Good morning. When Henry Kravis and George Roberts handed off the day-to-day management of private-equity firm KKR to their successors in 2021, the two billionaires netted shares now worth more than $650 million.

A new lawsuit is accusing the company of paying Kravis and Roberts but getting nothing in return. Their windfalls came from a complicated financial structure that has netted billions of dollars for other company founders and dealmakers in similar transactions.

• Shareholders’ concerns: The shareholder suit filed by a Steamfitters union local pension fund is one of a string of legal actions that are steadily gaining momentum in Delaware courts that could force many private-equity executives to hand back the payouts. Already, a healthcare company has agreed to pay $71 million to settle a similar lawsuit and judges have issued decisions in other cases that have largely been favorable to plaintiffs.
   
• Not the first: The suit is similar to other litigation undertaken against rivals Apollo Global Management and Carlyle Group, as well as website host GoDaddy.
   
• Complicated arrangement: The KKR suit takes aim at a payment allegedly tied to a tax receivable agreement, or TRA. TRAs are typically combined with specific corporate structures to create and share potentially valuable tax assets between the company and their early investors. 
   
• The issue: While TRAs are increasingly common, they have also become controversial and prompted a raft of lawsuits against private-equity firms and some of their portfolio companies. Instead of the deals resulting in the tax benefits for the public companies, plaintiffs allege, boards have sometimes used the agreements to largely benefit the early investors, regardless of whether they create anything of value.

Elon Musk’s X sues advertising coalition over ‘massive’ boycott.

Elon Musk’s social-media company X filed a federal antitrust lawsuit against an advertising industry coalition, saying companies in the group illegally boycotted the platform.

X alleged companies including CVS Health, Mars Inc. and Unilever  conspired to withhold billions of dollars in a “massive advertising boycott” to force the platform formerly known as Twitter to maintain certain safety standards, according to the complaint filed Tuesday in Texas’ northern district.

The boycott began in November 2022 after Musk acquired Twitter, the lawsuit said. The coalition started the boycott due to a concern that Twitter would change its content and safety standards under Musk’s leadership, according to the complaint.

• Elon Musk’s X Is Leaving San Francisco Office but Will Stay in Bay Area

China restricts fentanyl chemicals after years of U.S. pressure.

China is imposing new restrictions on chemicals used in the production of fentanyl, a move long sought by the U.S. that signals Beijing’s desire to keep open an important diplomatic channel with Washington ahead of November’s presidential election.

The status of the chemicals has proven a diplomatic sticking point for the past two and half years, and the latest move marks a small step forward in the Biden administration’s strategy of seeking cooperation with China on counternarcotics even as the countries’ relationship is increasingly defined by competition.

• Last month, the National Basketball Association rejected Warner Bros. Discovery’s bid for a media-rights package in favor of Amazon, touching off a legal brawl. Now, it is becoming clear just how big an advantage the tech giant had in that contest.
   
• The insurance industry is waging a legal war against new protections for retirement savers. The courtroom offensive appears likely to kill a yearslong effort to curb advice steering people toward products packed with hidden fees.
   
• Meta has restored social-media posts by Malaysia’s prime minister concerning Hamas’s late political leader, saying their removal last week was in error.
   
• China Evergrande Group is seeking to recover $6 billion from its founder and others amid the former property giant’s continuing liquidation.
   
• WisdomTree has been notified the asset manager could face a U.S. Securities and Exchange Commission enforcement action related to its ESG-focused investment strategies, according to Dow Jones Newswires.
   
• A lawsuit against Harvard University, alleging that the school didn’t do enough to protect Jewish students from antisemitism will go on after a judge ruled against Harvard’s attempt to stop it.

Why Israel needs more than Iron Dome to thwart an Iranian attack.

Israel is preparing for a coordinated attack from Iran and its allies that will present the biggest test yet for a multilayered air defense system that has had to expand far beyond the country’s vaunted Iron Dome system.

In the past decade, the U.S.-Israel-developed Iron Dome has become the world’s leading system for shooting down short-range rockets, reducing the threat from weapons fired by Washington-designated terrorist groups like Hamas to population centers.

Iran and Lebanon-based Hezbollah’s capabilities are another matter.

• White House Rushes to Limit Fallout From Looming Iran Strike
• Israel’s Bomb Shelters Are Last Line of Defense as Iran Strike Looms
• Hamas’s Gaza Chief Yahya Sinwar to Take Place of Killed Political Leader

• A rally for stocks still left investors battered by markets’ wild swings and bracing for more turbulence.
   
• A week after Japan’s top central banker shook up global markets with comments about raising interest rates, one of his deputies walked them back and promised not to raise rates when markets are unstable.
   
• California’s utilities are investing billions to upgrade infrastructure and build out green energy, and passing the budget-breaking costs to households.
   
• Artificial intelligence startups raised billions of dollars last year, aiming to become winners in the latest tech-driven boom. Now many are struggling to survive—and asking Silicon Valley’s biggest companies to bail them out.
   
• Artificial intelligence is upending India’s technology outsourcing business. The industry is pivoting to adapt, but the changes could cost a large number of coveted jobs.
   
• Department stores’ long-term decline will be difficult to reverse.
   
• Microsoft said Delta Air Lines’ own outdated technology was likely the reason that the airline struggled to recover from an IT outage last month while rivals got back on track more quickly.
   
• China’s trade figures for July were a mixed bag, with exports slowing unexpectedly but imports growing at a faster-than-expected clip, signaling some improvement in domestic demand.

Cyberattack and Tropical Storm Debby disrupt blood supply.

Hospitals in the U.S. Southeast are invoking emergency procedures to conserve blood and platelets after a blood distributor suffered a cyberattack and as a tropical storm brings historic flooding to the region.

OneBlood, a nonprofit that supplies blood and blood products to more than 250 hospitals in Florida, Alabama, Georgia and the Carolinas, continues work to recover technology systems it shut down after a ransomware attack on July 29.

It was the third cyberattack in recent months against organizations that manage blood products, said John Riggi, national adviser for cybersecurity and risk at the American Hospital Association.

• Vice President Kamala Harris on Tuesday picked Minnesota Gov. Tim Walz, an avuncular former high-school teacher and football coach with a progressive streak, as her running mate.
   
• A Pakistani man with ties to Iran has been charged with plotting assassinations of former President Donald Trump and other politicians, law-enforcement officials said Tuesday.
   
• The use by former Bangladesh Prime Minister Sheikh Hasina of a slur with historic resonance sparked a larger movement against her rule. 
   
• The British government, trying to tamp down the worst social unrest in a decade following a series of anti-immigration protests that were turbocharged by online misinformation, is now struggling to contain another agitator: Elon Musk.

Follow us on X 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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