– CNBC reported that President Joe Biden was due to meet with artificial intelligence (AI) experts in San Francisco as the US government looks at how best to regulate the technology. Many in Washington, DC are seeking to learn more about AI’s risks and benefits for society so they don’t repeat the mistakes around lack of early regulation on social media and other internet technologies. The issue has generated a lot of discussion in the Biden administration, with White House principals meeting to discuss AI two to three times a week, according to a White House official.
– The New York Times (paywall) reported that Alibaba chair and CEO Daniel Zhang will leave the top job and step down from the company’s board of directors, while two of the company’s co-founders have moved into the leadership positions. Alibaba said Zhang would relinquish his top job in September. Instead, he will serve only as CEO of Alibaba’s cloud computing division. Joseph Tsai will move up from executive vice chair to chair. Joining Tsai is another Alibaba co-founder, Eddie Wu, who will succeed Zhang as CEO.
– According to the Financial Times (paywall), THG co-founder and CEO Matthew Moulding renounced his ‘golden share’ rights in the e-commerce company in an effort to ease investor concerns over governance. The decision to relinquish the agreement, which granted Moulding the power to veto any takeover, came ahead of the company’s AGM on Wednesday and two years after he first promised to do so.
The retailer also said non-executive director Iain McDonald would step down from the board’s remuneration committee after shareholder advisers urged investors to vote against his reappointment, warning he was no longer ‘independent’. McDonald still sits on the board’s nomination and sustainability committees.
Separately, THG appointed Helen Jones as a non-executive director. She is also the chair of the remuneration committee at Premier Foods, Virgin Wines and Fuller Smith & Turner. THG chair Lord Charles Allen said: ‘This appointment reinforces the board’s commitment to improve its corporate governance and continually enhance its composition.’
– CNN reported that Senate Majority Leader Chuck Schumer, D-New York, announced a broad, open-ended plan for regulating AI, describing the technology as an unprecedented challenge for Congress. The plan, Schumer said, will begin with at least nine panels to identify and discuss the hardest questions that regulations on AI will have to answer, including how to protect workers, national security and copyright and how to defend against ‘doomsday scenarios’.
The panels will be composed of experts from industry, academia and civil society, with the first sessions taking place in September, Schumer said. The Senate will then turn to committee chairs and other lawmakers to develop bills reflecting the panel discussions, he added, arguing that the resulting US solution could leapfrog existing regulatory proposals from around the world.
‘If we can put this together in a very serious way, I think the rest of the world will follow and we can set the direction of how we ought to go in AI, because I don’t think any of the existing proposals have captured that imagination,’ Schumer said.
– The Senate Banking Committee voted to send to the full Senate a bill that aims to hold bank executives accountable following recent collapses, CNBC reported. The Recovering Executive Compensation from Unaccountable Practices Act – or Recoup Act – would give regulators power to claw back compensation for executives of failed banks, impose penalties for misconduct and order banks to improve their corporate governance, according to the committee.
– The Wall Street Journal (paywall) reported that Google Cloud announced the launch of a new AI-driven anti-money-laundering (AML) product. Like many other tools already on the market, the company’s technology uses machine learning to help clients in the financial sector comply with regulations that require them to screen for and report potentially suspicious activity. Google Cloud aims to distinguish its tool by removing the rules-based programming that is typically a key part of setting up and maintaining an AML surveillance program.
Financial institutions for years have relied on more traditional forms of AI to help sort through the billions of transactions some of them facilitate every day. The process typically starts with a series of human judgment calls, then machine-learning technology is added to create a system that enables banks to spot and review activity that might need to be flagged to regulators.
– CNN reported that the Federal Trade Commission (FTC) sued Amazon, alleging that the company has tricked millions of consumers into signing up for its Prime subscription service through deceptive user interface designs. The complaint also alleges that Amazon tried to keep users subscribed who wished to cancel their memberships. ‘Specifically, Amazon used manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions,’ the FTC complaint said. The lawsuit is the FTC’s most significant step yet against business practices the agency says harm consumers by either luring them in or keeping them trapped using psychological gimmicks.
In a statement on Wednesday, Amazon called the FTC’s claims ‘false on the facts and the law’ and said it did not receive notice before the complaint was filed. ‘We also find it concerning that the FTC announced this lawsuit without notice to us, in the midst of our discussions with FTC staff members to ensure they understand the facts, context and legal issues, and before we were able to have a dialog with the commissioners themselves before they filed a lawsuit,’ the company said. ‘While the absence of that normal course [of] engagement is extremely disappointing, we look forward to proving our case in court.’
– According to the FT, the Church of England is selling its investments in Shell, BP, ExxonMobil and Total and seven other big oil and gas companies after concluding none were aligned with efforts to stop global warming. The decision comes after a vote by the General Synod, the church’s parliament, in 2018 to sell out of fossil-fuel companies that were failing to take sufficient action to tackle climate change by 2023. The church said it had decided to sell down its holdings in the remaining 11 oil and gas companies by the end of the year ‘after concluding that none are aligned with the goals of the Paris climate agreement, as assessed by the Transition Pathway Initiative.’
Shell said the church’s decision was ‘disappointing, but not surprising’. It added: ‘Our commitment to becoming a net-zero emissions energy business by 2050 remains as strong as it ever was, and we firmly believe our strategy is aligned with the more ambitious goal of the Paris climate agreement.’ ExxonMobil highlighted its plan to cut emissions from its operations to net-zero by 2050, describing the aims as part of its ‘comprehensive approach to create emission-reduction roadmaps for our major operated assets’. Total did not immediately respond to a request for comment. BP declined to comment.
– Although Wall Street bankers used to make multiples of what lawyers did, lawyers have been moving ahead thanks to stagnant banker pay for all but the very top performers and changing dynamics at law firms, according to the WSJ. The trend was in place before the recent slowdown in dealmaking dented banker pay. Managing directors who aren’t in high-ranking leadership roles at banks make an average of between $1 mn and $2 mn most years, including bonuses, more or less unchanged from two decades ago. Equity partners at top law firms can make around $3 mn or more a year, more than triple the amount they were earning two decades ago. An elite group of partners who bring in exceptional amounts of business are earning north of $15 mn at a handful of firms.
– According to the WSJ, the SEC started questioning some regional and community banks about risks tied to recent bank failures. Many financial institutions and other companies have voluntarily updated their financial statements to address potential consequences from the failures of First Republic Bank, Silicon Valley Bank and Signature Bank. But the SEC found that there are firms that haven’t done enough in providing clarity to investors when looking to raise capital or making other securities-related moves.
Companies have been cautious about providing extensive disclosure on risks from the bank failures to avoid the perception of facing a greater impact than was the case, said Anna Pinedo, a partner at law firm Mayer Brown.
‘A lot of companies were concerned that if they made significant changes in their disclosure, it would be read by the market as if they’ve got a problem or had exposure to one of the top banks or something along those lines that would have been more alarming,’ she said.