This week, there have been several significant developments in the areas of governance, compliance, and risk management.
Starting with Elliott Investment Management, the company has requested a special meeting at Southwest Airlines on December 10 in an effort to gain control of the board. This move comes after Elliott reduced its board slate from 10 director candidates to eight, following Southwest’s reduction of its board size from 15 to 12. This marks Elliott’s first US proxy fight since its involvement with Arconic in 2017. Southwest Airlines has expressed its opposition to Elliott’s demands, calling them unnecessary and inappropriate.
In another legal matter, gamers who sued over Microsoft’s acquisition of Call of Duty maker Activision Blizzard have settled their lawsuit. The lawsuit claimed that the acquisition would harm industry competition and lead to increased prices. The terms of the settlement were not disclosed, and Microsoft stated that the two parties had reached a resolution but did not provide further details.
On the investor front, Palliser Capital has acquired a stake in the holding company of AI chip maker SK hynix and is advocating for changes to enhance shareholder value. The activist investor is pushing for the addition of board members with more asset-management experience and tying executive pay to company performance. Discussions between Palliser and SK Square, SK hynix’s largest shareholder, have been described as positive.
In the pharmaceutical industry, Pfizer has appointed Mortimer Buckley, former CEO of Vanguard, to its board amid pressure from activist hedge fund firm Starboard Value. This move comes ahead of a scheduled meeting between Pfizer and Starboard Value.
Shifting focus to regulatory matters, the New York State Department of Financial Services has issued new guidance advising regulated entities to monitor and assess risks associated with AI-enabled tools as part of existing cybersecurity regulations. The department emphasized the importance of understanding AI-related risks such as social engineering, cyber-attacks, and the theft of non-public information.
Lastly, the US Department of the Treasury has seen significant success in leveraging machine learning AI to detect and prevent financial fraud. AI technology has enabled the Treasury Department to recover $1 billion worth of check fraud in fiscal 2024, nearly triple the amount recovered in the previous fiscal year. Overall, AI has helped prevent and recover over $4 billion worth of fraud in fiscal 2024, a substantial increase from the previous year. Treasury officials have highlighted the transformative impact of AI in enhancing fraud detection and prevention efforts. The department is continuing to improve its fraud-detection tools to combat financial crime effectively.
