Good morning. The Securities and Exchange Commission has fined a group of financial firms a total of $81 million to settle claims their staff used messaging apps that violated record-keeping rules, as the agency continues to crack down on off-channel messaging.

• Who’s being dinged? Firms fined by the regulator in Friday’s announcement include Northwestern Mutual, which agreed to pay $16.5 million; Guggenheim, which will hand over $15 million; and Oppenheimer & Co., which will pay $12 million.
   
• How does this compare? Friday's fines aren’t as large as the $200 million that JPMorgan paid in late 2021 to the SEC and Commodity Futures Trading Commission. A large group of banks including Morgan Stanley, Bank of America, and Goldman Sachs later collectively paid $1.8 billion to settle SEC and CFTC texting investigations. In August, several financial firms, including Wells Fargo and BNP Paribas, agreed to pay about $555 million in total to two regulators, admitting that their employees used banned messaging applications that broke record-keeping rules.
   
• The issue: The Securities and Exchange Commission in recent years has been wringing big fines from brokerages over the use of forbidden off-channel communications to do business. The commission and other regulators say the use of apps such as WhatsApp and iMessage to talk business undermines their ability to get records needed for oversight. Washington's campaign to punish firms that failed to spot and rein in the practice has been going on for two years.
   
• Getting the message: Gurbir Grewal, director of the SEC’s enforcement division, told Risk & Compliance Journal late last year that more financial firms “have gotten the message” about the use of off-channel communication to discuss business-related matters, adding that “there are still spaces where we need to continue our investigations.” Meanwhile, compliance experts have said that in the age of the internet and smartphones, regulators need to clarify the types of business messages that are to be retained, instead of simply determining whether firms are engaging in off-channel communications.

BASF to speed up exit from two Chinese joint ventures over Xinjiang human-rights concerns.

BASF is accelerating the process to sell its interest in two joint ventures in China’s north-western Xinjiang region, citing allegations that its partner is involved in the repression of ethnic Uyghurs.

The move follows an investigation by German media outlets Der Spiegel and ZDF, which claimed to have found employees of BASF’s partner, Xinjiang Markor Chemical Industry, accompanying Chinese officials on visits to surveil and indoctrinate Uyghurs—a Turkic ethnic group—to benefit the Chinese government.

The German chemicals giant said Friday that there was no indication that employees of the two joint ventures, located in Korla, were involved in alleged human-rights violations. The company said it doesn’t have a stake in Xinjiang Markor Chemical Industry itself.

• The Internal Revenue Service clamped down on employees’ and contractors’ access to confidential taxpayer data after a damaging 2021 leak, but some risks still remained, according to a report that provides new details on the agency’s response.
   
• Three powerful shareholders are trying to loosen Delaware’s long-held grip over public companies.
   
• A boardroom brawl at Walt Disney is expected to be the most expensive shareholder fight ever, and a chance for everyday investors to have a big impact.

New York Community Bancorp went from a crisis winner to banking’s next worry.

New York Community Bancorp closed a transformational deal in late 2022, buying mortgage lender Flagstar Bancorp to nearly double its size. Four months later, it struck again, buying parts of Signature Bank, which had just been seized by regulators during a bank run.

The deals catapulted NYCB from a relatively small lender focused on niche commercial real estate into the regulators’ group of big diversified commercial banks. It also crossed $100 billion in assets, bringing increased regulatory scrutiny and rules.

In recent weeks, NYCB said it needed to make changes to ensure its balance sheet was befitting its new stature, kicking off a series of events that have rocked its stock and credit ratings, raising questions about its soundness.

California’s flood defenses held this time, but they are weakening.

Los Angeles averted a flooding disaster during torrential rains this past week, thanks to an elaborate system of bulwarks that drivers hardly notice as they speed down freeways and course through canyons.

This system is showing its age and wear, and engineers and other experts are warning that it could crack as storms become more extreme as a result of a changing climate.

• Israeli Prime Minister Benjamin Netanyahu, raising the stakes in his widening rift with President Biden during a tempestuous election year, took his message directly to American voters in two television interviews Sunday, arguing that Israel must pursue Hamas in the southern Gaza city of Rafah until the militant group is destroyed.
   
• The U.S. drone strike that killed an Iran-backed militia commander in Iraq risks further straining relations with Baghdad and intensifying popular and political pressure on the Iraqi government to expel the U.S.-led coalition aiding the fight against Islamic State in the country.
   
• American officials are urging leaders in Gabon and Equatorial Guinea to reject Beijing’s overtures for a military presence on their Atlantic coastline.
   
• Venezuela is backing up its threats to annex part of Guyana and secure access to some of the world’s largest oil finds in more than a decade by moving light tanks, missile-equipped patrol boats and armored carriers to the two countries’ border.
   
• President Biden and NATO leaders on Sunday denounced presidential candidate Donald Trump’s latest comments that he would encourage Russia to invade U.S. allies that don’t contribute sufficiently to military defense.

Pinto succeeds Aaron Webster, who will now serve as executive vice president for global operations, business risk and Latin America.

Pinto, who will report to Chief Executive Anthony Noto,  joined SoFi from Wells Fargo, where he served as chief risk officer for consumer and small business banking. He also has worked in various risk-related roles at JPMorgan Chase and Bank of America.

• Stocks are setting repeated highs, reigniting a perennial debate among investors about whether they are too expensive.
   
• Rivals Diamondback Energy and Endeavor Energy Resources are finalizing a merger that would create an oil-and-gas behemoth worth more than $50 billion.
   
• Hidden deep below the headquarters of the United Nations’ aid agency for Palestinians in Gaza City is a Hamas complex with rows of computer servers that Israel’s armed forces say served as an important communications center and intelligence hub for the Islamist militant group.
   
• Temu’s rise as one of America’s most popular places to shop is powered by its ultracheap goods and billions of dollars of advertising, including in this Sunday’s Super Bowl.
   
• Long-winded, often factually erroneous arguments back Vladimir Putin's conviction that Russia has a historic right to Ukraine.

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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