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The Morning Risk Report: Wall Street Deal Making Faces Greater Scrutiny, Delays Under FTC’s Lina Khan
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Good morning. The Biden administration’s antitrust enforcers are throwing sand in the gears of Wall Street’s deal machine.
Under Chairwoman Lina Khan, the Federal Trade Commission is questioning mergers that likely would have gone unchallenged in years past—a change Ms. Khan says is needed to prevent companies from building up too much power and stifling competition.
[Continued below...]
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“In all too many areas of our economy, including agriculture, airlines, healthcare, we’ve seen significant consolidation and reduction of competition,” Ms. Khan said in an interview. “Mergers have played a role in that.”
The FTC issued 42 letters of investigation over mergers or similar transactions during the 2021 fiscal year, according to the latest available data, almost double the number for 2020 and the highest in more than 10 years. Deal makers, antitrust attorneys and Republicans complain that in some cases the FTC is simply trying to slow down deals where there isn’t a credible threat to competition.
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WSJ Risk & Compliance Forum
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Sign up for the next WSJ Risk & Compliance Forum on Nov. 16 for discussions on the critical issues facing corporate risk & compliance professionals, including keeping up with sanctions, screening for forced labor, and proposed U.S. rules on climate change and cybersecurity. Register here for a discounted ticket.
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Ex-Facebook General Counsel Joins Latham & Watkins
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Colin Stretch, a former general counsel for Facebook Inc., has joined the Washington office of the law firm Latham & Watkins LLP.
Mr. Stretch served as general counsel for Facebook, now known as Meta Platforms Inc., from 2013 to 2019, overseeing Facebook’s legal and compliance functions.
His tenure at Facebook coincided with a $5 billion settlement Facebook made in 2019 with the Federal Trade Commission over privacy violations, in which the company agreed to compliance overhauls.
After leaving Facebook, Mr. Stretch taught as part of a joint initiative between Columbia Law School and Columbia Business School. He will continue to lecture at Columbia Law School and serve as an entrepreneur-in-residence at Columbia Business School.
–Richard Vanderford
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The Fed’s board in Washington issued final guidelines Monday for its 12 regional branches to use. PHOTO: AL DRAGO/BLOOMBERG NEWS
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The Federal Reserve said Monday it would adopt a tiered approach toward determining whether to grant financial institutions access to its payment systems and signaled that cryptocurrency companies would be subject to a higher level of review.
“Institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review,” the Fed said in a press release.
The Fed’s board in Washington issued final guidelines Monday for its 12 regional branches to use when evaluating applications for access to the central bank’s payment systems.
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The coffee company alleged in a letter sent Monday to the National Labor Relations Board that federal officials there improperly oversaw mail-in elections at Starbucks locations in Buffalo, N.Y.; Seattle; and the Kansas City area this year. The alleged mismanagement unfairly assisted workers supporting the Starbucks Workers United union and influenced the election results, the company said.
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The Boy Scouts of America removed a $250 million sex-abuse settlement with the Church of Jesus Christ of Latter-day Saints from the youth group’s chapter 11 plan after a bankruptcy judge rejected the proposed terms.
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Lawyers for U.S. women’s basketball star Brittney Griner filed an appeal against her conviction in Russia on drugs charges and her nine-year sentence in an attempt to secure a fresh ruling in the case, her defense team said.
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Rudy Giuliani has been named a target of a Fulton County, Ga., investigation into efforts by then-President Donald Trump and his supporters to overturn the 2020 election in the state, one of his lawyers said Monday.
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Rockets launched from Russia's Belgorod region flew above Kharkiv, Ukraine, at dawn. PHOTO: VADIM BELIKOV/ASSOCIATED PRESS
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Kyiv is urging residents of the Russian-occupied Kherson region to leave before a winter exacerbated by shortages sets in and ahead of a promised Ukrainian counteroffensive to retake the strategic area.
“Evacuate. A harsh winter is coming. We need to help you, to save you from the cold and the enemy,” Deputy Prime Minister Iryna Vereshchuk said Sunday in Zaporizhzhia, a city near the front line.
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China’s economy stumbled in July as a two-month boost from easing lockdowns faded, prompting the country’s central bank to unexpectedly cut two key interest rates in an effort to shore up faltering growth.
A raft of data released Monday showed economic activity slowed across the board in July, including factory output, investment, consumer spending, youth hiring and real estate, highlighting the breadth of the economic challenge facing policy makers in a politically sensitive year for leader Xi Jinping, who is expected to break with recent precedent and seek a third term in power this fall.
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Iran on Monday said there were several issues with the nuclear-deal draft text that the U.S. needs to address before Tehran can agree to it, saying it would provide details on its view by the end of the day.
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The Biden administration has decided it won’t release any of the roughly $7 billion in foreign assets held by Afghanistan’s central bank on U.S. soil and has suspended talks with the Taliban over the funds after the killing of al Qaeda’s leader in Kabul, according to U.S. officials.
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The U.K. became the first country to approve Moderna Inc.’s Omicron-targeting Covid-19 vaccine as a booster shot, paving the way for the variant shot to play a role in a planned fall vaccination campaign to shore up immune defenses against the virus.
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Galaxy founder and CEO Michael Novogratz. PHOTO: BRENDAN MCDERMID/REUTERS
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Mike Novogratz’s Galaxy Digital Holdings Ltd. said it is terminating a deal to buy BitGo for $1.2 billion, claiming the crypto custody firm failed to deliver audited financial statements for 2021 by July 31.
BitGo said it has hired law firm Quinn Emanuel and plans to take legal action against Galaxy for its "improper decision" to terminate the merger agreement. It's seeking more than $100 million in damages from Galaxy.
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Hong Kong’s accounting regulator is expanding a probe into China Evergrande Group’s financial reporting, following the troubled property developer’s recent disclosure of borrowing arrangements that led to banks seizing $2 billion from a key subsidiary earlier this year.
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The city’s Financial Reporting Council said Monday that it has also initiated an investigation into the financial statements of the subsidiary, Evergrande Property Services Group Ltd., and the audit of the unit’s 2020 accounts that was conducted by PricewaterhouseCoopers.
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Unity operates a platform for developing mobile, console and computer videogames. PHOTO: IGOR GOLOVNIOV/SOPA IMAGES/ZUMA PRESS
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Unity Software Inc.’s board has unanimously agreed that the $17.5 billion buyout offer from AppLovin Corp. isn’t in the best interests of shareholders.
Unity on Monday recommended shareholders vote against the AppLovin deal and instead vote in favor of Unity’s planned deal to buy ironSource Ltd. for $4.4 billion, a merger that was agreed upon last month. IronSource runs a platform for publishing and scaling mobile games and other apps.
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Activist investor Elliott Management has a large position in Cardinal Health Inc. and is seeking a handful of seats on the medical-products distributor’s board, according to people familiar with the matter.
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Activist investor Dan Loeb’s Third Point LLC has bought a new stake in Walt Disney Co. and is calling on the media company to buy the rest of Hulu, explore spinning off ESPN and refresh its board.
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Silvergate, led by CEO Alan Lane, has seen deposits swing by $5 billion in one quarter. PHOTO: SANDY HUFFAKER FOR THE WALL STREET JOURNAL
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When big banks steered clear of cryptocurrency companies, a handful of small lenders eagerly courted the booming businesses. Now, they are dealing with the bust.
Silvergate Capital Corp., Signature Bank and Customers Bancorp Inc. have snapped up billions of dollars in deposits from crypto businesses—the exchanges, investment firms and stablecoin issuers that grew rapidly alongside the market for digital currencies.
The plunge in crypto prices this year has taken the banks on a wild ride. At Silvergate, deposits swung by $5 billion in the second quarter, a nearly unheard of move for a bank of its size, before ending basically flat at $13.5 billion. Signature posted its second quarterly decline in deposits in the last decade, and a major crypto customer filed for bankruptcy.
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