Good morning. Companies can face more lenient treatment if they report to prosecutors potential criminal misconduct uncovered during the merger and acquisition process, a senior official at the Justice Department said.

“Our goal is simple: Good companies—those that invest in strong compliance programs—will not be penalized for lawfully acquiring companies when they do their due diligence and discover and self-disclose misconduct,” Deputy Attorney General Lisa Monaco said in remarks delivered remotely at the Society of Corporate Compliance and Ethics conference in Chicago on Wednesday.

• The new incentivves: An acquiring company that discloses potential wrongdoing at a company being acquired within six months of the deal closing date—and fully cooperates and fixes the underlying problems within a year of closing—can presume it won’t be prosecuted by the Justice Department.
   
• Reporting timelines: For companies that identify misconduct related to national security issues or involving ongoing or imminent harm, Monaco said they must act quickly to benefit from the program. “I do want to be clear about this: Setting timelines is not an invitation to game the system. Our prosecutors are going to be very attuned to that,” Monaco said in response to an audience question.
   
• Tips for companies: The time frame laid out in the Justice Department’s new M&A policy suggests it expects acquiring companies to act fast to identify potential misconduct, said Maria Cruz Melendez, a partner at law firm Skadden, Arps, Slate, Meagher & Flom who specializes in white-collar defense and investigations. She added the new policy highlights the importance of compliance teams at both the acquiring and target companies working together to quickly identify misconduct.

The WSJ Pro Sustainable Business Forum on Oct. 12 will include a discussion about risk and resilience in corporate sustainability programs with Maryam Golnaraghi, director of climate change and environment at The Geneva Association, and Torolf Hamm, head of physical catastrophe and climate risk management at Willis Towers Watson.

Other sessions will cover reporting to U.S. and European standards, the role of artificial intelligence and what corporate decarbonization measures are proving effective. Register here.

Sam Bankman-Fried jury hears dueling narratives as fraud rrial begins

The long-awaited criminal trial of FTX founder Sam Bankman-Fried kicked off Wednesday with the defense and prosecution clashing over whether the fallen crypto leader was a deeply flawed company manager or the architect of one of the biggest financial frauds in U.S. history.

In opening statements, Assistant U.S. Attorney Thane Rehn told a Manhattan jury of nine women and three men that Bankman-Fried was on top of the world a year ago, living in a $30 million penthouse, flying on private jets and hobnobbing with NFL great Tom Brady and former President Bill Clinton. “He had wealth. He had power. He had influence,” Rehn said. “But all of that—all of it—was built on lies.”

Mark Cohen, a lawyer for Bankman-Fried, told jurors that the government was falsely portraying his client as a cartoonish villain when in reality he was a “math nerd who didn’t drink or party” and acted in good faith in building his crypto exchange in the emerging cryptocurrency space.

• What’s Happening Today at the Sam Bankman-Fried Trial
• When Caroline Ellison Met Sam Bankman-Fried
• FTX Employees Found Alameda’s Secret Backdoor Months Before Collapse

After being raided, Chinese firm says it will toe national-security line

A large expert-network consulting firm, Capvision, said it had completed a Chinese government-supervised “rectification,” as companies operating in the country face heightened scrutiny from authorities.

Chinese police raided several offices of the company and broadcast their investigation into the firm on state-run television in May, alleging that Capvision’s activities ran counter to national-security regulations. China Central Television said at the time that some consultants had become accomplices to the West in “spying, buying and extorting state secrets and intelligence.” Late Tuesday, Capvision said it had overhauled its internal operating systems to comply with China’s national-security laws.

• The biggest U.S. airlines are searching for thousands of jet-engine parts with fake safety certificates that were installed on their planes, an unusual incident that highlights the complexity and risks in the aerospace global supply chain.

Kaiser Permanente Union workers strike, mounting largest U.S. healthcare walkout on record

More than 75,000 nurses, pharmacists and other employees of the Kaiser Permanente health system walked off the job Wednesday in the largest U.S. healthcare strike on record. 

The workers struck after contracts expired and their unions couldn’t reach an agreement with Kaiser on how much a new deal would increase wages and staffing.

To minimize the impact on patients, Kaiser said it has brought on thousands of temporary workers to fill some vacancies, but would, if needed, postpone some appointments and expand its network to retail pharmacies and, for some people, non-Kaiser hospitals.

• Hundreds of thousands of people nationally are signing up with state insurers of last resort as home insurers pull back from disaster-prone areas.
   
• Kevin McCarthy has traced his successful run in life and politics to a lucky lottery ticket. This week, his luck ran out.
   
• Russia has withdrawn the bulk of its Black Sea Fleet from its main base in occupied Crimea, a potent acknowledgment of how Ukrainian missile and drone strikes are challenging Moscow’s hold on the peninsula. 
   
• Hong Kong’s $4 trillion stock market is having liquidity issues. Trading volumes in the financial hub have slumped over the past three years, reflecting fading investor interest in buying and selling stocks on the city’s exchange.

• The question of whether France is in the grip of a bedbug outbreak or simply grappling with normal levels of pestilence has become a political Rorschach test.
   
• Florida employs more migrant guest workers on its farms than any other state and might become even more reliant on them because of a new law making it tougher to hire people who entered the U.S. illegally.
   
• Some Americans jailed in Russia fear being left behind. 

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

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