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The Morning Risk Report: How Enforcers Curtailed a Coronavirus Robocall Scam
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Alleged robocall scams include pitches for free testing kits, work-from-home jobs and cleaning of air ducts supposedly to fight the virus. PHOTO: DANIEL ACKER/BLOOMBERG NEWS
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Good morning. In the war against illegal robocalls, enforcers claim something unusual: a few wins. Scam phone calls pitching bogus coronavirus tests, phony remedies and nonexistent economic aid have proliferated in recent weeks, telecom tracking companies said, adding to other long-running cons aimed at draining bank accounts or obtaining credit-card information.
A telecom-industry task force, led by trade association USTelecom, said it recently identified and cut off a barrage of virus-related calls it suspected were phony, with help from federal agencies. The alleged scams included pitches for free testing kits, work-from-home jobs with Amazon.com Inc. and cleaning of air ducts supposedly to fight the virus.
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Phone companies shut down the accounts where the calls originated after being notified and, in some cases, threatened with legal action, said officials from USTelecom and the Federal Communications Commission. “It’s progress,” said Alex Quilici, chief executive of YouMail Inc., which tracks robocalls through a consumer smartphone app and flagged some of the suspect calls. “It’s showing that certain classes of these calls can be shut down.”
It is rare for authorities to act on a stream of robocalls so quickly, said Kevin Rupy, a communications lawyer at Wiley Rein LLP, who previously worked at USTelecom. “Rapidly identifying the source of these calls and getting them shut down—that is a game changer,” he said. More broadly, some evidence suggests Americans are receiving fewer unwanted phone calls.
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From Risk & Compliance Journal
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European Regulator Asks Insurers for Dividend Suspensions
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The European Union’s insurance regulator asked insurers and reinsurers in the region to temporarily suspend dividends and consider a postponement of bonuses amid the coronavirus pandemic, knocking stocks across the sector. The European Insurance and Occupational Pensions Authority urged insurers to have a prudent approach to shareholders’ remuneration and variable pay. It wants insurers and reinsurers to preserve their capital position and ability to absorb potential losses, as well as ensure the continuity of their services.
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The Ruby Princess cruise ship off the coast of Sydney on Saturday. PHOTO: STEVEN SAPHORE/EPA/SHUTTERSTOCK
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Australian police launched a criminal investigation into whether staff of a cruise ship that docked in Sydney misled authorities about a coronavirus outbreak among passengers and crew aboard.
The crew of the Ruby Princess, operated by Carnival Australia, had told authorities that some passengers were suffering from flulike symptoms when the cruise ship docked in Sydney last month, but that Covid-19—the illness caused by the new coronavirus—wasn’t an issue, police say. More than 660 people from the ship, mainly passengers, have now tested positive for the new coronavirus, and 11 passengers have died.
New South Wales state Police Commissioner Mick Fuller said he has reviewed information, including a 17-minute emergency call from the ship on March 18, and decided that the only way to determine whether laws were broken is through a criminal investigation.
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The Treasury Department issued new guidance aimed at expanding access to the emergency small-business lending program, but some in Silicon Valley say it falls short of ensuring startups will be able to get aid.
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Bayer says the new coronavirus is slowing down settlement talks with tens of thousands of plaintiffs who claim its Roundup weedkiller causes cancer, the latest evidence that the pandemic is causing delays and disruptions throughout the legal system. The company recently exercised a right to terminate a draft settlement agreement it had reached with a group of firms and extended the negotiations through April, according to a person familiar with a matter. The legal maneuver buys Bayer some time to assess the fallout from the global economic collapse caused by virus-related shutdowns.
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General Motors is asking the Trump administration to drop import tariffs on Chinese parts that the auto maker needs to make ventilators, saying the levies will make it more expensive to build desperately needed machines that can save lives.
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The Federal Trade Commission’s antitrust lawsuit against Altria Group and Juul Labs focuses largely on a noncompete agreement in which the tobacco giant pledged to take its e-cigarettes off the market. That agreement, according to the agency’s administrative complaint, was the linchpin of a December 2018 deal in which Juul agreed to sell Altria stake for $12.8 billion.
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PHOTO: SHAW THEW/SHUTTERSTOCK
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The Securities and Exchange Commission said it would not object to a provision in the $2 trillion stimulus package allowing lenders to delay implementing a new accounting standard on expected credit losses. The law gives lenders the option to defer implementing a rule, known as Current Expected Credit Losses, or CECL, that requires companies to forecast expected loan-related losses as soon as a loan is issued and to set aside capital for them.
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Accounting firm Ernst & Young said it uncovered the problems at China’s Luckin Coffee Inc., which said last week an internal investigation indicated its chief operating officer and others had fabricated much of its reported revenue in 2019. While auditing Luckin’s financials for 2019, the accounting firm said it found some “management personnel engaged in fabricated transactions which led to the inflation of the Company’s income, costs and expenses” from the second quarter to the fourth quarter.
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As the coronavirus pandemic creates economic uncertainty, some directors are attending virtual meetings to discuss their concerns about cybersecurity with management. PHOTO: ISTOCK
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Business disruption during the coronavirus crisis could change how boards in the U.S. and Europe think over the long term about remote work, privacy and cybersecurity.
Hackers are capitalizing on coronavirus fear with phishing campaigns and are seeking out vulnerable home networks and videoconferencing apps. Risk and audit committees, in particular, are asking executives to spell out cybersecurity measures that their company is taking to protect data while employees work remotely, and to develop contingency plans to address such risks.
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South African security forces enforce a lockdown in Johannesburg. PHOTO: MARCO LONGARI/AGENCE FRANCE-PRESSE/GETTY IMAGES
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After slamming developed economies in Asia, Europe and North America, the coronavirus pandemic is coming for economies across the developing world. Economic output in emerging markets is forecast to fall 1.5% this year, the first decline since reliable records began in 1951, according to research firm Capital Economics. In Mexico, the U.S.’s largest trading partner, the economy could contract by up to 8%, its steepest decline since the Great Depression, Bank of America has estimated.
Even if some developing nations manage to avoid catastrophic coronavirus infection rates, the lockdowns and expected recessions in industrialized countries will take a heavy economic toll. They likely will dent demand for beach holidays in Thailand, clothing stitched together in Bangladesh and auto parts and avocados from Mexico. One-third of Mexico’s economy depends on exports to the U.S.
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A “sleeping risk” on the books of U.S. businesses could be awakened by the pandemic, as the sudden cash crunch exposes a hidden type of financing that makes balance sheets look better, credit-rating firms warn. The three biggest ratings firms issued reports highlighting the dangers of supply-chain financing, a fast-growing, opaque technique for delaying payments to suppliers to improve cash flow.
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Oceangoing shipping companies, already hit by crumbling demand and fractured supply chains from the coronavirus pandemic, are facing another problem on their vessels. Thousands of seafarers can’t travel to man ships, leaving growing numbers of crews around the world exhausted and facing illness at sea.
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Lufthansa planes parked on a closed runway northwest of Frankfurt Airport in Germany. PHOTO: ULI DECK/DPA/ZUMA PRESS
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The world’s airlines, no longer operating a globe-spanning choreography of flights, are consumed with new work: navigating government bailout offers, negotiating with unions, finding places to park idle planes and scrounging for business like flying cargo and repatriating marooned travelers.
Expansion plans aren’t just on hold amid the coronavirus crisis; executives are plotting major retrenchments they expect to last for months.
“Nobody’s traveling in the next 30 or 60 days,” said Vasu Raja, American Airlines Group’s senior vice president for network strategy. “But nobody is really making any plans to go travel in the next 90 to 150 days, either.”
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Oceangoing shipping companies, already hit by crumbling demand and fractured supply chains from the coronavirus pandemic, are facing another problem on their vessels: Thousands of seafarers can’t travel to man ships, leaving growing numbers of crews around the world exhausted and facing illness at sea. The widespread travel restrictions countries have imposed to rein back the spread of the coronavirus have made such movement nearly impossible.
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Intensified manufacturing efforts aren’t moving fast enough to meet the rising U.S. need for ventilators that can keep critical coronavirus patients breathing, hospital and medical-device company officials said.
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Zoom chief Eric Yuan said the company is cooperating with authorities as it has fielded questions from 27 U.S. attorney general’s offices about the platform’s security. PHOTO: CARLO ALLEGRI/REUTERS
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For many business leaders, the coronavirus pandemic has been a struggle to survive. For Eric Yuan, chief executive of Zoom Video Communications Inc., the challenge has been how to manage breakneck growth. And lately, it hasn’t been going well.
In the space of a month, the Silicon Valley videoconferencing business he founded nine years ago has gone from an enterprise-software provider little known outside the business world to a near-ubiquitous social lifeline for homebound Americans and, most recently, the subject of complaints about privacy problems and harassment on its platform.
The whiplash has left Mr. Yuan trying to appease upset users and figure out what went wrong—and rethinking a company culture that for nearly a decade was focused on ease of use.
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PHOTO: SÉBASTIEN THIBAULT
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As the coronavirus pandemic spreads, management teams are fortifying their succession plans and reviewing backup operating procedures for when top executives or other critical employees fall ill.
Some businesses are including more people on projects to duplicate decision making, or insisting that technical staffers document their work in greater detail so others can help, if necessary. A few companies have told top executives to take it easy, in hopes the downtime will bolster their immune systems.
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Occidental Petroleum hired a new finance chief, part of a wider management shake-up that comes amid renewed criticism of the company’s $38 billion deal to buy rival Anadarko Petroleum.
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