s quarterly results reflected the conventional wisdom about the current state of the global economy: U.S. consumers are going strong while corporate sentiment—particularly in Asia—is weakening due to trade tensions. But there is another message in the results: the threat of lower interest rates that hangs over Citi and all of its U.S. peers. The most international U.S. bank reported better-than-expected earnings for the second quarter, thanks largely to a one-time gain on a stake it holds in electronic bond-trading platform Tradeweb, which went
public in April. Excluding this, earnings were more or less in line with estimates. Citi’s shares fell slightly on Monday.
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Rio Tinto PLC said it will take longer and cost more than expected to finish building one of the world’s biggest copper mines in Mongolia’s remote southern Gobi desert. Prospects of an around two-year delay to an underground mine at the Oyu Tolgoi operation risks worsening a global shortage of copper that is predicted to deepen in coming years. Copper is an industrial commodity used in everything from smartphones to electric cars and power cables, and demand has been rising as households in China and India become wealthier.
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PG&E Corp. said it is working to repair nearly 10,000 problems it discovered throughout its electrical system as it steps up efforts to prevent its equipment from sparking more wildfires. The company posted to its website the results of an accelerated inspection process that began late last year. The company said it discovered more than 1,000 immediate safety risks and has repaired nearly all of them, as well as thousands of other lower-priority ones. But it is still working through more than 3,700 repairs as California’s wildfire season proceeds.
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Charles Schwab has more than $3.5 trillion in client assets. PHOTO: KEVIN HAGEN FOR THE WALL STREET JOURNAL
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Charles Schwab Corp. is in talks to buy brokerage and wealth-management operations from USAA for roughly $2 billion, a move that would push the discount-brokerage pioneer further into financial advice. The deal, which could bring Schwab roughly $100 billion of assets from closely held USAA, may be reached this month, people familiar with the matter said.
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LVMH Möet Hennessy Louis Vuitton bought a minority stake in the British fashion house set up by Stella McCartney, giving the French luxury company a high-profile vehicle to tap growing demand for high-end clothing marketed as sustainable. Details of the deal, announced by both companies on Monday, won’t be disclosed until September, but LVMH said Ms. McCartney would retain a majority stake in the company and continue as creative director.
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Emerging-markets investor Actis LLP has completed its takeover of two Abraaj funds in a deal that will boost the firm’s footprint across Africa and the Middle East. Abraaj filed for provisional liquidation last year after investors accused the firm of mismanaging its money. Six of its executives are now facing criminal charges by U.S. prosecutors.
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