In Brief: CLO Edition
2018 Apr 26
Today's Top Story
Supreme Court Rules Foreign Companies Cannot Be Sued in U.S. for Human Rights Violations Abroad
The U.S. Supreme Court on Tuesday ruled by a 5-4 margin that a foreign corporation cannot be sued in U.S. courts for terrorist attacks and other human rights violations abroad, reports The Hill (24 April, Wheeler). The decision affirmed a lower court ruling that dismissed a lawsuit 6,000 victims of a terrorist attack attempted to bring against Arab Bank PLC under the Alien Tort Statute for allegedly financing terrorist attacks in the Middle East. The victims claimed the Jordanian bank used its New York branch to clear dollar-denominated transactions that benefited terrorists through the Clearing House Interbank Payments System and to launder money for a Texas-based charity allegedly affiliated with Hamas. In delivering the court's opinion, Justice Anthony Kennedy called the connection between the terrorist attacks at issue and the alleged conduct in the U.S. relatively minor, adding that most of the petitioner's allegations involve conduct that occurred in the Middle East.
African Deals Entangle Head of Bolloré Group
French Prosecutors are investigating whether Bolloré Group, the listed family company of which French billionaire Vincent Bolloré is chairman and chief executive, bribed politicians in Africa by offering them reduced-price public relations through ad agency group Havas, which it controlled at the time. The suspicion is that, in return, another Bolloré division won contracts to operate container ports, reports the Wall Street Journal (24 April, Wilmot). Bolloré himself is being detained, and the group issued a statement denying "illegal actions," claiming the services were provided "in full transparency" and welcoming the chance to "fully cooperate with the judicial authorities."
Mergers and Acquisitions
Shire Opens Door to Sale to Takeda
Takeda Pharmaceutical moved closer to securing a US$64 billion takeover of Shire, reports the Wall Street Journal (25 April, Rana), after the target said it was willing to recommend that shareholders accept the Japanese firm's latest proposal and extended a deadline to reach a definitive agreement. If successful, the move would cap a prolonged battle by Takeda to purchase the European company. The deal would also mark the biggest-ever acquisition by a Japanese company of a Western competitor. On Tuesday, Takeda proposed a sweetened deal to acquire Shire at £49 a share, its fifth attempt to buy the Dublin-based drugmaker. The new bid is marginally higher than the £47 a share offer it proposed late last week.
Corporate Boards Remain the Same, Only Older, Study Finds
Corporate America's boardrooms have long been criticized for being too old, too white, and too male. While the race and gender makeup of corporate boards have come under scrutiny for years, the age part of the "old boy's club" stereotype has gotten far less attention. A new report from professional services firm PwC shows just how little age diversity there is among these pivotal figures who govern America's largest corporations. Directors younger than 50 make up 6 percent of the seats on S&P 500 boards—drop the age to 45, and it is less than 2 percent. There are more directors 75 or older than those 50 or younger, reports the Washington Post (24 April, McGregor).
Microsoft Names First GC in Two Years
Microsoft has named Dev Stahlkopf as general counsel, reviving a position that was left vacant about two years ago. Stahlkopf will report to Microsoft President Brad Smith, who also serves as chief legal officer. Smith was succeeded in the general counsel role by Horacio Gutierrez in 2015, soon after Smith was named the company's president. The position was left empty after Gutierrez left to join music streaming company Spotify in 2016, reports the Seattle Times (24 April, Lerman).
Chinese Startups Advertise for Attractive Women to Ease Coder Stress
China's technology scene is searching for people like Shen Yue, who are attractive, know how to charm socially awkward programmers, and give relaxing massages. Shen is a "programmer motivator," as they are known in China. Part psychologist, part cheerleader, the women are hired to chat up and calm stressed-out coders, reports the New York Times (24 April, Wee). The jobs are proliferating in a society that largely adheres to gender stereotypes and believes that male programmers are "zhai," or nerds who have no social lives. Chinese women have made great strides in the workplace. For example, the country has the world's largest number of self-made female billionaires, while many startups have women in senior roles. However, the inequalities and biases in China are rarely discussed openly and remain firmly entrenched. The country's laws against gender discrimination are not often enforced. In tech, men dominate the top ranks. Just one woman sits on the 11-member board of Alibaba, the e-commerce giant and at Baidu, a search company, none of its five board members is a woman.
Employers Unprepared for 401(k) Plan Data Breaches
The U.S. retirement model has become of increasing interest to foreign hackers, typically the perpetrators of large-scale data breaches. However, companies, 401(k) plan sponsors, and plan participants are unaware or underprepared for the ramifications of a cyberattack, experts warn. One problem is that the current system focuses on who is liable in the case of a hack rather than on educating employees on the risks they bring to their own retirement savings, reports Employee Benefit News (24 April, Eisenberg).
Yahoo Fined for Failing to Disclose Cyber Breach
The U.S. Securities and Exchange Commission (SEC) announced a US$35 million fine against the company formerly known as Yahoo for failing to tell investors about a massive cyber breach, the first time the regulator has punished a company for such conduct. In 2014, the Web giant learned that Russian hackers had stolen the user names, email addresses, and other user data of 500 million of its users, the largest breach of its kind at the time. However, the company did not tell investors about the breach for nearly two years, according to the SEC. Yahoo, which sold its core business to Verizon last year for US$4.8 billion and renamed itself Altaba, did not admit wrongdoing as part of the settlement, reports the Washington Post (24 April, Merie).
Asset Managers Seek Cyber Insurance to Counter Threat of GDPR Fines
Asset managers grappling with new EU data privacy rules have been turning to the insurance sector to help limit the fallout from business-crippling cyberattacks. The General Data Protection Regulation is designed to bolster existing data privacy rules and give individuals more say over how their personal information is used. However, companies such as asset managers that hold vast amounts of consumer data are at risk of landing significant financial penalties if the information they hold is compromised, reports Financial News (25 April, Ricketts). Given growing anxiety about client data falling into the wrong hands—and the increased threat of regulatory repercussions—insurers have noticed an uptick in queries from asset managers looking to bolster their cover in order to limit the reputational and financial repercussions that could result from a breach.
U.S. High Court Upholds Legality of Patent Review Process
The U.S. Supreme Court on Tuesday gave its stamp of approval to a government review process prized by high technology companies as an easy and cheap way to combat "patent trolls" and others that bring patent infringement lawsuits, reports Reuters (24 April, Chung). The justices ruled by a 7-2 margin that a type of in-house patent review at the U.S. Patent and Trademark Office does not violate a defendant's right under the U.S. Constitution to have a case adjudicated by a federal court and jury. Oil States International Inc., a Texas-based oilfield services company, had challenged the legality of the process, known as inter partes review (IPR). The ruling indeed gave Silicon Valley cause for celebration. However, it disappointed major drugmakers, which has called the IPR process a threat to innovation. So-called "patent trolls" have a business model based on suing other companies over patents instead of actually making products.
Apple Takes a Step to Comply With EC Tax Order
Apple Inc. completed an agreement with Ireland enabling the company to transfer roughly €13 billion into a Dublin escrow account, in a step toward complying with a European Commission (EC) tax order. The executive body of the European Union ruled in 2016 that Apple had underreported profit in Ireland for more than a decade because of two tax deals with the Irish government. The EC viewed the tax treatment as illegal state aid that must be repaid. Ireland and Apple, which has a large facility in the city of Cork, are appealing the decision, but the U.S. company was required to hand over the money for the back taxes in the meantime, reports the Wall Street Journal (24 April, Schechner). Ireland said that Apple will pay the cash for the back taxes, plus interest, into the account in installments next month through September.
Generic-Drug to Face U.S. Price-Fixing Charges
U.S. prosecutors are nearing their first charges against companies in an almost four-year-old criminal investigation into alleged price-fixing by generic-drug makers, according to people familiar with the matter. At least two companies are on track to be indicted in the coming months, in addition to several executives, said two people who spoke on condition of anonymity. The charges, which the people said could be filed as soon as the summer, would mark a major breakthrough in an investigation that began in 2014 and has spread to nearly every major generic-drug manufacturer, including Mylan NV and Teva Pharmaceutical Industries Ltd. Federal authorities have raided at least two companies in the investigation, reports Think Advisor (24 April, McLaughlin, Armstrong). Perrigo Co. disclosed its offices were searched last year and Mylan's Pennsylvania headquarters was also raided by the FBI in the fall of 2016, according to another person familiar with the matter.
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