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3 Ways Companies Can Achieve Inclusivity at All Levels

For organizations to root out racial bias in the workplace, they must first address these issues. Read


Fraud’s Perfect Storm: Mitigating Risk in a Global Pandemic

Implement these anti-fraud strategies to prepare for what’s beyond the horizon. Read


How Companies Can Commit to Diversity and Inclusion Holistically

Key takeaways from ACC and SHRM’s webcast on improving workplace D&I programs. Read


Decision Time: Should You Reopen the Office?

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How ESG Provides Investors Useful Information

A solid Environmental, Social, and Governance (ESG) framework shows how prepared a company is for a potential crisis. Read


In Brief

Today's Top Story

Britain Seeks to Preserve UK Lawyers' Access to EU Market

The United Kingdom drafted a plan designed to ensure that UK lawyers can continue to practice UK and international law in the European Union after the Brexit transition period without having to seek new qualifications or authorizations. London has argued that 20 EU member states already grant such rights to lawyers from outside the bloc, and is asking for similar access to be locked in for UK lawyers after the transition period ends. But the European Commission is opposed to the UK proposal, with the Financial Times (12 July, Brunsden) reporting that the commission views it as an attempt on the part of the United Kingdom to retain existing EU rights while leaving the orbit of the bloc's rules. "The gist is they're asking a lot," said one EU diplomat. London's plan highlights its desire to preserve its status as a global hub for legal services and litigation. The legal sector accounts for about 1.5 percent of the UK gross domestic product, and London is the EU hub for settling cross-border civil and commercial legal disputes. But EU diplomats noted that the disagreement between the United Kingdom and the European Union is a sign of the limitations of the future relationship agreement the two parties are trying to negotiate.

From "Britain Seeks to Preserve UK Lawyers' Access to EU Market"
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Legal Actions

Pharmacy Executives Tied to Deadly US Meningitis Outbreak Lose Appeals

The First US Circuit Court of Appeals on Thursday upheld the racketeering and fraud convictions of New England Compounding Center (NECC) ex-president Barry Cadden, and Glenn Chin, its former supervisory pharmacist, reports Reuters (9 July, Raymond). The three-judge panel also cleared the way for prosecutors to seek longer prison sentences, ruling that a trial judge erred in sentencing Cadden and Chin to nine and eight years in prison, respectively, when he declined to apply various federal sentencing guideline enhancements. Both men were indicted in 2014 after a fungal meningitis outbreak traced back to mold-tainted steroids that prosecutors say NECC produced in filthy and unsafe conditions and shipped to hospitals and clinics nationally. The outbreak sickened 793 patients, more than 100 of whom have died, prosecutors said. Jurors in separate trials in 2017 acquitted Cadden and Chin of second-degree murder charges related to the deaths of 25 patients but convicted them of racketeering and fraud over alleged misrepresentations made to NECC's customers. Prosecutors argued hospitals would not have bought drugs from NECC had they known about its quality control issues.

From "Pharmacy Executives Tied to Deadly US Meningitis Outbreak Lose Appeals"
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Sutter Health's Request to Delay US$575 Million Settlement Is Denied

California-based Superior Court Judge Anne-Christine Massullo on Thursday refused to allow Sutter Health to delay its US$575 million settlement over allegations of price gouging and anticompetitive behavior. Xavier Becerra, California's attorney general, filed the lawsuit against Sutter, alleging that the health system cornered much of its market and imposed artificially high costs. Sutter reached the settlement agreement in December, but said the challenges posed by the COVID-19 pandemic have altered its ability to pay, reports the New York Times (10 July, Abelson). But Massullo refused to delay the settlement payment, scheduling a hearing next month on the preliminary agreement. Jaime King, a senior scholar at the UC Hastings College of Law, said the pandemic is an especially important time to enforce antitrust laws, pointing out that major health systems like Sutter have accepted millions in federal aid while smaller practices are struggling to keep their doors open. If weaker facilities are scooped up by stronger health systems, the imbalance of power will become even more pronounced.

From "Sutter Health’s Request to Delay US$575 Million Settlement Is Denied"
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Regulatory Developments

Exclusive: Google Can Ward Off EU Antitrust Probe Into Fitbit Deal with Data Pledge

Google may be able to stave off a full-scale EU antitrust investigation into its planned US$2.1 billion bid for Fitbit by pledging not to use Fitbit’s health data to help it target ads, people familiar with the matter said. The deal, which was announced last December, would give Google a foothold in the fitness tracking and smartwatch market, allowing it to compete with Apple, Samsung, and others. But the deal has drawn heavy criticism from privacy advocates on both sides of the Atlantic, reports Reuters (10 July, Chee), including concerns that Google may use Fitbit’s trove of health data to boost its dominance in online advertising and search. Earlier this month, EU regulators asked for input from rival makers of wearable devices, app developers, and other online service providers, as well as healthcare providers. But the sources said Google could allay competition concerns by offering a binding pledge to EU competition enforcers along the lines of its promise last year not to use Fitbit’s health and wellness data for Google ads.

From "Exclusive: Google Can Ward Off EU Antitrust Probe Into Fitbit Deal with Data Pledge"
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Governance

A New Proxy Adviser Regulation in Switzerland?

The Swiss Parliament late last week adopted a motion requiring the government to propose a new regulation addressing the conflicts of proxy advisers, notes Mondaq (10 July, Reutter, Weber). The motion primarily focuses on Institutional Shareholder Services (ISS) and Glass Lewis for their role in advising investors. The motion asks the Swiss government to propose legislation designed to both disclose and avoid conflicts of interests of proxy advisers. In the reasoning for the motion, proponents noted that the proxy advisory firms analyzing Swiss-listed companies are often offering advisory services on corporate governance and compensation to those same companies. The motion also alleges that some proxy firms recommend no votes for compensation systems of companies in order to be retained in advisory roles on a re-design of such systems by these companies.

From "A New Proxy Adviser Regulation in Switzerland?"
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Labor and Employment

Wells Fargo Readying Thousands of Job Cuts to Start in 2020

Wells Fargo & Co., the largest employer among US banks, is readying thousands of job cuts that will start later this year, a bleak sign for an industry that has resisted mass layoffs amid the COVID-19 pandemic. People with knowledge of confidential talks said heavy pressure to reduce costs has spurred executives to draft plans that could eliminate tens of thousands of positions, reports Bloomberg (9 July, Levitt). Wells Fargo is significantly less efficient than its largest competitors, a situation exacerbated by years of regulatory probes and sanctions. Though Wells Fargo is facing more significant strain than many of its rivals, its widespread job cuts could test the resolve of competitors that pledged to provide job security for their massive workforces.

From "Wells Fargo Readying Thousands of Job Cuts to Start in 2020"
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Finance

Banks in Hong Kong Audit Clients for Exposure to US Sanctions

US and European banks in Hong Kong are conducting emergency audits of their clients to identify Chinese and Hong Kong officials and corporates that could face US sanctions over a new national security law. The US Hong Kong Autonomy Act, which could be signed into law as early as this week, gives Washington the power to impose sweeping sanctions on officials accused of undermining Hong Kong's semi-autonomous status, as well as banks and state entities that do "significant transactions" with them. The US sanctions could range from freezing the property of individuals and companies to cutting them out of the US financial system. That has spurred a number of banks to conduct emergency audits and identify clients with which they might have to terminate their business relationships, according to the Financial Times (9 July, Riordan, Lewis). HSBC, Standard Chartered, and Citibank all have retail outlets in Hong Kong, while JPMorgan, Goldman Sachs, Bank of America, UBS, and others have offices in the city. Lawyers predicted the conditions in Hong Kong could force financial institutions to choose between doing business with the United States or China.

From "Banks in Hong Kong Audit Clients for Exposure to US Sanctions"
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Manufacturing

Ford Says Restrictions at Mexico Plants 'Not Sustainable'

Ford Motor Co. said Thursday that new staffing restrictions imposed on plants producing car parts in the Mexican state of Chihuahua were “not sustainable,” the latest signal that US automakers are reeling from coronavirus lockdowns in Mexico. Chihuahua has limited employee attendance to 50 percent in plants, causing complications for a Ford engine plant and many auto parts producers. Reuters (9 July, Esposito) reports that Christopher Landau, the US ambassador to Mexico, suggested Ford may have to shut down some US plants as early as this week if they fail to receive Mexico-produced engines. Mexico's federal government has started to give automakers, mining firms, and builders approval to restart work, but states can implement their own individual restrictions as coronavirus cases continue to climb.

From "Ford Says Restrictions at Mexico Plants 'Not Sustainable'"
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Transportation

American Airlines Has Threatened to Cancel Some Boeing 737 MAX Orders

Sources familiar with the matter said American Airlines has threatened to cancel some of its orders for Boeing's troubled 737 MAX jets. The COVID-19 pandemic and subsequent plummet in air travel has put financial strain on global airlines, and the Wall Street Journal (10 July, Tangel) reports that American is struggling to secure financing for 17 jets it had expected Boeing to deliver this year. The sources said American executives told Boeing it needed to help secure funding for the jets or the airline would be forced to cancel some of its orders. This marks the latest hurdle for Boeing and the 737 MAX, which has been grounded since March 2019 following two fatal crashes. Regulatory approval for the jets is expected in September, but Boeing will be returning the troubled jet to the market at a time when airlines are shedding tens of thousands of jobs and cutting costs wherever possible. Boeing's aircraft-purchase agreements generally allow customers to walk away without financial penalty if deliveries are delayed more than a year.

From "American Airlines Has Threatened to Cancel Some Boeing 737 MAX Orders"
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Economic Outlook

China Auto Sales Bounce Back From Worst-ever Quarter

Auto sales in China jumped 10.4 percent year-over-year in the second quarter, signaling that dealers and automakers are repairing the damage from a first quarter wrecked by the coronavirus. The government-backed China Association of Automobile Manufacturers announced Friday that the industry bounced back more strongly than had been projected, and that June's sales were a record for the month. Still, auto sales were down 16.9 percent year-over-year for the first six months of 2020, setting the market on track for its third consecutive year of declines in spite of the recent rally. The association predicted that China's 2020 auto sales would be down between 10 and 20 percent from 2019's numbers, notes the Wall Street Journal (10 July, Moss). "The uncertainty of the international epidemic still exists. This will affect consumption," said Chen Shihua, the association’s deputy secretary-general.

From "China Auto Sales Bounce Back From Worst-ever Quarter"
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France Eyes Faster Recovery with New Cash Tool for Companies

French lawmakers approved a plan to spur the economic recovery using government guarantees to accelerate the flow of cash to companies, reports Bloomberg (10 July, Horobin). The new crisis tool will allow companies to get payments for new orders before they deliver, or even issue a bill to customers. Paris said the financing will come in the form of a state-guaranteed loan and will advance cash flow by an average of 45 days. Finance Minister Bruno Le Maire characterized the plan as "an innovative response to help businesses in the period of picking up activity." The French government expects the economy will need two years to reach 2019 levels of output.

From "France Eyes Faster Recovery with New Cash Tool for Companies"
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Default Risk for Indian Firms Drops at Fastest Pace in Decade

Default risks for Indian firms are declining at the fastest pace in more than a decade as the nation’s government deploys huge stimulus to support local companies hit by the impact of the pandemic. The cost to insure against nonpayment by a number of Indian companies, including Reliance Industries Ltd. and State Bank of India, dropped by 252 basis points in May and June combined, the most for any two-month period in over a decade. Meanwhile, Prime Minister Narendra Modi's government unveiled US$272 billion in stimulus in May and the central bank cut benchmark borrowing rates to the lowest since at least 2000, with Bloomberg (10 July, Joshi) reporting the measures are designed to prop up an economy facing contraction. Ajay Marwaha, head of investment advisory for Sun Global Investments Ltd. in London, said India's economic package "has brought relief to global investors and helped boost Indian asset prices, including easing of domestic firms’ default swaps."

From "Default Risk for Indian Firms Drops at Fastest Pace in Decade"
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