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The Morning Risk Report: Former BitMEX CEO Sentenced to House Arrest on Anti-Money-Laundering Charges
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Good morning. Arthur Hayes, a co-founder and former chief executive of cryptocurrency derivatives exchange BitMEX, has been sentenced to serve six months of house arrest for violating U.S. law by failing to establish a compliant anti-money-laundering program, Risk & Compliance Journal’s Richard Vanderford reports.
Mr. Hayes, who was sentenced at a hearing in federal court in Manhattan on Friday, also was ordered to serve two years probation. He already has paid a $10 million penalty in connection with a settlement with the U.S. Commodity Futures Trading Commission.
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The offense, though “very serious,” didn’t warrant the more than one year in prison that prosecutors had sought, U.S. District Judge John Koeltl said.
Mr. Hayes was charged in what has become a closely watched test of U.S. power to impose its banking rules on offshore crypto exchanges.
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From Risk & Compliance Journal
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Ex-Panama President’s Sons Sentenced to Three Years in U.S. Prison
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The two sons of former Panama President Ricardo Martinelli were sentenced to three years in prison on Friday for their role in a bribery scheme involving the Brazilian construction giant Odebrecht SA, reports Risk & Compliance Journal’s Dylan Tokar.
The sentencing, which took place in U.S. District Court in Brooklyn, N.Y., comes after the two brothers last year pleaded guilty to money-laundering conspiracy charges following what prosecutors described as an extraordinary effort to evade prosecution in the U.S. by means of a furtive border crossing and boat ride to the Bahamas.
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Wells Fargo says the matter ‘refers to legacy issues that impacted a transaction monitoring system,’ adding, ‘The issues were resolved promptly upon discovery.’ PHOTO: DAVID PAUL MORRIS/ BLOOMBERG NEWS
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A Wells Fargo & Co. unit has agreed to pay $7 million in a settlement with the Securities and Exchange Commission after alleged glitches in a new anti-money-laundering system let suspicious transactions escape initial notice.
Wells Fargo Advisors, a brokerage arm of the bank, failed to properly implement and then test a new version of a system designed to catch incidents of money laundering, leading to failures to file suspicious-activity reports in a timely way, the SEC said Friday. The unit failed to file at least 34 reports between April 2017 and October 2021, the SEC said.
Wells Fargo didn’t formally admit to or deny the SEC’s allegations, the agency said.
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The crypto ecosystem is increasingly grappling with headaches that the world of traditional finance tackled decades ago. The collapse of a so-called stablecoin from its dollar peg earlier this month stemmed from crypto’s version of a bank run. How cryptocurrency exchanges prevent market-sensitive information from leaking has also become a growing topic of concern. The focus comes as regulators are raising questions about the market’s fairness for retail users, many of whom just booked major losses on steep declines in crypto assets.
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Russian finance officials said Friday that they had pushed through around $100 million in interest payments due under some of the country’s foreign-currency debts, ahead of a likely change in U.S. sanctions that is expected to curtail Moscow’s ability to keep paying its sovereign debt.
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Top U.S. officials who oversee the Internal Revenue Service are expressing growing dismay with a year-old D.C. mystery: how confidential information about the nation’s wealthiest and highest-income taxpayers—including Jeff Bezos and Elon Musk—became public.
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Prosecutors on Friday rested their case against Ramesh “Sunny” Balwani—the top deputy and close confidant to Theranos Inc. founder Elizabeth Holmes—as the government seeks another fraud conviction against the leaders of the defunct blood-testing startup.
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A federal jury in Florida ruled Friday that 3M Co. has to pay $77.5 million to army veteran James Beal, whose lawsuit alleged the company’s faulty earplugs caused hearing loss and ringing in his ears.
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Russian troops are seeking to expand the territory under their control in eastern Ukraine's Donetsk region. PHOTO: ALEXANDER ERMOCHENKO/REUTERS
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Russia said it had taken complete control of the southeastern port city of Mariupol on Saturday after the surrender of the last remaining Ukrainian forces there, while Moscow’s troops pressed an offensive in the country’s east.
Ukrainian President Volodymyr Zelensky described the soldiers and marines who had defended Mariupol through a monthslong siege as national heroes. He said the military had told them to get out and save their lives.
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China spends much more in helping favored industries with state-directed funds, cheap loans and other government incentives than other major economies, according to a new study expected to intensify the debate in Washington and elsewhere over Beijing’s use of industrial policy.
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The study, to be published by the Center for Strategic and International Studies on Monday, finds that China’s backing of its companies amounted to at least 1.73% of its gross domestic product in 2019—the most recent year for which comprehensive data is available—and the trend is continuing.
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Stock deals by Jim Taylor when he was CEO of Electric Last Mile Solutions have embroiled accounting firm BDO in a conflict-of-interest controversy. PHOTO: TAYLOR GLASCOCK/BLOOMBERG NEWS
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When the two top executives of a hot electric-vehicle startup made share purchases that later drew scrutiny, they were helped by accounting firm BDO USA, according to the auto company. BDO was also the auditor of the company they ran.
The dual roles that BDO played at Electric Last Mile Solutions Inc. are typical of potential conflicts of interest faced by auditors. Relationships like this one are under scrutiny by the Securities and Exchange Commission, people close to the inquiry said.
BDO is one of several midtier accounting firms caught in a sweeping probe by the SEC into conflicts of interest by auditors, one of the people close to the investigation said. The probe also includes the Big Four accounting firms Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers, The Wall Street Journal has previously reported.
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Employees work on the body shells of all-electric Porsche AG Taycan luxury automobiles on the production line inside the company’s factory in Stuttgart, Germany, in 2020. PHOTO: BLOOMBERG
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German car maker Porsche is developing fine-grained privacy settings for its luxury cars as part of a new strategy to expand customers’ trust.
Porsche now lets drivers stop sharing their personal data with the company altogether, as part of a board-approved departure from how auto-industry rivals treat driver information.
The sports-car brand, part of the Volkswagen AG group, wants to customize services for drivers, said Christian Völkel, Porsche’s chief privacy officer. Drivers can view details including their car’s electric charge level and statistics about previous trips on a mobile app, if they consent to having their car data collected.
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Gerhard Schröder, a former chancellor of Germany, joined Rosneft’s board five years ago. PHOTO: CARMEN JASPERSEN/ASSOCIATED PRESS
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Russian state oil giant Rosneft Oil Co. is losing several senior executives and board members, a brain drain that stands to weaken a prime driver of the country’s economy while Moscow wages war on Ukraine.
Former German Chancellor Gerhard Schröder and Matthias Warnig, a longtime friend of President Vladimir Putin, are leaving the board of directors, the company said Friday.
Chief Executive Igor Sechin’s two top lieutenants, first vice presidents Didier Casimiro and Zeljko Runje, are leaving the company, people familiar with the departures said. Their exit means Mr. Sechin, a close associate of Mr. Putin, will have to navigate a crisis in Russian oil markets without his most experienced deputies.
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Wilmington, Del.-based Chemours Co. has cut down on the number of orders it takes. PHOTO: BRENDAN SMIALOWSKI/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Ongoing supply-chain issues are forcing finance teams to rethink how they are managing customer demand, from increasing inventory to cutting the number of orders taken, or—as a last resort—canceling those that cannot be filled.
Supply of key commodities and components, including computer chips, has been strained by pandemic-related restrictions and pent-up demand since early 2020. More than two years later, companies continue to battle with shipping delays for much needed goods as ports in China and elsewhere remain clogged up, trucking firms struggle to find drivers and demand stays high.
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U.S. officials acted this week to ease a nationwide shortage of baby formula. But none of the moves will create immediate relief for parents scrambling to find stocked shelves. And none fully address the underlying flaws of the more than $4 billion U.S. formula industry, in which business and government depend on one another to keep the country supplied.
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It is a tricky time to work at Twitter. Far beyond the usual uncertainty at an acquisition target, Mr. Musk’s $44 billion takeover deal has left employees bewildered about what their jobs are and will be, as well as how to keep operating a platform with around 229 million daily users while its would-be owner uses it to publicly assail the company for everything from its free-speech policies to its business model.
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Apple Inc. has told some of its contract manufacturers that it wants to boost production outside China, citing Beijing’s strict anti-Covid policy among other reasons, people involved in the discussions said.
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In a northwest Ohio industrial park, up the highway from a new Amazon.com Inc. warehouse and a soon-to-open solar-panel plant, Peloton Interactive Inc. is building a million-square-foot factory that it will never use.
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Broadcom Inc. is in advanced talks to buy VMware Inc., according to people familiar with the matter, setting the stage for what would be one of the year’s biggest deals.
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