Good morning. Fast-fashion giant Shein seemed to be on a roll. The purveyor of $3 T-shirts, $10 jeans and other ultra-low-priced clothing had become one of the world’s biggest fashion companies, with hundreds of millions of customers. In November, it filed to go public in New York, raising expectations it would be one of the biggest IPOs in years.

Its U.S.-based executive chairman, Donald Tang, shuttled across the country meeting politicians, optimistic he could sell them on his vision of Shein as a model of compliance and transparency.

Now the company is awkwardly stuck in the middle of U.S.-China tensions, and its hopes for a New York initial public offering have faded.

• What are the issues? Shein has largely failed to bridge misgivings on both sides. Washington lawmakers are suspicious of Shein’s China ties and have demanded more details on its supply chain. Beijing wants Shein and other companies with substantial operations in China to stay in line with its own messaging. One outsize issue is cotton—not just where Shein gets the fabric, but also how it talks about it.
   
• Shein' s focus: According to Tang, the company’s priority now is compliance. Shein plans to spend $50 million on global compliance for the next few years. That follows a similar strategy by TikTok, which to stave off a U.S. ban expanded its U.S. presence and spent $1.5 billion on a data-use compliance project.
   
• Touting efforts: Tang even paints Shein’s listing plans as part of its transparency efforts. “Most companies seek to go public for liquidity reasons. We seek to go public to embrace scrutiny and public diligence,” he said.

FTX’s Ryan Salame sentenced to 7½ years.

A federal judge sentenced former FTX executive Ryan Salame to 7½ years in prison, saying his crimes and efforts to undermine transparency in the 2022 election merited a substantial penalty to deter others.

Charges. Salame pleaded guilty last year to conspiring to make illegal political contributions and conspiring to operate an unlicensed money-transmission business. U.S. District Judge Lewis Kaplan’s decision was harsher than the five to seven years that prosecutors had sought.

Donation efforts. In determining the Salame sentence, Kaplan cited messages that Salame had sent to a confidant. Salame wrote that Bankman-Fried wanted to donate to both Republicans and Democrats and that Salame would be the face of the Republican donations, with Bankman-Fried routing money through him.

• OpenAI’s board formed a safety and security committee after recently becoming embroiled in a legal battle over a new voice assistant in its latest artificial-intelligence model.
   
• Stock trades will settle in one business day rather than two starting today, as the U.S. financial industry completes a monthslong push to adopt "T+1 settlement."
   
• The Biden administration released a set of policies and principles aimed at bolstering trust in voluntary carbon markets, according to WSJ Pro Sustainable Business. 

Israeli tanks close in on central Rafah as global uproar grows.

Israeli tanks advanced further into Rafah on Tuesday, according to witnesses, as the Israeli military said it was expanding operations in the southern Gaza city amid growing international condemnation.

Israel is trying to thread a needle by pursuing a fight with Hamas in Rafah without further damaging its relationship with the U.S., its closest ally, or derailing fragile relations with the Arab world.

• Israel’s Deadly Rafah Strike Turns Up Political Pressure on Biden

• U.S. lawmakers from both parties traveled to Taiwan this week to show support for the island democracy, the first such delegations since the inauguration of a new Taiwanese president.
   
• French President Emmanuel Macron said Ukrainian forces are allowed to use powerful cruise missiles supplied by France to strike inside Russia on the condition the weapons are only used to take out military sites that have fired on Ukraine.
   
• Available retail locations are near record lows, making it easy for landlords these days to replace departing tenants.
   
• Annual U.K. shop-price inflation eased further in May for the 13th consecutive month, helped by slowing food inflation, according to a report published Tuesday.

• Hess’s shareholders on Tuesday voted to approve a $53 billion deal to sell the company to Chevron, clearing a hurdle for the companies to combine.
   
• Donald Trump’s defense team and New York prosecutors told starkly different stories in closing arguments at his hush-money trial: one about a lying former loyalist out to twist legal recordkeeping into revenge, the other about a scheme to interfere with the 2016 presidential election.
   
• Saudi Arabia is likely to announce as soon as this week plans to sell $10 billion to $20 billion worth of stock in Aramco, according to people familiar with the matter.
   
• Joseph Ferrara says tariffs on Chinese goods have helped resuscitate flailing business at his apparel manufacturing company in New York City.
   
• More Americans are profoundly lonely, and the way they work—more digitally linked but less personally connected—is deepening that sense of isolation.

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