Good morning. Class-action lawsuits—a favorite of U.S. lawyers that costs companies billions of dollars each year—are set to roll out throughout the European Union this month, reports Risk & Compliance Journal’s Richard Vanderford, as the bloc requires each of its members to make it easier for consumer groups to bring group actions targeting alleged corporate wrongdoing.

• Major expansion in Europe: Though some EU states had delved into allowing class actions previously, a new directive scheduled to come into effect later this month will expand the mechanism across the bloc. Countries will have to allow suits based on EU laws touching on areas such as data privacy, the environment, food labeling, airline delays and insurance, among others.
   
• What it does: The new regime doesn’t create new-EU level class-action courts, but instead directs EU member states to create enabling legislation with a minimum number of certain characteristics. Qualified entities, such as nonprofit consumer groups, would be allowed to bring such actions.
   
• Expect more big lawsuits? The potential impact on companies doing business in Europe, especially those that deal directly with consumers, could be wide-ranging. Class-action suits can be among the most expensive lawsuits for companies and payouts sometimes run in the billions of dollars. The suits allow claims to be brought on behalf of large groups of consumers, or even all of a company’s customers.

SEC sues Coinbase, alleges it is unregistered broker.

The Securities and Exchange Commission sued Coinbase on Tuesday, a back-to-back punch by regulators trying to flex their power over the crypto industry.

The SEC alleged that Coinbase, the largest crypto exchange in the U.S., violated rules that require it to register as an exchange and be overseen by the federal agency.

Regulators turn the heat up on crypto. The case is the second in two days against a major crypto company. On Monday, the regulator sued the world’s largest crypto exchange, Binance, and its founder Changpeng Zhao.

New York judge punts on legality of decentralized finance protocol PoolTogether.

Those wondering how U.S. courts will handle legal questions around so-called decentralized finance may have to wait a little longer, reports Risk & Compliance Journal’s Dylan Tokar.

More than a year and a half after a user of the decentralized finance protocol PoolTogether brought a lawsuit challenging its legality, a federal judge in New York on Tuesday said questions it raised should be handled in state court.

The significance. Software engineer Joseph Kent’s lawsuit appeared to be one of the first to ask a court to decide how the law applied to the world of DeFi, where protocols are designed to be autonomous and governed by a community of token-holders, rather than the company or person who creates them.

• The U.S. Treasury has placed sanctions on six entities and seven individuals in China, Hong Kong and Iran for allegedly helping Iran obtain technology for use in its ballistic missile program.
   
• Microsoft agreed to pay $20 million to settle charges that it violated children’s privacy rights when they signed up for its Xbox game system, the Federal Trade Commission said Tuesday.
   
• Drugmaker Merck & Co. filed a lawsuit on Tuesday challenging the U.S. government’s plan to negotiate drug prices, saying it is unconstitutional.
   
• A former executive at ByteDance, the parent company of the hit video-sharing app TikTok, alleges in a legal filing that a committee of China’s Communist Party members accessed the data of TikTok users in Hong Kong in 2018—a contention the company denies.
   
• The Public Company Accounting Oversight Board wants auditors to take a more proactive role in flagging potential fraud at clients, requiring them to identify areas of noncompliance that could have a material impact on companies’ financial statements.

Ukraine dam blast shakes farmers, pushes grain prices higher.

The destruction of a major dam in Ukraine on Tuesday heaped further pressure on the country’s beleaguered agriculture sector, a major source of revenue for Kyiv, while sending prices of grains and other produce higher around the world.

Europe’s breadbasket at stake: Ukraine is responsible for a large chunk of global agricultural exports and Russia’s 2022 invasion sent prices of grains and other produce sharply higher, adding to global food inflation and worsening food shortages in some developing countries. Agriculture also represents more than half of Ukraine’s export revenue, which Kyiv depends on to help finance its fightback against Russia’s invasion.

• Ukrainian Towns Inundated as Floodwaters Rise
• Dam Destruction Floods Front Line, Cutting Counteroffensive Options
• From Drone Strikes to Ground Incursions, War Comes to Russia

• A conflict over who controls Pirelli is an example of the rising economic tensions between China and Western countries, where executives and politicians once welcomed Chinese investments but have become increasingly wary.
   
• CEOs spent the past few years adjusting to a world in which investors, customers and employees expected corporate leaders to align themselves with social causes. Today, that has made companies targets in the U.S. culture wars, where one step can turn a social-media storm into a corporate crisis that cripples businesses and wrecks careers.
   
• Millions of Americans in the Midwest and the Northeast were under air-quality alerts Tuesday as smoke moved south from more than 400 active Canadian wildfires, officials said.
   
• Does the software industry need to do more to keep its products safe from hackers?

Cyber chiefs seeking board seats have their work cut out.

Cyber chiefs who want to serve on corporate boards are filling out their résumés with directorship training and stints on advisory boards. Such moves probably aren’t enough.

Those who check these boxes will be in demand, but other CISOs will find ordinary education and professional knowledge likely won’t land them board seats, said Steven Martano, a partner at Artico Search, a recruiting firm that specializes in cybersecurity.

• The Wall Street Journal’s James Rundle talks to Kristy Littman, who until last year was chief of the crypto assets and cyber unit at the SEC’s enforcement division, about a series of rules and proposals aimed at shoring up cybersecurity defenses at publicly traded companies, advisory firms and exchanges and clearinghouses, among others.

Ryan will assume the role of chief compliance officer alongside his existing responsibilities as the telecommunication company’s assistant general counsel, an AT&T representative said.

A 17-year veteran of the Dallas-based company, Ryan previously worked as deputy general counsel for satellite television service DirectTV.

• The PGA Tour and LIV Golf, the Saudi-backed upstart that sent the industry into chaos when it teed off last year, have agreed to a stunning merger that ends the divide that has dominated the sport for the last year.
   
• Nearly $1.5 trillion in commercial mortgages are coming due over the next three years, according to data provider Trepp. Many of the commercial landlords on the hook for the loans are vulnerable to default in part because of the way their loans are structured.
   
• Ukraine asked the International Court of Justice to declare Russia in violation of treaties against terrorism financing and racial discrimination for actions dating from 2014 in occupied Crimea and the Kremlin-controlled Donetsk and Luhansk regions.
   
• Some of CNN’s highest-profile hosts are expressing concerns to management about Chris Licht’s ability to keep leading the network, people close to the situation said, after a series of blunders by the embattled chief executive in recent months.
   
• After insurance-industry company Farmers Group told employees last year that most of them would be remote workers, many made significant lifestyle changes in response to the policy. Then last month, Raul Vargas, who recently took over as chief executive, said he was reversing the approach.
   
• Chinese exports stumbled at a steeper-than-expected pace in May, fueling concerns that the country’s post-reopening recovery is sputtering and global trade activity is cooling rapidly.

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.

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