Automakers can likely expect more tough treatment from U.S. regulators, after Fiat Chrysler Automobiles NV was struck with a record penalty.
The National Highway Traffic Safety Administration hit Fiat Chrysler with the penalty after facing years of criticism for being deceived by automakers. For example, Toyota Motor Corp. admitted to prosecutors last year that it mislead the NHTSA about the causes for sudden acceleration. NHTSA also came under attack for failing to spot General Motors Co.'s ignition switch issue. (The NHTSA has said it tried to detect these issues but was deceived by the automakers.) But now NHTSA is taking a tack more familiar to criminal prosecutors, assigning Fiat Chrysler an independent monitor to supervise the company's recall processes. Fiat Chrysler has acknowledged the safety lapses. "This signals that NHTSA is getting serious in its safety watchdog role," said Todd Tracy, a Dallas-based attorney who specializes in product liability cases against automakers. "There was a sense that they had kept their head in the sand for far too long. You are going to see far more aggressive tactics from NHTSA."
Mr. Tracy said automakers are going to have to invest more in safety checks if they are to avoid heavy penalties. In the short-term, he said, that's likely to mean more recalls. But longer term "you'll see recalls dwindling back down...once the industry gets back to engineering safety, " he said .
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EXCLUSIVE ON RISK AND COMPLIANCE JOURNAL
Lawmakers propose supply-chain bill after trafficking report. Following the release of the U.S. Department of State's annual Trafficking in Persons report, Reps. Carolyn Maloney (D., N.Y.) and Chris Smith (R., N.J.) proposed legislation requiring public companies with global receipts of more than $100 million to disclose any measures to prevent human trafficking, slavery or child labor in their supply chains as part of their annual reports.
FATF probes risks in gold trade. The Financial Action Task Force, an international body that sets standards for anti-money laundering and combating terrorist financing, last week released a report with more than a dozen case studies on how gold can be used to launder money.
Crisis of the week: Toshiba. The crisis this week involves the actions taken by Toshiba Corp. in the wake of an accounting scandal that saw the company overstate earnings by more than $1.2 billion over seven years.
COMPLIANCE
SEC poised to complete CEO-pay rules. Regulators are poised to complete a rule requiring companies to disclose the pay gap between chief executives and employees, putting in place a measure without broad exclusions sought by companies, people familiar with the deliberations told WSJ. In a setback to corporations and their trade groups, the Securities and Exchange Commission is expected to allow companies to exclude 5% of their overseas workers from the pay-ratio calculation, these people said. Companies had pressed to exclude a much larger percentage of foreign workers, which likely would have narrowed the pay gap some businesses report.
Fiat Chrysler could spend billions buying back trucks. Fiat Chrysler Automobiles could pay billions of dollars to buy back defective trucks as part of a settlement with U.S. safety regulators, but has the option to recover costs by reselling vehicles once they are repaired, Reuters reports. FCA said on Monday that about 193,000 Ram trucks previously recalled for suspension and steering problems had not been repaired and were therefore eligible for the buyback deal negotiated with the National Highway Traffic Safety Administration. The company endured a rough weekend, FT notes.
Malaysia's premier shakes up cabinet amid probe. Malaysian Prime Minister Najib Razak shook up his cabinet Tuesday and removed his deputy premier, who had publicly raised questions over the government's closure of newspapers and delays in the continuing investigation into state-investment fund 1Malaysia Development Bhd, WSJ reports.
Side issues weigh on trade negotiations. The Obama administration's push to clinch a sweeping Pacific trade deal this week faces stiff opposition over concerns--ranging from human trafficking to antigay laws--that have little to do with trade, WSJ reports. At talks starting Tuesday in Hawaii, U.S. trade negotiators hope to resolve an array of technical differences over dairy duties, drug pricing rules and other issues to complete the 12-nation Trans-Pacific Partnership trade agreement.
DATA SECURITY
EU watchdog backs big fines. Europe's data-protection watchdog is advising European Union lawmakers to slap strict fines on businesses violating new data-privacy rules that will tighten guidelines on how companies -- including U.S. firms operating in Europe -- manage their customers' data, WSJ reports.
Planned Parenthood probing claims of hack. Planned Parenthood called on the FBI and the U.S. Department of Justice on Monday for help managing cybersecurity, following a report that the reproductive healthcare group's website had been hacked by anti-abortion activists, Reuters reports.
GOVERNANCE
P&G nears replacement of CEO. Procter & Gamble Co. brought back A.G. Lafley two years ago to pull the company out of a protracted slump. This week, P&G is poised to announce his replacement, WSJ reports. Pending a P&G board meeting Tuesday, the company is expected to announce as early as Thursday that company veteran David Taylor will be made chief executive, according to a person familiar with the matter. Mr. Lafley is expected to remain as chairman to help with the leadership transition.
Blackstone quickly replaces CFO. When Blackstone Group LP's top executives learned last week that they were losing their longtime chief financial officer, they eschewed a lengthy search and went with one of their most-tenured deal makers, WSJ reports. The world's largest private-equity firm said last week that Michael Chae would become its finance chief next month when Laurence Tosi, Blackstone's CFO since 2008, leaves for the same role at Airbnb Inc.
Click ticks on Time CEO. Since taking the top job at Time Inc. nearly two years ago, the 63-year-old Joe Ripp has been racing to reinvent what was once one of America's most powerful media companies, WSJ reports. He also is trying to counter the narrative that Time Inc. is a lumbering, old-guard print publisher unable to adapt to the digital age.
Toshiba keeps interim CEO. Toshiba Corp has decided to propose interim President Masashi Muromachi as a more permanent chief executive officer beyond September after a slew of executives resigned over their roles in the country's biggest accounting scandal in years, Japanese media said on Tuesday.
Twitter employees fly coop. More than 450 employees left Twitter in the past year, according to a Financial Times analysis, as the messaging platform struggles to find its feet as a public company. Twitter is releasing its first earnings statement on Tuesday since Dick Costolo stepped down as chief executive, with co-founder Jack Dorsey now running the messaging platform as interim CEO.
Firms weigh linking bonuses to currency swings. North American companies lost $28.9 billion in the first quarter of the year due to currency fluctuations, nearly nine times the $3.3 billion loss from the first quarter of 2014, according to the currency-risk consultancy FiREapps. As a result, more U.S. companies are beginning to consider whether to adjust executives' compensation packages to take currency swings into account, CFO Journal reports.
Bank of England names financiers to regulation board. The Bank of England named two men who have had long careers in the financial sector, David Thorburn and Norval Bryson, to serve as external members of its Prudential Regulation Authority, which handles day-to-day regulation of banks, Reuters reports.
REPUTATION
Boy Scouts vote to end ban on gay leaders. The national executive board of the Boy Scouts of America voted Monday to end a ban on gay adult leaders, clearing the way for gay men and lesbians to serve as volunteers, counselors, and in other leadership roles within the 105-year-old organization, WSJ reports. The new policy, which will take effect immediately, was approved in a 45-12 vote, according to a statement on the Scouts' website.
RISK
China steps up fight against money laundering. China's central bank and other government agencies have vowed to step up efforts to combat money laundering, following recent high-profile cases, China Daily reports. A statement on the People's Bank of China website on Monday said that an inter-ministerial meeting led by the bank to discuss combating illegal money transfers was held in Beijing on Friday.
Dearth of compliance skills hinders Singapore's anti-money laundering fight. Singapore's fight to stem illicit fund inflows has shoved private bankers into a new quandary -- finding enough qualified compliance specialists to ensure the money passing through their accounts is clean, Business Times reports. Like other wealth management centers around the world, Singapore is forcing banks to make more stringent checks on their clients as governments crack down on tax evasion and money laundering.
Ofcom claims Royal Mail breached competition law. Royal Mail faces the prospect of hefty fines after the postal watchdog said the former state-owned company had breached competition laws and prevented rivals from expanding, FT reports. In a strongly worded statement, Ofcom said proposed changes proposed by Royal Mail to the prices, terms and conditions it charges rivals for bulk mail delivery services -- known as access services -- had been "unlawful".
OPERATIONS
(MORE TO FOLLOW) Dow Jones Newswires
July 28, 2015 07:39 ET (11:39 GMT)
China debt woes present threat to supply chains. China's troubled debt market is a growing threat to global supply chains, according to a new report from the Chartered Institute of Procurement and Supply. Companies doing in business in China could see suppliers fall into disarray overnight if the People's Bank of China moves to rein in the debt market, either through monetary policy or by allowing more borrowers to default, said John Glen, a CIPS economist.
STRATEGY
(END) Dow Jones Newswires
July 28, 2015 07:39 ET (11:39 GMT)
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