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The Morning Risk Report: SEC Charges Volkswagen With Defrauding U.S. Bond Investors
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The SEC’s complaint alleges that Volkswagen made false and misleading statements to investors. PHOTO: FILIP SINGER/SHUTTERSTOCK
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Hello. The U.S. Securities and Exchange Commission charged Volkswagen AG and its former Chief Executive Martin Winterkorn with defrauding U.S. investors in connection with the emissions cheating scandal that the auto maker is trying to leave in the past.
The surprise move by the SEC, which also charged two of VW’s units, comes just over two years after Volkswagen settled civil and criminal matters with U.S. authorities, agreeing to pay a criminal fine of $2.8 billion after pleading guilty to violating U.S. laws.
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The SEC alleges in its complaint that from April 2014 to May 2015 VW issued more than $13 billion in bonds and asset-backed securities in the U.S. markets at a time when senior executives knew that more than 500,000 vehicles in the U.S. grossly exceeded legal vehicle-emissions limits, exposing the company to massive financial and reputational harm.
Risk & Compliance Journal reported this week on Volkswagen's efforts to move on from the scandal.
Stephanie Davis, chief ethics and compliance officer at Volkswagen Group of America, said Volkswagen AG has taken steps to improve the company's workplace culture. “We saw what not having a strong robust compliance program can do for you,” Ms. Davis said during a panel discussion hosted by Dow Jones Risk & Compliance and The Wall Street Journal.
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UBS was banned from the most senior role on Hong Kong IPOs for a year. PHOTO: BOBBY YIP/REUTERS
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Hong Kong’s market regulator banned UBS Group AG from the most senior role on initial public offerings for a year, fining the Swiss bank and three rivals 786.7 million Hong Kong dollars (US$100.2 million) in total for cutting corners on IPOs. Units of Morgan Stanley and Bank of America Corp. were fined HK$224 million and HK$128 million, respectively, for their work on the Tianhe IPO. Standard Chartered PLC was fined HK$59.7 million over China Forestry.
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A bipartisan pair of U.S. senators want to give Wall Street’s top cop more power to recover funds for burned investors. The legislation would allow the Securities and Exchange Commission to recover money for harmed investors based upon wrongdoing that occurred as much as a decade ago. The measure would help restore some of the muscle the SEC lost when the Supreme Court unanimously decided in 2017 that federal regulators are bound by a five-year statute of limitations.
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Former casino executive Steve Wynn generated $2.1 billion and a big potential tax bill last March when he was forced to sell his stake in Wynn Resorts Ltd. after sexual-misconduct allegations. Less than three months later, he held a meeting with Treasury Department officials as they were writing regulations for a new tax incentive that had the potential to help him defer and reduce those taxes. Mr. Wynn’s interaction with the Treasury Department doesn’t appear to violate any laws or ethics rules, but it shows that he retained access to senior officials in government despite being largely locked out of the business and political worlds he had previously inhabited.
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From Risk & Compliance Journal
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Pro-Brexit and anti-Brexit protesters hold flags as they demonstrate outside the Houses of Parliament in London on Thursday. PHOTO: TOLGA AKMEN/AGENCE FRANCE-PRESSE/GETTY IMAGES
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The U.K., which is so far closely aligned with France and other European Union countries on sanctions, might use its planned departure from the EU as a chance to revisit its sanctions policies, compliance specialists said Thursday during an event hosted by The Wall Street Journal and Dow Jones Risk & Compliance.
After Brexit, the U.K. might seek closer proximity to the general sanctions imposed by the U.S., in contrast to the list-based sanctions favored by the EU, said Tom Plant, a director for proliferation and nuclear policy at the Royal United Services Institute for Defense and Securities Studies in the U.K., a think tank.
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A Bushmaster AR-15 gun found at Sandy Hook Elementary School in Newtown, Conn., in photo provided by the Connecticut State Police PHOTO: CONNECTICUT STATE POLICE/REUTERS
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The gun industry suffered a potentially significant legal setback Thursday when the Connecticut Supreme Court said that a leading maker of AR-15 rifles can be held legally responsible for marketing practices that allegedly made the semiautomatic gun the weapon of choice for mass shooters. Legal experts said the decision could give victims of other shootings a legal road map for establishing liability against an industry that has faced little legal threat for more than a decade.
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Boeing Co. said it has paused deliveries of its 737 MAX airplane following the grounding of the aircraft by aviation regulators around the world after two fatal crashes within five months. Meanwhile, the U.S. Air Force has lost confidence in Boeing’s ability to maintain quality control over a new aerial refueling tanker it is building, with a senior Pentagon official saying Thursday that it could take at least a year to rebuild trust in the program.
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Employee Laila Ummelaila makes her way through a Walmart in Old Bridge, N.J., collecting items to fill a customer’s online order. PHOTO: JULIO CORTEZ/ASSOCIATED PRESS
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Walmart Inc. was caught off guard after it began offering to deliver fresh groceries from a store in North Bergen, N.J., earlier this month, only to find orders flooding in from across the Hudson River.
Drivers from DoorDash Inc. balked at paying the usual $15 toll to cross into Manhattan, store workers said; one driver was offered $11 to make the trip. Some orders were never filled.
“We never would have gone in with the intention that this would work with $11,” said a spokeswoman for Walmart, which hadn’t intended to include Manhattan within the delivery radius. “We offered additional incentive to drivers to finish the orders that came in,” then stopped offering deliveries to Manhattan after a few days, she said.
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Facebook Chief Product Officer Chris Cox, left, and Chris Daniels, head of the WhatsApp unit. PHOTO: NIKKI RITCHER FOR THE WALL STREET JOURNAL; GUILLERMO LEGARIA/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Two Facebook Inc. senior executives said Thursday that they would leave the company—surprise departures that come days after CEO Mark Zuckerberg announced a major shift in direction for the company. Chris Cox, who is chief product officer and considered a confidant of Mr. Zuckerberg, said he decided to leave the company, as did Chris Daniels. Mr. Daniels last year was named head of the WhatsApp unit. The announcement came as the company blamed one of its longest-ever outages on a change to its servers, saying the daylong disruption to its core app,
Instagram and WhatsApp was resolved.
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Tesla Inc. has named Vaibhav Taneja to fill the post of chief accounting officer, as the electric-car maker looks to bolster its senior-executive team following a wave of departures.
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WPP PLC said it would pay its former Chief Executive Martin Sorrell shares worth more than 2 million pounds, or $2.65 million, as part of his long-term bonus, despite having threatened to withhold the payment following his departure from the firm.
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Chop Chop Bikes, which designs light-weight, high-end bicycles, needed a loan to increase sales growth, but couldn't get one from a bank. It turned to Credijusto instead. PHOTOS: GINNETTE RIQUELME FOR THE WALL STREET JOURNAL
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Fintech investors are flocking to Mexico to try to fill a gap in the country’s credit market: loans to young businesses looking to expand. The latest example is Goldman Sachs Group Inc., which is providing a credit line of up to $100 million to Credijusto, a four-year-old financial technology firm in Mexico City backed by former Morgan Stanley Chief Executive John Mack and Capital One Financial Corp. co-founder Nigel Morris.
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Some of China’s quirkiest social-media firms are signing up hundreds of millions of consumers in India, tech’s biggest untapped market, looking to capture users who aren’t already locked into Facebook, Twitter or other American apps.
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Toyota Motor Corp. raised its planned investment in its U.S. operations through 2021 by about one-third to nearly $13 billion to build more models and parts in the country, a move that comes as the Trump administration considers imposing tariffs of up to 25% on auto imports.
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Mark Bristow has recently become the new chief executive of Barrick Gold, the world’s largest gold producer, which struck an agreement to pool its assets with its rival Newmont. Now the South African geologist, who described himself as a “consultative dictator,” has to make the partnership work, which could be his biggest challenge.
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