Good morning. BAE Systems is set to pay $36 million for violating U.S. export restrictions on military technology.
-- What are the charges? A U.S. subsidiary of the U.K.-based defense manufacturer was charged with violating U.S. arms trafficking regulations 104 times between 2019 and 2025, according to the settlement. The newly charged violations included a December 2023 episode in which the subsidiary sent technical data for a wiring board used in a GPS device to a manufacturer in China, according to the settlement. The subsidiary was charged with 38 violations related to the transfer.
-- Staffing issues: BAE's supply chain team didn't fully understand what constituted violations of export controls and its file transfer software failed to issue warnings before the designs were sent, State said, adding the company's staff weren't properly trained to address the situation.
-- Compliance monitor needed: BAE will also pay for an external compliance officer to audit its export controls program for at least 24 months, according to terms of an administrative settlement the U.S. State Department announced Thursday. State will suspend $18 million of the fine if BAE spends that money improving its compliance program, according to the settlement.
-- BAE's response: A spokesperson for BAE said the settlement only applies to the U.S. subsidiary, adding the company has been working to improve its compliance program over the last several years.
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Compliance
Justice Department maps out priorities for fraud investigations.
The Justice Department issued a memo Thursday addressed to staff in its newly formed National Fraud Enforcement Division detailing its broad plans for investigating fraud cases, Risk Journal's Clara Hudson reports (free link).
The contents: The memo from Colin McDonald, the assistant attorney general of the division, said the fraud team will focus on cases from public trust to healthcare, internal revenue, global trade and commerce, and corporate misconduct. The healthcare focus includes investigations into marketing for unsafe products and services that deceive consumers, the memo added.
The Fraud and Enforcement Division will lead the department's criminal enforcement strategy, the memo said, targeting trade and customs violations as well as forced labor in supply chains.
Polestar dealer claims automaker 'orchestrated' its U.S. ban in lawsuit.
The Chinese-owned automaker Polestar "orchestrated" its recent ban by the U.S. government as "cover" for its desire to leave the U.S. market, one of its largest American dealers alleged in a lawsuit filed this week.
What do they say happened? Prestige Imports of East Hanover, N.J., doing business as Prestige Polestar and owned by dealer Matthew Haiken, alleges Polestar's decision to exit from the U.S. effectively and wrongfully terminates its state dealer franchise agreement under state law. The lawsuit was filed in a New Jersey state court. The dealership claims it is owed at least $25 million in damages.
-- Meta, Oakley and Ray-Ban face a criminal complaint in Germany over whether the companies' new artificial intelligence glasses breach the country's strict privacy rules, Risk Journal's Yusuf Khan reports (free link).
-- XRG, the investment arm of Abu Dhabi National Oil Company, said Thursday that Venezuela awarded it a stake in an offshore gas license, alongside BP and a Qatari company.
-- Four human rights organizations filed a lawsuit against the Trump administration challenging sanctions on officials associated with the International Criminal Court, Risk Journal reports (free link).
-- A new White House report says more than 40 countries enable Chinese exporters to evade U.S. tariffs through illegal transshipment.
-- The U.S. will use artificial intelligence to help stop China's "great transshipment scam" that evades tariffs by sending its goods through a third country, the White House said on Thursday.
-- Alphabet chief scientist Demis Hassabis discussed forming an independent AI safety entity before stepping down as Google DeepMind chief executive.
-- House Minority Leader Hakeem Jeffries signaled that Democrats would look to overhaul the Supreme Court if they regain power in Washington.
-- The SEC may soon unveil an innovation exemption to allow firms to trade real-world assets like stocks on the blockchain.
-- Forbes fired its top editorial executive, Randall Lane, over an undisclosed $6 million gift from the former head of its ranking partner Shook Research.
-- Luigi Mangione is expected to plead guilty Friday in a Manhattan federal court, where he is facing stalking charges in connection with the killing of UnitedHealthcare CEO Brian Thompson outside a Midtown hotel in 2024, people familiar with the matter said.