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The Morning Risk Report: Banks Get Some Relief in Volcker-Rule Changes
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The proposed changes, unveiled by the FDIC, would ease rules on short-term proprietary trading by big banks. PHOTO: STEPHEN VOSS FOR THE WALL STREET JOURNAL
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Good morning. Banks are on the verge of getting some relief from Volcker-rule limits on speculative trading, one of the industry's priorities in amending the regulations put in place after the financial crisis. Two financial regulators on Tuesday approved changes relaxing trading restrictions for midsize banks and easing compliance for the biggest banks.
The largest banks, including JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp., will get limited relief by no longer having to prove to regulators that trades held for less than 60 days weren't made for the firms' own short-term profit or otherwise prohibited.
[Continued below...]
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Among the changes, firms with less than $1 billion in trading assets and liabilities—including midsize firms that engage in hedging for agricultural loans or other trades made on behalf of clients—will be given the benefit of the doubt by regulators that they comply with the Volcker rule's trading restrictions. Previously, those companies faced the burden of showing regulators that they were in compliance with the rules.
The biggest banks will still have to comply with other Volcker requirements, which encompass other short-term trading restrictions and a requirement that chief executives sign off on compliance programs.
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From Risk & Compliance Journal
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A U.S. judge rejected a former Alstom executive’s claims that his constitutional rights had been violated but agreed to delay his trial on bribery charges. PHOTO: REGIS DUVIGNAU/REUTERS
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Judge Agrees to Delay Former Alstom Executive’s Bribery Trial
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A federal judge granted former Alstom SA executive Lawrence Hoskins a brief reprieve from his upcoming trial, but rejected claims that his constitutional rights had been violated, Risk & Compliance Journal’s Dylan Tokar reports.
Mr. Hoskins, a former Alstom senior vice president, failed to show that years of delays to his trial had violated his Fifth Amendment and Sixth Amendment rights as well as the Speedy Trial Act, U.S. District Judge Janet Bond Arterton ruled Monday.
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U.S. Blacklists Dominican Republic-Based Drug Trafficking Network
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The U.S. designated a Dominican Republic-based network linked to Dominican national Cesar Emilio Peralta as narcotics traffickers—the latest move by the Trump administration to address the nation’s opioid epidemic, the Treasury Department said Tuesday.
The designation includes eight Dominican nationals in addition to Mr. Peralta and six entities in the Dominican Republic, including several nightclubs. The Treasury alleges that the network has trafficked significant quantities of cocaine and opioids through the Dominican Republic and into the U.S. and Europe, and uses nightclubs and front persons to launder the proceeds.
Mr. Peralta didn’t immediately respond to a request for comment sent to Flow Gallery Lounge, one of the blacklisted nightclubs that the Treasury says is owned or controlled by him.
“This administration continues to systematically target strategically important drug kingpins and cartels fueling our country’s opioid epidemic,” Sigal Mandelker, Treasury’s undersecretary for terrorism and financial intelligence, said in a statement.
—Mengqi Sun
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Brazil Central Bank Takes Over Anti-Money-Laundering Agency
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Brazil’s central bank is absorbing a government agency tasked with flagging larger-than-usual financial transactions in order to prevent money laundering, terrorism funding and mass-destruction weapons financing.
The agency previously known as COAF has been assigned to different ministries earlier this year before landing at the central bank. It will now be called Financial Intelligence Unity, or UIF. The body has played an important role in the sprawling Operation Car Wash graft probe.
—Paulo Trevisani
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Qualcomm said it will allow LG to develop and sell smartphones with its technology under a new patent-licensing deal. PHOTO: VCG/GETTY IMAGES
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Qualcomm Inc. has reached a new patent-licensing deal with LG Electronics Inc. of South Korea, helping land its technology in a suite of wireless devices while U.S. federal regulators continue to scrutinize its business practices on antitrust grounds.
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Robert Cohen, the former government lawyer who managed Washington’s crackdown on cryptocurrency fraud, is joining Davis Polk & Wardwell LLP, a white-shoe law firm whose clients include some of Wall Street’s biggest banks and stock exchanges. Mr. Cohen spent 15 years at the Securities and Exchange Commission, where he supervised insider-trading enforcement and complex cases involving stock-market infrastructure before taking over the SEC’s Cyber Unit, which is dedicated to the threat of crypto fraud.
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An online gun bazaar is taking shape on Facebook Inc.’s Marketplace, as recent mass shootings have renewed the debate in Washington over access to firearms. The private sale of many items, including guns, is specifically forbidden by Facebook rules. But sellers are getting around that with a simple trick: They list gun cases or boxes at inflated prices. Those postings have become code for the real thing, while in many instances evading Facebook efforts to screen postings for banned items.
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A national-security panel that oversees foreign investment in U.S. businesses, the Committee on Foreign Investment in the U.S., known as Cfius, approved the transfer of a stake in cybersecurity company Cofense Inc. from a Russia-linked private-equity firm to funds managed by BlackRock Inc., people familiar with the matter said.
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Mexican authorities are preparing to file more criminal charges against the former head of state oil company Petróleos Mexicanos, expanding the scope of the anticorruption efforts launched by the government of President Andrés Manuel López Obrador. Emilio Lozoya, the former CEO of Pemex, has been at large since late May, after being charged in two separate corruption probes for allegedly receiving more than $12 million in bribes from Brazilian construction firm Odebrecht and Mexican steelmaker Altos Hornos de México.
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Huawei Technologies Co.’s chief financial officer argued in court documents made public Tuesday that Canadian efforts to extradite her to the U.S. should be stayed because of misconduct by Canadian and U.S. law enforcement. The U.S. has charged Meng Wanzhou and Huawei with violating U.S. sanctions against Iran. Ms. Meng and Huawei have denied any wrongdoing.
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Australia will join a U.S.-led coalition protecting oil tankers and cargo ships from attacks by Iran in the Strait of Hormuz, the government said, bolstering Washington’s efforts to increase international pressure on Tehran.
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Facebook CEO Mark Zuckerberg at the annual F8 summit in San Jose, Calif., last year. PHOTO: JOSH EDELSON/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Facebook Inc. said it would start letting users review and dissociate themselves from the data Facebook receives about them from other apps and websites off the platform, a step toward a pledge of enhanced privacy options Chief Executive Mark Zuckerberg made more than 15 months ago. The company said it is rolling out a feature called “Off-Facebook Activity” to let users see information apps and websites gather on them and send to Facebook, such as shopping activity, logins using Facebook credentials, or site visits that trigger tracking signals.
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U.S. Cities Rethink Data Relationship With Residents
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Cities across the U.S. are measuring everything from air quality to traffic. Privacy rules and hackers’ interest in such information, however, are prompting city officials to think carefully about how that information is managed. Cyberattacks on cities largely have been waged by criminals who deploy ransomware and lock people out of systems and data used for public services. As more information about residents is collected, officials worry the resulting reams of data could attract different antagonists such as nation-states or terrorists who could incorporate the data into physical and cyber-warfare campaigns.
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Seth Fischer of Oasis Management says his firm is using Japan’s stewardship code to push for change. PHOTO: BLOOMBERG
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Shareholders are growing more vocal in Japan, lodging protest votes against chief executives, presidents and other company directors. Embarrassing bosses like that was once rare in the consensus-based corporate culture. But the taboo is weakening, as part of a yearslong push to improve Japanese companies’ profitability and corporate governance, and to encourage more involvement from investors.
It hasn’t led directly to the ouster of many leaders. But it has given stockholders a new weapon as they try to nudge companies around to their way of thinking. In some cases, such as with Olympus Corp., investors have managed to get their nominees onto boards.
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This year is shaping up to be the first year that women make up the majority of the college-educated labor force, a milestone that is already altering benefits packages offered by companies and one that could influence family sizes in the future.
Women make up only 46.6% of the overall labor force, but they first reached 45% of the college-educated labor force at the turn of the century. Since 2013, the female share of college-educated workers has been around the 49% mark, with 2019 being the year that women cross into the majority.
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Animal medication produced by Elanco, top, and Bayer at a veterinary practice in Frankfurt. PHOTO: FRANK RUMPENHORST/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Bayer AG is selling its animal-health business to an American rival for $7.6 billion, part of the German drug-and-chemicals giant’s plan to divest assets amid mounting legal liabilities from its Roundup herbicide.
The deal to sell the unit to Elanco Animal Health Inc., based in Greenfield, Ind., would create a new industry heavyweight in the business of preventing and treating diseases for pets and livestock.
The combined company would have a market share of roughly 13%, making it the second-largest animal-health company by revenue behind U.S. rival Zoetis Inc. and ahead of German, family-owned Boehringer Ingelheim, according to Germany’s Baader Bank.
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Cereal makers, under increasing competitive pressure, are struggling to improve sales of puffed rice, wheat flakes and oat clusters that were once a standard part of Americans’ morning routines. Now manufacturers say they are stepping up spending by retooling marketing campaigns, ramping up product investments and developing new flavors to try to keep shoppers engaged.
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One of them, General Mills Inc., has promoted its controller to the role of chief financial officer as the company continues to expand its portfolio of products in response to changing consumer tastes.
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