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In Brief

Today's Top Story

Terrorism Financing Charge Upheld Against French Company Lafarge

A French court on Thursday upheld preliminary criminal charges against one of France’s biggest companies over allegations that it financed the ISIS and other armed groups in Syria, while putting the lives of its employees there in danger, reports the New York Times (8 November, Alderman). The Court of Appeal in Paris ruled that Lafarge, a multinational cement maker, had violated international embargoes by continuing to court business in Syria despite a civil war there. But the court rejected a separate charge that Lafarge had been complicit in crimes against humanity for abetting terrorist groups operating in the region by funneling financing to them. That accusation was made by former Lafarge employees. The ruling stems from an investigation conducted by French authorities into Lafarge that produced charges against the company and six of its former executives, including former CEO Bruno Lafont. Lafarge had a plant on Syria's northern border with Turkey. Company employees fled the plant in 2014 when ISIS targeted it for attack. The plant then served as a strategic base for US troops until President Trump withdrew American forces from Syria last month. Marie-Laure Guislain, the head of litigation at a French organization that pursues human rights abuses by corporations, said the legal victory should serve as a warning to other multinationals that "that might feel encouraged not to act legally responsible for the human rights of its employees in other countries." Guislain's group, Sherpa, filed a lawsuit in 2016 on behalf of the former Lafarge employees in Syria, and plans to file an appeal to the dropped war crimes charge. Lafarge previously acknowledged that it had made mistakes in Syria, but insisted that the company as a whole was not responsible.

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Legal Actions

US Supreme Court Hears Arguments in IBM Stock-Drop Fiduciary Challenge

The US Supreme Court on Wednesday heard arguments in a case originating in 2015, when 401(k) plan participants sued IBM, reports Pensions & Investments (7 November, Croce), saying its plan managers should have acted to protect holders of company stock due to IBM's writing down US$2.4 billion of a troubled microelectronics unit and paying US$1.5 billion to another company to take the unit. A District Court judge ruled in September 2016 and September 2017 that participants failed to show a prudent fiduciary could have taken actions without causing more harm than good, referencing the Supreme Court's guidelines. In December 2018, the 2nd Circuit Court of Appeals reversed and remanded the ruling. IBM petitioned the Supreme Court in June to revisit a unanimous 2014 ruling in Fifth Third Bancorp et al. vs. Dudenhoeffer et al., which established a series of guidelines for lower courts to use in assessing stock-drop complaints.

From "US Supreme Court Hears Arguments in IBM Stock-Drop Fiduciary Challenge"
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Regulatory Developments

China Reboots Plan to Attract Tech IPOs

China's securities regulators and stock-exchange officials are overhauling a plan to lure more technology listings to the country's stock exchanges, reports the Wall Street Journal (7 November, Yang, Deng). The revitalized efforts comes after the original plan was derailed by trade disputes and slow activity by Chinese firms. Regulators also did not garner enough political support for the original plan. The new system would allow foreign companies and Chinese businesses that are incorporated abroad to list in mainland China. Officials could also lower the market-capitalization threshold for overseas-listed tech companies to 100 billion yuan (US$14.29 billion) or less. New rules are also expected to address issues such as the repatriation of proceeds, and limitations on existing shareholders’ ability to sell their shares. The changes would apply to companies with international stock listings and startups. The plan could be officially introduced in a few days.

From "China Reboots Plan to Attract Tech IPOs"
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Board/Management Relations

CoreLogic Hires New Legal Leader Amid Antitrust Inquiry

CoreLogic Inc. has brought on a new leader of its in-house legal department as it deals with a federal antitrust investigation into the real estate brokerage industry, a major consumer of its services. CoreLogic, a data analytics company, announced on 6 November that F. Aaron Henry has been hired as its next chief legal officer, replacing the company's former general counsel, Arnold Pinkston. In his new role, Henry will oversee all legal and compliance functions at CoreLogic, according to Big Law Business (6 November, Baxter). Pinkston departed on 14 June after reports that CoreLogic and other real estate data vendors had notified clients about a request from the Department of Justice for documents and answers to questions about how the company handles its business. Henry has relevant career experience that has prepared him to help the company manage the legal risks in its data pool. He previously worked in high-level legal positions for Western Union Co. and MoneyGram International Inc. While at MoneyGram, Henry helped steer the company through a number of thorny legal matters. CoreLogic CEO Frank Martell said Henry's experience would serve him well in his new position.

From "CoreLogic Hires New Legal Leader Amid Antitrust Inquiry"
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Labor and Employment

Alphabet Expects to Complete Probe of Misconduct Claims by Next Month

The board of Alphabet Inc., parent company of Google, expects to complete an investigation into its handling of sexual misconduct complaints against current and former executives by next month. The board formed a special litigation committee last spring after several shareholder groups filed lawsuits alleging that company directors breached their fiduciary duties by covering up sexual misconduct claims against two former executives. Four of the lawsuits were joined together in June, and Alphabet was expected to respond to the allegations by 8 November. However, Alphabet and the plaintiffs said in a joint court filing on 18 October that they had agreed to move the company's response deadline to 13 December so it could finish the investigation and have those findings in hand. The investigation includes reviewing the behavior of Alphabet's chief legal officer, David Drummond, who has been accused of having relationships with employees. The shareholders suing Alphabet include individuals and various labor unions and pension funds, according to Reuters (6 November, Dave). They have called for Alphabet to enact governance and oversight reforms to stop future workplace conduct, and call for directors to pay damages to Alphabet for engaging in corporate waste. These allegations stem from large severance payments made to Andy Rubin and Amit Singhal, both former unit leaders, who were implicated in company investigations for sexual harassment.

From "Alphabet Expects to Complete Probe of Misconduct Claims by Next Month"
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Information Security

Two Ex-Twitter Employees Charged With Spying on Users for Saudis

US prosecutors on Wednesday accused two former Twitter employees of spying on behalf of Saudi Arabia, reports Bloomberg (7 November, Burnson). Ali Alzabarah, a Saudi national, and Ahmad Abouammo, a US citizen, used their access at the social media giant to gather sensitive and nonpublic information on dissidents of the Saudi regime, the US Justice Department alleged in a criminal complaint. The case, unsealed in San Francisco federal court, underscores allegations the Saudi government tries to control anti-regime voices abroad.

From "Two Ex-Twitter Employees Charged With Spying on Users for Saudis"
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Greek Competition Watchdog Raids Banks in Pricing Probe

Greece's competition authorities conducted raids on the country's main commercial banks Thursday as part of an investigation on pricing and commission practices. The unprecedented raids all launched simultaneously, with different inspectors dispatched to head offices of all of Greece's big banks, witnesses and sources familiar with the situation told Reuters (7 November, Georgiopoulos). The competition commission declined to offer an immediate justification for the raids, which reportedly took place at National Bank, Piraeus Bank, Eurobank, Alpha Bank, Attica Bank, and the offices of the Greek bank association. Banking sources suggested that the watchdog may be probing whether banks colluded on fees charged for bank transactions. Greek Prime Minister Kyriakos Mitsotakis had discussed fees with banks last month, and had urged them to revoke increases in charges they had announced for a series of services, government officials said at the time. One senior banker told Reuters that there was no nefarious scheme, arguing that "when you price services, naturally you track your competitors — up and down." Two additional bankers alleged that the raids were politically motivated.

From "Greek Competition Watchdog Raids Banks in Pricing Probe"
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Intellectual Property

Trump Administration Sues Gilead, Maker of HIV-prevention Drugs

The Trump administration sued Gilead Sciences, accusing the company of earning billions from research funded by taxpayers without paying taxpayers back, reports the New York Times (7 November, Victor). The government said Gilead infringed upon patents owned by the
US Department of Health & Human Services and had refused attempts by the department to license its patents and collect royalties.

From "Trump Administration Sues Gilead, Maker of HIV-prevention Drugs"
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Little Interest for Brazil's Oil Tender, Yields US$17 Billion

Brazil's government has awarded two of the four blocks on offer in its most expensive oil auction since 2010, reports the Associated Press (6 November), earning about US$17 billion in the process. The highly anticipated tender had captured the attention of some of the world's biggest oil firms, including the United States' ExxonMobil and other companies from China, Malaysia, and Norway. But in the end, few firms participated in the auction, though Brazilian energy officials maintained that the auction had been a success. Chinese state-owned oil firms CNOOC and CNODC won the largest block, Buzios, in a consortium with Brazil's state-controlled Petrobras. Petrobras was the only firm interested in the second block, and therefore was the de facto winner. If all four blocks had been auctioned, Brazil could have brought in US$26 billion. Brazil's energy minister, Bento Albuquerque, said he would explore why bigger firms did not participate in the auction, adding that the government would review the auction's methodology to improve future tenders. Potential participants may have been spooked by a requirement that winning bidders reimburse an undisclosed amount of money to Petrobras to compensate for exploratory works already carried out by the company.

From "Little Interest for Brazil's Oil Tender, Yields US$17 Billion"
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Mining Project Suspended in Madagascar as Government Negotiates Terms

The Financial Times (7 November, Dempsey) reports that the government of Madagascar has instructed Base Resources to suspend activities on the ground at its mineral sands site until the fiscal terms for a deal can be worked out. Base's Toliara project in Madagascar is mining ilmenite, rutile, and zircon, with the end goal of producing titanium dioxide. Base said Madagascar's command would not affect the timeline of its definitive feasibility study for Toliara, which is needed to secure funding for the project. In a statement, Base vowed to "continue to engage in a transparent and respectful dialogue" with the government "to deepen [our] understanding of the significant benefits of the project to Madagascar." The dispute between Australia-based Base and Madagascar is just the latest example of tension between mining companies and host governments. Sierra Leone, Tanzania, the Democratic Republic of the Congo, and Zambia have all pushed back against mining companies in attempts to secure better deals.

From "Mining Project Suspended in Madagascar as Government Negotiates Terms"
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BHP Pressured to Quit Minerals Council After Shareholder Vote

Australian mining company BHP Group faces growing pressure to quit the Minerals Council of Australia (MCA), as nearly 30 percent of its shareholders voted for a resolution that would make it impossible for the company to stay a member, reports the Guardian (7 November, Butler). The resolution, put forth by investor group the Australasian Center for Corporate Responsibility (ACCR) at BHP's recent annual meeting, calls on the miner to quit industry bodies that have a long-term track record at odds with the company's support of emissions reduction. While the resolution did not pass, the high level of support builds on the result achieved by ACCR at a similar shareholder meeting last month, which gathered 22 percent of the vote. BHP is set to announce whether it will leave the MCA within two months. Chairman Ken MacKenzie said the company will leave if it identifies misalignment between an industry association and BHP's position, pointing out that BHP quit the World Coal Association over its position on the 2015 Paris Agreement.

From "BHP Pressured to Quit Minerals Council After Shareholder Vote"
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Gap CEO Art Peck to Step Down

Gap announced that CEO Art Peck is stepping down immediately and is being succeeded on an interim basis by Robert Fisher, the son of the company’s founders, reports the Wall Street Journal (8 November, Maidenberg). The apparel maker has struggled in recent years with sluggish sales. Yesterday, it warned market watchers of another quarter of tepid sales and lowered its profit targets for 2019. As a result, shares fell 7 percent in after-hours trading. Peck joined Gap almost 15 years ago and was elevated to chief executive in 2015. In stepping down, he is also relinquishing his seat on Gap's board of directors. Fisher, who is Gap's chairman and a board member since 1990, was previously interim CEO.

From "Gap CEO Art Peck to Step Down"
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