|
The Morning Risk Report: SEC Whistleblower Tips Decline as Agency Looks to Limit Big Awards
|
|
|
|
|
|
|
Pedestrians outside the Securities and Exchange building in Washington. The SEC received 5,212 whistleblower tips during the 2019 fiscal year. PHOTO: STEPHEN VOSS FOR THE WALL STREET JOURNAL
|
|
|
Good morning. The U.S. Securities and Exchange Commission reported its first annual decline in tips from corporate whistleblowers as the agency prepares to finalize a proposal that could limit the size of big awards, Risk & Compliance Journal’s Kristin Broughton and Dylan Tokar report.
The SEC received 5,212 tips during the 2019 fiscal year ended in September, down 1% from a year earlier, the agency said in an annual report to Congress. The largest drop was in tips about potential cases of fraud in securities offerings, which had spiked the previous year. The overall decline follows years of steady growth since the program was established by Congress after the financial crisis. Tips in 2018 jumped 18% from 2017.
[Continued below...]
|
|
|
The SEC could begin imposing limits on its largest awards under a proposal introduced last year that would give the agency discretion to scale back awards above $30 million. Whistleblower advocates and lawyers have criticized the proposal, saying it could discourage people from reporting information about corporate wrongdoing.
SEC Chairman Jay Clayton addressed those concerns in a statement, saying critics have mischaracterized the proposal as imposing a cap on future awards. “Congress vested in the commission the authority and responsibility to use our good judgment and experience to determine award amounts,” Mr. Clayton said.
|
|
|
|
Corporate Compliance in a Disrupted World
|
|
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 Tuesday for:
-
A live discussion with compliance officers from Alstom SA and BNP Paribas USA about how their focus is changing.
-
An interview with former U.S. Treasury Department Senior Advisor Elizabeth Rosenberg, who is now a senior fellow and director at the Center for a New American Security.
For details and to register, click here.
|
|
|
From Risk & Compliance Journal
|
|
|
|
DXC Technology Co. signage displayed outside the New York Stock Exchange in 2017. The technology services company notified regulators of possible sanctions violations. PHOTO: MICHAEL NAGLE/BLOOMBERG NEWS
|
|
|
-
U.S. technology services company DXC Technology Co. has notified regulators of potential sanctions violations. The Tysons, Va.-based company said in a regulatory filing that it submitted a voluntary disclosure to the U.S. and U.K. regulators that enforce sanctions compliance.
-
The Justice Department charged two former executives of Herbalife with conspiracy to bribe Chinese government officials, Risk & Compliance Journal’s Dylan Tokar reports.
-
Skandinaviska Enskilda Banken AB said it has been contacted by a Swedish TV show that claims it has information on the bank ahead of a program it will air on suspected money laundering in the Baltics.
-
The European Investment Bank said it would end financing for fossil-fuel energy projects from the end of 2021 onward, marking the latest blow to oil-and-gas companies as the European Union readies for its version of the Green New Deal.
|
|
|
|
An Uber car in Brooklyn, N.Y. PHOTO: KEVIN HAGEN FOR THE WALL STREET JOURNAL
|
|
|
Uber has been hit with an almost $650 million bill in unpaid employment taxes and fines from New Jersey, marking another setback for the ride-sharing firm as it struggles to prevent its drivers from being classified as employees.
The state’s Department of Labor and Workforce Development demanded Uber and a subsidiary, Rasier LLC, hand over the amount for failing to pay employment taxes by, the state argues, misclassifying drivers as independent contractors.
The Labor Department said in letters sent to the firms that they owe $523 million in unemployment and disability insurance taxes for 2014 through 2018. The state added $119 million in penalties and interest. The firms are contesting the decision, according to the correspondence which was first reported by Bloomberg Law.
|
|
|
-
A sweeping federal enforcement initiative aimed at sales practices related to retirement savings for teachers began after town halls across the country where the nation’s top securities regulator heard things that worried him.
-
The Supreme Court agreed to hear an appeal by Google, challenging its loss to Oracle in a copyright case that could produce a multibillion-dollar verdict and have wide ramifications for the software industry.
-
Federal prosecutors in New York are investigating whether Rudy Giuliani stood to profit personally from a Ukrainian natural-gas business pushed by two associates who also aided his efforts there to launch investigations that could benefit President Trump, people familiar with the matter said.
-
Hospitals and insurers would be forced to disclose their secret negotiated rates for the first time under a far-reaching plan released by the Trump administration.
-
Steve Wynn can’t be punished with fines by Nevada gambling regulators, the former Las Vegas magnate’s attorneys argued in a filing, because he has already left the casino industry and remains willing to stay out.
-
A group representing the world’s largest miners published draft proposals for strict new standards to govern how companies build and operate the sort of mine-waste dam that collapsed in Brazil early this year, killing 270 people.
-
A coalition of 23 states and the District of Columbia sued the Trump administration Friday to preserve the ability of states to set vehicle-emissions rules that surpass federal standards.
|
|
|
|
FAA Administrator Stephen Dickson said ‘human factors,’ such as pilot reaction time, should be more of a priority in the process of designing jets. PHOTO: STEFANI REYNOLDS/BLOOMBERG NEWS
|
|
|
U.S. air-safety regulators are considering ways to alter fundamentally how they certify aircraft in the wake of Boeing’s 737 MAX crisis, the head of the Federal Aviation Administration said.
FAA Administrator Stephen Dickson has previously said he wants to adopt a more holistic approach to certification. In the interview, he provided new details about the agency’s thinking, including the possibility of the FAA being involved in the design of a new plane from the outset.
There should be more dialogue between the FAA and plane makers over the course of the development of a new jet, Mr. Dickson said. He said that “human factors”—such as how rapidly airline pilots realistically are able to react in certain emergency situations—should be more of a priority in the process of designing jets, echoing earlier comments. “That probably needed to happen some time ago,” he said.
|
|
|
How Google Interferes With Its Algorithms and Changes Your Results
|
|
Every minute, an estimated 3.8 million queries are typed into Google, prompting its algorithms to spit out results for hotel rates or breast-cancer treatments or the latest news about President Trump. They are arguably the most powerful lines of computer code in the global economy, controlling how much of the world accesses information found on the internet, and the starting point for billions of dollars of commerce.
The company states in a Google blog, “We do not use human curation to collect or arrange the results on a page.” It says it can’t divulge details about how the algorithms work because the company is involved in a long-running and high-stakes battle with those who want to profit by gaming the system.
But that message often clashes with what happens behind the scenes. Google has increasingly re-engineered and interfered with search results to a far greater degree than the company and its executives have acknowledged, a Wall Street Journal investigation has found.
|
|
|
|
The FDA found traces of asbestos in Johnson’s Baby Powder earlier this year, prompting Johnson & Johnson to voluntarily recall 33,000 bottles of the product, do its own testing—and conclude that the product is asbestos-free. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES
|
|
|
Johnson & Johnson rushed to test its famous baby powder last month after the U.S. Food and Drug Administration found asbestos in a bottle and triggered a recall. The company announced 11 days later that independent testing had found no trace of the contaminant. But J&J’s push for a rapid turnaround contributed to results that were more complicated, a review of lab reports released by the company shows.
J&J’s rapid response challenging the FDA’s findings reflects how important Johnson’s Baby Powder is to the New Brunswick, N.J., health-care conglomerate. Baby powder generates less than 1% of total sales, but because the product is so well-known, the FDA’s asbestos finding represents a threat to J&J’s reputation for quality.
|
|
|
|
Paul Singer, president of Elliott Management, an activist firm that has recently pursued non-settlement agreements. PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS
|
|
|
A new playbook is emerging in the world of shareholder activism, one that calls for quick peace treaties enabling investors and the companies they target to sidestep costly, protracted battles.
In the past few weeks, AT&T and Emerson Electric Co. managed to quickly end high-profile activist challenges—at least temporarily—by agreeing to make modest changes. The hedge funds besieging them pledged nothing in return.
People involved in the deals insist they are not “settlements,” the formal arrangements that typically end activist campaigns and impose strict measures on both parties. Such agreements often enable activists to name one or more board directors while preventing them from agitating publicly or waging a proxy fight—and trading in the stock.
|
|
|
-
Activist investor Engaged Capital LLC has taken a large position in Medifast Inc.—its second time targeting nutrition and weight-loss company—with plans to push for change, including operational fixes, board structure and alternatives that can close the gap between what Engaged believes Medifast’s stock should be worth and where it is currently trading.
-
Shareholders of Eldorado Resorts and Caesars Entertainment approved an $8.58 billion cash-and-stock merger that would create the largest casino operator in the U.S.
|
|
|
|
Some investors in TikTok’s parent company, Beijing-based ByteDance, have acknowledged that distancing the social-media company from its Chinese roots may be difficult. PHOTO: SHIHO FUKADA/BLOOMBERG NEWS
|
|
|
TikTok this year made history as China’s first social-media company to make it big in the U.S. Now, TikTok wants to shed its label as a Chinese brand.
As TikTok faces mounting scrutiny from U.S. lawmakers and regulators, some employees and advisers in recent weeks have approached senior executives to suggest ways the company could rebrand, according to people familiar with the discussions.
Ideas discussed include expanding operations in Southeast Asia, possibly Singapore—which would allow executives to distance the video-sharing app from China—and rebranding it in the U.S., the people said.
|
|
|
-
HP rejected a $33 billion takeover offer from Xerox as too low, but the PC and printer maker made clear it is interested in discussing a deal to combine with its smaller rival.
-
Twitter said it would no longer allow certain types of geographic or keyword targeting for advertisers promoting any type of cause, as part of rules aimed at blocking most political-related ads. Meanwhile, as political ads flourish online, few agree how to regulate them.
-
Emirates Airline bet its future on giant planes and mega hubs, but the world’s biggest international airline is now in the middle of the most significant rethink of that strategy in its history.
|
|
|
|
|
|