– The Wall Street Journal reported that several dozen former McDonald’s Corp franchisees sued the company, alleging it unfairly treated black owners by selling them below-par stores and failing to support their businesses. The lawsuit accused McDonald’s of steering black franchisees to restaurants in undesirable locations in inner cities for several years. Those restaurants were destined to fail, and often had lower sales and higher operating costs, according to the lawsuit. Many of the 52 former owners from 18 states said they lost their businesses over the past four years.
McDonald’s denied the allegations of discrimination, saying they didn’t reflect the company’s work in the small-business community. ‘We are confident that the facts will show how committed we are to the diversity and equal opportunity of the McDonald’s system, including across our franchisees, suppliers and employees,’ the company said in a statement.
McDonald’s CEO Chris Kempczinski said in a video message to US employees, franchisees and suppliers on Tuesday morning that he personally takes seriously any allegations that the company hasn’t lived up to its values. ‘Based upon our review, we disagree with the claims in this lawsuit and we intend to strongly defend against it,’ he said in the message.
– According to CNN, Ben & Jerry’s is taking its support for Black Lives Matter to launch a podcast that delivers an unflinching appraisal of US history and encourages listeners to ‘dismantle systemic racism’ and white supremacy. The ice cream brand, owned by Unilever, is launching the six-part series in partnership with Vox Media and The Who We Are Project. It links specific periods in American history to modern-day systemic racism in 30-minute episodes and premieres on September 15.
Ben & Jerry’s has a long history of social, political and environmental activism. It is one of the few major brands to explicitly call out systemic racism in the US and supports calls to defund the police, while advocating specific policies to redress racial inequality. An increasing number of companies have in recent years used podcasts as a means of brand building or reputation management, or to showcase expertise.
– Verifying companies’ financial statements remotely is adding to the strain on external auditors that already face pressure for failing to conduct basic checks and spot accounting issues, the WSJ said. Auditors usually meet with company employees in their offices, visit factories and warehouses, and rely on personal interactions and observations to make assessments. During the Covid-19 pandemic, they are limited to phone and video calls.
Some elements of an audit have become more difficult during the pandemic. Auditors say counting inventory or company goods is tough when they can’t visit clients’ sites to assess inventory for months. Auditors and companies have to work out how to perform physical inventory checks before the last day of their fiscal year, which is often December 31.
– CNBC noted that, according to a report from Morningstar, both the number of ESG index funds and their assets have doubled over the past three years. The financial research firm said that as of the end of the second quarter 2020 there were 534 index funds focused on sustainability with a combined $250 billion in assets. In the US, which has lagged Europe in ESG investing, assets in sustainable index funds have quadrupled in the last three years and now represent 20 percent of the total.
Actively managed ESG funds continue to attract most inflows and represent a much larger portion of the sustainable investing landscape. Combined inflows into both active and passive ESG-focused funds reached $71.1 billion during the second quarter, pushing global assets under management above $1 trillion for the first time.
– The WSJ reported that the SEC called off a second attempt to vote on long-pending amendments to its whistleblower award program, indicating that the commission members have not reached a consensus on a final version of the rules. The amendments, which have been worked on for more than two years, would enable the SEC to limit the largest whistleblower awards and process some award claims more quickly.
‘In light of a combination of factors, including holiday schedules and other work demands, we will reschedule the meeting for a future date,’ an SEC spokesperson said. The commission previously called off another vote on the amendments that was scheduled for last October.
– CNBC reported that Helle Thorning-Schmidt of Facebook’s incoming oversight board said heavy-handed regulation is not the answer to the social media industry’s problems. Thorning-Schmidt, one of four co-chairs of the independent body set up by the company to review its content moderation, warned that an aggressive regulatory approach could infringe freedom of speech.
‘If regulation gets too heavy, it will actually impact freedom of speech very heavily,’ she said. ‘I believe in regulation, I believe politics has to play a role.’ First announced in November 2018, the board will have the power to overrule even Facebook CEO Mark Zuckerberg on whether to delete controversial posts. It will govern appeals from Facebook and Instagram users, and questions from Facebook itself.
– Meanwhile, Reuters reported that four Republican state attorneys general backed President Donald Trump’s efforts to narrow the ability of social media companies to remove objectionable content and require new transparency rules. Texas, Louisiana, Indiana and Missouri’s state attorneys general said in joint comments that new rules are needed. They argue social media platforms cannot be truly free ‘unless the participants understand the rules of the forum, and competition is able to provide alternatives when speech restrictions go too far.’
A group representing major internet companies on Wednesday urged the Federal Communications Commission to reject a petition filed by the Trump administration, saying it was ‘misguided, lacks grounding in law and poses serious public policy concerns.’
– The WSJ said Robert Zink, chief of the US Department of Justice’s fraud section, has been promoted to serve as acting deputy assistant attorney general of the department’s criminal division. Zink will fill a role created by the departure of John Cronan, who was nominated by the Trump administration to serve as a judge in the US District Court for the Southern District of New York. Cronan’s nomination was confirmed by the Senate and he was sworn in as a judge last month.
Daniel Kahn, a fraud section senior deputy chief, will take over as acting chief of the section. Joseph Beemsterboer, another fraud section senior deputy chief, will become the acting principal deputy of the section.
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...
