Good morning. More prohibited cotton was found in garments sold in Western countries in 2025 than the prior year for the first time in four years, according to a new report from forensic origin-verification company Oritain.

• Prohibited imports: Oritain looked for materials from regions including the Xinjiang area of China, Turkmenistan and Uzbekistan that are banned under federal legislation or its customers’ sourcing policies. A 2021 U.S. law called the Uyghur Forced Labor Prevention Act prohibits companies from importing products made with forced labor in the Xinjiang region of China, or from entities associated with the region’s government.
   
• Crackdown: The stakes have gotten higher as U.S. and European governments crack down on imports of materials produced using forced labor, or that contribute to deforestation. Companies can face financial penalties or criminal investigations.
   
• Apparel deep-dive: Oritain uses forensic science techniques like those used in criminal investigations to identify the geographic origin of products such as cotton, leather and timber. Its customers include Patagonia, Carhartt and Lacoste. Oritain says its techniques are more accurate than traditional supply-chain tracing efforts that rely on paperwork or digital tools, because the forensic results can’t be forged or altered.

Federal judge says SEC settlement with Musk raises red flags.

A federal judge in Washington, D.C. on Wednesday said that a settlement the Securities and Exchange Commission reached with Elon Musk over his purchase of Twitter shares before taking control of the company “raises some red flags.”

Judge Sparkle Sooknanan said she can’t just “rubber stamp” the agreement, which would require Musk’s family trust to pay a $1.5 million fine to resolve the SEC’s claims that Musk failed to timely disclose his purchase of shares in Twitter in 2022 as he took control of the social-media network he later renamed X.

U.S. aluminum importer agrees to $550 million duty evasion settlement.

A California-based aluminum company and several of its affiliates agreed to pay nearly $550 million to settle allegations they deliberately evaded duties on imports from China, Risk Journal reports (free link).

Perfectus Aluminum is settling whistleblower claims it misrepresented the duties owed on more than 2.2 million aluminum extrusions it imported from 2011 to 2014, the U.S. Justice Department said Wednesday. The aluminum extrusions were worth more than $880 million, according to the settlement agreement.

• Meta Platforms said it will let rival artificial intelligence chatbots use a WhatsApp tool for talking to users in the European Union for free for one month as the company attempts to avoid a potential fine from the bloc’s antitrust regulator.
   
• Democratic and Republican senators are proposing a tax incentive for businesses that set up water recycling infrastructure—the latest in a series of moves to tackle data-center water worries.
   
• The way companies aim for net zero is flawed. But it’s also working.

SEC watching ‘stresses’ in private credit, agency official says.

The U.S. Securities and Exchange Commission is keeping an eye on a series of defaults and losses playing out in the private credit industry, the agency’s new enforcement chief said.

“There are stresses in some portfolios and developments playing out more broadly across this sector, and we are monitoring the situation,” David Woodcock, who started his new role at the SEC last week, said in a Wednesday speech at a legal conference in New York.

Bessent meeting with state insurance regulators focused on risk monitoring.

A meeting last week between state insurance commissioners and Treasury Secretary Scott Bessent focused on how to "make sure (commissioners) have the right regulatory tools to assess risk given this new investment landscape” of private credit and other alternative investments, Wisconsin state insurance commissioner Nathan Houdek said.

Houdek attended the private meeting in Washington D.C., and spoke about it Wednesday in response to an audience question at an actuarial conference. Houdek said Bessent requested the meeting and commissioners set it for last week when they were in D.C. for a separate conference.

• Chinese leader Xi Jinping warned President Trump that any mishandling of Taiwan could lead to “an extremely dangerous situation,” directly raising a point of tension that has loomed over what the U.S. president said at the start could be “the best summit ever.”
   
• The Taiwan Strait is now a crowded front line. Increasing encounters between Chinese and Taiwanese vessels have transformed one of the world’s busiest shipping lanes into a tinderbox.
   
• More Chinese nationals who return home after working in the U.S., called ‘sea turtles,’ are fueling Beijing’s efforts to take on Silicon Valley.
   
• Russia claims its economy is growing despite sanctions pressure.
   
• The Pentagon abruptly canceled the deployment of an armored brigade to Poland, a major step toward President Trump’s plan to shrink the U.S. posture in Europe that caught some military officials by surprise.

• The shale-drilling boom that began two decades ago not only flooded U.S. markets with oil and gas, it transformed the country into the world’s largest energy exporter.
   
• The Senate confirmed Kevin Warsh as the Federal Reserve’s 17th chair Wednesday in a largely party-line vote.
   
• Job postings in the information-technology and computer-science sector are up and recruiters say companies are hiring again. But they want those at mid and senior levels and other top-tier technical talent who can harness the new powers of AI.
   
• Taking weight-loss drugs means eating less—and for many Americans, dining out less, too.
   
• The hedge-fund herd was early to see opportunity in the stocks of chip makers and other artificial-intelligence hardware companies. Those bets just delivered stock-picking funds their best month in over two decades.

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