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The Morning Risk Report: SEC Whistleblower Program Sets New Records in 2020
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Jay Clayton, chairman of the Securities and Exchange Commission, giving an address last year in New York. PHOTO: SHANNON STAPLETON/REUTERS
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Good morning. The U.S. Securities and Exchange Commission’s whistleblower program set annual records, awarding more money to more tipsters in fiscal 2020 than in any other year of the program’s history. The volume follows efforts by the regulator to speed up payouts to whistleblowers after years of complaints that it was slow to dole out awards.
“We are sending the message to people that if you bring us high-quality tips, we’re going to dig into them, and pursue actions with vigor, and then we’re going to get you a whistleblower award promptly,” SEC Chairman Jay Clayton tells Risk & Compliance Journal’s Mengqi Sun.
[Continued below…]
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The SEC’s Office of the Whistleblower issued about $175 million to 39 individuals in the fiscal year ended Sept. 30, according to the office’s annual report to Congress. The total dollar amount was 4% higher than the previous record—about $168 million in fiscal 2018—and almost three times the total issued in fiscal 2019, when $60 million was distributed to eight individuals.
The SEC started to review its claim-evaluation process with the goal of making it more efficient about a year and a half ago, as the regulator proposed changes to whistleblower program rules, according to Mr. Clayton.
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Mr. Clayton said Monday that he will step down at the end of the year, opening the door for Democrats to push for a more aggressive approach to regulation of Wall Street. His departure is the latest in a wave of expected turnover at federal regulators as power changes hands in Washington. Mr. Clayton said he intends to remain active on the commission until the end of the year.
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Mitigating Ransomware Sanctions Risks
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Join us Wednesday for a discussion on the U.S. Treasury Department’s stance related to companies paying ransoms to those on money laundering and sanctions blacklists. We’ll talk with Ryan Fayhee of law firm Hughes Hubbard and Katherine Keefe of insurer Marsh about how companies can stay on the right side of the law. Sign up here.
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From Risk & Compliance Journal
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Airbnb Reveals Potential Noncompliance of U.S. Sanctions
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Airbnb said it made voluntary disclosures to the Treasury Department about its compliance efforts and certain user activity on its platform that may have been at odds with requirements under U.S. sanctions laws.
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The San Francisco-based home-sharing company said it conducted an internal review and is in discussions with the Treasury’s Office of Foreign Assets Control, which enforces U.S. economic and trade sanctions, according to initial public offering documents filed with the Securities and Exchange Commission on Monday.
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Watchdog Warns of Risks Associated With Sponsored Speeches
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The Office of Inspector General at the U.S. Department of Health and Human Services issued an advisory warning pharmaceutical companies and others in the health-care industry of risks associated with sponsored events that involve paying physicians or other health-care professionals to give speeches or presentations about a company’s drugs or medical devices.
Speakers payments come with legal risks for the industry. Payments made to induce or reward referrals or orders for items and services reimbursable under a federal health-care program such as Medicare and Medicaid, for example, are a violation of the U.S.’s anti-kickback statute. Physicians, too, can face prosecution under the statute.
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Workforce-training company 1Huddle opened a new headquarters in Newark, N.J., in September. PHOTO: 1HUDDLE
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As Covid-19 cases surge in nearly every state, offices around the country have stayed largely closed or only partially reopened, and not just because of health concerns. For white-collar workplaces, the pandemic has required compliance with the kind of complex workplace-safety regulations that, until recently, applied more to industrial settings than to offices.
Office spaces that fail to comply with the requirements face a liability threat few had to think about before the pandemic, employment lawyers say. “A white-collar company is not used to having this much burden from a workplace-safety standpoint,” said Travis Vance, an attorney at employment firm Fisher Phillips LLP who estimates he has advised 600 companies on Covid-19-related questions. Of those looking to reopen, he said, about one-quarter have decided the legal requirements are too challenging.
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A New York judge threw out a defamation lawsuit filed by former American International Group chief Maurice “Hank” Greenberg against former state Attorney General Eliot Spitzer, ending a seven-year court battle. The men have been rivals for years, dating to when Mr. Spitzer pursued fraud claims against the financial-services industry during his tenure as New York attorney general.
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A former Harvard University fencing coach was arrested along with a parent who federal prosecutors say conspired to pay the coach more than $1.5 million to secure spots at the school for his two sons as fencing recruits beginning in 2013.
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Honor gadgets accounted for 24% of Huawei’s 156 million smartphone shipments this year, according to market tracker Canalys. PHOTO: ALASTAIR GRANT/ASSOCIATED PRESS
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Chinese telecom company Huawei Technologies moved to shore up its U.S.-sanctions-damaged business by selling budget smartphone brand Honor to a state-led consortium.
The deal is in response to “tremendous pressure” on its consumer business from component shortages caused by U.S. curbs on its supply chain, Huawei said. Unloading Honor could enable the unit to sidestep restrictions from the Trump administration that block Huawei from buying computing chips or other parts made using American technology. Huawei executives have described the company as fighting for survival following the U.S. actions.
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The Federal Reserve’s Randal Quarles, pictured last year, said recent turmoil underscored the need to strengthen nonbank financial intermediation. PHOTO: ERIN SCOTT/REUTERS
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Global policy makers said market tumult triggered by the coronavirus pandemic in March exposed risks posed by nonbank financial firms and pledged to take steps to address them.
A report by the Financial Stability Board, a global body overseeing financial regulation, highlighted money-market mutual funds that saw destabilizing investor runs that prompted the Federal Reserve to intervene. The FSB said it would work to develop specific policy improvements sometime next year.
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Moderna said its experimental coronavirus vaccine was 94.5% effective at protecting people from Covid-19 in an early look at pivotal study results, the second vaccine to hit a key milestone in U.S. testing.
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President-elect Joe Biden warned that delays to his presidential transition could hinder the federal government response to the coronavirus pandemic as he sought to coordinate with business and labor leaders ahead of his new administration.
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Citigroup is pointing to internal communications written in the hours and days following an errant $900 million payment as evidence Revlon investors were aware they had been paid in error. Lenders have argued they had no reason to think the transactions were erroneous until Citi claimed as much and demanded repayment.
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Martin Shkreli during a television appearance in 2017. PHOTO: RICHARD DREW/ASSOCIATED PRESS
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Retrophin Inc., a biopharmaceutical company founded by now-convicted drug executive Martin Shkreli, is rebranding itself as Travere Therapeutics Inc.
The new name—which company officials say is a nod to the Latin roots for truth and path—severs another tie to its founder, Mr. Shkreli, who is serving prison time for securities fraud related to his management of two hedge funds and Retrophin. He is scheduled to be released in 2023.
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