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Jan 15, 2021

The week in GRC: Investors urge social media controls and companies stop political donations after DC riot

This week’s governance, compliance and risk-management stories from around the web

– GameStop Corp said it reached a deal with Chewy co-founder Ryan Cohen to add him and two former colleagues to its board after he pressed the company to focus more on digital sales, The Wall Street Journal reported. Cohen didn’t personally request a seat on the GameStop board when he said in a November letter that his investment firm had built a roughly 10 percent stake in the company. Cohen wasn’t available for comment, a spokesperson said. GameStop CEO George Sherman said the deal with Cohen’s firm was in the best interest of all stockholders.

CNBC reported that the UK’s Financial Conduct Authority (FCA) warned about the risks associated with investments and lending products related to crypto-currencies. ‘The FCA is aware that some firms are offering investments in crypto-assets, or lending or investments linked to crypto-assets, that promise high returns,’ the FCA said. ‘If consumers invest in these types of product, they should be prepared to lose all their money.’

The FCA has become tougher in this area recently, banning the sale of crypto-derivatives to retail investors. The regulator, which introduced a new register for crypto-asset businesses, warned that firms operating without registration are committing a ‘criminal offense.’

– According to the WSJ, companies are changing security strategies and reviewing personnel policies in the wake of the riot at the US Capitol. The most obvious lesson from the violence is that companies need to better monitor and manage risks posed to corporate premises, particularly as physical threats have risen over the past year. ‘If I’m a CEO today, I’d better have my corporate security officer in my office,’ said Mark Beasley, director of the enterprise risk-management initiative at North Carolina State University.

Companies are expected to study the riot for lessons on preparedness. They will also see it as a sign that violence could be more likely to arrive at corporate doorsteps, Beasley said. The chaos could be seen as an example for copycat events targeting storefronts, headquarters or factories.

CNN noted that following the recent riot at the US Capitol a growing number of companies are distancing themselves from President Donald Trump and supporters who are making false claims about his election loss. For example, Airbnb said it will try to ban Capitol rioters from staying at properties on its platform amid fears about more violence ahead of president-elect Joe Biden’s inauguration.

GoFundMe will no longer allow people to fundraise for travel expenses to potentially violent political events. Facebook said it will begin removing all content that includes the phrase ‘stop the steal,’ a common refrain among those who participated in the riot. And Twitter said it has banned 70,000 accounts for promoting the baseless QAnon conspiracy theory.

– Similarly, the WSJ looked at the increasing number of major companies that have suspended or are reviewing their campaign donations following the riot at the Capitol, with many saying they would stop donating to Republicans who objected to the election’s certification.

AT&T, ConocoPhillips, Dow, Facebook and United Parcel Service were among those that said they are halting or reviewing campaign donations from their political-action committees (Pacs) to lawmakers and political candidates. Those announcements followed JPMorgan Chase and Citigroup saying they were halting their Pac donations. Some companies, including, Comcast and General Electric, pledged to stop donations to the Republican lawmakers who objected to Biden’s victory in the Electoral College.

‘Last week’s attempts by some congressional members to subvert the presidential election results and disrupt the peaceful transition of power do not align’ with company values, American Express CEO Stephen Squeri said in a memo sent to employees, announcing the company’s decision to suspend Pac donations to more than 100 congressional Republicans who voted to challenge the election results.

– According to the WSJ, companies are adjusting their plans for bonuses and other incentive compensation after the Covid-19 pandemic upended financial forecasts and executives managed through a once-in-a-lifetime economic downturn. The pandemic has led to soaring profits in some industries, such as online retail and groceries, and steep losses in others, such as hospitality and travel.

As companies prepare to pay out bonuses and other rewards for the past year, boards are contemplating whether it makes sense to assess executives based on goals and targets that were put in place in late 2019 and early 2020, when the outlook for their business was very different.

Reuters reported that, according to people familiar with the matter, Gary Gensler will be named SEC chair by Biden, an appointment likely to prompt concern among Wall Street firms of tougher regulation. Gensler was chair of the Commodity Futures Trading Commission from 2009 to 2014, and since November has led Biden’s transition planning for financial industry oversight.

Policy experts expect Gensler will pursue new corporate disclosures on climate change-related risks, political spending and the composition and treatment of workforces. Democrats are also keen to restore some shareholder rights and complete post-crisis executive compensation curbs.

Gensler did not respond to a request for comment. A spokesperson for Biden did not immediately respond to a similar request.

CNBC reported that Intel CEO Bob Swan is stepping down, effective February 15, and will be replaced by VMWare CEO Pat Gelsinger. Dan Loeb’s Third Point hedge fund firm in December urged Intel’s board to explore ‘strategic alternatives’ after Intel lost market share to competitors AMD, Samsung and TSMC.

Following the news of Swan’s departure, Loeb called him ‘a class act’ and said he ‘did the right thing for all stakeholders in stepping aside for Gelsinger.’ Gelsinger has previously worked at Intel, eventually becoming its first chief technology officer.

– Uber Technologies appealed a $59 million fine by the California Public Utilities Commission (CPUC) in a dispute over whether the company should share detailed information on sexual assault and harassment claims reported on its platform, according to Reuters. The CPUC fined Uber in December after the company refused to share the information, including full names and contact information, arguing that doing so would violate victims’ rights to privacy. An anti-sexual abuse group also appealed the decision and supported Uber’s ‘transparency and commitment to protecting survivors.’

Uber’s chief legal officer Tony West said on Tuesday that no regulator had previously asked the company for personally identifiable information of sexual assault victims and said the CPUC had not disclosed why it needed the data.

The CPUC did not respond to a request for comment.

The Guardian reported that Unilever CEO Alan Jope said his office workers will never return to their desks five days a week, in the latest indication that the pandemic will transform modern working life. Jope said the company would also encourage all of its employees to receive vaccinations against Covid-19 but would stop short of making jabs mandatory. Employees who opt not to be vaccinated will, however, face mandatory testing.

Jope said the company would look at different working patterns after it saw during the pandemic that it could adapt and make big changes more quickly than previously thought. He said he did not expect office workers across western Europe and North America to return to work until at least April, and added that Unilever would use a ‘hybrid mode’ of working between homes and offices after that.

– According to CNN, big banks, climate activists and banking reform advocates have joined forces to denounce a proposed Trump administration rule that would make it harder for banks to cut ties with the fossil fuel industry. If adopted, the proposed Office of the Comptroller of the Currency (OCC) regulation would mean banks could no longer deny loans to fossil fuel companies, gunmakers or other industries just because those companies don’t match lenders’ corporate values. Banks would only be able to refuse loans to companies with a ‘documented failure’ of meeting previously established lending standards.

The American Bankers Association criticized the rule as ‘untenable,’ in part because it would limit the ability of lenders to manage their own risks. Senator Sherrod Brown, D-Ohio, the incoming chair of the Senate Banking Committee, echoed the sentiment.

In a statement, the OCC said it is ‘reviewing all’ comments from stakeholders in order to develop a final rule.

– According to Reuters, pension fund managers and religious investors asked leading social media companies to step up their content-control efforts to reduce the threat of violence ahead of the inauguration of president-elect Biden. In letters sent on Thursday, the investors – including New York State Comptroller Thomas DiNapoli, the Service Employees International Union and the Unitarian Universalist Association – asked for steps including disabling the coding they said tends to elevate conspiracy theories and radicalizing content, and for the companies to continue to flag content with hashtags like #Stopthesteal.

In the longer run, boards and executives must review their ‘business model and reliance on algorithmic decision-making, which has been linked to the spread of hate and disinformation online,’ the investors wrote.

Alphabet representatives did not respond to questions. A Facebook spokesperson said it has banned more than 250 white supremacist groups and enforced rules like those barring militias from organizing on its platform. A Twitter representative cited actions it has taken, such as suspending accounts that mainly shared QAnon content.


Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...