– The Wall Street Journal (paywall) reported that 3M’s board approved a $6 bn settlement to resolve claims that its earplugs caused hearing loss among veterans. 3M said it would pay $5 bn in cash and $1 bn in stock between 2023 and 2029 to settle the allegations. Veterans allege that 3M and Aearo Technologies, a company 3M acquired in 2008, made faulty earplugs that failed to protect their hearing from noise damage after they were issued by the US military.
3M has said the earplugs work correctly when used with proper training. The company said its settlement isn’t an admission of liability: ‘The products at issue in this litigation are safe and effective when used properly.’
The litigation has become the largest single mass tort in US history, with more claims than any one company has faced in mass litigation, including cases related to asbestos exposure, opioid sales or wildfires.
– The American Bar Association (ABA) said it is forming a new group to assess how artificial intelligence (AI) will impact the practice of law and to probe ethical questions the technology poses for the legal profession, according to Reuters (paywall). Attorneys and law firms have been increasingly experimenting with AI tools since ChatGPT and other new generative AI products emerged last year, but many are also grappling with potential challenges and ethical pitfalls. The task force will look at issues such as risk management, generative AI, access to justice, AI governance and AI in legal education.
‘At a time when both private and public sector organizations are moving rapidly to develop and use [AI], we are called again to lead [on addressing] both the promise and the peril of emerging technologies,’ said ABA president Mary Smith in a statement.
A group of seven ‘special advisers’ to the ABA’s new task force includes Michael Chertoff, the former secretary of the US Department of Homeland Security, and Seth Waxman, a former US solicitor general who is now a partner and co-chair of the appellate and US Supreme Court litigation practice at WilmerHale. Former US Patent and Trademark Office director Michelle Lee and former US Department of Homeland Security general counsel Ivan Fong are also among the special advisers. Lucy Thomson, a lawyer and cyber-security engineer, will chair the group.
– CNBC reported that US banking regulators revealed plans to force regional banks to issue debt to protect depositors in the event of more failures. All US banks with at least $100 bn in assets would be subject to the new requirement, which makes them hold a layer of long-term debt to absorb losses in the event of a government seizure, according to a joint notice from the US Department of the Treasury, Office of the Comptroller of the Currency, Federal Reserve and Federal Deposit Insurance Corporation.
The proposal generally takes measures that apply to the biggest institutions down to the level of banks with at least $100 bn in assets. The moves were widely expected after the collapse of Silicon Valley Bank surprised customers, regulators and executives, alerting them to emerging risks in the banking system.
– The board of struggling Swiss asset manager GAM intends to step down after the failure of a takeover offer by UK rival Liontrust, leaving the company in the hands of the activist investors that disrupted the deal, according to the Financial Times (paywall). In a statement, GAM said the activist group would propose new directors for election to the board at an extraordinary general meeting (EGM) in September. It added that all of GAM’s board would recommend shareholders approve the election of the new candidates and would step down providing they secured election.
The future of GAM is now in the hands of the activists, which include Rock Investment and wealth manager Bruellan and are led by French telecoms billionaire Xavier Niel. The group had previously criticized Liontrust’s offer, saying it undervalued GAM and did not recognize the value a turnaround could generate for shareholders.
David Jacob, GAM’s chair, said he was pleased the firm had successfully concluded its discussions with the activist group and entered into financing arrangements. Jacob is among those intending to resign. ‘This provides a clear path forward for GAM and stability for our clients, employees and all other shareholders,’ he said.
– The FT later reported that the activist investors named their candidate to become CEO of GAM. The activist group NewGAMe will put forward hedge-fund and asset-management industry veteran Randel Freeman as chief executive at the September EGM. NewGAMe had already named its own board nominees: Antoine Spillmann, CEO at Bruellan, is the candidate for board chair. Other candidates include Fabien Pictet, founder of Fabien Pictet & Partners, and Carlos Esteve, founder of Banque Heritage.
– Parent company Warner Bros Discovery said it appointed Mark Thompson as the next CEO and chair of CNN, CNBC reported. Thompson was president and CEO of The New York Times from 2012 to 2020 and was director general of the BBC from 2004 to 2012. His first day at CNN will be October 9.
‘I am confident he is exactly the leader we need to take the helm of CNN at this pivotal time,’ Warner Bros Discovery CEO David Zaslav told staff in a note. ‘Big thanks to all of you for your patience, commitment and hard work. Simply stated: the real strength of CNN is its people, and you continue to set the highest standard in all that you do.’
– Reuters reported that according to a new study from the University of Minnesota, low-performing law students scored higher on final exams when given access to AI, while high-performing classmates performed worse when using the technology. Researchers compared the final exam scores of 48 students in two courses. The students first took the final without AI, then took a second, different final using GPT-4, the latest large language model from OpenAI. They found that GPT-4, which produces human-like text based on user prompts, vastly improved student performance on multiple-choice questions.
Students saw a 29 percentage-point improvement over their real exam scores, which were earned without GPT-4. Those gains were particularly pronounced among low-performing students, who saw a 45 percentage-point increase in their exam scores with AI. But GPT-4 did not help students score higher on the essay portion of the exams and top students’ exam scores were about 20 percentage points lower when using the tool.
‘This suggests AI may have an equalizing effect on the legal profession, mitigating inequalities between elite and non-elite lawyers,’ reads the study released by Minnesota law professor Daniel Schwarcz and University of Southern California law professor Jonathan Choi.
– Shareholders in China’s HollySys Automation Technologies owning a total 32.2 percent of the company’s stock asked the board to set a special shareholder meeting, according to a letter seen by Reuters. Asking for a special meeting is a highly unusual step and indicates shareholders’ mounting frustration with management of the US-listed company, which has received takeover bids but has not started a sales process, people familiar with the matter said.
‘We trust that the board of directors of the company is taking the appropriate steps to duly convene a meeting of the shareholders of the company to consider the matters set out in the member’s business notice without delay,’ the letter said. It was sent to the company on behalf of 33 investors by law firm Conyers Dill & Pearman on August 23.
A representative for the law firm said HollySys had not responded to the letter. HollySys did not respond to requests for comment.
– The WSJ reported that under new requirements approved by FASB, companies will have to disclose more details about the income taxes they pay to government authorities in an effort to provide greater transparency for investors. Companies have opposed the changes, arguing that they will lead to more confusion among investors and that existing disclosures are sufficient for understanding their tax profile whereas additional information would put firms at a competitive disadvantage.
‘The costs won’t be nearly as significant,’ said FASB vice chair Jim Kroeker, referring to comparisons with earlier proposals. ‘I’m not trying to minimize those. There’s going to be discipline and controls now at a lower level, but I think with significant benefits.’
– Walgreens Boots Alliance said Roz Brewer stepped down as the company’s CEO, CNBC reported. She also left the company’s board. The decision was mutual, according to a news release. Ginger Graham, the lead independent director and a healthcare industry veteran, will work as interim CEO while the company searches for a successor. Brewer has agreed to continue advising the company until it selects a permanent CEO. She didn’t immediately return requests for comment.
‘Our board and leadership team will intensify our focus on creating value for our customers and our shareholders while we advance the search for a successor with deep healthcare experience to lead in today’s dynamic environment,’ said Stefano Pessina, Walgreens’ executive chair.
– According to Reuters, an Amazon shareholder filed a lawsuit against company founder Jeff Bezos and the Amazon board alleging directors failed to fully vet a decision to award launch contracts for the company’s Project Kuiper satellite project to Blue Origin, Bezos’s space company.
The lawsuit, filed by Cleveland Bakers and Teamsters Pension Fund, claims the Amazon board awarded contracts worth billions of dollars to Blue Origin and did not consider rival Elon Musk-owned SpaceX as an alternative launch provider, despite its track record.
Asked about the lawsuit, an Amazon spokesperson said in an email to Reuters: ‘The claims in this lawsuit are completely without merit and we look forward to showing that through the legal process.’
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...
