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The Morning Risk Report: Goldman, Citadel Securities Settle SEC Record-Keeping Probes
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Good morning. Financial regulators are demanding more from Wall Street to settle enforcement investigations—even those focused on violations of technical requirements.
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On Friday, Goldman Sachs agreed to pay $12 million, while Citadel Securities reached a $7 million settlement, to settle charges that the firms violated record-keeping requirements.
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What happend at GS? Goldman was accused of not submitting complete and accurate “blue sheets,” or electronic brokerage records that help regulators analyze a firm’s trading activity, including the orders and identities of its customers. Goldman agreed to pay separate $6 million fines to the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
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And at Citadel? Citadel Securities didn’t accurately mark whether transactions were long or short, the SEC alleged. Citadel’s alleged failures resulted from a coding error and compromised the accuracy of records over a five-year period, according to the SEC.
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Content from our Sponsor: DELOITTE
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Financial Services: 6 Ways to Support a Generative AI Risk Management Strategy
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Modernizing financial services institutions by introducing generative AI tools can be a big win for organizations, especially if company values reflect strong risk management efforts. Keep Reading ›
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WSJ Pro Sustainable Business Forum
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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.
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Kalshi ,a startup led by Tarek Mansour, had sought to introduce a first-of-its-kind derivative contract related to the partisan control of Congress. PHOTO: DALIA KHAMISSY FOR THE WALL STREET JOURNAL
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CFTC rejects bid to launch political election-betting market.
Regulators rejected a proposal for a marketplace that would allow betting on congressional elections.
The Commodity Futures Trading Commission said Friday that it blocked a financial startup from launching a political-betting market. the commission made the decision in a 3-1 vote.
The startup, Kalshi, had sought to introduce a first-of-its-kind derivative contract whose value would depend on whether Republicans or Democrats capture control of either the House or Senate in a particular year’s election.
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American Infrastructure funds to pay $1.6 million to settle SEC claims.
The Securities and Exchange Commission levied a penalty on American Infrastructure Funds, part of the regulator’s crackdown on private-equity conflicts of interest and disclosure failings.
The Foster City, Calif., firm agreed to pay $1.6 million to settle allegations of three separate breaches of its fiduciary duty to investors between 2016 and 2019, the SEC said Friday. The agency said these breaches involved the private-equity firm’s failure to disclose conflicts of interest tied to so-called accelerated monitoring fees—a type of payment the regulator has tried to stamp out for nearly a decade—as well as an asset transfer and a loan between funds.
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Charles McGonigal, a former high-level U.S. counterintelligence agent, pleaded guilty in a Washington, D.C. federal court to concealing from the Federal Bureau of Investigation the receipt of $225,000 in cash from a person with business interests in Europe while he supervised counterintelligence efforts.
McGonigal, the former head of the agency’s counterintelligence operations in New York, has already pleaded guilty in August to a separate charge of accepting secret payments from Russian oligarch Oleg Deripaska.
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Chinese regulators have taken a novel approach to prop up the country’s faltering stock market by banning many companies’ biggest shareholders from selling.
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Sen. Bob Menendez and his wife were indicted Friday in a sweeping bribery scheme, with federal prosecutors alleging the New Jersey Democrat accepted cash, gold and other benefits in exchange for using his office to enrich three businessmen and aid the Egyptian government.
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The Labor Department said it is investigating plants operated by poultry giants Perdue Farms and Tyson Foods following a report that some of the companies’ contractors employed migrant children to clean meat-processing plants.
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The chief financial officer of multinational insurer Prudential resigned earlier this year after trying to help a relative of a senior regulator get hired at the company, according to people familiar with the matter.
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Lawyers for New York Attorney General Letitia James and Donald Trump faced off in court Friday over the scope of an upcoming civil fraud trial that will examine whether the former president falsified the value of his assets for financial gain.
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Members of the United Auto Workers union marched through downtown Detroit last week. PHOTO: PAUL SANCYA/ASSOCIATED PRESS
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Auto industry finance chiefs watch for ripple effects from UAW strike.
As the United Auto Workers’ strike against Detroit carmakers hits its eighth day, companies across the auto industry, including the electric-vehicle market, are bracing for the potential impacts.
Scale of strike. About 12,700 factory workers are picketing in a limited strike against General Motors, Ford Motor and Jeep maker Stellantis. With the possibility of a wider strike looming, finance chiefs across the auto industry are watching closely and looking to manage any effects on their businesses.
Wider impacts. The implications of the strike are significant, and could ripple across the auto industry and beyond, Ford Chief Financial Officer John Lawler said in August.
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U.S. economy could withstand one shock, but four at once?
The U.S. economy has sailed through some rough currents this year but now faces a convergence of hazards that threaten to create more turbulence. Among the possible challenges this fall: a broader auto workers strike, a lengthy government shutdown, the resumption of student loan payments and rising oil prices.
What about all four? Each on its own wouldn’t do too much harm. Together, they could be more damaging, particularly when the economy is already cooling due to high interest rates.
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Central banks around the world appear to be nearing the end of a series of interest-rate rises, but the economic cost of the battle against inflation is only beginning to emerge, with mounting signs that Europe could be among the hardest hit.
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The U.S. economy’s prospects of a soft landing are getting a boost from an unexpected source: a historic rise in immigration.
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Why America has a long-term labor crisis: While the hot pandemic-era job market is cooling, it is set to remain tight for years
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Ukrainian cruise missiles Friday slammed into the headquarters of the Russian Black Sea Fleet in the occupied city of Sevastopol, in the latest of a series of strikes that aim to dent Russia’s naval power.
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Russian President Vladimir Putin has used hard power to enforce Moscow’s sphere of influence. But the Ukraine war has caused him to lose out in regions he once sought to control.
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Hawaiian Electric regularly fell behind on plans to replace tens of thousands of utility poles at risk of failure and spent millions less on upgrades than it planned in the years before a wildfire destroyed the town of Lahaina this summer, a Wall Street Journal review of regulatory records found.
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0.6%
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Estimated gross domestic product change in the fourth quarter from the prior quarter, according to EY-Parthenon, amid slower economic growth this fall.
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Directors with professional experience in cybersecurity represented 2.3% of directors on boards of S&P 500 companies at the end of August. PHOTO: ISTOCKPHOTO/GETTY IMAGES
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How much cybersecurity expertise do boards really have?
The number of directors at S&P 500 companies who have cybersecurity experience has increased sharply since last year. But the amount of cybersecurity expertise on boards remains relatively low, at a time when boards are under increased scrutiny for security failings.
Still a small number. As of Aug. 31, 107 directors at 113 companies had professional experience in cybersecurity, according to research conducted by WSJ Pro Research. Together, those directors held a total of 124 S&P 500 board seats and represented 2.3% of the directors on the boards of companies in the index. This same research conducted last November found 86 directors at 91 companies held 100 board seats.
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More than a year after Moscow failed in its goal of a lightning victory in Ukraine, the Russian military has steadily adapted on the battlefield as it shifts to a strategy of wearing down Ukraine and the West.
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Congress heads into a make-or-break week for avoiding a government shutdown, with leaders of the Republican-controlled House hoping they can persuade GOP holdouts to get on board with four full-year bills and a short-term funding patch.
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Canadian intelligence agencies intercepted communications among Indian diplomats indicating that New Delhi was involved in the killing of a Sikh separatist leader in British Columbia earlier this year, a Western official familiar with the matter said.
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For years, Europe has been at the forefront of the global drive to curb carbon emissions and slow climate change. Now, however, a small but growing backlash suggests a more complicated truth: Voters may like the idea more than the reality.
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The efforts by Federal Trade Commission Chair Lina Khan to protect Main Street are inadvertently enriching some on Wall Street, generating outsize profits for Pentwater Capital Management and other large hedge funds that bet on merger deals.
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