The week in GRC: SEC appoints chief enforcer and House committee passes diversity legislation
– The Wall Street Journal reported that the UK government said it would probe Nvidia’s $40 bn deal to buy UK chip designer Arm from SoftBank Group over possible national security issues. UK digital secretary Oliver Dowden asked the country’s antitrust agency to investigate the merger’s national-security implications and deliver a report by July 30, adding to previously announced plans to probe the deal on antitrust grounds.
Arm has long based its business model on partnering with as many companies as possible in providing its chip designs. Nvidia CEO Jensen Huang has said he supports keeping Arm’s open business model, but competitors have been skeptical. An Nvidia spokesperson said the company didn’t ‘believe this transaction poses any material national security issues.’ He said the firm will work with UK authorities on the probe.
– According to the Financial Times, Germany’s financial regulator BaFin filed a criminal complaint against Deutsche Bank board member Alexander Schütz over alleged insider trading of Wirecard shares. Prosecutors told the FT they received the criminal complaint from BaFin by fax on Monday, adding they were waiting for details, which the regulator has sent by post. Schütz has already announced that he will step down from Deutsche Bank’s board next month.
Deutsche Bank and BaFin declined to comment. Schütz did not immediately respond to a request for comment.
– CNN reported that Boeing’s board raised the company’s executive retirement age. Normally the mandatory retirement age for Boeing executives is 65, but the board extended that to age 70 for CEO Dave Calhoun. Calhoun became CEO in January 2020, about halfway through the 20-month grounding of the 737 MAX, after the board removed predecessor Dennis Muilenburg. ‘I plan to work well past 65,’ Calhoun said at that time. ‘The board can have me as long as it wants me.’
– Brian Brooks, an acting head of the Office of the Comptroller of the Currency (OCC) under the Trump administration, will become the new CEO of Binance.US, the US affiliate of overseas cryptoexchange Binance Holdings, according to the WSJ.
During his time at the OCC, Brooks was dubbed the ‘CryptoComptroller’ on social media for his friendly attitude toward digital currencies. Under his leadership, the OCC released guidance clarifying that banks could provide cryptocurrency custody services and use ‘stablecoins’ – a type of digital coin backed by a commodity or traditional currency – to facilitate payment activities.
– CNN reported that Goldman Sachs has only 49 black executives and senior managers among its US workforce, accounting for about 3 percent of the total. In a sustainability report published Tuesday, the bank revealed data on the racial and gender composition of its US workforce for the first time. Of 1,548 US executives and senior managers, just 24 are black men and 25 are black women, or about 3.2 percent of the total, according to Goldman Sachs.
‘We’ve made good progress on our aspirational diversity and inclusion goals,’ wrote CEO David Solomon in the introduction to the report, adding that recent partner and managing director classes were the ‘most diverse’ in the company’s history. ‘There’s still a long road ahead, but I will continue to make this effort a personal priority.’
– According to CNBC, some of the US’ top business leaders expressed relief at the guilty verdict in the trial of former Minneapolis police officer Derek Chauvin in the murder of George Floyd. They also called for the country to continue to fight against systemic racism and for police reform. Companies in the past year have faced scrutiny for their records on racial equity and have been pushed to do more than simply put out statements, prompting a series of corporate commitments to everything from overhauling how companies recruit and hire black employees to backing mandatory de-escalation training for police.
– Canadian National said it had notified the US Surface Transportation Board (STB) of its intent to buy Kansas City Southern after it made an unsolicited $30 bn bid for the US railroad, Reuters reported. Canadian National had informed the STB, which oversees freight rail service and rates in the US, that it plans to file an application seeking permission to combine with Kansas City Southern, the company said.
– The WSJ reported that beef and pork company JBS USA Holdings has hired Kevin Arquit, who previously served as general counsel at the Federal Trade Commission (FTC) and as director of the FTC’s Bureau of Competition, as its new chief legal officer. In the newly created position, Arquit will lead the company’s legal, ethics and compliance efforts in the US, Canada, Mexico, Australia, Europe and the UK. Kim Pryor will continue to be general counsel for JBS in the US. JBS USA is a subsidiary of Brazilian meatpacking company JBS.
– Investment Company Institute president and CEO Eric Pan welcomed the House Financial Services Committee having passed the Improving Corporate Governance Through Diversity Act, which was introduced by Rep Gregory Meeks, D-New York. The legislation, if approved by Congress, would require companies to disclose the race, ethnicity, gender and veteran status (based on voluntary self-identification) of their board members, nominees and executives. Companies would disclose the data when they solicit shareholder votes for director elections or file annual reports with the SEC.
– According to CNN, progressive activists are calling on large companies that have pledged to support voting rights to cut ties with the US Chamber of Commerce. At issue is the chamber’s opposition to the Democrats’ voting bill known as the For the People Act, which advocates say would counter efforts by Georgia and other states to impose new voting restrictions. The chamber has criticized the legislation as ‘extremely problematic’ in part because it includes curbs on political advocacy by companies and associations.
Accountable.US, a progressive watchdog group, sent letters to 25 companies that have a relationship with the Chamber of Commerce even though they signed the recent statement vowing to oppose discriminatory voting legislation. A spokesperson for the chamber called the campaign by Accountable.US a ‘misrepresentation’ of what the organization has said, emphasizing that the chamber is deeply troubled by efforts to change election law on a partisan basis because that can erode confidence in election outcomes.
– The US Supreme Court limited the FTC’s longtime practice of seeking to recover ill-gotten gains in court from companies and individuals who cheat consumers, saying Congress hadn’t given the agency that power, the WSJ reported. The commission has other tools available and had been making contingency plans for a loss at the Supreme Court, but FTC officials said losing their long-believed authority would harm their efforts to protect consumers. The ruling may put pressure on Congress to consider new measures to boost the agency’s powers.
An FTC spokesperson didn’t immediately respond to a request for comment.
– The SEC appointed Alex Oh as director of the division of enforcement. Oh was most recently a partner at Paul Weiss Rifkind Wharton & Garrison and co-chair of the law firm’s anti-corruption and FCPA practice group. She was previously an assistant US attorney in the criminal division of the US attorney’s office for the Southern District of New York, where she was a member of the securities and commodities fraud task force and the major crimes unit.
‘I’m excited to join the division of enforcement’s team of deeply talented and committed public servants,’ Oh said. ‘The enforcement division plays a critical role in protecting investors and maintaining fair, orderly and efficient markets, essential components of the SEC’s mission. I am committed to working tirelessly to uncover and prosecute violations of the law, whether by businesses or their leaders, so that we can keep American capital markets the strongest in the world.’
– Reuters reported that New York City sued ExxonMobil, BP, Royal Dutch Shell and the American Petroleum Institute (API), claiming they have ‘have systematically and intentionally misled consumers’ through fuel sales at branded stations as ‘cleaner’ and ‘emissions-reducing’ while not disclosing climate impacts. It comes after a federal appeals court this month rejected the city’s effort to have five major oil companies help pay the costs of harm caused by global warming.
‘These lawsuits have no merit and do nothing to advance meaningful efforts that address climate change,’ an ExxonMobil spokesperson said.
Shell is ‘disappointed’ by the suit and believes climate change requires ‘inclusive action from all business sectors, including ours,’ a spokesperson said.
The industry provides affordable energy ‘while substantially reducing emissions,’ said Paul Afonso, API’s chief legal officer, adding that the suit is ‘meritless.’
BP declined to comment.