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The Morning Risk Report: Southwest Is Flying 38 Jets That Lack Final Safety Verification
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Southwest carries the most domestic passengers. PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS
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Good morning. Southwest Airlines currently flies more than three dozen jets without being able to verify they comply with all mandatory federal safety standards, according to government documents that also reveal U.S. regulators recently considered grounding the planes.
Congressional investigators and the U.S. Department of Transportation’s inspector general’s office are stepping up scrutiny of such issues involving operation of used foreign aircraft Southwest introduced into its fleet over the years, according to the documents and people familiar with the details. In letters to the Federal Aviation Administration over the past two weeks, the carrier indicated it previously found dozens of problematic repairs on other planes, done before it bought those aircraft. The problems included substandard or improper fixes.
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The basic problem Southwest is grappling with stems from a lack of reliable paperwork needed to verify that repairs, small fixes and a host of maintenance actions were conducted while the planes were being flown by their previous operators. Without clear-cut documentation, neither Southwest nor regulators can definitively verify that all safety requirements have been met.
Southwest’s difficulty documenting the maintenance history of the used planes is unusual. The company initially believed it had all the necessary backup documents but later it turned out some important paperwork was missing or incomplete, the documents show. The paperwork issues led the company and the FAA to hammer out a backup inspection and verification program, according to the documents. The carrier told the FAA it had 50 employees evaluate 63,000 repair documents in 15 languages.
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Corporate Compliance in a Disrupted World
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Digital disruption, shifting workplace norms and the rapidly changing state of world affairs have added new dimensions to corporate compliance. Join The Wall Street Journal in New York on Nov. 19 for a live discussion with chief compliance officers from leading companies about how their focus is changing. For details and to register, click here.
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Federal prosecutors are examining McKinsey’s investing unit, known as MIO Partners. PHOTO: CHARGES PLATIAU/REUTERS
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A McKinsey unit faces mounting legal and court challenges as the giant consulting firm defends its bankruptcy-advisory business. Federal prosecutors have launched a criminal investigation into whether McKinsey’s bankruptcy unit improperly failed to disclose investment interests in companies it was advising in bankruptcy and clients that had ties to those cases, according to people familiar with the matter.
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President Trump said Monday that he would meet with vaping-industry representatives as he nears a decision that could bar sales of sweet, fruit-flavored e-cigarettes aimed at young people, raising concerns among public-health advocates that the measure could be diluted. He didn’t say when the meeting would happen, but the policy has been delayed under heavy lobbying.
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UBS overcharged and misled wealthy clients for a decade without detection, Hong Kong’s securities regulator said Monday, as it fined the bank 400 million Hong Kong Dollars (US $51 million) and demanded HK$200 million in customer compensation. The Hong Kong Securities and Futures Commission said client advisers and assistants at the Swiss bank regularly added extra fees and padded out spreads on bond and structured-note trades, taking “profits from its clients without agreement with or disclosure to them.”
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Iran carried out its threat to enrich uranium at its underground Fordow nuclear site, the United Nations atomic agency confirmed on Monday, its most serious breach of the 2015 nuclear deal. The International Atomic Energy Agency stated on Monday that Iran had started feeding uranium gas into two cascades of centrifuges at its underground Fordow nuclear site, which is barred under the accord.
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Amazon 'is the most cost-effective way to sell into the United States,’ says businessman Zhao Weiming. A factory in southern China produces his Lagunamoon-branded products. PHOTO: BILLY H.C.KWOK FOR THE WALL STREET JOURNAL
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Amazon has aggressively recruited Chinese manufacturers and merchants to sell to consumers outside the country. And these sellers, in turn, represent a high proportion of problem listings found on the site, according to a Wall Street Journal investigation.
How Amazon exercises control of its site has come under scrutiny from some in Congress, where some lawmakers are calling for more regulation of the company. That is part of a growing backlash in Washington over how tech companies run their platforms.
Amazon’s third-party marketplace, which connects merchants and buyers around the world, is crucial to the company’s growth. At the same time, even though it has become a source of fake or dangerous goods, Amazon has denied it is liable for what’s sold there, saying in court cases that it neither makes nor sells the products in question.
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As Michael Bloomberg weighs another bid for political office, the financial-data and media company he co-founded is grappling with the implications of having to cover his campaign.
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After pushing U.S. oil and natural-gas production to record levels, some shale companies are planning to pump less.
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Google launched the effort last year with Ascension, the country’s second-largest health system. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
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Google is engaged with one of the country’s largest health-care systems to collect and crunch the detailed personal health information of millions of Americans across 21 states.
The initiative, code-named “Project Nightingale,” appears to be the biggest in a series of efforts by Silicon Valley giants to gain access to personal health data and establish a toehold in the massive health-care industry. Amazon, Apple and Microsoft are also aggressively pushing into health care, though they haven’t yet struck deals of this scope.
Google began Project Nightingale in secret last year with St. Louis-based Ascension, the second-largest health system in the U.S., with the data sharing accelerating since summer, according to internal documents.
Some Ascension employees have raised questions about the way the data is being collected and shared, both from a technological and ethical perspective, according to the people familiar with the project. But privacy experts said it appeared to be permissible under federal law.
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Funds with a focus on socially responsible investing are enjoying a record year of inflows. But many such portfolios aren’t as clean as investors might expect. Eight of the 10 biggest U.S. sustainable funds are invested in oil-and-gas companies, which are regularly slammed by environmental activists, according to a review of the funds’ public disclosures.
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WeWork is in discussions with T-Mobile US Inc. Chief Executive John Legere to take over leadership of the troubled office-sharing startup, according to people familiar with the matter. WeWork’s parent, formally known as We Co., is searching for a CEO who can stabilize the company following the erratic tenure of its co-founder Adam Neumann.
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Credit Suisse said it had appointed new leadership to head its investment banking and capital markets division, as the Swiss bank struggles to boost revenue from its businesses advising on mergers and acquisitions and helping clients go public. David Miller, a 22-year veteran of the Zurich-based bank, succeeds James Amine, another long-serving banker with the firm who had led the investment banking and capital markets business over the last four years.
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Uber CEO Dara Khosrowshahi PHOTO: SAMYUKTA LAKSHMI/BLOOMBERG NEWS
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Uber Technologies Chief Executive Dara Khosrowshahi said he regretted calling the murder of Saudi Arabian journalist Jamal Khashoggi a “mistake” in a recent video interview, opening a new front of controversy for the ride-hailing giant as it looks to rebound from a difficult initial public offering and regulatory scrutiny of its contractor-reliant business.
The interview with media outlet Axios aired on HBO Sunday, and Mr. Khosrowshahi’s comment came in response to being asked whether H.E. Yasir Al-Rumayyan, managing director of Saudi Arabia’s Public Investment Fund, should be re-elected to Uber’s board in the wake of the murder. The fund is Uber’s fifth-largest shareholder. Mr. Al-Rumayyan has been a board member since June 2016.
“I think that government said that they made a mistake. It’s a serious mistake,” Mr. Khosrowshahi replied on camera. “We’ve made mistakes, too, right, with self driving.” He later added: “People make mistakes, it doesn’t mean they can never be forgiven.”
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The National Rifle Association has long burnished its image by attracting celebrities to its board. Internal NRA documents show that two of them—actor Tom Selleck and rock star Ted Nugent —engaged in big-ticket financial transactions with the nonprofit that the NRA board didn’t approve until at least a year later.
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