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Yahoo’s 10K: Lessons on What Not to Do in a Breach

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Attorney-Client Privilege and Sexual Harassment: Lessons from a Hollywood Scandal

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Sexual Harassment in the US: Don’t Be a Trending Topic

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How to Prepare Companies for Natural Disasters

The more prepared in-house counsel are, the sooner their company and employees can get back on their feet. Read


Paying Employees during Natural Disasters

Are companies expected to pay their employees if they can’t get to work? Read


In Brief

Today's Top Story

U.S. Federal Communications Commission Repeals Net Neutrality Rules

The U.S. Federal Communications Commission (FCC) voted on Thursday to roll back far-reaching rules governing how internet service providers treat traffic on their networks, a move expected to empower cable and wireless providers and transform consumers' online experience. The agency scrapped the so-called net neutrality regulations that prohibited broadband providers from blocking websites or charging for higher-quality service or certain content. The federal government will also no longer regulate high-speed internet delivery as if it were a utility, like phone service. The action reversed the agency's 2015 decision, during the Obama administration, to better protect Americans as they have migrated to the internet for most communications. The changes will take a couple of weeks to go into effect, but groups opposed to the action have already announced plans to sue the agency to restore the net neutrality regulations. Those suits could take many months to be resolved. The commission's vote was 3-2, along party lines, reports the New York Times (15 December, Kang), with FCC Chairman Ajit Pai and the two fellow Republicans on the panel backing the change. The dismantling of the rules is not expected to change the delivery of web content to consumers overnight. But internet service providers such as Comcast Corp. or Verizon Communications Inc. would be free to make all sorts of big changes, such as offering new packages with pricing schemes that deliver some kinds of content but not others. One type of service that could proliferate in the new regime is zero-rating deals, where specific websites or services are exempted from a mobile carrier's data caps.

The Wall Street Journal (15 December, McKinnon) notes that net neutrality, which has been the subject of public policy debates for more than a decade, has stirred activists who view a tightly regulated, open internet as a powerful force for democracy and opportunity. Much of that opposition was led by major internet firms such as Alphabet Inc.'s Google, Netflix Inc., Amazon.com Inc., and Facebook Inc. These groups have worried for years that internet providers would use their outsize influence to extract unfair fees or promote their own content.

From "U.S. Federal Communications Commission Repeals Net Neutrality Rules"
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Legal Actions

Dakota Access Developer, Publication Argue Over Lawsuit

The Dallas-based developer of the Dakota Access oil pipeline and a Florida-based environmental publication are arguing in court over whether something billed as a social movement can be sued. In August, Energy Transfer Partners (ETP) filed a lawsuit against Earth First, Greenpeace, and BankTrack, alleging they disseminated false and misleading information about the US$3.8 billion pipeline to move North Dakota oil to Illinois, interfered with construction, and damaged the company's reputation and finances through illegal acts. Greenpeace and BankTrack have called the lawsuit meritless and asked that it be thrown out. ETP lawyers have asked U.S. District Judge Daniel Hovland to declare that Earth First also has been served with the lawsuit, via Earth First Journal. The Journal has a post office box in Florida and its website bills the publication as a forum for discussion within the Earth First movement, reports the Associated Press (14 December, Nicholson). Journal attorney Pamela Spees argues in court documents that the two "are not one and the same." She describes Earth First as a "broad-based social movement" with no formal membership or leadership structure.

From "Dakota Access Developer, Publication Argue Over Lawsuit"
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U.S. State of Maryland Sues Petroleum Companies Over Groundwater Contamination

Maryland has filed a lawsuit against more than 50 petroleum-related companies over groundwater pollution from a chemical compound that used to be common in gasoline. The lawsuit, filed 13 December in Baltimore City Circuit Court by Maryland Attorney General Brian E. Frosh's office, alleges that ExxonMobil, Chevron, and dozens of other companies knew a fuel additive called methyl tertiary butyl ether (MTBE) would contaminate groundwater and tried to obstruct research about its harmful effects. The American Fuel & Petroleum Manufacturers, which represents petroleum companies, blasted the lawsuit as misguided and misdirected, reports the Baltimore Sun (13 December, Gantz).

From "U.S. State of Maryland Sues Petroleum Companies Over Groundwater Contamination"
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Regulatory Developments

U.S. Regulators Vow to be on Guard for Bitcoin Risk

U.S. regulators including several Trump appointees have vowed to be on guard for financial stability risks posed by bitcoin as its rocketing value triggers a wave of investor interest in cryptocurrencies. A group that includes the Treasury department and the Federal Reserve used its first annual risk assessment of the Trump era on 14 December to declare that financial watchdogs were focused on potential dangers posed by the volatile virtual currency, reports the Financial Times (14 December, Jopson, Wigglesworth). The signal came with bitcoin mania exploding around the world. The price of one unit has lurched upwards from under US$1,000 at the start of the year to a high of US$17,578 this week. The regulators, organized in a club known as the Financial Stability Oversight Council, said that although investment in virtual currencies is increasing, they are only used by a "very small" number of consumers and that their impact on financial stability at present is "likely limited."

From "U.S. Regulators Vow to be on Guard for Bitcoin Risk"
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Mergers and Acquisitions

Disney Acquiring Key Parts of 21st Century Fox in US$52.4 Billion Deal

Walt Disney Co. on Thursday agreed to buy most of 21st Century Fox Inc. for US$52.4 billion in stock, in a deal that would give Disney a dominant position in movies and sports and could help bolster its flagging television business as it prepares to directly challenge digital giants like Netflix Inc. Disney is buying the Twentieth Century Fox television and film studios, cable networks including FX and National Geographic Channel, Star India, a 39 percent stake in Sky, 22 regional sports networks, and majority control of streaming-video service Hulu. The agreement is subject to the approval of antitrust regulators, notes the Wall Street Journal (15 December, Fritz, Sharma, Rabil). A month after it sued to block AT&T's purchase of Time Warner, President Trump's Justice Department now has another big media deal to scrutinize. In some respects, experts say the Disney-Fox deal could face more antitrust scrutiny than a combination of AT&T and Time Warner, CNN's parent company. The Disney-Fox merger would pair the largest movie studio by box office sales with the third-largest. The deal would also combine Disney's cable channels ESPN, Freeform, and the Disney Channel with Fox's FX, National Geographic, and Star India. The Justice Department will consider to what extent the new company could dominate the market, using its increased leverage to force cable companies and other distributors to pay higher rates to carry Disney and Fox content.

From "Disney Acquiring Key Parts of 21st Century Fox in US$52.4 Billion Deal"
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Governance

More Than Half of Hong Kong-Listed Firms Do Not Meet Corporate Governance Requirements

The South China Morning Post (15 December, He) reports a new global study on corporate governance performance has found more than half of Hong Kong's largest listed companies failed to meet some aspects of the government's voluntary standards, although the rate is an improvement on last year. Forty-six percent of the Hang Seng Composite Index constituent companies are now in full compliance with the "Corporate Governance Code" issued by the Hong Kong Exchanges and Clearing in January 2005, according to Grant Thornton Hong Kong's 2017 Corporate Governance Review, which assesses compliance with voluntary codes in the city each year. "That ratio has improved from last year, when 41 percent of companies were found to have met the requirements fully, so companies have enhanced their disclosure on information about code compliance, internal controls, and risk management," said Mian Wong, director for advisory at Grant Thornton Hong Kong.

From "More Than Half of Hong Kong-Listed Firms Do Not Meet Corporate Governance Requirements"
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Labor and Employment

Ryanair to Recognize Pilot Unions for First Time in Effort to Avoid Strikes

Ryanair has abruptly reversed decades of policy to recognize pilot unions for the first time in a bid to avert strikes next week by cockpit crew at the start of the busy holiday season. On 15 December, the company said it wrote to the pilot unions in Ireland, Britain, Germany, Italy, Spain, and Portugal inviting them to talks to recognize them as the representative body for Ryanair pilots, reports the Financial Times (15 December, Beesley). The move follows the damaging scheduling crisis at the airline that led to the cancellation of 20,000 flights and prompted a pilot backlash for higher pay and better employment terms.

From "Ryanair to Recognize Pilot Unions for First Time in Effort to Avoid Strikes"
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Legislation

Tax Overhaul Would End Corporate Tax Incentives for Executive Pay

A decades-old corporate tax incentive for performance-based pay of top executives faces elimination under the current tax bill, as Republican lawmakers say it has failed to rein in compensation or encourage responsible management. Current law caps the amount companies can deduct from their taxes for executive compensation at US$1 million. However, write-offs exceeding the US$1 million limit are allowed for certain types of compensation, most notably performance-based pay, often cash or equity promised to executives if predetermined financial or stock-market targets are met. Twenty-eight percent of executives had taxable compensation above the US$1 million limit, according to Kevin Murphy, a finance professor at the University of Southern California's Marshall School of Business. That figure would rise to 70 percent under the proposed rules, partly because finance chiefs, previously excluded, would now be included. The new rule would apply to taxable years beginning in 2018, reports the Wall Street Journal (15 December, Minaya). Government officials estimate the proposal would generate about US$9.3 billion in additional tax revenue over 10 years. Critics of the proposed move say the added taxes would raise the cost of attracting and retaining company leaders. Opponents also say the measure could ultimately make executives less accountable to investors by undermining the trend toward the linking of pay to performance.

From "Tax Overhaul Would End Corporate Tax Incentives for Executive Pay"
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Saudi Arabia Unveils US$19 Billion Stimulus Package for Private Sector

Saudi Arabia unveiled a US$19 billion stimulus package on 14 December aimed at supporting the struggling private sector as the government tries to revive an economy battered by low oil prices and austerity measures. The package was approved by King Salman and includes subsidized loans for house buyers and developers, fee waivers for small businesses, and financial support for distressed companies, the state news agency reported. The move is the first big part of a broader three-year SR200 billion (US$53 billion) stimulus planned by Riyadh as Crown Prince Mohammed bin Salman tries to balance pushing ahead with an ambitious reform program with the need to implement tough austerity measures as the budget deficit widens. Still, economists said there were doubts about whether the stimulus package, which relies heavily on loans, subsidies, and indirect support, will do enough to boost demand in the economy to help companies, reports the Financial Times (14 December, Al Omran, Kerr).

From "Saudi Arabia Unveils US$19 Billion Stimulus Package for Private Sector"
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Economic Outlook

Mexico Central Bank Increases Key Rate, Says Ready to Act Again

Mexico's central bank raised borrowing costs on Thursday in the face of intensifying inflation pressures and said it was willing to act again whenever needed in order to rein in the jump in consumer prices. With new governor Alejandro Diaz de Leon at the helm for the first time since the departure of Agustin Carstens last month, the Banco de Mexico board raised its key rate by 25 basis points to 7.25 percent, its highest in nearly nine years. A majority of analysts in a Reuters (14 December) poll expected the quarter-point hike, while others thought the bank would stand pat.

From "Mexico Central Bank Increases Key Rate, Says Ready to Act Again"
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Compensation

Gender Pay Gap Data Said to be Altered by Companies

Four U.K. companies have reportedly altered gender pay gap figures since first submitting them to the government. The four were among 16 companies that initially reported that, on average, there was no gap between what they paid their male and female employees, measured by both the mean and the median, a result which is statistically implausible. Hugo Boss U.K., Dana U.K. Axle, Eastgate Care Group, and Age U.K. North Tyneside have all altered their figures at least once, with Hugo Boss changing its submission three times, reports the Financial Times (14 December, Ehrenberg-Shannon, Wisniewska). Hugo Boss initially reported that there was no gap between what it paid its male and female staff, but then changed the mean and median gap to 32.6 percent and 76.5 percent after the Financial Times questioned the original data submission. Following the publication of the Financial Times' analysis on 7 December, the data were changed again to a mean pay gap of 7.2 percent and a median of 4.7 percent. The Department of Education, which administers the gender pay gap portal, said that employers were legally liable for the accuracy of the 14 data points required by the government. Published data must be signed off at a senior level by employers, but the government does not check the information.

From "Gender Pay Gap Data Said to be Altered by Companies"
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Corporate Social Responsibility

Exxon, 237 Other Firms Commit to Climate Change Reports

Under pressure from investors, Exxon Mobil Corp. this week joined some 237 other companies that have publicly committed to include climate-related data in their financial disclosure reports. Exxon's statement filed with the U.S. Securities and Exchange Commission said the company's board of directors "has decided to further enhance the company's disclosures…and will seek to issue these disclosures in the near future. These enhancements will include energy demand sensitivities, implications of two degree Celsius scenarios, and positioning for a lower-carbon future." The company noted in its statement that the board had reconsidered a shareholder proposal raised at its 31 May annual meeting requesting a report on the impact of climate change policies. The proposal received 62 percent of the shareholder vote, which was nonbinding on the company, but the board opposed such a report at that time, reports the Corporate Counsel (14 December, Reisinger).

From "Exxon, 237 Other Firms Commit to Climate Change Reports"
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