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Two crypto industry trade associations, the Blockchain Association and the Crypto Freedom Alliance of Texas, have filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) to block a new rule that expands the regulator's interpretation of what constitutes a "dealer" of securities. The associations argue that the SEC exceeded its authority by adopting an unclear rule that conflicts with existing securities regulations. The rule aims to enforce stricter oversight and risk management controls on proprietary traders and other firms in the U.S. Treasury market. However, the crypto groups claim that the rule could potentially harm the digital assets industry. The lawsuit seeks to declare the rule arbitrary and capricious and asks for its complete removal. The SEC spokesperson stated that the commission will vigorously defend the rule in court. This is the second lawsuit challenging the SEC's rule to be filed in Fort Worth, Texas. The case is related to another lawsuit filed by groups representing the private fund management industry. The plaintiffs' case has been marked as related to the previous lawsuit and may be assigned to the same judge. The case is Crypto Freedom Alliance of Texas, et al, v. Securities and Exchange Commission, U.S. District Court for the Northern District of Texas. The plaintiffs' legal representation includes Jeffrey Wall of Sullivan & Cromwell and Randy Gordon of Duane Morris.

 

Reuters

A class-action lawsuit has been filed against Prime Hydration, the sports drink brand founded by Logan Paul and KSI, alleging that some of its products contain toxic "forever chemicals" at three times the recommended limit. The lawsuit accuses the company of fraudulently marketing its drinks as healthy, despite high levels of per- and poly-fluoroalkyl substances (PFAS) found in one of its flavors. PFAS chemicals are highly toxic and can cause various health problems. The Environmental Protection Agency has banned some PFAS chemicals, but there are thousands of different types. The lawsuit follows previous attention on Prime for its marketing tactics and elevated caffeine content. The company has marketing deals with major sports teams and athletes. The case is ongoing, and a decision is pending. In response, Mr Paul said there are "claims PFAS or forever chemicals come from plastics," therefore the allegations are not about the ingredients in Prime Hydration drinks but rather the bottle the product is manufactured in. "This ain't a rinky-dink operation," he added.

 

USA Today

NJ.com

Royal Philips NV shares soared 37% this morning, after a lower-than-expected settlement on U.S. claims linked to faulty sleep apnea devices. The Dutch company has set aside $1.1bn (€982m) to cover the expected expense for a medical monitoring class-action lawsuit and individual personal injury claims in the U.S., well below analyst predictions of as much as $4.5bn. The manufacturer started recalling the sleep therapy devices over concerns of disintegrating noise-cancelling foam inside the machines that patients inhaled. The firm also reported a first-quarter loss of €988m ($1.07bn), on sales of €4.14bn.

 

Bloomberg

CNBC

Financial Times

BBC News reports that former Boeing employee John Barnett, who was found dead in March, accused the company of "countless" violations of U.S. law in testimony given just before his death. The former quality control manager claimed that plane manufacturer tried to "eliminate" quality inspections at one of its plants, while also alleging the falsification of records relating to problems within the production process. He also claimed employees had been under pressure to circumvent procedures set out in Boeing's Quality Management System to save time. Before his death, Mr Barnett had filed a lawsuit against the company, claiming he had suffered retaliation from managers after raising a number of serious safety concerns.

 

BBC News

Major U.S. companies may be sued by their own shareholders for making political donations, according to a new legal strategy progressives are advocating to rein in corporate influence on elections. Shareholders have the right to sue if they disagree with how their money is spent, according to a report by the Center for American Progress. This could discourage executives from publicly traded companies from donating to political causes. The strategy could impact the 2024 elections, potentially hurting Republicans who receive more money from key sectors. The Citizens United ruling in 2010 allowed corporations and other groups to spend unlimited amounts on elections, leading to a surge in spending by outside groups. Some campaign finance lawyers are skeptical about the effectiveness of the strategy. Local jurisdictions have also implemented rules to restrict corporate spending in elections.

 

Bloomberg

The European Parliament has passed new legislation to protect workers employed by digital platforms, such as couriers, drivers, and food delivery providers. The law creates a presumption of employment relationship, shifting the burden of proof to the platform to demonstrate that the worker is not an employee. The legislation aims to improve working conditions and prohibits firing workers based on algorithmic decisions. It also mandates human oversight for crucial decisions and imposes restrictions on processing personal data. Member States have two years to incorporate these rules into national law, which could lead to a broader review of employment contracts for workers under B2B agreements.

 

Warsaw Business Journal

The U.K.'s Competition and Markets Authority (CMA) is looking into whether Microsoft and Amazon’s partnerships with AI start-ups fall within U.K. merger rules. The competition watchdog is considering the impact partnerships between Microsoft and Mistral AI, Amazon and Anthropic, and Microsoft’s hiring of key figures from Inflection AI could have on competition in the U.K. Joel Bamford, executive director of mergers at the CMA, said: “While we remain open minded, and haven’t drawn any conclusions, our aim is to better understand the complex partnerships and arrangements at play.” He added: “Given the global nature of these markets, competition authorities around the world are actively looking into AI.” A spokesperson for Amazon said: "It's unprecedented for the CMA to review a collaboration of this type," while a spokesman for Microsoft commented: “We remain confident that common business practices such as the hiring of talent or making a fractional investment in an AI start-up promote competition and are not the same as a merger.”

 

The Times

City AM

Daily Mail

Norway's $1.6tn sovereign wealth fund, the world's largest, is facing criticism for not supporting shareholder proposals to reduce greenhouse gas emissions by oil companies. A report from Norwegian NGO Framtiden i vaare hender (the Future in our Hands) states that the fund, which aims for its invested companies to achieve net zero emissions by 2050, falls short on its climate ambitions. The report analysed the fund's voting record on climate resolutions at nine oil majors, finding that it supported seven resolutions but backed "climate harmful" strategies in the remaining nine cases. The report highlights a misalignment between the fund's climate engagement strategy and its voting behaviour. The fund also voted against all climate resolutions at the annual general meetings of BP, Shell, TotalEnergies, and Marathon. The report concludes that the fund's failure to endorse climate resolutions undermines its role as a steward of sustainable finance.

 

Reuters

Two major U.S. law firms, Quinn Emanuel Urquhart & Sullivan and Morgan Lewis, are opening offices in Saudi Arabia following a change in the country's foreign lawyers practicing regulations. Quinn Emanuel, with 1,000 lawyers, has been focusing on Saudi Arabia due to its investment in diversifying the economy and encouraging international investment. Morgan Lewis, with over 2,000 lawyers, is also preparing to open an office in Riyadh. Since October 1, several other U.S. and international law firms have either opened offices or been granted licenses to work in Saudi Arabia. The country has been implementing economic and social policies to reduce dependence on oil exports, including plans to double the size and population of Riyadh through $800bn investments. Last year, Saudi Arabia allowed foreign law firms to operate independently in the country. Quinn Emanuel has had a presence in Saudi Arabia since 2022 through its affiliation with Alrubayyi & Attorneys. Nasser Alrubayyi, the head of that office, also serves as the co-chair of Quinn Emanuel's Middle East and North Africa practice.

 

Reuters

Google has fired more activist employees following the termination of workers who occupied company offices to protest a contract with the Israeli government. The second round of terminations came after Google struggled to identify employees who concealed their identity. No Tech for Apartheid claimed that a total of 50 workers had been fired. Google confirmed that every terminated employee was involved in disruptive activity. No Tech for Apartheid said it will continue organizing against the Nimbus contract. Google had previously stated that the protests were part of a campaign by organizations and people who largely don't work at Google.

 

The Jerusalem Post

Customers Bancorp has announced that the departure of CFO Carla Leibold was by mutual agreement, contradicting an earlier statement that she was terminated for violating company policy. Leibold disputed the characterization of her separation. As part of the agreement, Leibold will receive $2.5m in compensation paid in installments over two years. She also forfeited her unvested equity awards.

 

Bloomberg

Chemours' CFO Jonathan Lock has resigned two months after the company announced an internal investigation into its accounting practices. Lock, along with two other executives, was put on leave during the investigation. The Delaware-based chemical maker shocked the market when it suspended its CEO, CFO, and controller. The investigation is focused on the company's accounting. Lock is not entitled to severance pay but can receive three months of healthcare premium payments.

 

Bloomberg Tax

The Treasury Inspector General for Tax Administration (TIGTA) has assisted the IRS in uncovering a scheme where fraudsters improperly claimed up to $3.5bn in pandemic relief tax credits. The scheme involved obtaining Employer Identification Numbers and using them to claim Employee Retention Credit and Sick and Family Leave Credits on business tax returns. TIGTA alerted the IRS, which implemented safeguards to prevent similar schemes. TIGTA's acting inspector general Heather Hill stated that their office's work saved billions of dollars by preventing improper payments. Trevor Nelson, TIGTA's deputy inspector general for investigations, highlighted their strategic use of money from the Inflation Reduction Act to identify emerging fraud schemes. “We’re strategically using our budget to invest in innovative tools and hire experienced employees with sought-after technical skills who are dedicated to protecting taxpayer dollars," he added. TIGTA Special Agents are also actively working with IRS Criminal Investigation Special Agents to hold those responsible for the scheme accountable.

 

Bloomberg Tax

Accounting Today

CPA Practice Advisor

Tax Notes

India's central bank, the Reserve Bank of India (RBI), has instructed Kotak Mahindra Bank to immediately stop onboarding new customers through its online and mobile banking channels, as well as to cease issuing fresh credit cards. The RBI cited serious deficiencies in the bank's IT systems and risk management practices as the reason for the order. Despite being under scrutiny and engaging in discussions with the RBI for the past two years, Kotak Mahindra Bank failed to address these issues adequately. The bank's core banking system and digital channels have experienced frequent outages, causing inconvenience to customers. The RBI warned that prolonged outages could impact the bank's ability to provide efficient customer service and harm the broader digital banking and payment ecosystem. The restrictions will be reviewed after a comprehensive external audit and remediation of identified deficiencies.

 

Techcrunch