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The Morning Risk Report: Theranos Ex-President Sunny Balwani Sentenced to Almost 13 Years in Prison
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Good morning. Theranos Inc.’s former No. 2 executive, Ramesh “Sunny” Balwani, was sentenced to 155 months, just under 13 years, in prison for his involvement in an elaborate fraud scheme at the blood-testing company, marking the capstone of a yearslong saga that is a blemish in Silicon Valley history.
Mr. Balwani’s sentencing comes more than four years after the collapse of Theranos, which promised to revolutionize healthcare but peddled faulty technology to patients and investors, along the way delivering inaccurate health results and squandering hundreds of millions of dollars. Mr. Balwani helped lead the deception as Theranos’s former president and chief operating officer, and along with his longtime romantic partner, he became the focus of one of the highest-profile white-collar cases in recent years.
Theranos founder Elizabeth Holmes, Mr. Balwani’s former business partner and ex-girlfriend, was sentenced last month to 11¼ years for four counts of criminal fraud tied to her now defunct blood-testing startup.
The Balwani sentence marks the final chapter in a corporate scandal that erupted more than seven years ago following a series of Wall Street Journal articles that called into question Theranos’s claims about its blood-testing technology.
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Content from our Sponsor: DELOITTE
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Board Agenda: Cyber in an Era of Escalating Risk and Regulatory Focus
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A recent regulatory proposal on cybersecurity presents boards with a chance to assess policies and capabilities on the board and in their organization in areas of cyber risk management, disclosure, and mitigation. Read More ›
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South Dakota Gov. Kristi Noem’s order bans the use of TikTok on ‘state-owned or state-leased equipment.’ PHOTO: PHELAN M. EBENHACK/ASSOCIATED PRESS
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U.S. politicians from both parties in Washington are threatening a ban on TikTok. South Dakota is already implementing a partial one.
Last week, Gov. Kristi Noem, a Republican, issued an executive order banning TikTok from state agencies over national-security concerns stemming from the app’s Chinese ownership. The state tourism department has since deleted its TikTok account, which had 60,000 followers. South Dakota’s public broadcaster did the same. The state’s six public universities are evaluating next steps later this week.
Others are suddenly following suit in quick succession.
TikTok also faces legal challenges. Indiana filed a pair of lawsuits against TikTok Wednesday, alleging the platform is deceiving consumers about its content and data security.
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Elon Musk said one of Twitter Inc.’s top lawyers “was exited,” part of the fallout from the billionaire’s unusual efforts to release internal communications to criticize prior practices at the company he bought almost six weeks ago.
Mr. Musk announced in a tweet Tuesday the departure of Deputy General Counsel Jim Baker, who had been with the company since 2020. Since completing the $44 billion acquisition, Mr. Musk has fired several company leaders, including Mr. Baker’s immediate boss.
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An accused Russian agent was charged with federal bank fraud and money laundering for trying to evade U.S. sanctions imposed on him over his alleged interference in the 2020 presidential race.
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An Argentina court convicted Vice President Cristina Kirchner of fraud charges and sentenced her to six years in prison for embezzling money through public-construction contracts.
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Shares in pharmaceutical companies GSK PLC and Sanofi SA traded higher after a U.S. judge dismissed a series of lawsuits around a heartburn treatment that the companies had marketed.
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Juul Labs Inc. reached a sweeping legal settlement covering more than 5,000 lawsuits and about 10,000 individual plaintiffs, resolving much of the legal uncertainty that had pushed the e-cigarette company to the brink of bankruptcy.
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A burning house in Bakhmut, a city in eastern Ukraine that has seen heavy fighting recently. PHOTO: LIBKOS/ASSOCIATED PRESS
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European Union officials proposed a new round of sanctions on Russia on Wednesday over its invasion of Ukraine, including a ban on exports of drone engines to Russia and other potential suppliers of the machines to its military, a prohibition on investing in Russia’s mining sector and new financial restrictions.
The sanctions, the ninth package of restrictions on Russia since its February invasion of Ukraine, come days after the EU and the Group of Seven advanced democracies placed a price cap on Russian oil and after European countries began their embargo on imports of Russian crude.
However, the measures once again point to the diminishing range of sanctions targets the EU is willing to hit. Calls by some member states to sanction Russian’s nuclear industry, to ban Russian rough diamond imports from EU markets or to ban fresh energy imports from Russia aren’t in the package.
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Chinese exports fell at the steepest pace in more than two years in November, the latest indication of how the country’s pandemic restrictions and waning global demand for goods is throttling China’s economy.
On Wednesday, Chinese leader Xi Jinping landed in Saudi Arabia for a visit that could deepen the relationship between the world’s top oil importer and top oil exporter amid strained U.S.-Saudi ties and a global reshuffling of power accelerated by the Ukraine war.
The U.S. meanwhile said it would deploy more military assets in Australia, including air, land and sea forces, as the two countries agreed to deepen defense cooperation amid growing concerns about China’s actions in the Indo-Pacific region.
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Peru’s Congress overwhelmingly voted to remove President Pedro Castillo from office on Wednesday afternoon, shortly after the Peruvian leader plunged the mineral-rich country of 33 million country into turmoil by announcing he would dissolve the legislature to avoid impeachment.
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Apple has added additional methods to help users recover their end-to-end encrypted data. PHOTO: APPLE
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Apple Inc. is planning to significantly expand its data-encryption practices, a step that is likely to create tensions with law enforcement and governments around the world as the company continues to build new privacy protections for millions of iPhone users.
The expanded end-to-end encryption system, an optional feature called Advanced Data Protection, would keep most data secure that’s stored in iCloud, an Apple service used by many of its users to store photos, back up their iPhones or save specific device data such as Notes and Messages. The data would be protected in the event that Apple is hacked , and it also wouldn’t be accessible to law enforcement, even with a warrant.
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ILLUSTRATION BY ALEXANDRA CITRIN-SAFADI/THE WALL STREET JOURNAL
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Investors bemoan the lack of disclosure in the crypto industry. But many crypto companies disclose a lot of information, and some of it is worrisome, a review of financial statements shows.
The blowups of FTX and Celsius Network LLC exposed hidden risks that might have raised red flags for investors, including related-party transactions, commingled customer funds, sketchy record-keeping and questionable accounting. Some of these problems often appear in disclosures by public crypto companies, including weak systems used to keep numbers accurate.
A look at 19 of the publicly traded crypto miners showed that 16 disclosed significant internal-control weaknesses in the past four years, some of which were “alarming,” according to Bedrock AI, which makes software that analyzes financial filings.
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The U.S. audit watchdog sanctioned three firms and four audit professionals from KPMG’s global network for alleged misconduct such as failing to cooperate with an inspection and cheating on training exams.
Along with the fines totaling $7.7 million, the sanctions include barring or suspending the four named auditors from auditing public companies and requiring the three member firms—KPMG U.K., KPMG Colombia and KPMG India—to review quality control policies and procedures and improve them as necessary.
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Bret Taylor, right, is set to exit his role at Salesforce at the end of next month, leaving his co-CEO Marc Benioff, left, in charge. MARLENA SLOSS/BLOOMBERG NEWS
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Tensions had been growing between Salesforce Inc.’s co-Chief Executives Marc Benioff and Bret Taylor over their responsibilities and how the business was run for months before the business-software provider said last week that Mr. Taylor would exit the role, people familiar with the executives said.
Mr. Benioff, who is also co-founder, became frustrated about how Mr. Taylor was spending his time, the people said. Among his concerns were whether Mr. Taylor was spending too much time in a new role as Twitter Inc.’s chairman, too much time with other CEOs and customers and not enough time on Salesforce product and engineering, the people said.
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