Good morning. Federal prosecutors have opened a criminal investigation into whether pharmaceutical companies intentionally allowed opioid painkillers to flood communities, employing laws normally used to go after drug dealers, according to people familiar with the matter.

The investigation, if it results in criminal charges, could become the largest prosecution yet of drug companies alleged to have contributed to the opioid epidemic, escalating the legal troubles of businesses that already face complex, multibillion-dollar civil litigation in courts across the country. Prosecutors are examining whether the companies violated the federal Controlled Substances Act, a statute federal prosecutors have begun using against opioid makers and distributors this year.

[Continued below...]

At least six companies have said in regulatory filings that they received grand-jury subpoenas from the U.S. attorney’s office in the Eastern District of New York: drugmakers Teva Pharmaceutical Industries Ltd., Mallinckrodt PLC, Johnson & Johnson and Amneal Pharmaceuticals Inc., and distributors AmerisourceBergen Corp. and McKesson Corp. People familiar with the matter said the subpoenas were in connection with the Brooklyn federal probe.

In response to state and local government lawsuits, these companies have denied responsibility for the opioid crisis. They have said they follow all laws around the manufacture and distribution of prescription painkillers.

Join The Wall Street Journal on Dec. 10 in London for a discussion about regulatory risk and geopolitics with Anna Bradshaw, a partner on the business crime team at Peters & Peters Solicitors; Neil Donovan, a senior associate at Freshfields Bruckhaus Deringer; and Sophie Harding, global geopolitics lead at KPMG International. To register, click here.

The Morning Risk Report won't be published on Thursday or Friday in observance of the Thanksgiving holiday in the U.S. We will be back on Monday.

The U.S. placed sanctions on Corporacion Panamericana SA, accusing the Cuban company of helping the state-run oil import-and-export company evade sanctions.

State-owned Cubametales was blacklisted in July for allegedly operating in the oil sector of the Venezuelan economy, according to the U.S. Treasury’s Office of Foreign Assets Control.

Cubametales has shifted employees to Corporacion Panamericana and used the company as an intermediary to continue its operations, the Treasury Department said Tuesday. Corporacion Panamericana allegedly has replaced Cubametales in various energy deals and international commercial dealings with several countries, OFAC said. 

Cubametales and Corporacion Panamericana couldn’t be reached for comment.

—Mengqi Sun

The Commodity Futures Trading Commission ordered a Goldman Sachs subsidiary to pay $1 million to settle charges it failed to obtain and retain recordings of certain phone lines on a sales and trading desk.

Goldman Sachs & Co. LLC violated swap dealer regulations that require firms to record certain phone conversations, the CFTC said Tuesday. The regulator said Goldman failed to record the lines for 20 days starting in January 2014.

• The U.S. Justice Department has thrown its weight behind a group of past investors in an African mine who say they were the victims of a bribery scheme by the hedge fund Sculptor Capital Management Ltd. The publicly traded fund, which until recently was named Och-Ziff Capital Management, should pay the investors at least $150 million in compensation, prosecutors said in a court filing.
   
• The U.K. Prudential Regulation Authority said Tuesday that it has fined Citigroup’s U.K. operations £44 million ($56.6 million) for regulatory reporting failures. The PRA said that between June 19, 2014, and Dec. 31, 2018, Citigroup Global Markets Ltd., the Citibank N.A. London branch and the Citibank Europe PLC U.K. branch failed to submit complete or accurate regulatory returns to the regulator.

Two former senior executives of MiMedx Group Inc. were indicted on accounting-fraud charges, capping a tumultuous period for the high-profile maker of tissue grafts.

The Justice Department unsealed an indictment Tuesday against Parker H. Petit and William Taylor, accusing them of engaging in an accounting fraud during 2015 and 2016 that overstated the company’s revenue and misled investors.

The Securities and Exchange Commission separately filed a civil suit against MiMedx, Mr. Petit, Mr. Taylor and Michael Senken, the company’s former chief financial officer, accusing them of conducting a “pervasive” accounting fraud from early 2013 to late 2017. The SEC said MiMedx agreed to settle the case, without admitting or denying wrongdoing, and pay $1.5 million, subject to court approval.

• A startup that raised millions by illegally selling digital tokens to investors but escaped harsh punishment after reporting its own misconduct is calling it quits. The SEC has settled with or sued about 20 defendants over their initial coin offerings. The deals offered to startups such as Gladius Network LLC—which admitted it failed to follow investor-protection laws when it raised $12.7 million in 2017—included lighter sanctions in exchange for amending their conduct and following the regulated path.
   
• In the latest hurdle confronting Boeing’s bid to get its grounded 737 MAX fleet back in the air, federal regulators now intend to inspect and sign off on every jet individually before delivery to airlines.
   
• The Food and Drug Administration has come under fire for not moving quickly to address the health risks of e-cigarettes, but outside the public spotlight it is also under attack for not prioritizing study of whether those vaping products may well be an important way to reduce deaths from traditional smoking.
   
• Commerce Secretary Wilbur Ross would have the power to unwind business deals that threaten the country’s telecommunications infrastructure under a federal proposal released Tuesday.
   
• The U.K.’s financial regulator banned the marketing of some of the riskiest types of bonds to mom-and-pop investors, after the collapse of a lender earlier this year left thousands of people poised to lose a significant portion of their investments.
   
• Pope Francis weighed in on a Vatican financial scandal concerning the Holy See’s investments in London real estate, casting suspicion on his own banking regulator and playing down the Vatican’s suspension from an international network of financial watchdogs.

• Telegram App Tackles Islamic State Online Propaganda
• New York City Bans Flavored E-Cigarettes

General Electric’s decision this week to appoint an outsider as finance chief is rekindling speculation over whether the company will end its audit relationship with KPMG that goes back more than a century.

The Boston-based industrial conglomerate is in the middle of a transformation effort. The U.S. Securities and Exchange Commission is investigating GE’s accounting practices, alongside the U.S. Justice Department.

A new auditor would add credibility to the company’s efforts to uphold agreements with regulators, said William Blair & Co. analyst Nick Heymann.

Federal Reserve Gov. Lael Brainard said that three central-bank rate cuts have put monetary policy in the right place for now, in remarks that also sketched out her preferred path for updating central-bank tools to deal with a low interest-rate world.

“It will take time” for the full effects of the Fed’s rate cuts to move through the economy, Ms. Brainard said in a speech before a gathering of the New York Association for Business Economics. “I will be watching the data carefully for signs of a material change to the outlook that could prompt me to reassess the appropriate path of policy.”

Critical pieces of China’s cutting-edge surveillance state share a connection. They came from America.

Some of the biggest names in U.S. technology have provided components, financing and know-how to China’s multibillion-dollar surveillance industry. The country’s authoritarian government uses those tools to track ethnic minorities, political dissidents and others it sees as a threat to its power—including in Xinjiang, where authorities are creating an all-seeing digital monitoring system that feeds into a network of detention camps for the area’s Muslims.

U.S. companies, including Seagate Technology PLC, Western Digital Corp., Intel and Hewlett Packard Enterprise Co., have nurtured, courted and profited from China’s surveillance industry. Several have been involved since the industry’s infancy.

Once Silicon Valley’s highest-flying darlings, companies from WeWork to Uber Technologies have collectively lost about $100 billion in value this year, prompting some startup executives to talk up profitability over growth as venture-capital investors grow more cautious about spending.

In recent weeks, car-subscription company Fair and software company UiPath have downsized. Scooter-renting company Lime has rejiggered its operations to prove to investors it can turn a profit.

The startup industry remains awash in cash, and with interest rates staying historically low, any further steep decline in the private markets is unlikely, investors say. Still, the magnitude of the value destruction has cast a level of uncertainty over the venture-capital industry not seen in years. It has also prompted some soul-searching and calls by investors for stricter corporate governance.

• SoftBank Shareholders Criticize Company After WeWork Wipeout

• An activist investor is trying to remove Colony Capital Inc.’s chief executive Thomas Barrack Jr., citing poor stock performance and an investigation into President Donald Trump’s inaugural committee, which Mr. Barrack chaired.

• Luxury-car maker Audi said it would eliminate 9,500 jobs over the next five years as part of a restructuring aimed at bolstering profits in a slowing global auto market.
   
• Canadian National Railway Co. said Tuesday it has struck a tentative agreement with the union representing 3,200 conductors and yard-crew workers, bringing an end to a weeklong strike that threatened to upend the economy.

Subscribe to The Morning Risk Report here.

Follow us on Twitter at @WSJRisk, @kcbroughton, @_MengqiSun and @dgtokar.

Send comments to the Risk & Compliance editor, Jack Hagel, at jack.hagel@wsj.com