CLOs

CNet (8 July, Ng) is reporting that Microsoft has taken legal action to stop a widespread pandemic-related hacking campaign. Unsealed in the US District Court for the Eastern District of Virginia, the lawsuit allowed the technology giant to take control of domains that hackers were using to dupe their victims. Cyberattacks have spiked during the COVID-19 crisis, with more people working remotely and most business discussions occurring online. Microsoft confirms that it worked to thwart a hacking campaign that had targeted businesses in more than 60 countries with cyberattacks linked to the coronavirus. Tom Burt, Microsoft's corporate vice president for customer security and trust, notes that the campaign sent millions of phishing emails out to potential victims.

From "Microsoft Sues Over Trademark to Stop COVID-19 Hacking Campaign"
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First State Super, Australia's second-largest superannuation fund, is preparing to dump shares in companies that derive more than 10 percent of their revenue from thermal coal mining by October amid heightened scrutiny on carbon emission cuts, reports the Sydney Morning Herald (9 July, Toscano). Among the fund's priorities is setting a 30 percent emissions-reduction target across its investment portfolio by 2023 and a 45 percent reduction by 2030. "Why we are stepping [climate change] up to a much greater degree now is we see that risk front and center in terms of the impact it is likely to have on investment returns for our members," said First State CEO Deanne Stewart. The Investor Group on Climate Change also said more Australian funds are planning to unveil tougher climate targets forthwith.

From "Top Super Fund Dumps Coal Miners as Emissions Cuts Intensify"
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The UK and Australian information commissioners have announced a joint investigation into the controversial facial recognition company Clearview AI, reports the Financial Times (9 July, Venkataramakrishnan). Clearview is already the subject of a Canadian investigation. The UK Information Commissioner's Office (ICO) said its probe would focus on Clearview's "use of 'scraped' data and biometrics of individuals." Clearview's software, which algorithmically compares an uploaded image to billions of others compiled from social media platforms, is used by hundreds of police forces across the world, and has come under criticism before. News of the probe comes amid growing scrutiny of facial recognition tools across the board. Critics have raised questions about algorithmic bias and argued that facial recognition software has significant implications for privacy and mass surveillance.

From "UK and Australian Regulators Launch Probe Into Clearview AI"
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The UK government, staring down a potential avalanche of layoffs in the fall, announced a host of tax and spending measures Wednesday designed to preserve and create jobs as the United Kingdom reopens its economy. Rishi Sunak, chancellor of the Exchequer, detailed to Parliament a £30 billion spending plan that includes tax cuts, employment coaching, and even a 50 percent discount for diners who go to restaurants and pubs, reports the New York Times (8 July, Nelson. The measures are designed to support the economy as it transitions away from a robust program that subsidized workers' wages during lockdown. Sunak warned that the United Kingdom faces "profound economic challenges" in the coming weeks and months, adding that increased unemployment is unavoidable. Through the fall and into the start of 2021, the UK government will provide £1,000 to companies for each employee they bring back to work. The UK unemployment rate has held steady at 3.9 percent thanks to the furlough scheme, but the Organization for Economic Cooperation and Development warned on Tuesday that the rate could climb to 11.7 percent by the end of the year.

From "Britain Plans Incentives to Bring Its Workers Back"
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Merck on Wednesday announced the appointment of Deborah Telman as general counsel for Organon & Co., its intended spinoff of its women’s health, legacy brands, and biosimilars businesses, according to a release from Business Wire (8 July). In her new role, Telman will be a senior legal adviser to Organon's board of directors, CEO, and senior management. She is departing her current position as senior vice president, general counsel, and corporate secretary of Sorrento Therapeutics in order to join Organon. Telman has more than 20 years of experience in senior executive roles at several global companies.

From "Merck Announces Appointment of Organon & Co. General Counsel"
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The cryptocurrency exchange Coinbase has hired Paul Grewal to serve as its new chief legal officer, reports Bloomberg Law (8 July, Baxter). Grewal has spent the past four years as deputy general counsel and vice president at Facebook, where he oversaw regulatory affairs, litigation, and commercial matters for the social media giant. He also previously served as a federal magistrate judge. Grewal joins Coinbase at a time when the company and its cryptocurrency industry peers are facing increased regulatory scrutiny over their financial services.

From "Coinbase Taps Facebook Deputy General Counsel as New Legal Chief"
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Sources familiar with the situation said the US Department of Justice (DOJ) is examining whether Wirecard played a critical role in an alleged US$100 million bank-fraud conspiracy connected to an online marijuana marketplace. Two businessmen have already been charged in the alleged fraud, and stand accused of conspiring with third-party payment processors and others to trick US banks into approving credit-card payments for marijuana products. The prosecutors alleged the men were able to do this by using phony companies with accounts at offshore merchant banks that in turn earned steep fees off the transactions. The Manhattan US Attorney's office and the New York field office of the Federal Bureau of Investigation (FBI) are investigating whether Wirecard contributed to the alleged scheme by serving as both a payment processor and an offshore merchant bank, reports the Wall Street Journal (8 July, Davis O'Brien, Chung, Kowsmann). Two of the sources said investigators are considering the possible role of several former or current top Wirecard executives. The new attention from US authorities adds a new headache to the German firm, which rapidly unraveled last month amid an accounting scandal.

From "Wirecard Under Criminal Scrutiny by US Authorities as Part of Probe Into Alleged Bank Fraud Conspiracy"
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The New York State Department of Financial Services has fined Deutsche Bank US$150 million over charges that it maintained weak internal controls, including processing hundreds of transactions for the late Jeffrey Epstein. The penalty marks the first time regulators have punished a bank for its relationship with Epstein, a convicted sex offender, notes the Washington Post (7 July, Merle, Telford). Linda Lacewell, the superintendent of financial services, said Deutsche Bank "inexcusably failed to detect or prevent millions of dollars of suspicious transactions" despite knowing Epstein's “terrible criminal history." Deutsche Bank agreed to pay the fine to settle the allegations almost exactly one year after Epstein was arrested on accusations that he had abused women and girls for decades. Prosecutors contended that Epstein preyed on his victims' financial needs by promising them career opportunities and educational assistance, and used a convoluted web of shell companies to conceal the trafficking and abuse. Deutsche Bank issued a statement expressing regret for its relationship with Epstein.

From "Deutsche Bank Fined US$150 Million For Relationship with Jeffrey Epstein, Other Lapses"
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US District Judge Paul Borman on Wednesday dismissed a General Motors lawsuit accusing Fiat Chrysler of bribing union officials to gain an advantage on its labor costs. GM filed the civil racketeering suit in November, claiming the Italian-American automaker intentionally hurt GM by paying off United Auto Workers (UAW) leaders to win more favorable contract terms for union-represented factory workers. But Borman said GM failed to show it was the primary victim of any alleged racketeering activity that Fiat Chrysler officials might have engaged in, reports the Wall Street Journal (8 July, Colias). Instead, Borman concluded the primary victims were rank-and-file UAW workers, who would have received lower pay from any attempt by Fiat Chrysler to lower labor costs. His decision did not come as a surprise to legal experts, who had described GM's civil racketeering suit as unusual and a long shot given the difficulty of proving GM was the primary victim of the alleged corruption. But GM said Borman's decision was "contrary to well-settled RICO case law" and pledged to continue pursuing the case. Fiat Chrysler said Borman's decision reinforced its view that the complaint is "meritless."

From "GM's Legal Battle with Fiat Chrysler Quashed by Federal Judge"
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The European Union's top court ruled Thursday that online platforms do not have to disclose the full personal data, including email addresses, telephone numbers, or IP addresses, of users who illegally upload movies and copyright material. The case stemmed from a German distributor's request that YouTube provide details about users who uploaded the films "Parker" and "Scary Movie 5" onto the platform, reports the Associated Press (9 July). YouTube and its parent company Google both refused to provide the distributor with the users' email addresses, telephone numbers, and IP addresses. The German Federal Court of Justice referred the case to the European Court of Justice, which ruled that platforms like YouTube are only required to provide the user’s postal address under European rules on intellectual property rights.

From "EU Court: No Need to Reveal IP Addresses in Uploading Cases"
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According to the Wall Street Journal (8 July, Sun), Amazon.com Inc. on Wednesday agreed to settle allegations that it violated multiple US sanctions regulations. "The Seattle-based ecommerce giant allegedly provided goods and services to individuals or entities subject to US sanctions," according to the settlement accord reached between Amazon and the US Treasury Department's Office of Foreign Assets Control, "primarily due to deficiencies in the company's automatic screening processes." The sum Amazon agreed to pay to settle the allegations, around US$135,000, is paltry compared with the size of the company. But the agreement is further proof of the importance of maintaining effective sanctions-compliance tools and programs and how those tools can sometimes fail even the biggest corporations.

From "Amazon Settles Allegations of US Sanctions Violations"
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The COVID-19 pandemic has put Australia in a recession for the first time in 30 years, and fraying relations with China threaten to make the downturn even worse. Canberra this week made the latest move in a growing argument between the two nations when it warned against travel to Hong Kong and suspended its extradition treaty with the territory in response to a new national security law China has imposed on the city. The Financial Times (9 July, Henderson) notes the travel warning and treaty suspension came after Australia called for an inquiry into the origins of COVID-19 and China responded by imposing an 80 percent tariff on Australian barley imports and banned beef imported from four Australian abattoirs. Chinese officials have also targeted Australia's tourism, education, and wine sectors in a series of blistering statements, and are expected to promote domestic coal at the expense of Australian coal. Until now, China's expanding economy has been a rocket booster for Australian growth, and a free trade agreement signed in 2015 helped Australia double its exports to China in recent years. Morgan Stanley analysts warned last month that the "continued escalation in trade friction between China and Australia" is a major threat to Australian stocks.

From "Rising Tension with China Rings Corporate Australia's Alarm Bells"
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Almost 40 Brazilian companies, including some of the country's largest firms, expressed concerns Tuesday over deforestation in the Amazon rainforest, reports Reuters (7 July). Signatories to the joint statement included the bank Itau Unibanco, the miner Vale, the brewer Ambev, and the state-owned electric utility Eletrobras, as well as regional chiefs for international companies like Shell, Microsoft, Bayer, and Cargill. The companies issued their joint statement about Amazon deforestation after global investors demanded that Brazilian President Jair Bolsonaro end the destruction or risk divestment. The Brazilian companies' joint statement, while less forceful than the global investors' demands, was the first from such a broad and powerful group of Brazilian companies since Bolsonaro became president, signaling that corporate pressure for action is building within the country. The rate of destruction of Brazil's Amazon rainforest climbed 34 percent in the first five months of the year from a year ago after hitting an 11-year high in 2019, government data shows. Environmental advocates have blamed Bolsonaro for the expanding destruction.

From "Brazilian Companies Join Call for Action on Amazon Deforestation"
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AMC, Cinemark, Regal, and other movie theater chains are suing the state of New Jersey over what they charge are "unconstitutional" pandemic-related closures, reports the Deseret News (7 July, Scribner). The theater giants insist New Jersey Gov. Philip Murphy cannot keep cinemas dark for much longer, citing the US Constitution and arguing that movie theaters should not be excluded if people are allowed to gather in public assembly at other locations. The lawsuit notes that the second stage of Murphy's reopening orders focuses on shopping malls, retail stores, and places of worship, but leaves out movie theaters. New Jersey currently has no timeline for the commencement of Stage 3, which would include the reopening of cinemas. The lawsuit is petitioning New Jersey to treat theaters like other similar businesses and seeks a declaration that Murphy's actions constitute a deprivation of just compensation.

From "Movie Theater Giants Have Decided to Sue New Jersey Over Closures"
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As viral videos of shoppers' tirades and confrontations over being asked to wear face coverings during the COVID-19 pandemic erupt, major retailers are urging governors to make it a requirement for everyone to wear a mask. The Retail Industry Leaders Association, which represents Walmart, Target, Best Buy, Walgreens, Home Depot, and other major chains, says different local mandates across the country have created confusion, leading to conflicts between customers and store employees, according to USA Today (8 July, Tyko). "Retailers are alarmed with the instances of hostility and violence front-line employees are experiencing by a vocal minority of customers who are under the misguided impression that wearing a mask is a violation of their civil liberties," Brian Dodge, the retail association’s president, said in a letter to the National Governors Association. Fewer than half of US states require masks in public places, according to the retail group, and some cities and counties have issued their own mandates. Retailers "respectfully ask that those governors that haven't yet required masks in public to do so immediately," Hodge said in the letter. The National Governors Association said Tuesday that its members are discussing the letter and others like it from different retail groups. Hodge says the association recommends that retailers communicate safety policies with extensive signage at stores and not by physically confronting customers.

From "Retailer Group Urges Governors to Require Everyone to Wear a Mask"
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Brooks Brothers filed for bankruptcy on Wednesday, buckling under the pressure from the coronavirus pandemic after years of faltering sales as customers embraced more casual apparel and sales shifted online. The retailer, which was founded in New York in 1818, filed for Chapter 11 restructuring proceedings in the US Bankruptcy Court for the District of Delaware, reports the New York Times (9 June, Maheshwari, Friedman). In an emailed statement, Brooks Brothers said the filing would allow it to obtain additional financing as it facilitates a sale. Brooks Brothers became the latest high-profile retail fall during the pandemic, which has caused widespread store closures and subsequent sales declines, exacerbating existing woes for many stores and brands. J.C. Penney, Neiman Marcus, and J.Crew have all entered Chapter 11 proceedings over the past few months. The chains, including Brooks Brothers, plan to continue operating, though likely in a pared-back fashion. Brooks Brothers will close 51 of its 250 North American locations, and previously indicated it would close its three factories in the United States.

From "Brooks Brothers, Founded in 1818, Files for Bankruptcy"
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EDP Renewables North America has disclosed a cyberattack, in which ransomware targeted parent company Energias de Portugal's (EDP) systems in April. In a letter sent to customers, the company said there is "no evidence" that consumer information was compromised or stolen, reports ZDNet (7 July, Osborne). The ransomware in question appears to be Ragnar Locker, whose operators are known for targeting corporate entities. The ransomware note demanded 1,580 Bitcoin (BTC), or roughly US$10 million. The cybercriminals warned EDP that over 10 terabytes of information had been taken from impacted systems, and as proof, the group was willing to decrypt some files for free. If the company refused to pay, the malware's operators threatened to make the data public or sell "sensitive and confidential information about your transactions, billing, contracts, clients, and partners."

From "Energy Company EDP Confirms Cyberattack; Ragnar Locker Ransomware Blamed"
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United Airlines is sending layoff warnings this month to 36,000 employees, almost half its US staff, as the outlook for a recovery in air travel dips. The layoff warnings are meant to comply with 60-day warning requirements at large companies ahead of mass job cuts, notes CBS News (8 July). United officials said the 36,000 tally is a worst-case scenario and stressed that the airline hopes to limit the number of layoffs by offering early retirement packages. The layoffs would include 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers, and 2,250 pilots, and would take effect on or shortly after 1 October. United is barred from laying off employees until then because it accepted US$5 billion in federal payroll aid this spring.

From "United Airlines Warns of 36,000 Layoffs, Nearly Half Its US Staff"
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The manufacturing industry spent more than any other sector last year on ransomware payments, paying out US$6.9 million, according to a new study by Kivu Consulting. This represents 62 percent of the total sum transferred to cybercriminals throughout 2019, despite manufacturing only making up 18 percent of all paid ransom cases. Sixty-seven percent of paid ransomware attacks against organizations in the manufacturing industry were conducted with the Ryuk ransomware, notes Infosecurity Magazine (7 July, Coker). The report also revealed that healthcare was the sector most frequently hit by ransomware threat actors in 2019, making up 28 percent of cases in which ransoms were paid out.

From "Manufacturing Sector Paid Out 62 Percent of Total Ransomware Payments in 2019"
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AXA XL has announced that Sean McGovern has been appointed as CEO UK & Lloyd’s market, subject to regulatory approval. The Insurance Journal (8 July) notes that McGovern has already spent several months performing the role in an interim capacity. McGovern joined XL Group in 2016 and has led the claims, legal and compliance, and regulatory and government affairs functions. He was involved in the merger of AXA Corporate Solutions, AXA Matrix, AXA Art, and XL Catlin, and the formation of AXA XL. Prior to joining XL Group, McGovern held various senior positions at Lloyd’s of London, which he joined in 1996 from private practice at Clifford Chance.

From "AXA XL Names McGovern as CEO UK & Lloyd's Market"
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