The Morning Risk Report

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Good morning. A number of investigation firms are retreating from Hong Kong and moving staffers out of the city, the latest sign of concern among foreign companies as business dwindles and Chinese authorities crack down on corporate intelligence gathering.

• Firms leaving: Three U.S. and British due-diligence companies that established a presence in the city more than a decade ago have exited or are winding down their operations this year, according to people familiar with the matter. They include Nardello, a global company built by a former U.S. federal prosecutor, and the Risk Advisory Group, co-founded by a former British fraud investigator.
  
   
• The background: China has this year conducted a series of raids in mainland China on foreign-owned due-diligence firms, which advise clients on business risks, or conduct checks and investigations in the country. Besides raiding Mintz, Chinese authorities have also questioned the staff of blue-chip U.S. consulting firm Bain, and barred a Hong Kong-based senior executive at U.S. risk-advisory firm Kroll from leaving mainland China, The Wall Street Journal reported earlier.
  
   
• The firms’ concerns: Many companies in the industry are re-evaluating their business plans and the potential risks they face in China, including their operations in the partly autonomous city of Hong Kong. The majority of their work, such as pre-transaction checks, was previously thought to be routine. The scope of what was considered sensitive to authorities has broadened recently, and firms are less certain where the line should be drawn.

FTX’s political donations came from stolen customer funds, testifies company insider

FTX made political donations with stolen customer funds using signed blank checks and access to employee bank accounts, former FTX executive Nishad Singh testified in court Monday.

Singh told the jury that former FTX executive Ryan Salame, who has pleaded guilty to his role in the campaign-finance scheme, logged into his bank account and entered the details for the money to be sent to political causes. Then Salame would ask Singh to approve the transaction in an encrypted Signal chat, he said.

SEC lists examination priorities 

The Securities and Exchange Commission’s examination division released its priorities for fiscal year 2024. Among other areas, the division said it would be focusing on crypto-related compliance and artificial intelligence.

• Goldman Sachs has reversed course on its ill-fated foray into consumer lending and on Tuesday, when it reports earnings, one big question will be how quickly the retreat is proceeding. Goldman has been moving employees from consumer lending to an internal effort named Project Blue, which is tasked with fixing regulatory issues, according to people familiar with the matter.
  
   
• America’s largest producer of stone fruit entered bankruptcy last week, less than five years after Paine Schwartz Partners created it by combining two farming companies, and follows on the heels of a July lawsuit alleging the firm drained cash from the California peach grower, which operates as Prima Wawona. But Paine Schwartz has denied the allegations and said the lawsuit, filed by Negocios Libertad, a company controlled by a former chief executive of Prima Wawona, is nothing more than the “latest installment in a campaign of meritless challenges” brought by former CEO Daniel Gerawan after he was fired in late 2020 by the company’s board of managers.
  
   
• A federal judge Monday restricted what Donald Trump can say about his election-interference prosecution in Washington, saying the former president’s free-speech rights aren’t greater than those of other criminal defendants just because he is making another bid for the White House.
  
   
• The Supreme Court of India ruled on Tuesday against legalizing same-sex marriage, dashing hopes that millions of LGBTQ people would see a dramatic change in their status and rights in the world’s most populous country.

• Companies are seeing health-insurance costs climb at the steepest rate in years, a trend that has finance chiefs looking for ways to remain competitive with job seekers while managing those higher expenses.
  
   
• Florida’s explosion in insurance premiums threatens to ground the state’s highflying housing market.
  
   
• Two Ukrainian children have been brought out of Russia and reunited with relatives following months of diplomatic efforts by Qatar, raising hopes that hundreds more could follow, an official familiar with the matter said.
  
   
• With Ukraine’s monthslong southern counteroffensive making slow progress, Russia last week launched a large-scale assault of its own with a narrower aim: the small eastern city of Avdiivka. By most accounts, it didn’t go well.
  
   
• China’s property market meltdown created a multibillion-dollar opportunity for distressed-debt investors. It hasn’t paid off.
  
   
• China on Tuesday welcomed Putin to Beijing with open arms, in the Russian leader’s first major visit abroad since the International Criminal Court accused him of committing war crimes in Ukraine.
  
   
• Anti-Jewish sentiment is surging in Germany’s large and growing Muslim community, much expanded by the country’s openness to asylum seekers from a war-ravaged Middle East.

• Companies are dialing back or delaying hiring of M.B.A.s this fall, a sharp turn from the supercharged recruiting seasons of years past.
  
   
• Social-media platform X, formerly known as Twitter, has begun aggressively pitching political advertisers after owner Elon Musk reversed a previous ban on political ads this year.
  
   
• Ford Motor Executive Chair Bill Ford called for a resolution to an “acrimonious” round of talks with the United Auto Workers and warned that a continuing strike could hurt the company’s ability to keep factory jobs in the U.S.