Good morning. The record $279 million whistleblower award issued by the Securities and Exchange Commission earlier this month stemmed from a bribery case against telecommunications company Ericsson, Risk & Compliance Journal’s Mengqi Sun reports.

The award from the SEC’s cash-for-tips program was related to the $1.1 billion settlement the Swedish company reached with U.S. authorities in 2019 over allegations it conspired to make illegal payments to win business, in violation of U.S. antibribery laws, according to people familiar with the matter.

• Large cut: Under SEC rules, a whistleblower can receive an award of between 10% and 30% of the fines collected in SEC civil-enforcement actions and related actions from other enforcement agencies resulting from a tip, assuming the SEC collects more than $1 million.
   
• Many millions: The $279 million whistleblower award topped the previous record, a $114 million whistleblower award the SEC issued to an individual in October 2020.
   
• Long-running scheme: Prosecutors who brought the charges in 2019 said that Ericsson’s wrongdoing occurred in Djibouti, China, Vietnam, Kuwait and Indonesia from 2000 to 2016.

Note to readers: The Morning Risk Report won’t be published Monday in observance of Memorial Day in the U.S. We will be back on Tuesday.

U.S. regulator vows tough line on problem banks.

Large U.S. banks found to have consistently poor risk management and other failings will face more heavy-handed government intervention, including demands to shore up capital or exit lines of business.

A policy unveiled Thursday creates a new set of guardrails targeting complex banks that fail to fix “persistent weaknesses,” said Michael Hsu, head of one of the nation’s top banking regulators, the Office of the Comptroller of the Currency. The move from Hsu’s agency comes after several significant bank failures this year that have rattled markets and the financial industry.

• The Supreme Court limited the Environmental Protection Agency’s authority over wetlands in a decision with broad ramifications for the environment, agriculture, energy and mining.
   
• The Securities and Exchange Commission penalized Sciens Diversified Managers for not having a proper policy for valuing fund assets, a failure the regulator said can lead firms to overcharge investors for fund management fees.
   
• Microsoft President Brad Smith backed calls for the U.S. government to create a new agency to license major artificial-intelligence systems, amid growing support for regulation of an industry that is moving aggressively to commercialize powerful new tools such as ChatGPT.

Pressure is on U.S. to hit back at China’s ban on Micron.

Commerce Secretary Gina Raimondo and her Chinese counterpart head into a pivotal meeting for fraught U.S.-China ties Thursday, as pressure builds on the Biden administration to respond to Beijing’s blacklisting of U.S. semiconductor maker Micron Technology.

Any retaliation by the U.S. over Micron risks setting back a fragile rapprochement after bruising months of acrimony. Thursday’s dinner meeting between Raimondo and Chinese Commerce Minister Wang Wentao is the latest in a series of high-level talks intended to restart dialogue, and the first one to take place in Washington.

• China Hack Is Latest Challenge for West’s Diplomatic Reset With Beijing
  ​

Biden, McCarthy see progress but no deal on debt ceiling

The House of Representatives left for its Memorial Day weekend recess with no deal in place to raise the nation’s debt ceiling, as the White House and top Republicans struggled to agree on the central issue of government-spending levels.

Leaders are hoping to pass the deal through both the Republican-controlled House and Democratic Senate next week ahead of a June 1 deadline, when the government could run short of funds to pay all of its bills on time. The ability to make that deadline wanes each day lawmakers don’t have a deal on the table, as any legislation would likely take several days to pass.

• Potential Debt-Ceiling Deal Starts to Take Shape as Deadline Looms
• How a Debt-Ceiling Crisis Could Play Out on Wall Street
   

• Target is facing growing criticism after it stopped selling certain items related to Gay Pride Month that offended some customers and social-media commenters, a decision that prompted others to say the retailer had caved in to pressure from anti-LGBT voices.
   
• Germany slipped into recession during the first three months of the year, as households cut spending in response to sharply higher prices for energy and food.
   
• Atlanta faces an extraordinary security lockdown in August, when a local prosecutor has indicated she will present criminal charges on alleged 2020 election interference to a grand jury.
   
• NOAA forecasters predict a “near-normal” Atlantic hurricane season over the next six months, with 12 to 17 large storms. Some of those are expected to become hurricanes.

• Yield-curve pioneer Campbell Harvey believes an economic contraction could begin this month and last two to three quarters. “The question is how deep the recession will be,” he said.
   
• Although AI offers benefits, some sectors are finding challenges. The tech was supposed to transform insurance; it hasn’t. And cybersecurity chiefs say the promises and risks of early generative AI are overblown.
   
• Companies are facing more shareholder proposals from both sides of the political spectrum, dragging them into the increasingly fractious conversations over environmental, social and governance issues.

• Beijing and the rest of China are gearing up for a new Covid-19 wave that a top Chinese medical expert says could infect 65 million people a week by late June. And yet the mood this time is decidedly blasé.
   
• Grant Thornton is laying off about 300 U.S. employees, or roughly 3% of its workforce in the country, people familiar with the matter said, as the professional-services firm navigates declining demand for its advisory and tax services.
   
• Most shoppers’ budgets remain under pressure and retailers continue to adapt. Companies from Best Buy and Dick’s Sporting Goods to Kohl’s and Lowe’s flashed mixed signals on the state of the U.S. consumer this week.
   
• When Twitter’s watching, companies behave better.

Follow us on Twitter at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

You can reach us by replying to any newsletter, or email David at david.smagalla@wsj.com.