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The Morning Risk Report: SEC’s Whistleblower Chief Manages Growing Pains as Program Gains Popularity
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Good morning. Risk & Compliance Journal’s Mengqi Sun profiles Nicole Creola Kelly, who as head of the Securities and Exchange Commission’s whistleblower award program, faces perhaps her biggest challenge: critics who say the program favors those with connections to the regulator.
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What’s the whistleblower program all about? Established by the Dodd-Frank Act to encourage the reporting of financial wrongdoing and preventing the types of oversight lapses that led to Bernard Madoff’s multibillion-dollar Ponzi scheme, the SEC’s award program has given out more than $1 billion in total to whistleblowers as the number of tips it receives has steadily risen.
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More eyes on the prizes: With that success has come greater scrutiny. The SEC program’s process of determining who receives awards has come under the spotlight in recent years in both circuit courts and law studies. A legal research paper found that almost a quarter of the SEC’s whistleblower awards have gone to law firms with attorneys who have connections to the regulator, potentially deterring other whistleblowers from coming forward. Recent appeals court judgments also have broadly questioned how the agency decides who receives awards.
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The issues she confronts: Kelly faces the challenge of managing the increasing popularity of the whistleblower program with her office’s current staffing resources, industry participants said. At the same time, she is under pressure to address calls for transparency in the program’s processes and the need to protect the identities of whistleblowers.
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Maintaining balance: “I’ve been here for 25 years. I’ve seen many chairs, and as a longtime civil servant…it sounds cliché but we call the balls and strikes,” Kelly, who goes by “Cree,” said. “At no point have I ever considered who the counsel is on a recommendation. It doesn’t factor into our analysis.”
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Content from our Sponsor: DELOITTE
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First Bias Audit Law Starts to Set Stage for Trustworthy AI
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New York City’s law aims to address hiring practices that involve the use of AI tools. It is one of the latest signals that leaders should consider refreshing their AI regulatory strategies. Keep Reading ›
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Sam Bankman-Fried, founder of collapsed crypto exchange FTX, arriving for a bail hearing at federal court in Manhattan on Friday. PHOTO: MICHAEL M. SANTIAGO/GETTY IMAGES
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Judge sends FTX’s Bankman-Fried to jail ahead of fraud trial.
A federal judge revoked FTX founder Sam Bankman-Fried’s bail and sent him to jail Friday. The decision ended a monthslong battle between the Justice Department and the onetime crypto entrepreneur over his behavior while awaiting trial on fraud charges.
U.S. District Judge Lewis Kaplan said at a hearing in New York that Bankman-Fried pushed the limits of his bail conditions repeatedly and possibly committed a federal crime.
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China’s options for retaliation are few after U.S. investment ban.
China is unlikely to hit back at the U.S. blow for blow over the Biden administration’s new investment ban on certain Chinese tech companies. That’s because Beijing is limited both in its ability and desire to fire a big salvo, analysts say.
American tech companies aren’t as reliant on Chinese investments as their Chinese counterparts are on U.S. capital. China is also grappling with worsening macroeconomic conditions and falling investor confidence, which makes it less inclined to escalate an economic standoff, they say. On the political front, Beijing is also seeking to sustain a diplomatic thaw with Washington.
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The U.S. on Friday levied sanctions against four prominent Russian businessmen tied to one of Russia’s largest financial institutions, as part of the broader Western effort to ratchet up the political pressure on President Vladimir Putin.
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A federal court dismissed a lawsuit accusing Starbucks executives and directors of violating their fiduciary duty to shareholders by supporting corporate diversity policies.
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UBS said it would no longer rely on Swiss government assistance tied to its emergency takeover of Credit Suisse in March, marking an important step in the complex and politically fraught absorption of its smaller rival.
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The U.S. Supreme Court’s decision to review Purdue Pharma’s chapter 11 case poses a threat to the grants of legal immunity that keep businesses owners, executives and affiliates safe from lawsuits through a bankruptcy restructuring.
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Producer prices for foods gained 0.5% in July from June, the most since November. PHOTO: JOE RAEDLE/GETTY IMAGES
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After pulling inflation down, gasoline and food threaten to nudge It up.
While inflation continued on a downward glide path in July, economists say to brace for some turbulence in coming months as rising energy and food prices disrupt that process.
Gasoline is headed higher again. While its price rose just 0.2% in July, bigger gains are in store. Regular gasoline on Friday was up 30 cents a gallon from a month earlier at $3.84 Friday according to OPIS, an energy-data and analytics provider.
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State and local officials are facing mounting scrutiny over their response to the wildfire that reduced the town of Lahaina to rubble, with residents who lost businesses, homes and family members receiving little early information on what caused the fire and why it became so destructive.
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After Taiwan’s president traveled through the U.S. this spring, China responded with three days of live-fire military drills and a barrage of condemnations asserting its claims to the self-governing island. Now, with Taiwan’s vice president, Lai Ching-te, touching down in New York on Saturday night, China’s leaders have more to think about as they weigh a response.
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Iran has significantly slowed the pace at which it is accumulating near-weapons-grade enriched uranium and has diluted some of its stockpile, people briefed on the matter said Friday, moves that could help ease tensions with the U.S. and allow the resumption of broader talks over its controversial nuclear program.
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Startups are dying amid a historic drought in venture funding, showing how an indispensable engine of Silicon Valley is suffering even as technology stocks rebound and investors swoon over artificial intelligence.
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Private markets firms are increasingly setting their investment sights on banks as traditional lenders retreat and the recent regional banking crisis weighs on balance sheets. But they are positioning themselves as friend rather than foe.
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Wall Street is growing confident the U.S. can avoid a recession. But one key market indicator is still sending seemingly bleak signals.
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Ukraine’s current campaign to retake territory occupied by Russian forces could still have many months to run. But military strategists and policy makers across the West are already starting to think about next year’s spring offensive.
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Instead of preparing to hand over the reins with his legacy secure, 87-year-old Carl Icahn is fighting for the company’s survival after a short-seller attack nearly halved its value, lurching the famed investor into one of the most trying periods of his six-decade career.
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U.S. officials forged an uneasy compromise to let DuPont sell its sustainable-materials business last year to a Chinese company while ensuring the technology behind it never left the U.S. The arrangement hasn’t worked as planned, according to people familiar with the matter.
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Likely trials for both Trump and President Biden’s son put legal woes squarely in the political arena.
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