Good morning. A judge sentenced Trevor Milton on Monday to four years in prison for defrauding investors in Nikola, the electric-truck company he founded.

The exuberant Milton, 41 years old, was convicted on several fraud charges last year. Witnesses testified that he lied to ordinary investors about nearly every aspect of Nikola.

• The background: Milton said the company’s zero-emission truck prototype was drivable when it wasn’t. He said Nikola was equipped to produce the necessary hydrogen to power the trucks when it wasn’t. And he boasted that the company had a long list of sales orders, many to companies that didn’t exist.
   
• In addition to prison time, U.S. District Judge Edgardo Ramos also ordered Milton to pay a $1 million fine and forfeit a property in Utah. Ramos said real people were hurt by Milton's actions. “The law does not grant a pass for good intentions,” Ramos said. “It is decidedly the obligation of business executives who are seeking to have the public purchase their stock to speak the truth.”
   
• Calculations for sentencing: Sentencing in fraud cases can depend heavily on how much financial loss a defendant caused. In Milton’s case, Ramos was sorting through three very different calculations, as well as philosophical questions about how long was appropriate for the first-time offender to spend behind bars.

Southwest hit with $140 million penalty for 2022 holiday meltdown as it prepares for next Christmas weekend.

Southwest Airlines faces a civil penalty totaling $140 million after the U.S. Department of Transportation said the airline violated consumer protection laws during its holiday meltdown last year.

The penalty, which the agency said is 30 times larger than any it has levied for consumer protection violations, includes a $35 million payment directly to the government.

Southwest will receive credit for $33 million for the frequent flier points it gave to customers who were affected. And vouchers Southwest will have to issue to compensate travelers caught up in future travel disruptions account for the remainder of the penalty.

Carlyle and Insight Partners acquire risk-management business Exiger.

Buyout firm Carlyle Group and technology investor Insight Partners have acquired risk-management software and services provider Exiger at a valuation of around $1.2 billion, according to two people familiar with the matter.

The firms beat out high-profile rivals including Blackstone in a competitive auction process, one of the people said. Blackstone didn’t respond immediately to request for comment.

Carlyle and Insight secured a controlling stake in the McLean, Va. company, with existing backer Carrick Capital Partners retaining a minority interest, Washington-based Carlyle said. Exiger founders and managers also participated in the deal, which is subject to closing conditions and regulatory approval.

Musk’s X faces probe in Europe over handling of illegal content, disinformation.

Elon Musk’s social-media platform X will face a formal probe in Europe over its handling of illegal content and disinformation in a first test of the European Union’s new online-content law.

The European Commission, the bloc’s executive arm, said Monday it opened a formal infringement proceeding against X, the platform formerly known as Twitter, under the Digital Services Act. The EU legislation, which took effect earlier this year, requires some of the world’s biggest online platforms to take steps to address illegal content and offer users a way to register complaints about the platforms’ moderation decisions, among other rules.

• Adobe has called off its planned $20 billion acquisition of the collaboration-software company Figma, weeks after a U.K. regulator warned that the deal would likely harm innovation.
   
• Google parent Alphabet agreed to pay $700 million and make certain changes to its app store, settling one of several antitrust challenges to the search-engine company.
   
• Apple is set to halt sales of its smartwatch in the coming days as it prepares to comply with a U.S. import ban ordered by a federal trade agency that found the company violated patents of a competitor.
   
• A Houston bankruptcy court rejected a request from creditors of hand-sanitizer maker 4E Brands to disqualify Judge Marvin Isgur from ruling on a fee dispute involving the company’s law firm, saying no evidence of bias was established.

U.S. vows naval forces to protect ships passing through Suez Canal.

The U.S. unveiled a multinational naval force to protect merchant vessels in the Red Sea after Houthi rebel attacks threatened the Suez Canal’s central role in global trade.

On Monday, the Pentagon said it was establishing a security operation to protect seaborne traffic from ballistic missiles and drone attacks launched by the Houthi groups in Yemen. The effort, called Operation Prosperity Guardian, will include the U.K., Bahrain, France, Norway and other countries.

Many of the world’s biggest shipping lines, oil producers and other cargo owners in recent days started diverting vessels from the region, prompting a spike in oil prices and insurance rates.

• CIA Director in Talks With Mossad to Restart Hamas Hostage Deal

• Hungarian Prime Minister Viktor Orban, long a thorn in the side of the European Union, is now trying to upend its plans, using his veto in an effort to pry loose money and tilt EU policy.
   
• North Korea’s missiles can reach the U.S., Japan says, but Kim Jong Un wants to perfect them. 
   
• A Federal Reserve official said it is appropriate for the central bank to begin looking ahead to lowering interest rates in 2024 because of how inflation has improved this year.
   
• Electric-vehicle startups were flying high just a few years ago. Now many are focused on survival.
   
• Office building owners, hammered by falling demand and high interest rates, struggled in 2023. But they mostly managed to stay afloat. That is going to be a lot harder to do next year.
   
• American air-traffic-control facilities are short on controllers, leading to delayed flights and adding potential safety risks.

Vans, North Face parent VF warns cyberattack may snarl holiday deliveries.

Apparel and footwear maker VF said Monday a ransomware attack on its computer systems could materially affect its ability to fulfill customer orders, less than one week from Christmas Day.

The company, which produces popular brands such as Vans, North Face and Supreme, said in a filing with the U.S. Securities and Exchange Commission it detected an intrusion into its network on Dec. 13. The attackers encrypted systems and stole data, VF said, including unspecified personal information.

• America had ‘quiet quitting.’ In China, young people are ‘letting it rot.’ Demoralized by a weak economy and unfulfilling jobs, young Chinese are dropping out, exploring spirituality and becoming more rebellious, presenting new challenges for Beijing.
   
• A Russian court has asked the country’s prison service to provide it with information on the whereabouts of opposition politician Alexei Navalny, whose associates say has been missing for almost two weeks from the penal colony where he is serving a series of sentences totaling 30 years.
   
• Israel's freed child hostages presents a challenge for authorities, who are still figuring out how to treat them. Physically, doctors say, they are relatively unscathed. But the psychological scars may run much deeper.
   
• Rescue workers in northwestern China were racing against time and freezing temperatures to find missing survivors from an earthquake that has killed more than 100 people and injured many more.
   
• A volcano has erupted in Iceland after a string of earthquakes rattled the area Monday evening.

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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