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June 26, 2019Today's Top Risk News + Analysis From the Editors at RANE
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01
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GEOPOLITICAL
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U.S. Chipmakers Still Sell to Huawei, Sidestepping Trump Ban

U.S. chipmakers are still selling to Chinese telecom firm Huawei, sidestepping a ban imposed by the Trump administration by not labelling the goods as American-made, the New York Times reports. Industry leaders including Intel and Micron have found ways to get round the ban on selling U.S. technology to Huawei, because goods produced by American companies overseas are not always considered American-made. The sales, which began about three weeks ago, show how difficult it is for the Trump administration to clamp down on companies that it considers a security threat. U.S. companies may sell technology supporting current Huawei products until mid-August, but a ban on components for future Huawei products is already in place. It is not clear what percentage of the current sales are for future products. Huawei buys approximately $11 billion in technology from U.S. companies each year. Although the Trump administration has known about the sales, government officials are split regarding how to respond to them, people with knowledge of the sales said. Some feel that the sales go against government efforts to pressure Huawei, while others are more supportive.

READThe New York Times 
02
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GEOPOLITICAL
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Britain Suspends Arms Export Licenses to Saudi Arabia and Shipments of Riot Gear to Hong Kong

The UK government will not grant any new licenses for weapons exports to Saudi Arabia or its coalition partners fighting in Yemen after a court ruled the sales were unlawful, Al Jazeera reports. Britain’s Department for International Trade said it would appeal the UK Court of Appeal ruling, but would abide by it in the meantime. It said exporters could continue to export under licenses issued before the ruling, though it is required to reconsider the decisions it made about those licenses. The landmark decision followed a challenge by a group called the Campaign Against Arms Trade (CAAT), which accused the UK government of licensing arms sales despite a clear risk their use could breach international humanitarian law. The UK’s arms sales have strengthened the Saudi-led coalition’s ability to carry out air attacks in Yemen. The final six Typhoon jet fighters of 72 ordered in 2007 were delivered in 2017, and in 2018, Riyadh agreed to buy an additional 48 Typhoons. Meanwhile, the UK has also suspended exports of tear gas and rubber bullets to Hong Kong after police clashed with demonstrators at protests over the controversial extradition bill, the South China Morning Post reports.

READAl Jazeera , South China Morning Post 
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03
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CYBER + INFORMATION
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Health Insurer Reports Data Breach That Started Nine Years Ago

Dental and vision insurance provider and administrator Dominion National has started notifying patients of a data breach that began nearly nine years ago, Dark Reading reports. Dominion was investigating an incident that began on April 24, 2019 when it discovered that its servers had been compromised in an attack that dated to August 2010. It said it moved quickly to “clean the affected servers,” which held enrollment and demographic information of Dominion National and Avalon vision programs, as well as of patients whose benefits are administered by the firm, and had no evidence that any information was “accessed, acquired or misused.” The servers may have held names, addresses, email addresses, dates of birth, Social Security numbers, taxpayer identification numbers, bank account and routing numbers, member ID numbers, group numbers, and subscriber numbers. In a press release, Dominion National said that to help stop an incident like this from occurring going forward, it has implemented “enhanced monitoring and alerting software.” Dominion National also told the FBI about the incident.

READDark Reading 
04
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LEGAL, REGULATORY + COMPLIANCE
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EPA Plan to Roll Back Rule on Smokestacks Undermines Its Enforcement Powers

The Environmental Protection Agency’s (EPA) attempt to roll back an Obama-era rule on coal-fired power plants could have far-reaching consequences for its own ability to enforce aggressive regulation, the Wall Street Journal reports. Critics of the mandates that could have forced older coal- and gas-fired power plants to close said the EPA overstepped its authority, and the Supreme Court temporarily blocked implementation, following legal challenges by 26 states. Taking the side of the critics, EPA administrator Andrew Wheeler last week approved a new policy that cedes authority to state regulators. New York and California have already stated their intent to sue and try to block the administration’s new rules, but if they survive the legal challenges, which may go as high as the Supreme Court, it could set a precedent that could apply not only to power plants, but other heavy industries like oil refineries, cement factories and steel mills, making it harder for future administrations to propose “expansive” rules. Business groups in Washington have been advocating for these very limitations on EPA authority for a long time.

READThe Wall Street Journal  
05
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GOVERNANCE
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Wayfair Employees Plan Walkout to Protest Sales to Migrant Centers

Wayfair employees are planning a walkout to protest sales of furniture to the operators of facilities for migrant children detained at the U.S. border with Mexico, the Boston Globe reports. Wayfair employees said they were “disheartened and concerned” when they learned BCFS, a government contractor that manages camps at the border, had placed an order for $200,000 of bedroom furniture for a facility in Carrizo Springs, Texas that will detain up to 3,000 migrant children. A group of 50 employees drafted a letter to the company’s leadership, which included cofounders Niraj Shah, Steve Conine and the board. More than 547 employees signed it. In the letter, the employees said they were “writing from a place of concern and anger about the atrocities being committed at our Southern border.” They asked Wayfair to stop doing business with BCFS and other contractors and establish a code of ethics for business-to-business sales. The board replied that Wayfair is entitled to sell to any customer “acting within the laws of the countries within which we operate.” The planned walkout, set to take place early afternoon Wednesday in Boston’s Copley Square, is the latest instance of workers going against workplace social issues, Reuters reports.

READThe Boston Globe  , Reuters 
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06
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LEGAL, REGULATORY + COMPLIANCE
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Justice Department Probes Price-Fixing by Chicken Processors

The U.S. Department of Justice (DOJ) has opened an investigation into allegations of price fixing by chicken processors, including Tyson Foods Inc., Pilgrim’s Pride Corp. and Sanderson Farms Inc., that alone control almost half of the U.S. chicken market, Bloomberg reports. The grand jury probe was revealed in a filing in a court in Chicago, where civil lawsuits against more than a dozen companies are pending. Consumers, distributors, grocery chains and food companies allege the chicken processors colluded to increase prices for broiler chickens. Prosecutors intervened in the civil litigation to ask the court to suspend for six months depositions of the chicken processors’ current and former employees. Tyson said the DOJ’s request does not change its view that there is “no merit to the allegations that Tyson Foods colluded with competitors.” Sanderson Farms Chief Financial Officer Mike Cockrell said the company hasn’t received a subpoena, and said it continues to believe the civil cases “are wholly without merit.” The poultry industry is extremely consolidated, with just two companies, Tyson and Pilgrim’s Pride, controlling 40 percent of the market, the Food & Environment Reporting Network reports.

READBloomberg , Food & Environment Reporting Network 
07
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LEGAL, REGULATORY + COMPLIANCE
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FedEx Sues U.S. Government Over Requirement to Screen Packages From China

FedEx is suing the U.S. Department of Commerce to block its attempt to make it screen packages from China that may pose a security risk, saying it is “a transportation company, not a law enforcement agency,” NBC News reports. FedEx says the Export Administration Regulations place an “unreasonable burden” on it. It filed the suit after Chinese tech firm Huawei demanded to know why it failed to deliver a device destined for the tech magazine PCMag. Huawei also said FedEx refused to ship a package that contained a Huawei phone. In June, the Commerce Department added five Chinese organizations involved in super-computing, including Huawei, to a so-called entity list, meaning U.S. companies cannot sell them technology without government approval. Commerce Secretary Wilbur Ross said “the regulation states that common carriers cannot knowingly ship items in contravention of the entity list or other export control authorities,” but did not need to know “what’s in every package.” Even though there is no blanket ban on transporting Huawei merchandise, the Verge reports FedEx stated that, under the current rules, its employees will probably commit errors to avoid legal trouble.

READNBC News , The Verge 
08
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LEGAL, REGULATORY + COMPLIANCE
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More Laws Around the World Address Human Trafficking

An attempt to ban imports of palm oil from a Malaysian company accused of exploiting foreign migrant workers underlines the need for businesses to examine their supply chains, CFO reports. FGV, which is accused of exploiting foreign migrant workers, including victims of human trafficking, supplies multinational companies such as Cargill, Mars, Nestle, PepsiCo and Procter & Gamble. More laws are being passed to end human trafficking, which traps as many as 40 million people around the world, requiring companies to be vigilant to its existence. An example would be Australia’s Modern Slavery Act, which came into force this year and like the 2015 UK Modern Slavery Act, it requires organizations above a revenue threshold to report on the risks of modern slavery in their operations and supply chains, the actions they have taken to address those risks, and their effectiveness. Canada and Switzerland are currently debating similar laws. The strongest human trafficking law is probably France’s 2017 Duty of Vigilance law, which requires companies to identify risks and maintain a plan outlining remedial action.

READCFO 
09
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LEGAL, REGULATORY + COMPLIANCE
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FTC and Justice Department in Joint Move Against Robocallers

The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are taking coordinated action against robocallers, TechCrunch reports. The FTC brought four cases, two of which were filed on its behalf by the DOJ, and three settlements in cases said to involve more than a billion illegal robocalls. Several state and local authorities also brought actions as part of “Operation Call it Quits.” So far, the FTC has fined companies more than $200 million but it has collected less than 0.01 percent of the fines because of its limited powers of enforcement. The FTC said the new campaign will send a strong signal to the robocalling industry. In May, it took action against four companies accused of making “billions” of robocalls. Several of the latest cases involved shutting down operations that offer consumers “bogus” credit card interest rate reduction services, which the FTC said specifically targeted seniors. Other cases involved the use of illegal robocalls to promote money-making schemes. The robocalling phenomenon has also caught the Federal Communications Commission’s (FCC) attention. In May, FCC commissioners had proposed a new rule making it easier for carriers to block robocalls.

READTechCrunch 
10
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LEGAL, REGULATORY + COMPLIANCE
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Media Firms Responsible for Comments on Facebook, Australian Judge Says

Media companies are responsible for pre-moderating comments posted on Facebook an Australian judge has ruled, the Guardian reports. The ruling came in a case brought by a 22-year-old man who says comments made about him by members of the public on posts published on several media companies’ public Facebook pages were defamatory. A supreme court judge in New South Wales concluded that commercial entities, including media companies, could be regarded as the publishers of comments made on Facebook, and therefore, had a responsibility to ensure defamatory remarks were not posted in the first place. News organizations were already liable for Facebook comments made on articles posted on their public pages, but, until now, the test related to whether they had been negligent in not removing defamatory comments. The new ruling says media companies have a responsibility to pre-moderate them, which is a far more demanding task. It could mean that any operator of a public Facebook page, including politicians, could be liable for third-party comments. The new ruling has once again revived the debate regarding the country’s restrictive defamation laws.

READThe Guardian 
11
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GOVERNANCE
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Companies Lose Revenue and Customers Because of Bad Data Practices

Companies are missing out on revenue opportunities and customers because of bad data practices, claimed a new survey from commercial data and analytics firm Dun and Bradstreet. ZDNet reports that nearly 20 percent of companies have lost a customer by using incomplete or inaccurate information about them, and an additional 15 percent said they failed to sign a new contract with a customer for the same reason, the survey of 510 business decision makers in the U.S. and UK found. Nearly one-quarter said their financial forecasts have been inaccurate, and 17 percent offered too much credit to a customer due to a lack of information, losing money as a result. More than 10 percent of organizations have been fined for data compliance issues. Forty-six percent of respondents said data is often poorly structured, difficult to access, and out of date, and 41 percent of business leaders said no one in their organization is responsible for managing it. Companies “need to make data governance and stewardship a priority,” Dun and Bradstreet said. Most of the companies in the survey also acknowledged that data will be key to their success in the future.

READZDNet 
12
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SAFETY + SECURITY
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Schools Use Aggression Detectors to Preempt Violence — but Do They Work?

Some schools are installing surveillance technology designed to detect aggression before it erupts into violence, ProPublica reports. This is in the hope of preventing mass shootings as well as more trivial incidents, despite concerns the technology does not work very well. The aggression detectors, which are used in hundreds of schools, healthcare facilities, banks, stores and prisons worldwide, including more than 100 in the U.S,, are supposed to recognize anger, as well as the sounds of gunshots, car alarms and broken glass. This will allow security officers to “engage antagonistic individuals immediately, resolving the conflict before it turns into physical violence.” Some companies even offer sensors that can tell if students are vaping in the school bathroom. Congress approved more than $25 million for school security improvements last year, and one analyst said the new technology could augment the $2.7 billion market for education security products. However, another expert questioned the technology’s usefulness and reliability, saying it wasn’t clear it was “solving the right problem” or “solving it with the right tools.”

READProPublica 
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