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A recent survey conducted by a Washington-based trade association representing biotechnology companies found that 79% of respondents have contracts or product agreements with Chinese manufacturers. The survey, conducted by the Biotechnology Innovation Organization (BIO), revealed that the majority of respondents are small, emerging biotechs. The survey was conducted in response to proposed legislation that could restrict business with Chinese biotech companies. BIO stated that 74% of respondents have contracts with Chinese companies for pre-clinical and clinical services, while 30% have contracts for manufacturing approved medicines. The trade group warned that decoupling from China-based or China-owned biomanufacturing could harm millions of U.S. patients. The survey also found that it would take up to eight years to switch manufacturing partners.

 

Reuters

Tesla is facing a July 1 deadline to provide information to U.S. regulators regarding its largest-ever recall. The National Highway Traffic Safety Administration (NHTSA) is pressing Tesla for details on the usage of its driver-assistance system and the effectiveness of warnings to drivers. Failure to comply may result in penalties of up to $27,168 per violation per day, with a maximum fine exceeding $135m. NHTSA's investigation into Tesla's Autopilot system has escalated since August 2021, with over 50 crash investigations opened. Other regulators, including the Justice Department and the Securities and Exchange Commission, are also scrutinizing Tesla's driving systems. The recall response deadline is a critical moment for Tesla as it navigates the challenges surrounding its autonomous driving technology.

 

Bloomberg

Wall Street Journal

Plaintiffs relying on short-seller reports to allege securities fraud are facing skepticism from the 9th U.S. Circuit Court of Appeals. The court has rejected a securities fraud complaint that cites reports published by short sellers, stating that the reports must "relate back" to alleged false statements or be based on new information that requires expert analysis. The recent decision in Espy v. J2 Global, Inc. highlights the court's increasing skepticism towards such claims. This ruling demonstrates that challenging securities fraud suits based on the plaintiff's failure to allege loss causation is a viable argument. While these suits may not disappear completely, defendants can use this argument to seek dismissal. Virginia Milstead, a litigation partner, emphasizes the importance of loss causation in securities fraud cases. The court's decision sets a precedent for future cases involving short-seller reports.

 

Reuters

Chipmaker MediaTek has successfully defended itself against a lawsuit accusing it of illegally partnering with a patent owner to file meritless lawsuits to drive rival Realtek out of the market for smart-television chips. A California federal court rejected Realtek's antitrust claims against MediaTek and alleged patent-assertion entity IPValue, citing free-speech rights under the U.S. Constitution. Realtek has been given permission to amend and refile the lawsuit. MediaTek, which owns nearly 60% of the global market share for television chips, was accused of violating antitrust law by trying to monopolize the industry. However, the court ruled that MediaTek's agreement with IPValue was protected under the U.S. Constitution.

 

Reuters

The Justice Department is supporting Colorado's bid to block the proposed merger between supermarket giants Kroger and Albertsons. Colorado filed a lawsuit separately from the Federal Trade Commission and other states challenging the merger. Kroger and Albertsons have sought to dismiss Colorado's case, arguing that the state lacks the authority to seek a nationwide injunction. The case is being closely watched as it could set a precedent for future state antitrust lawsuits. Judge Andrew J. Luxen has yet to rule on the motion to dismiss.

 

Bloomberg

Houston-based drilling company Ensco Group is suing the IRS in the District Court for the Southern District of Texas to recover $69.6m in income taxes, plus interest, from its 2015 and 2018 tax years. The company claims that the IRS had agreed to the refund but has not paid up. In the meantime, the IRS is seeking to collect $41.8m in additional taxes and a $976,000 "failure-to-pay" penalty from 2014.

 

Bloomberg Tax

Alphabet, the parent company of Google, has requested a London tribunal to block a £13.6bn ($17bn) lawsuit accusing it of abusing its dominance in the online ad market. The lawsuit, filed by U.K. publishers of websites and apps, claims that they have suffered losses due to alleged anticompetitive behavior. The Ad Tech Collective Action, represented by lawyers, has asked the Competition Appeal Tribunal to certify the case for trial. Google has dismissed the claims as incoherent.

 

The Times

Traces of banned Chinese cotton have been discovered in 19% of merchandise sold by U.S. retailers, according to a study. The research, conducted by Stratum Reservoir and Applied DNA Sciences, analysed garment samples, cotton swabs, and shoes from various retailers and e-commerce platforms. The study used isotopic testing to identify cotton from Xinjiang, China, a region linked to forced labor. The U.S. has implemented laws to prevent the import of products associated with human rights abuses in Xinjiang. However, the study highlights the challenges of enforcing these laws, as 57% of items containing Xinjiang cotton were labelled as U.S.-only. The study tested 822 products from February 2023 to March 2024.

 

Reuters

Fuselages made by Boeing's largest supplier regularly left the factory with serious defects, according to Santiago Paredes, a former quality inspector at Spirit AeroSystems. Mr Paredes, who says he often found up to 200 defects on parts being readied for shipping to Boeing, claims that he was nicknamed "showstopper" for slowing down production over his concerns. Spirit said it "strongly disagreed" with the allegations and is “vigorously defending” against the claims.

 

BBC News

Collapsed cryptocurrency exchange FTX says it has more than it needs to repay customers, claiming that once it has sold off its remaining assets it will have as much as $16.3bn to cover debts, which stand at around $11bn. With the firm setting out a new reorganization plan, chief executive John Ray said: “We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.” FTX co-founder Sam Bankman-Fried was sentenced to 25 years in prison in March, having been found guilty of defrauding FTX customers and investors.

 

BBC News

Financial Times

CNBC reports that a number of private equity firms have been considering a buyout of Peloton as the connected fitness company looks to refinance its debt and get back to growth. Last week, Peloton announced a broad restructuring plan that’s expected to reduce its annual run-rate expenses by more than $200m by the end of fiscal 2025. Peloton has become a takeover target after seeing its market capitalization plummet from a high of $49.3bn in January 2021 to about $1.3bn as of Monday.

 

CNBC

As expectations for U.S. interest rate cuts decrease, American corporations are turning to stock and cash instead of debt to finance acquisitions. The volume of M&A financed by stock or a combination of cash and stock has reached its highest level in over two decades. All-stock M&A transactions account for 24% of overall announced volumes this year, while cash-and-stock deals make up 10.8% of total announced transaction volumes. This funding strategy is expected to gain momentum as interest rate cuts become less likely and borrowing costs remain high. Corporations are being cautious about their capital structures and prefer to use stock for deals when their currencies are strong. The trend of using stock as acquisition currency is expected to continue, especially as opportunistic buyers use stock to bridge valuation differences with sellers. Overall M&A volumes are projected to increase by 50% in 2024, but the financing expectations have changed due to fewer anticipated rate cuts. Investment-grade companies have raised nearly $71bn of debt for M&A transactions this year, but the total amount raised is expected to be below previous years. Private equity firms may use cash and stock for acquisitions to avoid rating downgrade risks. U.S. corporations currently hold a significant amount of cash on their balance sheets, and smaller strategic transactions funded with cash or stock are preferred.

 

Reuters

U.S. consumer borrowing rose in March by the smallest amount this year, with credit card usage declining. The Federal Reserve said total credit increased $6.3bn, below the expectations of economists in a Bloomberg survey. Revolving credit, including credit cards, rose $152m, the smallest increase in three years, while non-revolving credit, such as loans for vehicles and education, increased $6.1bn. The rise in revolving credit balances, if sustained, could be positive for consumer finances. However, with pandemic-era savings decreasing, consumers may have to rely more on credit cards, especially in the face of inflation and high borrowing costs.

 

Bloomberg

China has revised and broadened its State Secrets Law (SSL) for the first time since 2010, as it aims to tighten procedures for protecting and restricting the disclosure of state secrets. The changes, which took effect on May 1, 2024, are part of China's efforts to expand and enforce national security-driven regulations. The Revised SSL creates challenges for foreign-invested companies operating in China, particularly in terms of data acquisition, management, use, and transfer. Cross-border transfers of data are subject to additional scrutiny and requirements. The definition of "state secrets" remains unchanged, allowing for broad interpretation and extensive government discretion. The Revised SSL introduces new articles that expand the scope of confidentiality obligations to all stakeholders, including non-state parties and foreign-invested companies. Chinese authorities are granted increased powers to conduct inspections and investigations. The Revised SSL also protects "work secrets" generated by state agencies and organizations. The changes pose challenges for due diligence, investigations, and compliance programs in China. They may also lead to increased enforcement actions and deter whistleblowers.

 

Reuters