Good morning. Robinhood Financial LLC’s settlement with a Wall Street regulator highlights the scrutiny and compliance challenges financial technology companies could face as they transition from startups to publicly traded companies, experts said.

Robinhood agreed to pay nearly $70 million to resolve allegations the brokerage misled customers, approved ineligible traders for risky strategies and didn’t supervise technology that failed and locked millions out of trading, according to the agreement with the Financial Industry Regulatory Authority that became public Wednesday. The settlement is the largest ever levied by Finra.

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“These are common issues with fintech companies,” Alma Angotti, a partner at consulting firm Guidehouse who previously worked in the enforcement department at Finra, said. “It is hard to make that shift from technology companies building really cool things to a regulated financial institution.”

Robinhood, which on Thursday filed paperwork with the Securities and Exchange Commission to go public, is also facing a number of federal and state investigations, including its handling of user account takeovers, its compliance with anti-money-laundering rules and its practices around approving users to trade options, among other things, according to the prospectus.

The Morning Risk Report is taking a break for the July 4th holiday. We will be back on Tuesday. 

A U.K. judge has approved a deferred prosecution agreement between the Serious Fraud Office and engineering firm Amec Foster Wheeler Energy Ltd. to resolve alleged corruption charges, the agency said Thursday.

The SFO, the U.K.’s white-collar-crime prosecuting agency, confirmed last Friday it had agreed in principle to a deferred prosecution agreement with Amec, now owned by U.K.-based oil-and-energy engineering firm John Wood Group PLC. The details of the settlement agreement aren’t yet publicly available.

John Wood last week said it agreed to pay a total of $177 million in compensation, disgorgement and fines to U.S., Brazilian and U.K. regulators to settle corruption charges. The company said it entered into a three-year deferred prosecution agreement in the U.K. in connection with the use of third-party agents for alleged bribery in five countries by Foster Wheeler.

"The resolutions relate to historical conduct which occurred before Amec PLC acquired Foster Wheeler AG in November 2014 and prior to the combined firm’s acquisition by Wood in October 2017,” the company said. “Wood cooperated fully with all authorities in their investigations, which is reflected in the cooperation credit that Wood received from the authorities in their respective resolutions.”

—Mengqi Sun

New York prosecutors on Thursday unveiled a 15-count indictment charging the Trump Organization and its finance chief Allen Weisselberg with a wide-ranging conspiracy to avoid paying taxes, launching the first criminal case resulting from a multiyear investigation into former President Donald Trump’s business affairs.

In a Manhattan courtroom, prosecutors described a 15-year-long tax-fraud scheme involving off-the-books payments to employees at the Trump Organization. Executives were allowed to take perks like car leases and Manhattan apartments without the company or the recipient paying taxes, prosecutors said.

The indictment said Mr. Weisselberg, a close confidant of Mr. Trump who has worked at the company for almost 50 years, had illegally avoided paying taxes on $1.76 million in benefits since 2005. Mr. Weisselberg, appearing in handcuffs, pleaded not guilty. The Trump Organization, through its attorneys, also pleaded not guilty. 

A former top Wells Fargo & Co. executive in London said the lender had a flawed compliance culture and executives acted like a mafia to suppress internal critics, according to a recorded phone call submitted to a U.K. court.

Alicia Reyes was chief executive of Wells Fargo’s European investment bank. She left the bank in January 2020 and criticized the lender in an April 2020 telephone call with a former Wells Fargo contract worker who is suing for unfair dismissal after he raised concerns internally about compliance failings in the U.K.

“It’s like a mafia, literally,” Ms. Reyes said during the call. “This place is just a scheme. There’s no intention of actually solving problems or building things. There’s just smoke and mirrors and a coverup.”

• Former Trump adviser Jason Miller says a new, free-speech-focused social-media platform he is leading has received financial backing from a foundation tied to fugitive Chinese businessman Guo Wengui. Called Gettr—a portmanteau of “getting together”—the Twitter -like platform appeared in app stores last month and will formally launch on July 4, Mr. Miller said.
   
• The Federal Trade Commission voted Thursday to broaden its discretion to challenge what it finds to be unfair methods of competition, potentially opening the door to a wider array of antitrust enforcement cases against big technology companies. 
   
• The Justice Department on Thursday said it is withdrawing from an antitrust settlement it reached last year with the real-estate industry’s largest trade group over brokers’ commissions. The move marks a change in position by the Biden administration after Trump-era antitrust enforcers reached the agreement. It also signals the department is poised to return to its prior investigation in order to take a broader look at practices in the real-estate market. The department sued the National Association of Realtors on antitrust grounds—and filed a concurrent settlement—in November.
   
• Hennes and Mauritz AB put a number on the cost of upsetting China: about $74 million in lost sales last quarter. The Swedish fashion company said sales in China fell 28% in the three months ending May 31, to about $189 million from $263 million from the same period a year earlier. Thursday’s sales report was H&M’s first that included the period from late March, when it suddenly became the target of a Chinese boycott months after raising concerns about forced-labor allegations in China’s Xinjiang region.
   
• Two Republican senators want more information from the nation’s biggest 401(k)-type plan on how money managers BlackRock Inc. and State Street STT lobal Advisors cast shareholder votes on behalf of government savers.
   
• The Supreme Court ruled Thursday that California went too far in requiring charities to file with the state regulators federal forms disclosing major contributors to tax-exempt charities, finding that the policy infringed on donors’ First Amendment rights.
   
• Verizon Communications Inc. told federal regulators it would keep supporting low-cost wireless service for three years if it is allowed to buy TracFone, a sign of deepening negotiations in the carrier’s effort to control a giant in prepaid cellphone plans.
   
• The National Football League has fined the Washington Football Team $10 million following a law firm’s investigation into the franchise’s workplace culture that led commissioner Roger Goodell to conclude that for years the team’s workplace environment was “highly unprofessional,” particularly for women.

The International Accounting Standards Board on Thursday got a new leader after a decade in which the standard-setter expanded its reach to more countries and implemented several key rule changes.

Andreas Barckow, an accountant who had served as president of the Accounting Standards Committee of Germany until February and who formally took over the role of chairman of the IASB this month, is expected to dive deep into the weeds on international accounting rules. That marks a contrast from former chair Hans Hoogervorst, who isn’t a qualified accountant and took more of a big-picture approach to promoting the standards around the world.

The London-based body sets international financial reporting standards, or IFRS, which apply in many countries where the U.S. and multinational companies operate.

• Private-equity-backed insurance companies that owe billions of dollars to retirees in annuity payments are taking some additional risk with investments, new analysis by ratings firm A.M. Best shows. To offset that risk, however, these firms on average hold more cash than traditional insurers, and they have higher capital levels, according to the report.
   
• The U.S. has won international backing for a global minimum rate of tax as part of a wider overhaul of the rules for taxing international companies, a major step toward securing a final agreement on a key element of the Biden administration’s domestic plans for revenue raising and spending. Those governments now will seek to pass laws ensuring that companies headquartered in their countries pay a minimum tax rate of at least 15% in each of the nations in which they operate, reducing opportunities for tax avoidance.

• Activist investor Elliott Management Corp. has intensified pressure on GlaxoSmithKline PLC, calling on the pharmaceutical giant to replace members of its board and launch a process to decide whether Chief Executive Emma Walmsley should continue to lead the group. The hedge fund, known for waging forceful campaigns for change at companies in which it invests, on Thursday said Glaxo had a poor record of execution, that its share price had underperformed for years and that its management lacked credibility.
   
• Hertz Global Holdings Inc. shares swung wildly in the over-the-counter market after the rental-car company formally emerged from bankruptcy and was swiftly sued by bondholders demanding $272 million in premium payments.

• Pinterest Inc. said Thursday it will ban advertisements with weight-loss language and imagery on its platform, as the company joins a broader body-positivity movement. The online image-sharing company won’t allow any ads with weight-loss testimonials or weight-loss products. It will also prohibit language or imagery that idealizes or puts down certain body types, the company said. This doesn’t extend to ads that promote healthy lifestyles, habits and fitness services and products, it said.
   
• The Southwest is suffering through one of its worst droughts on record amid a critical reduction in the amount of water from snowpack runoff. One of the hardest-hit states is California, home to about 70,000 farms and ranches with a combined output of about $50 billion a year. The dairy industry accounts for the largest chunk of the state’s agricultural revenue, followed by almonds and grapes.
   
• MGM Resorts International agreed to take full ownership of the huge CityCenter property on the Las Vegas Strip in a complex arrangement to sell real estate but still gain all the revenues from operating the massive Strip casino, the company said Thursday.

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