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The Morning Risk Report: SEC Investigating Melvin Capital Management
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Good morning. The U.S. Securities and Exchange Commission is looking into Melvin Capital Management risk controls and investor disclosure after the hedge fund was crippled by the meme-stock rally last year, said people familiar with the matter.
The regulator has contacted investors in the hedge fund in recent months as part of an investigation into what Melvin founder Gabriel Plotkin and other senior executives told them in the wake of the meme-stock rally in January 2021, and whether it misled investors when it raised money last year.
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Content from our Sponsor: DELOITTE
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International Paper’s CFO on Leveraging Disruptive Finance
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Tim Nicholls, CFO of International Paper, discusses the complex role finance played in last year’s Sylvamo spin-off, and how cross-functional teams leverage data and analysis for faster, better decisions. Read More ›
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The SEC has obtained from Melvin, which has largely returned its clients’ money, its general communications with investors and has sought information about what the firm disclosed about the risks of its investment strategy to clients, the people said.
The investigation is in its early stages and may not lead to any formal claims of wrongdoing. It is being handled by the enforcement division’s asset-management unit in Washington, D.C., the people said. The SEC and other law-enforcement authorities have investigated the frenzied trading in early 2021 that sent shares of GameStop Corp. and others soaring. It couldn’t be learned whether the broader inquiries are related to the SEC’s probe of Melvin.
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WSJ Risk & Compliance Forum
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Sign up for the next WSJ Risk & Compliance Forum on Nov. 16 for discussions on the critical issues facing corporate risk & compliance professionals, including keeping up with sanctions, screening for forced labor, and proposed U.S. rules on climate change and cybersecurity. Register here for a discounted ticket.
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Crypto brokers, exchanges and blockchain companies flocked to Singapore after it enacted a regulatory framework for payment services in 2020. PHOTO: ORE HUIYING/BLOOMBERG NEWS
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Two years ago, Singapore opened its doors to cryptocurrency firms. Now, after the implosions of several digital currencies and players rooted in the city-state, regulators are trying to distance themselves from the blowups while they grapple with how to rein in the industry.
Crypto brokers, lenders, exchanges and blockchain companies flocked to the Southeast Asian financial hub after it enacted a regulatory framework for payment services in early 2020. Close to 200 firms applied for licenses to provide digital-payment-token services, according to the Monetary Authority of Singapore, the country’s central bank and top financial regulator.
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Lawyers for U.S. military veterans suing 3M Co. over its earplugs are trying to block the manufacturer’s plan to resolve the yearslong liability case in bankruptcy court.
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The Justice Department has asked a Florida judge to unseal the warrant FBI agents used to search former President Donald Trump’s Mar-a-Lago home this week, Attorney General Merrick Garland said Thursday, raising the prospect that details of the extraordinary search of the former president’s home could soon be public.
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The Federal Trade Commission said Thursday it would begin considering new federal rules to expand online privacy protections by targeting online surveillance and lax data-security practices by technology companies.
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A rescue operation to save fish from low-quality water in Saint-Fraigne, southwestern France. PHOTO: YOHAN BONNET/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Scorching temperatures have drained some of Europe’s main rivers, threatening to disrupt vital economic thoroughfares and exacerbate the continent’s energy shortage.
In Germany, the Rhine is at critically low levels, hampering deliveries of coal and industrial goods, and is forecast to potentially become impassable for most barges at a key stretch by the end of the week.
In France, the Rhône and Garonne have been too warm to cool nuclear reactors, leading to lower output. In Eastern Europe, Danube levels are dwindling, impeding a key Ukrainian grain route.
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The average price of a gallon of unleaded gasoline in the U.S. has fallen below $4, a 21% drop from June’s peak, as demand for oil softens around the globe.
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European Union diplomats trying to break a deadlock in talks over an Iran nuclear accord have proposed a significant new concession to Tehran aimed at speedily ending a U.N. investigation into the Islamic Republic’s past atomic activities.
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The Bank of Mexico raised interest rates for a 10th straight meeting Thursday as it again increased its forecasts for inflation, which is at its highest level in more than two decades.
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Ukrainian forces are preparing for a battle to free the southern city of Kherson from Russian occupiers, and aim to do it on their own terms.
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Shares of New York Times rose after ValueAct disclosed a 6.7% stake in the company. PHOTO: LUCAS JACKSON/REUTERS
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Activist investor ValueAct Capital Partners LP has taken a 6.7% stake in New York Times Co. and intends to push the media company to more aggressively market subscriber-only content.
In a filing with the U.S. Securities and Exchange Commission on Thursday, ValueAct said it has had and expects to have future conversations with executives and directors of New York Times about various issues, including “whether it makes sense for a ValueAct Capital employee to be on the issuer’s board of directors.”
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Cardinal Health Inc. Chief Executive Officer Mike Kaufmann is stepping down from the healthcare products distributor as it struggles with the impact of inflation and supply-chain constraints on its medical supplies business.
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Sonos Inc. is losing its chief financial officer as the company faces economic challenges and has cut its outlook for the fiscal year.
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German telecommunications giant Deutsche Telekom AG reiterated plans to build its stake in T-Mobile US Inc. and said it is nearing majority ownership of the U.S.’s second-largest wireless carrier by customers.
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Samsung’s de facto leader, Lee Jae-yong, will receive a pardon on Monday, South Korea’s presidential office said, a legal reprieve underpinned by expectations that the business tycoon will help propel the nation’s economy.
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Energy prices fell 9% in July from June, the PPI report showed. PHOTO: MARIO TAMA/GETTY IMAGES
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U.S. suppliers raised prices in July at the slowest annual pace since last fall as energy costs dropped, adding to signs price pressures in the economy have eased slightly.
The producer-price index, which generally reflects supply conditions in the economy, increased by 9.8% annually in July, the smallest annual rise since October 2021’s 8.9% increase, the Labor Department said Thursday. Producer prices climbed 11.3% in June from a year earlier.
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Walgreens Boots Alliance Inc. is offering signing bonuses up to $75,000 to pharmacists in some markets as the company struggles to fill jobs amid a chronic worker shortage that became acute during the Covid-19 pandemic.
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Warby Parker Inc. said it has cut 15% of its corporate staff and lowered its sales outlook for the year as the eyeglasses maker copes with consumers changing their shopping habits amid economic uncertainty.
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Calm.com Inc., maker of popular meditation and wellness app Calm, has laid off 20% of its staff, according to a memo sent by Chief Executive David Ko to employees on Thursday.
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Johnson & Johnson will stop selling baby powder made with talc globally in 2023, the company said.
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Rivian Automotive Inc. reported its net loss in the second quarter nearly tripled to $1.7 billion, further pressuring the electric-vehicle startup to conserve cash and move quickly to fill customer orders.
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