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The Morning Risk Report: Stock Sales by Lordstown Motors Executives Call Attention to Insider Trading Rules
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Lordstown Motors’ operations have been under intense scrutiny in recent months.
PHOTO: DUSTIN FRANZ/BLOOMBERG NEWS
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Good morning. A report that several top executives of Lordstown Motors Corp. sold off chunks of stock in the electric-truck startup ahead of reporting its financial results could fuel further calls for changes to insider trading rules.
Five top executives, including the company’s president and its former chief financial officer, sold more than $8 million in stock over three days in early February, according to regulatory filings. The trades raise questions about the company’s internal controls, particularly in light of its recent financial and operational troubles, lawyers and analysts told The Wall Street Journal.
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The trades occurred at a time when most listed companies forbid executives from making unscheduled trades. About 98% of companies have so-called black-out periods between the end of a quarter to when financial results are publicly released, according to a 2020 survey by Deloitte. The rules are meant to guard against even the appearance of insider trading.
Some executives use pre-arranged trading, known as 10b5-1 plans, to provide a safe haven under U.S. Securities and Exchange Commission rules. SEC Chairman Gary Gensler recently called for changes to such arrangements, which critics say can be manipulated. Lordstown Motors’ filings didn’t indicate whether its executives’ trades were conducted under 10b5-1 plans.
Lawyers who spoke to Risk & Compliance Journal’s Dylan Tokar said they expect insider trading rules to be a focus of the SEC under Mr. Gensler. “Regulators and practitioners have been pointing out areas for potentially strengthening the rules around 10b5-1 plans for a bunch of years now,” said Brian Rosenzweig, a partner at the law firm Covington & Burling LLP and co-chairman of its securities and capital markets practice group.
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Goldman Sachs’ New York headquarters. The bank was accused of artificially inflating its share price before, during and after the 2008 financial crisis.
PHOTO: NINA WESTERVELT/BLOOMBERG NEWS
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The Supreme Court on Monday rejected a plea from Goldman Sachs Group Inc. to raise the bar for shareholder lawsuits alleging fraud, but returned a class-action lawsuit against the company to a lower court for further proceedings.
At issue was an investor lawsuit filed in 2011 that alleged Goldman artificially inflated its share price before, during and after the 2007-09 financial crisis. The suit said the firm falsely claimed that it was complying with ethical rules when in fact it was riddled with undisclosed conflicts of interest in its packaging and selling of mortgage-backed securities.
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The U.S. and its trans-Atlantic allies on Monday imposed financial sanctions against senior Belarus officials and police units the Biden administration said are responsible for escalating political repression, including the forced diversion of a commercial airline carrying dissident journalist Roman Protasevich and his subsequent arrest in May.
The sanctions mark a significant expansion of pressure by the Biden administration as it coordinates joint action with the European Union and other Western governments against the political crackdown by the former Soviet state’s leader, Alexander Lukashenko.
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The European Union opened a formal antitrust investigation into allegations that Google abuses its leading role in the advertising-technology sector, the most wide-ranging case yet to look at that pillar of the tech giant’s business.
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The price of bitcoin and other cryptocurrencies slid Monday after China’s central bank ordered the country’s largest banks and payment processors to take a more active role in curbing cryptocurrency trading and related activities.
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The American meatpacking industry faces stricter oversight in Washington, as lawmakers and regulators push an overhaul of the $213 billion sector following complaints about meat companies’ alleged influence over markets and farmers.
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A former Deutsche Bank AG futures trader convicted of manipulating gold and silver prices was sentenced Monday to one year and one day in prison.
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Tobacco giant Altria Group Inc. is on trial, accused of breaking antitrust laws by abandoning its e-cigarette business at the request of rival Juul Labs Inc. The Marlboro maker’s defense: Our e-cigarettes were lousy. To make its case, Altria has asked its own executives to disclose, in detail, their litany of failures.
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The Supreme Court ruled unanimously that strict NCAA limits on compensating college athletes violate U.S. antitrust law, a decision that could have broad ramifications for the future of college sports.
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New York prosecutors are investigating whether a top Trump Organization executive, Matthew Calamari, received tax-free fringe benefits, as part of their probe into whether former President Donald Trump’s company and its employees illegally avoided paying taxes on such perks, according to people familiar with the matter.
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Ebrahim Raisi, Iran's president-elect, held his first news conference Monday since Friday’s election victory.
PHOTO: ALI MOHAMMADI/BLOOMBERG NEWS
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Iranian President-elect Ebrahim Raisi on Monday said the Islamic Republic wouldn’t stop supporting Shiite militia groups fighting across the Middle East or rein in its missile program, rebuffing a key goal of the Biden administration as it negotiates a revival of the 2015 nuclear deal.
President Biden has said he wants any fresh agreement on Iran’s nuclear activities to lead to broader discussions on how to reduce its military footprint in the Middle East.
But in his first press conference in Tehran after winning Friday’s election, Mr. Raisi ruled out such an approach.
“Regional and missile issues are not negotiable,” said the 60-year-old senior cleric.
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Business-software providers including Salesforce.com Inc., SAP SE and Microsoft Corp. are introducing tools to help companies keep track of their progress toward sustainability goals.
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Cruise operators are hoping to keep their guests distanced and virus-free using on-ship technology.
PHOTO: SUSAN STOCKER / SOUTH FLORIDA/ZUMA PRESS
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Cruise operators, whose U.S. operations have been suspended for more than a year amid the Covid-19 pandemic, are betting on technology to help keep passengers safe when they finally start leaving U.S. ports this summer.
Royal Caribbean Group, MSC Cruises and Virgin Voyages are among the cruise companies looking to smartphone apps, wearable devices, artificial intelligence and other technologies to keep passengers distanced, which lessens the chance of airborne transmission of the virus, and to provide contact-tracing if anyone does get sick.
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A logjam of ships in the Chinese port of Yantian is the latest obstacle hitting global shipping. The backup is likely to jolt trade flows for several more weeks, and could delay shipments heading into the year-end holiday shopping season.
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Three investment firms are launching a joint initiative aimed at attracting more Black talent to their industry. The initiative, which each firm will donate $3 million per year toward over the next decade, relies heavily on partnerships with historically Black colleges and universities.
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