The week in GRC: Unilever rejects $143 billion takeover and banks plan Trump risk disclosures

– Bloomberg reported that Daniel Tarullo, the Federal Reserve official who spearheaded the push to make banks safer after the financial crisis, plans to step down in early April. As the Fed governor who has handled regulation, Tarullo often took the lead in implementing new rules and in defending the government’s response to the crisis before Congress. He earned a reputation as one of the toughest supervisors of banks.

Tarullo’s departure means President Donald Trump will soon get to fill three of the Fed’s seven board positions, as there are two existing vacancies. In addition, Janet Yellen’s term as chair expires in February 2018, followed by Stanley Fischer’s term as vice chair in June next year.


– The CEOs of 18 auto manufacturers asked Trump to reinstate a US Environmental Protection Agency review of fuel efficiency regulations through 2025 that they say was unfairly cut short during the final days of the Obama administration, according to Bloomberg. In a February 10 letter, executives including Mary Barra of General Motors, Ford Motor’s Mark Fields and Fiat Chrysler Automobiles boss Sergio Marchionne asked Trump to return the review to its original schedule, giving the new administration a chance to shape the outcome.


– The SEC has accused a Chinese private equity executive of reaping $29.05 million in illegal profit from insider trading ahead of Comcast’s purchase of DreamWorks Animation SKG, Reuters reported. The SEC said it also obtained a court order freezing five brokerage accounts controlled by Shaohua Yin, a partner at Hong Kong-based Summitview Capital Management.

Yin was accused of trading illegally in DreamWorks stock before the $3.8 billion takeover was announced. He did not immediately respond to an email seeking comment. It was unclear whether he has hired a lawyer. Summitview was not charged, and did not immediately respond to a request for comment outside business hours.


– Bloomberg reported that, according to people familiar with the matter, the world’s largest banks plan to warn investors that Trump has the potential to roil global markets and impact their firms by redrawing regulations and limiting the free movement of employees.

US and UK banks are considering adding to their risk disclosures or beefing up particular sections in their annual reports due later this month, according to people familiar with the drafting of the documents. They would likely cite the incoming new administration as a potential source of heightened uncertainty, but stop short of calling out Trump by name, the people said.


– The Commodity Futures Trading Commission (CFTC) has given swaps dealers a six-month grace period to comply with a variation margin rule that becomes effective on March 1, saying most firms are unprepared for the change, according to Reuters. The CFTC said it will not take an enforcement action against a swap dealer for failing to comply with the rule until September 1. The six-month period will give the dealers time to bring their systems in line with the new rule requirements, and the CFTC has provided similar grace periods for previous rules, an agency spokesperson said.


– Toyota Research Institute CEO Gill Pratt, in testimony prepared for a House subcommittee hearing on Tuesday, urged the federal government to keep states from setting their own autonomous vehicle rules, something car makers say could threaten the emerging industry with a patchwork of contradictory regulations, Bloomberg reported.

‘A clear and unequivocal statutory or regulatory prohibition on states regulating vehicle performance of autonomous vehicle technology would help to halt or prevent the emergence of a patchwork of state laws,’ Pratt said.


– Trump swore in former Goldman Sachs banker and Hollywood financier Steven Mnuchin as Treasury secretary on Monday, putting him to work on tax reform, financial deregulation and economic diplomacy efforts, Reuters said.


– The Financial Times reported that interest in new bank charters began to recover after the Federal Deposit Insurance Corporation (FDIC) eased its rules for new banks almost a year ago. Now analysts say more groups are moving forward with plans, encouraged by prospects of more vigorous growth, lower taxes and a gentler regulatory environment under Trump.

The FDIC is weighing six applications for bank charters from five investor groups, across California, Tennessee, Georgia, Florida and Texas. An official said it was a significant increase on the application rate of the past few years.


– Bloomberg reported that Trump overturned an Obama-era anti-corruption rule that would have forced oil, gas and mining companies to disclose payments to foreign governments – becoming the first in 16 years to take advantage of a law that allows him to rescind a predecessor’s regulations. Trump on Tuesday signed a congressional resolution to repeal an SEC disclosure rule that was called for in Dodd-Frank. It’s likely just the start.


– Trump’s nominee for labor secretary, Andrew Puzder, withdrew his name from consideration on Wednesday amid concerns that he could not garner enough Senate votes to be confirmed, Reuters reported. Puzder is CEO of CKE Restaurants, which franchises fast-food chains including Hardee’s and Carl’s Jr. At least seven Republican senators, including Susan Collins of Maine and Lisa Murkowski of Alaska, declined to publicly back Puzder in advance of the confirmation hearing.


– According to Reuters, Anthem on Wednesday won a temporary restraining order that blocks Cigna from officially terminating the firms’ proposed $54 billion merger, a transaction already rejected by US antitrust regulators. Judge Travis Laster of Delaware’s Court of Chancery granted the temporary order, saying it would keep the deal together so Anthem could appeal its loss against the US Department of Justice.

The deal would have created the largest US health insurer. Cigna said on Tuesday it notified Anthem it had ended the deal and that Anthem was required to pay a $1.85 billion break-up fee under their agreement. In its lawsuit, Anthem said: ‘Cigna’s lawsuit and purported termination is the next step in [its] campaign to sabotage the merger and to try to deflect attention from its repeated willful breaches of the merger agreement.’ Cigna said Anthem’s allegations were meritless.


– The FT said Federal Reserve chair Janet Yellen put up a robust defense of the ban on banks’ proprietary trading during testimony to lawmakers on Wednesday, saying there was no hard evidence it had led to more volatile markets. The Volcker Rule, which took effect in 2015, aimed to prevent banks from using shareholders’ money to make risky trades on their own account. Critics have argued that the restrictions have been bad for companies, investors and the US economy.


– The WSJ reported that CEOs from several major US retailers, including Target, Best Buy and Gap, met with Trump to lobby against a proposed tax plan that would hurt their profits. The retailers, which also included JC Penney and Walgreens Boots Alliance, said they stand to lose more than other industries if Trump imposes new tariffs on trade or taxes on imports. Most rely heavily on overseas factories for the goods they sell.


– Former SEC chair Mary Jo White is returning to Debevoise & Plimpton, where she previously headed its litigation department, according to The New York Times. White will serve as senior chair of the law firm, focusing on counseling boards and representing clients on significant and delicate legal matters, including companies facing crises involving multifaceted government investigations and cases.


– The US Court of Appeals for the District of Columbia Circuit said on Thursday it will reconsider an October ruling that the Consumer Financial Protection Bureau’s (CFPB) structure is unconstitutional, virtually guaranteeing the battle over the agency will reach the US Supreme Court, according to Reuters.

A full panel of 10 judges on the appeals court will decide the case after hearing oral arguments on May 24. A three-judge panel ruled in October that the CFPB vests too much power in its sole director. It also said the should be able to fire the director at will, but stayed the decision pending appeal.


– The Senate on Thursday moved closer to approving Trump’s pick to head the Environmental Protection Agency even as almost 800 former officials urged the chamber to reject the nominee, who sued the agency more than a dozen times as attorney general of oil-producing Oklahoma, Reuters said. The 773 former officials signed a letter sent to the Senate that said Edward Pruitt’s record and public statements suggest he does not agree with the underlying principles of US environmental laws. Pruitt has also cast doubts on the science of climate change. A spokesperson for Pruitt did not immediately respond to a request for comment.


– The FT reported that Unilever has rejected a $143 billion takeover approach from Kraft Heinz. The Anglo-Dutch company behind brands such as Dove soap and Ben & Jerry’s ice cream said the $50 per share cash and stock offer – an 18 percent premium to its closing price on Thursday – from Kraft Heinz ‘fundamentally undervalues Unilever.’

Kraft Heinz said it had made a comprehensive proposal to Unilever about combining the two groups to create a leading consumer goods company with a mission of long-term growth and sustainable living. It added: ‘While Unilever has declined the proposal, we look forward to working to reach agreement on the terms of a transaction. There can be no certainty that any further formal proposal will be made to the board of Unilever or that an offer will be made at all or as to the terms of any transaction.’


– The WSJ reported that Hunter Harrison is frustrated by a breakdown in negotiations between his activist investment partner and directors of CSX Corp for him to take the helm of the railroad company. ‘I wish the two sides would get together and allow for this value creation for the shareholders,’ Harrison said.

CSX privately offered the CEO post to Harrison last week, but negotiations broke down when Paul Hilal, Harrison’s activist partner, refused to back away from some compensation and governance demands. Harrison said that although he is ‘disappointed’ Hilal was unable to reach an agreement with CSX, ‘I am not trying to abandon anyone.’ In a letter sent Thursday to the CSX board, Hilal urged the company to resume negotiations, rather than wait for a shareholder vote.


– The DC Circuit appeals court said it would reconsider an appeal that argues the SEC’s use of administrative courts is unconstitutional, throwing into disarray a pillar of the agency’s enforcement strategy, the WSJreported. The decision wipes out what had been an earlier SEC victory in the case and creates more uncertainty about the outcome of other lawsuits over the agency’s in-house courts. An SEC spokesperson declined to comment.