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The Morning Risk Report: Banks Take First Steps on Climate-Risk Evaluations
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Citigroup this year established a working group to integrate climate issues into its risk-management controls. PHOTO: JUSTIN CHIN/BLOOMBERG NEWS
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Chief risk officers of financial institutions are taking initial steps to evaluate the threat of climate change, but weighing the dangers posed by a warming planet isn’t a standard industry practice yet, Risk & Compliance Journal’s Kristin Broughton reports.
Banks are facing more scrutiny over how extreme weather or environmental regulations could affect their bottom lines. For many companies, environmental issues—once the domain of corporate sustainability offices—could soon fall under the purview of corporate risk managers as they become a bigger priority, said Jo Paisley, co-president of the risk institute at the Global Association of Risk Professionals.
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“I don’t think you want it corporate-responsibility led,” Ms. Paisley said. Instead, it should be integrated into standard risk controls, since corporate risk divisions are responsible for protecting the company’s core business units, she said. Banks should consider creating working groups with executives across several divisions to assess the impact of climate change on their core businesses, Ms. Paisley said.
Citigroup Inc. this year established a working group to integrate climate issues into its risk controls. The group was created under the direction of the bank’s chief risk officer in response to recommendations by regulators, and an increasing number of regulatory inquiries on climate-related matters, executives said. “This has really grown in importance and focus at the top of the house,” said Eliza Eubank, Citi’s global head of environmental and social risk management.
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From Risk & Compliance Journal
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The U.S. Treasury Building in Washington. PHOTO: ASSOCIATED PRESS
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The Treasury Department is changing how it calculates fines related to sanctions violations, a move that could signal larger penalties. The department will no longer credit all types of fines paid to other government agencies as part of joint settlements. It will only give credit for penalties imposed by other federal agencies that relate to “the same pattern of conduct for the same period of time” as the department’s own penalties, Andrea Gacki, the director of the Office of Foreign Assets Control, said last week during an American Bar Association event.
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IBM has agreed to pay $14.8 million to settle allegations regarding misrepresentations made about software capabilities and other technical issues that hurt the Maryland online health exchange. Federal prosecutors said IBM and its unit, Cúram Software, provided software and services as a subcontractor on a project to develop a platform that allows individuals and small businesses shop for medical insurance.
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A New York-based broker-dealer owned by China’s biggest lender pleaded guilty to an antitrust charge related to bid-rigging on American depositary receipts and reached a related civil settlement. Industrial and Commercial Bank of China Financial Services LLC will pay about $46 million in total fines and penalties, U.S. authorities said.
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The U.K.’s Serious Fraud Office charged the daughter of a former director of Eurasian Natural Resources Corp. as part of a continuing corruption probe into the Kazakh mining company.
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Join Risk & Compliance Journal on Wednesday for a webinar discussing major antibribery and corruption enforcement actions of 2019. The Wall Street Journal’s Nicholas Elliott, Laura Perkins, a partner at Hughes Hubbard & Reed LLP and Nicole Sprinzen, vice chair of white collar defense and investigations at Cozen O’Connor P.C., will discuss lessons compliance and risk officers can learn from these cases. Register here.
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Khadem al Qubaisi attends a news conference in Stuttgart, Germany, in 2009. PHOTO: JOHANNES EISELE/REUTERS
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Two prominent figures in a global Malaysian sovereign-wealth fund scandal were convicted of financial crimes and sentenced to prison in Abu Dhabi, according to a statement from the emirate’s criminal court and people familiar with the matter.
Khadem al Qubaisi, a United Arab Emirates citizen who once headed Abu Dhabi’s International Petroleum Investment Co., was given a 15-year prison sentence and Mohammed Badawy al Husseiny, an American citizen who ran a subsidiary of IPIC, was sentenced to 10 years.
They jointly must pay about $336 million, half to IPIC, referred to as the “victim company,” and half as a penalty, according to the criminal court. Lawyers for both men and a representative of the Abu Dhabi Criminal Court declined to comment on the charges.
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Iran said it would exceed limits on its stockpile of enriched uranium in 10 days, jeopardizing European efforts to save the international nuclear deal amid heightened military tensions in the Persian Gulf.
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Quicken Loans Inc. agreed to pay $32.5 million to resolve a lawsuit with the U.S. government, a court-appointed mediator. The suit stems from the period after the housing-market collapse a decade ago, when the U.S. Justice Department pursued mortgage lenders for misusing the Federal Housing Administration-insured loan program.
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Three pharmaceutical companies sued the federal government to block a proposal requiring drug manufacturers include the list price of prescription drugs in television ads, the latest volley by the industry as it faces criticism over escalating cost of drugs. The lawsuit alleges that the proposed rule violates the First Amendment by compelling drugmakers to communicate list prices in TV ads.
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The Department of Veterans Affairs advised its facilities not to use injectable amniotic tissue products for the most common uses because the effectiveness of the products isn’t proven. The nationwide advisory, issued in an email reviewed by The Wall Street Journal, was sent in late May after a Journal report detailed that MiMedx Group Inc.’s micronized products don’t meet federal regulatory standards, despite the company having advised the Food and Drug Administration two years earlier that those standards had been met.
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Three big high-speed trading firms asked a federal court to halt a Securities and Exchange Commission initiative that would limit the rebates that U.S. stock exchanges pay to attract investors’ orders.
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The SEC is expected to vote this month to approve a settlement with KPMG that would include a fine of as much as $50 million and a requirement that the firm retain an independent compliance consultant for at least a year. PHOTO: CHARLES PLATIAU/REUTERS
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KPMG LLP is preparing to pay as much as $50 million to settle civil claims related to the conduct of former partners who learned which of their audits would be subject to surprise regulatory examinations, according to people familiar with the matter. The fine would be one of the highest ever imposed on an auditor in a Securities and Exchange Commission action. The details could change as agency commissioners debate final details of the settlement.
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A Boeing 737 MAX 8 jetliner takes off on a test flight in Renton, Wash. PHOTO: TED S. WARREN/ASSOCIATED PRESS
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The Federal Aviation Administration could start flight trials of Boeing Co.’s proposed 737 MAX safety enhancement as early as this week as the plane maker’s chief executive vowed to restore public confidence in the jet. Boeing Chief Executive Dennis Muilenburg said he was disappointed in the company’s communication lapses surrounding the MAX and promised greater transparency.
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Bayer AG plans to invest about $5.64 billion on developing new ways to combat weeds over the next decade, as the German chemicals and pharmaceuticals giant seeks to win back trust in its business in the wake of thousands of lawsuits alleging its Roundup herbicide causes cancer.
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BB&T Corp. and SunTrust Banks Inc. merged and needed a new name. They came up with Truist, prompting some head-scratching and a cautionary tale about the perils of combining company names.
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Glenn Fogel, chief executive of online travel company Booking Holdings, at the WSJ Tech D.Live conference in Hong Kong on Friday. PHOTO: MANUEL WONG HO FOR THE WALL STREET JOURNAL
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Global companies are grappling with different data-privacy rules in individual markets, a situation pushes up costs for companies like Booking Holdings Inc., whose users are often on the move, said Glenn Fogel, chief executive of online travel company. Different data-privacy plans have emerged in major economies in recent years and it isn’t likely that they will converge soon, leaving global companies to scramble to stay compliant.
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Technical problems at Target stores this weekend frustrated shoppers, who were unable to make purchases for two hours on Saturday or use a credit card at some stores on Sunday. Target said the two incidents were unrelated, and neither was caused by a cyberattack.
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Biotech company BeiGene has raised its U.S. head count to more than 400, as it shepherds three experimental drugs through U.S. trials; a lab at its Beijing research-and-development center. PHOTO: GILLES SABRIE/BLOOMBERG NEWS
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China-based biotechnology startups looking to go global are poaching talent from the biggest American pharmaceutical companies, promising managers and medical chiefs lucrative pay packages and a more entrepreneurial work environment—all without asking them to uproot their lives in the U.S.
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The United Auto Workers suffered another defeat at Volkswagen AG’s factory in Chattanooga, Tenn., as workers rebuffed for a second time the union’s efforts to organize the plant’s blue-collar workforce.
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President Trump and Chinese leader Xi Jinping may meet in Osaka, Japan, during a summit of the Group of 20 economies. PHOTO: NICOLAS ASFOURI/AGENCE FRANCE-PRESSE/GETTY IMAGES
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The U.S.-China trade conflict is moving closer to home. Consumer items, largely spared by existing tariffs on Chinese imports, would face 25% levies under the Trump administration’s plan targeting $300 billion of Chinese goods that haven’t yet been taxed. On Monday, the Office of the U.S. Trade Representative is due to open seven days of hearings on the new tariffs to solicit public comment. Recent data points to lost momentum for the world’s No. 2 economy, reflecting battered sentiment stemming from the administration’s focus on tariffs.The U.S. campaign against
Huawei Technologies Co. is taking a toll, with the company’s founder forecasting a hit to revenue of about $30 billion over the next two years.
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The U.S. campaign against Huawei Technologies Co. is taking a toll, with the company’s founder forecasting a hit to revenue of about $30 billion over the next two years.
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