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The Morning Risk Report: Judge Strikes Down California Law Mandating Women on Boards
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Good morning. A state judge struck down a California law requiring companies in the state put female directors on their boards, the second legal setback in as many months for efforts to mandate board diversity.
Judge Maureen Duffy-Lewis of the Superior Court of California in Los Angeles ruled that the 2018 law was unconstitutional because it violated the equal protection clause of the state’s constitution, according to a copy of the verdict.
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Private Market Trends Driving M&A
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The California law mandated that public companies with headquarters in the state have at least two or three women on their boards by 2021, depending on the size of the board. Those that didn’t faced financial penalties.
The lawsuit challenging the mandate was brought by conservative legal group Judicial Watch on behalf of three California residents. The state attorney general’s office defended the case, with the two sides squaring off in front of Judge Duffy-Lewis for the nonjury trial, which concluded in February. [Read more]
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Gurbir Grewal, director of enforcement for the Securities and Exchange Commission, shown in April.
PHOTO: MICHAEL M. SANTIAGO/GETTY IMAGES
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SEC official decries delay tactics used by some defense lawyers. A senior U.S. Securities and Exchange Commission official called on lawyers to work more cooperatively with the agency, saying regulators have seen recent incidents in which the defense counsel for public companies had used delay tactics to stymie investigations.
The remarks by Gurbir Grewal, director of the SEC’s enforcement division, were a rare rebuke of the corporate defense bar, some of whom previously served as staff attorneys for the regulator.
Although Mr. Grewal said he welcomed zealous advocacy, he added that he was frequently hearing from SEC staff about behavior that crossed the line to what he called “gamesmanship.”
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Trial of Clinton lawyer puts spotlight on a veteran tech executive. For decades, Rodney Joffe, pictured left, built a career in Washington linking U.S. federal agencies to the engineers of the internet. He helped root out a computer worm called Conficker that in 2008 infected as many as 15 million computers. His work helping to analyze vast stores of data from internet-service providers prompted closer collaboration between government agencies and private researchers to pinpoint computer infractions and gather online intelligence.
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Mr. Joffe’s methods have now put him under the scrutiny of federal prosecutors examining whether he played a role in an alleged effort to aid Hillary Clinton against Donald Trump during the 2016 U.S. presidential campaign.
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FDA eases baby-formula import rules to boost supplies. U.S. health regulators took steps to allow more foreign baby formula on American shelves, easing rules that had effectively prevented shipments from many overseas manufacturers.
The Food and Drug Administration on Monday said it encouraged the overseas manufacturers to apply to ship their formula to the U.S.
Also on Monday, Abbott Laboratories said it had reached agreement with the FDA for the reopening of the Sturgis, Mich., plant where the company makes many formula products.
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Treasury Secretary Janet Yellen pushed Poland to advance the European Union’s implementation of a global minimum tax in a series of meetings Monday, saying that the two sides discussed potentially linking the minimum tax to an overhaul of international taxation authority.
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EU foreign ministers gathered in Brussels, seeking to overcome obstacles to another package of Russia sanctions. PHOTO: OLIVIER MATTHYS/ASSOCIATED PRESS
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European foreign ministers fail to sway Hungary on Russian oil ban. Hungary said a European Union embargo on Russian oil would cost the country close to $19 billion, raising the stakes in negotiations between it and other EU nations pushing to win Budapest’s support for the ban.
The European Commission proposed the oil ban as part of its latest round of sanctions almost two weeks ago, but has been locked in talks with Hungary over how Brussels could help the country adjust to such a move. Hungary relies on Russian oil more than most other members.
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Newsletter Extra: Crypto-focused venture funds keep hiring despite plunging prices. Cryptocurrency values are falling in tandem with equity markets, but crypto-focused venture funds show no signs of slowing down, WSJ Pro Venture Capital's Vipal Monga reports.
On Monday, TuongVy Le, former chief counsel of the Securities and Exchange Commission’s legislative affairs office, announced she had become head of the regulatory and policy group at Bain Capital Crypto, a crypto-focused venture strategy that Bain Capital established last fall.
Ms. Le is joining the firm two months after it closed a $560 million debut fund. Blockchain companies and investors have a chance to help create new regulatory and legal frameworks for cryptocurrencies, she said in her announcement, posted on the firm’s website.
After leaving the SEC in September, Ms. Le joined digital-currency company Worldcoin, where she was deputy general counsel and compliance officer.
Blockchain companies are beefing up their regulatory teams as regulatory pressure on the industry grows. Crypto-analytics company TRM Labs Inc. just hired Sujit Raman, a former Justice Department prosecutor, as its new general counsel.
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Elon Musk says Twitter bid can’t move forward without more clarity on fake accounts. Elon Musk said his $44 billion bid for Twitter Inc. can’t move forward until the company is clearer about how many of its accounts are fake. In a tweet early Tuesday, Mr. Musk said, “Yesterday, Twitter’s CEO publicly refused to show proof of <5%.”
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“This deal cannot move forward until he does,” he said.
He added: “20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher.” He said his offer “was based on Twitter’s SEC filings being accurate.”
On Monday Twitter Inc. Chief Executive Parag Agrawal defended his company’s ability to fight spam accounts after Mr. Musk last week said his deal to buy Twitter was temporarily on hold amid concerns about the number of spam accounts on the social-media platform.
“First, let me state the obvious: spam harms the experience for real people on Twitter, and therefore can harm our business,” Mr. Agrawal said as part of a series of posts on Monday. “As such, we are strongly incentivized to detect and remove as much spam as we possibly can, every single day. Anyone who suggests otherwise is just wrong.”
Mr. Musk responded with multiple tweets, one that depicted a piece of poop.
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Secretary of State Antony Blinken, center, and Secretary of Commerce Gina Raimondo met with French Foreign Minister Jean-Yves Le Drian in Paris on Sunday.
PHOTO: KEVIN LAMARQUE/ASSOCIATED PRESS
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U.S., EU boost trade ties to remedy supply shortages. Senior U.S. and European Union officials agreed to expand cooperation on supply chains for critical technologies including semiconductors and materials used in their production, they said at a high-level gathering about shared concerns surrounding high-tech international commerce.
At the second meeting of the U.S.-EU Trade and Technology Council, the two sides unveiled initiatives to better align policies and work in 10 areas, including high-tech supply chains, artificial intelligence and international industrial standards. In response to the economic impact of Russia’s invasion of Ukraine, the group added an additional work stream on global food security.
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Boeing gets broadside from one of its biggest customers. The chief executive of Ryanair Holdings PLC, one of Boeing Co.’s biggest customers, took aim at the planemaker’s sales team and its 737 MAX delivery schedule and said the company needed to reboot its commercial-aircraft division.
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Michael O’Leary also questioned Boeing’s pending shift of its headquarters from Chicago to Virginia. While the move “may be good for the defense side of the business, it doesn’t fix the fundamental underlying problems on the civilian aircraft side in Seattle,” Mr. O’Leary told analysts on a conference call after the company’s earnings release Monday.
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