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The Morning Risk Report: SEC Sues Crypto Exchange Kraken, Alleges It Is Unregistered Broker
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Good morning. The Securities and Exchange Commission sued Kraken on Monday, alleging that it violated investor protection laws that require it to comply with the same rules stock exchanges face.
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Commingling charges: The SEC also alleged that Kraken commingled customers’ crypto assets and fiat currencies with its own, creating what its independent auditor had identified in its audit plan as “a significant risk of loss” to its customers. The complaint alleges that Kraken has at times paid operational expenses from the same bank account that holds its customers’ cash.
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SEC says Kraken operating as a broker-deal: The SEC alleges that Kraken acted simultaneously as a broker, dealer, exchange and clearing agency without registering with the agency.
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Previous legal action: The lawsuit comes after Kraken agreed to stop offering so-called crypto staking services in the U.S. and pay $30 million in penalties to the SEC in February.
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Agency continues to pursue crypto cases: The case shows that the SEC continues to file new crypto enforcement actions despite setbacks in its legal fights with Grayscale Investments and Ripple this year. The SEC has used enforcement actions to try to force crypto companies to follow the same regulations that bind Wall Street. The lawsuit against Kraken echoes similar claims the SEC made in June when it sued Coinbase.
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Content from: DELOITTE
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How Inclusive Boards Can Make the Most of Diversity
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Boards can be intentional about how they foster an inclusive culture in the boardroom, which is critical to help realize the benefits of their efforts to promote diversity. Keep Reading ›
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Rep. Lisa McClain of Michigan is one of two Republican lawmakers on the House Oversight Committee who have sent a letter to the FDIC requesting records and a briefing by senior officials. PHOTO: RON SACHS – CNP/ZUMA PRESS
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Two GOP lawmakers demand records from FDIC.
Two Republican lawmakers on the House Oversight Committee are investigating allegations of a toxic workplace at the Federal Deposit Insurance Corp., sending a letter to the agency Monday requesting records and a briefing by senior officials.
What’s being requested. In a letter to FDIC Chairman Martin Gruenberg, Reps. Lisa McClain of Michigan and Andy Biggs of Arizona requested records including complaints, investigations and reports, as well as all communications involving human-resources officials and the office of the chairman related to allegations of sexual misconduct, harassment or discrimination. They also requested a list of individuals who have been reassigned within the agency, and where they were reassigned to, related to such allegations.
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DOJ settles with two U.K. reinsurance brokers over Ecuador bribes.
The Justice Department has settled with two U.K.-based reinsurance brokers that admitted to participating in a scheme to bribe Ecuadorean government officials, reports Risk & Compliance Journal's David Smagalla.
Tysers Insurance Brokers and H.W. Wood have agreed to enter into three-year deferred prosecution agreements filed in the Southern District of Florida.
Prosecutors said that between 2013 and 2017, Integro Insurance Brokers, which was acquired by Tysers in 2018, and H.W. Wood agreed to pay bribes totaling around $2.8 million to Juan Ribas Domenech, then-chairman of two state-owned Ecuadorean insurance companies, Seguros Sucre and Seguros Rocafuerte, as well as to three Ecuadorean officials to help secure the companies’ reinsurance business.
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Federal regulators have ordered Toyota Motor’s auto-lending arm to pay $60 million in fines and consumer redress for allegedly preventing borrowers from canceling product bundles that raised their monthly loan payments.
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Donald Trump and his lawyers are mounting a multifront defense against the civil fraud case threatening his personal fortune as he seeks to reclaim the White House.
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A federal appeals court signaled Monday that it would affirm but potentially narrow a gag order imposed on former President Donald Trump in the criminal case alleging he conspired to overturn his 2020 election loss.
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A federal appeals court ruled Monday that voters alleging discrimination in election rules don’t have a right to sue, a decision that could have a sweeping impact on voting rights if adopted by other courts.
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Chinese Premier Li Qiang on Monday chaired a meeting as head of the Communist Party’s new agency that oversees the nation’s financial sector, urging to step up regulation and ward off risks.
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OpenAI unexpectedly pushed out co-founder Sam Altman as chief executive officer last week. PHOTO: CLARA MOKRI FOR THE WALL STREET JOURNAL
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OpenAI employees threaten to quit unless board resigns.
The future of iconic startup OpenAI was in jeopardy Monday, as the vast majority of employees threatened to quit if the board that fired its CEO, Sam Altman, didn’t resign itself and restore him to power.
Turmoil at OpenAI. At the same time, it seemed like a demand that might have arrived too late. Microsoft said late Sunday that it was hiring Altman and Greg Brockman, OpenAI’s president who resigned in protest after Altman was ousted, and was opening its doors to more joining from the company behind viral chatbot ChatGPT. The OpenAI board also found someone else to take Altman’s spot, former Twitch CEO Emmett Shear.
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Iran-backed Yemeni rebels said they hijacked an Israeli-linked cargo ship with 25 crew members in the Red Sea over the weekend, heightening tensions in the Gaza conflict.
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The self-styled anarcho-capitalist who won Argentina’s presidency on Sunday plans to ditch his nation’s peso and adopt the U.S. dollar as the national currency.
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China pushed back against Australia’s allegations that a Chinese warship used sonar pulses to target Australian navy divers and injure them.
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Bayer shares fell sharply after the company stopped a late-stage study for a blood-thinning drug early because of lack of efficacy and was told to pay $1.56 billion in a lawsuit relating to its Roundup weedkiller.
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Several alarming mishaps involving GM’s ballyhooed self-driving car division have raised questions about whether the vehicles are safe enough to carry passengers or be near human drivers and pedestrians.
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America’s transition to electric vehicles is running into an unexpected snarl. A surprising crash in prices for lithium, cobalt and other metals used in EV batteries is hitting mining companies, which are suspending or delaying new projects and expansions.
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