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The Morning Risk Report: U.S. Targets Russian ‘Evil Corp’ Hacker Group With Sanctions, Indictments
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Maksim Yakubets, the leader of Russian hacker group Evil Corp, is wanted for his alleged work for Moscow’s intelligence agency. PHOTO: SAMUEL CORUM/GETTY IMAGES
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Good morning. The Trump administration Thursday placed a $5 million bounty on the leader of a Russian hacker group called Evil Corp for his alleged work for Moscow’s intelligence agency, part of what U.S. officials say is a broader reprisal for a Kremlin-directed cyber offensive against the U.S.
The State Department’s action against Maksim Yakubets coincides with Treasury Department sanctions and indictments by the Justice Department and the U.K.’s National Crime Agency against core members of the group, which is accused of orchestrating the theft of more than $100 million from more than 300 banks in the U.S. and dozens of other countries.
[Continued below...]
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The cyber theft, using malware that stole credentials and passwords, isn’t believed to be directed by Russian intelligence, though a senior administration official said the activities couldn’t have been carried out without the knowledge of the Russian government.
But the Treasury Department said Mr. Yakubets was conducting separate work for Russia’s Federal Security Service as of 2017, and was seeking a license to handle classified intelligence with the agency in April of last year. The State Department bounty is for information that leads to the capture or conviction of Mr. Yakubets.
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Regulatory Compliance in a Disrupted World
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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 Heading, global geopolitics lead at KPMG International. Register here.
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Ericsson Still Thinks $1.2 Billion Provision Will Cover Probe
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Ericsson said Thursday that it still expects a previously announced provision of $1.2 billion to cover monetary sanctions and related costs from a continuing U.S. foreign corruption probe.
The telecommunications-equipment company said in September that it had made the provision amid a yearslong investigation by the U.S. Securities and Exchange Commission and the U.S. Department of Justice over the company's compliance with the U.S. Foreign Corrupt Practices Act.
The investigation relates to historical deals made in China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam. “The provision of $1.2 billion is still its current estimate of the amounts needed to cover the monetary sanctions, plus other related costs, as announced on Sept. 26,” Ericsson said.
—Dominic Chopping
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From Risk & Compliance Journal
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The push to establish an EU anti-money-laundering supervisor comes amid a wave of allegations of weak internal controls at some of the region’s largest banks. PHOTO: YVES HERMAN/REUTERS
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The European Union should consider creating an independent agency to supervise anti-money-laundering compliance, the bloc’s finance ministers said Thursday, the Risk & Compliance Journal’s Kristin Broughton reports.
The finance ministers urged the EU’s executive arm to evaluate and develop legislative proposals to establish a new supervisory body. Anti-money-laundering supervision is largely handled on a country-by-country basis in the EU, rather than by a central agency.
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The Justice Department is giving increasing consideration to companies’ efforts to prevent legal infractions before they happen. But even the best legal compliance programs can’t outweigh particularly egregious misconduct, one official said. The department’s criminal division, which oversees investigations into a range of business crimes, is trying to better explain how they assess the strength of a company’s compliance program during the course of an investigation, said Matthew Miner, a Justice Department deputy assistant attorney general.
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Comtech Telecommunications Corp. is being investigated for potential violations of U.S. sanctions on Sudan after the company disclosed the possible noncompliance to the Treasury Department’s Office of Foreign Assets Control, the company said in a regulatory filing.
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Workers fill barrels with balls of metal ore before loading them into a furnace at a copper and cobalt mine in the Democratic Republic of Congo. PHOTO: SIMON DAWSON/BLOOMBERG NEWS
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Britain’s top financial cop said it is investigating Glencore for alleged bribery, sending shares of the mining and commodities-trading company down almost 9% and adding to regulatory woes elsewhere that have weighed on the company all year.
The U.K.’s Serious Fraud Office said it was investigating suspicions of bribery “in the conduct of business by the Glencore group of companies, its officials, employees, agents and associated persons.” It didn’t elaborate. Glencore also disclosed the probe in a statement on Thursday. It declined to comment further.
The agency has been looking into the mining giant’s activities in the Democratic Republic of Congo and its relationship with Israeli diamond merchant Dan Gertler, according to a person familiar with the probe.
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For decades, insider trading has lacked a statutory definition, sometimes frustrating prosecutors who must rely on a shifting body of court precedent. The House of Representatives moved to clear up the uncertainty Thursday by passing a bill that explicitly defines—and bans—a crime that shakes investor confidence in the integrity of financial markets. If approved by the Senate and signed into law, the legislation could make it more likely that recipients of improper tips will face prosecution, some lawyers say.
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Italy is demanding €1.4 billion ($1.6 billion) in unpaid taxes from Fiat Chrysler Automobiles, in another hit to the car maker as it tries to complete its merger with Peugeot maker PSA Group while defending itself against a major lawsuit from General Motors Co. in the U.S.
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A box for a Smart Balance Wheel hoverboard after a fire in Lafitte, La. PHOTO: LOUISIANA OFFICE OF THE STATE FIRE MARSHAL
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The Wall Street Journal obtained government investigation reports for dozens of hoverboard fires, explosions and similar issues from the end of 2015 to the first few months of 2016, household disasters that were a bleak feature of that Christmas season. Together the fires caused at least $2.3 million in property damage and a handful of minor injuries.
Almost half of the hoverboards were purchased on Amazon—the most by far of any retailer during that period.
What followed were at least 17 lawsuits against Amazon.com Inc. from insurance companies and families, relating to problems with hoverboards largely shipped from unknown factories in China. Around half of those legal battles are still active.
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PHOTO: JOSH EDELSON/AFP VIA GETTY
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Uber Technologies said it received 5,981 reports of sexual assault involving U.S. passengers or drivers during 2017 and 2018, underscoring the risk that has been a chief criticism of ride-hailing companies around the world.
In a report released Thursday, Uber voluntarily disclosed the first comprehensive review of safety issues involving its ride service. Sexual violence in particular has been a challenge for Uber as well as rivals including Lyft Inc. and China’s Didi Chuxing Technology Co., prompting heightened pressure from lawmakers, advocacy groups and customers to address the problem.
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Federal safety limits for cellphone-radiation exposure have been a matter of debate. PHOTO: JUSTIN LANE/EPA-EFE/REX/SHUTTERS/EPA/SHUTTERSTOCK
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The Federal Communications Commission has decided to allow the rollout of new 5G wireless networks without making changes to federal safety limits for cellphone-radiation exposure. The U.S. telecommunications regulator voted unanimously this week to keep in place standards for how much exposure to the radio-frequency energy cellphones and antennas emit is safe. The standards cover consumer devices and the infrastructure used on cell towers and rooftops.
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Prices for a rare metal used to filter emissions in gasoline car engines continue rising, defying predictions that substitution of a cheaper alternative by auto makers would halt a yearslong rally. The gains highlight the challenges facing investors trying to predict how changing environmental standards and shifting technologies will affect commodity markets. Analysts have long predicted that palladium will be replaced by platinum in gasoline cars, but so far, demand continues to exceed supply.
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The Federal Trade Commission is considering updating rules on children’s privacy. PHOTO: ROBERT ALEXANDER/GETTY IMAGES
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Pediatricians and consumer advocates are calling on the Federal Trade Commission to investigate practices for collecting online data about children, amid concerns advertisers might be manipulating children with targeted ads.
“Advertising to children is a lucrative, booming business, and not enough is understood about these new methods of surveilling and monetizing children, or the impact that it has on their privacy and wellbeing,” according to a letter to the FTC dated Thursday.
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Mark Wiseman headed BlackRock’s approximately $300 billion active equities business. PHOTO: MIKE SEGAR/REUTERS
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A potential heir to the top job at BlackRock has been ousted from the money-management giant for failing to disclose a relationship with a colleague.
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United Airlines said its chief executive, Oscar Munoz, will step down after four-and-a-half years at the helm, promoting an air-travel veteran to continue one of the industry’s biggest turnarounds.
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Sundar Pichai’s appointment this week as chief executive of Google's parent Alphabet effectively shifts the focus back on the company’s advertising profit machine and away from its “moonshots” and other potential new businesses. Mr. Pichai’s promotion late Tuesday amounted to the biggest managerial overhaul of the internet giant since 2015, when co-founders Larry Page and Sergey Brin created Alphabet as a parent company above Google.
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A GM plant in Spring Hill, Tenn. PHOTO: HARRISON MCCLARY/REUTERS
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General Motors and South Korea’s LG Chem plan to build a large battery factory in Ohio, the latest example of an auto maker plowing money into the development of electric cars.
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Facebook is in talks to lease a landmark Manhattan building in a deal that would make it one of New York’s largest corporate tenants and would help offset the lack of Amazon’s second headquarters earlier planned for the city.
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