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The Morning Risk Report: The SEC Gets Two New Commissioners
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Good morning. The U.S. Securities and Exchange Commission welcomed two new commissioners last week, bringing its governing body back to full staff as the regulator grapples with an ambitious rule-making agenda laid out by Chair Gary Gensler, write Dylan Tokar and Richard Vanderford.
The two new commissioners are Jaime Lizárraga, a Democrat and a former top aide to House Speaker Nancy Pelosi (D., Calif.), and Mark Uyeda, a Republican and an SEC staffer who was most recently detailed to the Senate Banking Committee.
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With Democrats holding a 3-2 majority on the commission, it is all but certain Mr. Gensler will have the votes he needs to advance a range of controversial proposals. The SEC has, for example, proposed requiring public companies to report information on their greenhouse-gas emissions and climate risks, a rule that, if implemented, could force companies to adopt new, costly compliance procedures.
Exactly how Messrs. Lizárraga and Uyeda will add to the discussion over the climate disclosure rule and other parts of Mr. Gensler’s agenda remains to be seen, said Stephen Quinlivan, a partner at law firm Stinson LLP. “It's relatively difficult to determine how sausage is made at the SEC,” Mr. Quinlivan said. “It's hard to tell…how much input the respective commissioners have on [a] rule before it comes to a meeting.”
Nevertheless, the new commissioners in the coming months will have opportunities to weigh in through public statements, and could help shape Mr. Gensler’s proposals as they are crafted into final rules.
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From Risk & Compliance Journal
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Financial Watchdog FATF Curbs Russia’s Influence Within Group
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A global financial watchdog has moved to limit Russia’s role and influence in the organization, citing the Kremlin’s invasion of Ukraine, the group said Friday.
The Financial Action Task Force, a Paris-based intergovernmental body that sets anti-money-laundering law standards, said Russia would no longer be allowed to hold any leadership or advisory roles or participate in decision-making on standard-setting, peer-review processes, and governance and membership issues. The organization on Friday also made changes to its “gray list,” a terror-financing watchlist, removing Malta and adding Gibraltar.
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Russian President Vladimir Putin spoke at the St. Petersburg International Economic Forum. PHOTO: SERGEI BOBYLEV/ASSOCIATED PRESS
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In a combative speech, Russian President Vladimir Putin criticized the West for failing to recognize the rise of new power blocs since the end of the Cold War, and warned that its sanctions on Moscow had backfired, creating a growing economic crisis in Europe.
“The idea was clear: crush the Russian economy violently,” Mr. Putin said at the annual St. Petersburg International Economic Forum, which Russia pitches as an alternative to the World Economic Forum in Davos to drum up investment in its economy. “They did not succeed. Obviously, that didn’t happen.”
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The cryptocurrency market’s latest swoon is giving investors a painful lesson about the risks of trading digital tokens through intermediaries.
Sliding digital asset values pushed lending service Celsius Network LLC on June 12 to freeze all customer withdrawals and explore options that include a financial restructuring. In a bankruptcy restructuring, crypto investors would be navigating uncharted territory.
“What can safely be predicted is that there will be litigation, and there will be delay,” said Adam Levitin, a law professor at Georgetown University who studies bankruptcy.
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Vince McMahon, the public face of American wrestling, stepped aside as chief executive and chairman of World Wrestling Entertainment Inc., under pressure from disclosure of a board investigation into alleged misconduct.
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SpaceX fired some employees involved in a letter that criticized Chief Executive Elon Musk and the way the company applies internal rules, according to an email to staff from SpaceX’s president and people familiar with it.
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The Taliban released five British citizens after six months of captivity, ending a dispute with the U.K. government that had complicated the group’s effort to obtain international legitimacy.
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The Supreme Court is expected to issue at least one opinion on Tuesday as it closes out one of its most contentious sessions in recent years, including the unprecedented leak of a draft opinion that, if the majority holds, would overrule Roe v. Wade, the 1973 decision recognizing abortion rights.
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Output at factories, mines and utilities rose 0.2% in May, down from a revised 1.4% increase the prior month. PHOTO: JEFF KOWALSKY/BLOOMBERG NEWS
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U.S. industrial production grew at a slower pace in May and manufacturing output fell, the Federal Reserve said, adding to signs of slowing economic growth.
Industrial production, which measures factory, mining and utility output, increased a seasonally adjusted 0.2% in May, the Fed said Friday, down sharply from a revised 1.4% increase the prior month. Manufacturing output dropped 0.1% last month, marking the first decline since January. Mining and utility output both rose, by 1.3% and 1%, respectively.
Meanwhile, most top executives say they think a recession is looming or already here, according to a new survey, reflecting a rapid deterioration of the economic outlook among business leaders.
More than 60% of CEOs expect a recession in their geographic region in the next 12 to 18 months, according to a survey of 750 CEOs and other C-suite executives released Friday by the Conference Board, a business research firm. An additional 15% think the region of the world where their company operates is already in a recession.
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Rossann Williams—who has been with the company for more than 17 years, including a stint leading Starbucks Canada—stands in front of a Toronto Starbucks in 2015. PHOTO: COLIN MCCONNELL/ZUMA PRESS
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The head of Starbucks Corp.’s North American business is set to depart the company, as interim Chief Executive Howard Schultz reshapes the company’s executive ranks.
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Banco Santander SA named its head of Mexico and North America operations as its new chief executive, as the Spanish bank braces for a period of economic uncertainty in many of its markets.
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A group of investors is agitating for change at a London-listed investment vehicle managed by shareholder activist Trian Fund Management LP, arguing that the company has deviated from its original purpose when it went public nearly four years ago.
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BlackRock Inc. casts votes on tens of thousands of proxy proposals a year. The responsibility rests with a team of about 70.
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Iceland bananas in their wrappers.
PHOTO: DAVID VINTINER FOR THE WALL STREET JOURNAL
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When one of the best-known supermarket chains in the U.K. decided to remove plastic from its products, it hadn’t anticipated a spike in shoplifting. Yet that is what happened when Iceland Foods Ltd. started selling steak in recyclable paper trays. Some customers bent the pliable containers in half and stuffed them down their trousers, executives said. Such theft wasn’t as easy when the steaks came wrapped in more rigid plastic packaging.
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Walmart Inc is the latest retailer to say it is no longer carrying MyPillow Inc. products in stores.
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The head of Germany’s influential metalworker trade union urged Volkswagen AG to reconsider its presence in western China, where leaders of Western countries and human-rights groups say Beijing is persecuting the Uyghur Muslim minority.
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Construction projects across the U.S. are running short on labor just as $1 trillion in federal infrastructure money starts to kick in, leading companies to get creative in their quest to attract and retain workers. Meanwhile, small businesses are losing ground in the hiring game.
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Apple Inc. employees at a retail store outside Baltimore voted to unionize on Saturday.
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Technology company Hewlett Packard Enterprise is turning to potentially untapped pools of cybersecurity workers, such as those who have taken time out of their careers, to address a shortage.
PHOTO: ELISE AMENDOLA/ASSOCIATED PRESS
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Bobby Ford, chief security officer at Hewlett Packard Enterprise Co., doesn’t believe in the cybersecurity talent gap. Instead, he says, the problem is more of an experience gap.
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TikTok said on Friday that traffic for all U.S. user data is now being routed through the cloud infrastructure of its partner Oracle Corp. TikTok, whose parent company is China-based ByteDance Ltd., said it still uses its own U.S. and Singapore data centers as backup but expects to delete U.S. user data from its own data centers and migrate fully to Oracle servers.
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‘Fast forward to this time next year, we’re dominant,’ says GM CEO Mary Barra.
PHOTO: JEFF KOWALSKY/AFP/GETTY IMAGES
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The Ford Motor Co.-General Motors Co. rivalry—one of the business world’s fiercest for a century—is taking on an urgent new dimension as the companies enter the electric age. Each is under pressure to show Wall Street it can close the gap on Tesla Inc., which has been cementing its EV dominance through profit and sales growth.
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Ernst & Young’s plan to split its audit and consulting businesses would give thousands of its partners multimillion-dollar payouts and relies on optimistic assumptions for growth to justify the deal, according to internal company documents and people familiar with the matter.
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Companies are buying back debt, pushing out maturities and reviewing cash-management strategies as they sharpen their focus on financing costs as interest rates continue to rise.
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