Raphael Stevens

A bipartisan group of lawmakers urged the SEC to crack down on Chinese e-commerce giant Shein ahead of its possible U.S. IPO.
The fast-fashion brand is under fire for allegedly selling clothes made by forced labor in China.
“We have zero tolerance for forced labor,” a Shein spokesperson told CNBC.

Two people hold two Shein bags after entering SHEIN’s first physical store in Madrid, Spain, June 2, 2022.
Cezaro De Luca | Europa Press | Getty Images

WASHINGTON — Bipartisan lawmakers are urging the nation’s top markets regulator to require Chinese fast-fashion giant Shein to disclose potential forced labor practices ahead of the company’s possible initial public offering in the United States.
The fast-fashion company has come under fire for accusations of mistreatment of Uyghurs, a marginalized group in China, and for allegedly falsifying reports of forced or underpaid labor of its supplier factories, some of which are located in the Xinjiang Uyghur Autonomous Region of China.

The alleged practices violate the 2021 Uyghur Forced Labor Prevention Act, Reps. Jennifer Wexton, D-Va., and John Rose, R-Tenn., wrote in a letter Monday to Securities and Exchange Commission Chairman Gary Gensler.
“As a global company, Shein takes visibility across our entire supply chain seriously. We are committed to respecting human rights and adhering to local laws and regulations in each market we operate in,” a Shein spokesperson told CNBC. “Our suppliers must adhere to a strict code of conduct that is aligned to the International Labour Organization’s core conventions. We have zero tolerance for forced labor.”
The SEC didn’t immediately respond to a request for comment.
The representatives are leading a bipartisan group, including 22 other lawmakers, in demanding the SEC require that Shein independently verify that it does not use forced labor before being allowed to issue securities in the U.S. The $64 billion company is preparing for a potential IPO later this year.
“While Shein claims its products do not utilize Uyghur forced labor and it works with third parties to audit its facilities, experts counter these types of audits are easily manipulated or falsified by state-sponsored pressure,” the lawmakers wrote to Gensler. “Other experts argue that it is appropriate to presuppose that any product made in the XUAR is made with forced labor.”

Goods manufactured in that area of China are not entitled to entry into the U.S. under the 2021 act.
The lawmakers also asked Gensler to notify national securities exchanges registered under Section 6 of the Securities Exchange Act of the requirement. Section 6 outlines the application process for registration as a national securities exchange.
Shein’s business model relies heavily on advertising to Gen Z buyers on mobile apps, such as TikTok, and through social media influencers.
The company, whose de facto holding company is located in Singapore, hired its first federal lobbyists in 2022 with goals to expand its distribution into the U.S. market, according to Politico.
The lawmakers’ letter echoes concerns from outside groups. Independent coalition Shut Down Shein has also called on the SEC to deny IPO registration to Shein unless it provides proof of compliance with the Uyghur Forced Labor Prevention Act.
“Access to U.S. capital markets is a privilege, not a right, and should not be given freely to corporations who threaten U.S. national security with nefarious business practices, and who are making Americans complicit in their violation of U.S. law,” Chapin Fay, executive director of Shut Down SHEIN, has written.
– CNBC’s Gabrielle Fonrouge contributed to this article. More

Members of Congress who sit atop key banking committees praised the federal takeover of First Republic Bank and called its sale to JP Morgan Chase an example of a successful public-private collaboration.
“This prompt and cost-effective sale of the bank protects depositors, limits contagion and ensures that no cost is borne to our nation’s taxpayers,” said Rep. Maxine Waters, D-Calif.
Interest on Capitol Hill in legislation to tighten regulation of banks appears to have waned after an initial rush in the wake of the Silicon Valley Bank and Signature Bank failures.

Chairman Sherrod Brown, D-Ohio, left, and ranking member Sen. Tim Scott, R-S.C., arrive for the Senate Banking, Housing and Urban Affairs Committee hearing discussing recent bank failures, April 27, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

WASHINGTON — Lawmakers who sit atop key banking committees praised the federal takeover of First Republic Bank on Monday, and held up the sale of its assets to JP Morgan Chase as a successful public-private collaboration to protect the U.S. financial system.
“This prompt and cost-effective sale of the bank protects depositors, limits contagion and ensures that no cost is borne to our nation’s taxpayers,” said Rep. Maxine Waters of California, the top Democrat on the House Financial Services Committee.

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The Republican chairman of the committee, Rep. Patrick McHenry, of North Carolina, said, “I appreciate the quick work of regulators to facilitate a sale of the bank’s assets while minimizing risk to taxpayers.”
The collapse of the institution, which followed the failures of Silicon Valley Bank and Signature Bank in March, sparked a fresh debate on Capitol Hill about how best to address threats to the financial system.
GOP lawmakers have repeatedly cautioned against passing new legislation in response to the banks’ failure, and they declined to push for stricter regulation again on Monday.
Democrats, meanwhile, have focused on a 2017 bank deregulation bill that passed with bipartisan support at the time, making it unlikely that a repeal effort would succeed today.
More broadly, with control of the House and Senate split and negotiations over the debt ceiling poised to dominate the next several months, there is little hope in Washington that any serious banking reforms will come out of Congress this year.

Even so, an appetite for banking reform exists outside Congress.
The Federal Deposit Insurance Corporation, which has backstopped tens of billions of dollars worth of uninsured deposits at the failed banks, released a new report Monday outlining various options for deposit insurance reform. The report concluded that Congress should allow higher limits or unlimited insurance for business accounts.
Republicans have indicated so far that they strongly prefer private sector solutions over broadening government backstops.
On the Senate side, the ranking member of the chamber’s banking committee, Sen. Tim Scott, R-S.C., said he was “glad” the FDIC had “secured a private market solution for First Republic. I look forward to learning more about the bid process and bringing transparency to the American people.”
His statement contrasted from the reaction of the Senate banking committee’s chairman, Democratic Sen. Sherrod Brown of Ohio. He did not directly respond to the federal intervention, choosing instead to direct his ire at the failed bank.
“First Republic Bank’s risky behavior, unique business model, and management failures led to significant problems, and it’s clear we need stronger guardrails in place,” Brown said in a statement. “We must make large banks more resilient against failure so that we protect financial stability and ensure competition in the long run.”

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Like Brown, Waters called for a more robust congressional response to the failure of three major regional banks since the beginning of March: first SVB, then Signature Bank and, most recently, First Republic.
Friday’s government reports reviewing the federal responses to SVB and Signature “underscore the need for Congress and regulators to strengthen the regulation and supervision of regional banks,” said Waters, and for “compensation clawbacks to hold bank executives accountable for their actions.”
Waters also said the House Financial Services Committee should invite the CEO of First Republic to testify. A previous invitation from the Senate banking committee to the CEOs of SVB and Signature Bank in March was declined, according to follow-up letters the committee sent to the chief executives.
Still, it was unclear Monday whether the slow-motion collapse of First Republic over several weeks, which culminated in the sale announcement, would be enough to revive interest on Capitol Hill in legislation to increase the regulation of banks or impose stricter penalties on bank executives at failed banks.
Following a flurry of new bills in the weeks after the collapse of SVB, Congress has yet to take any concrete action in response to the bank failures, save for holding hearings with regulators.
A bipartisan Senate bill introduced in late March would give federal regulators far more power to claw back executive compensation at failed banks than they have under current law.
The bill has been referred to the banking committee, which has yet to take up any specific legislation in response to the bank failures.
The Failed Bank Executives Clawback Act was just one of several pieces of legislation championed by Sen. Elizabeth Warren, a longtime skeptic of big banks.
In a statement Monday, the Massachusetts Democrat said the failure of First Republic “shows how deregulation has made the too big to fail problem even worse.”
She added, “a poorly supervised bank was snapped up by an even bigger bank—ultimately taxpayers will be on the hook. Congress needs to make major reforms to fix a broken banking system.” More

The board of supervisors picked by Florida Gov. Ron DeSantis to oversee Walt Disney World’s operations voted to sue Disney.
The vote came after Disney sued DeSantis and the board members, alleging a campaign of political retaliation by the governor over the company’s criticism of a controversial bill.
DeSantis is considered a leading potential Republican candidate for the 2024 presidential race.

Florida Gov. Ron DeSantis responds to a question during a press conference at the headquarters of the former Reedy Creek Improvement District that a newly appointed board now calls the Central Florida Tourism Oversight District, in Lake Buena Vista, Florida, Monday, April 17, 2023. 
Joe Burbank | Orlando Sentinel | Getty Images

The board of supervisors picked by Florida Gov. Ron DeSantis to oversee Walt Disney World’s operations voted Monday to sue Disney in response to the company’s recent federal lawsuit alleging a campaign of political retaliation by the governor.
The panel, which challenged the company’s long-standing self-governing status when it replaced a Disney-backed board weeks earlier, unanimously voted to authorize a lawsuit in state court.

“This district will seek justice in state court here in central Florida where both it and Disney reside and do business,” board chair Martin Garcia said at a Monday morning meeting, where the legal fight was the sole topic of business. “Yes, we’ll see justice in our own backyard.”
Disney sued DeSantis and the oversight panel last Wednesday in U.S. district court in Tallahassee, Florida. The company asked to effectively restore its control over the special tax district that has allowed it to self-govern its Orlando-area parks’ operations since the 1960s.
The litigation escalated a fight that began more than a year earlier, when the entertainment giant criticized a Florida bill limiting talk of sexual orientation and gender identity in classrooms.
The bill, dubbed “Don’t Say Gay” by its opponents, was passed by the state’s GOP-held legislature and signed by DeSantis in March 2022. Within weeks, the governor and his allies started targeting Disney’s special governance district, which at the time was called the Reedy Creek Improvement District.
Disney filed its lawsuit on the same day that the governor’s board members voted to undo a development deal that the company struck right before the DeSantis choices took over — essentially throttling the new board’s power.

“In essence, Disney is asking a federal court in Tallahassee to wrestle back the hands of time to 1967,” Garcia said of Disney’s lawsuit during Monday’s meeting.
“For us to be stuck in an urban-planning design of 1967 — does that make sense to anybody?” Garcia said, arguing that his board is just trying to modernize the district.
A Disney spokesman declined to comment on the board’s vote.
But Disney’s civil complaint alleged that the state’s actions amount to “as clear a case of retaliation as this Court is ever likely to see.” The company noted the state’s issues with the district only began after the fight over the classroom bill.
“There is no room for disagreement about what happened here: Disney expressed its opinion on state legislation and was then punished by the State for doing so,” Disney’s lawsuit said.
Disney filed the complaint while DeSantis was overseas on a political trip that appeared to be laying more groundwork for a possible run for the 2024 Republican presidential nomination.
DeSantis, who is expected to announce his presidential plans after the Florida state legislature ends in early May, is considered a top contender against former President Donald Trump.
But the extended row against Disney, one of Florida’s top employers, has recently begun to generate criticism from some of DeSantis’ fellow Republicans. More

Lordstown said in a Monday filing that Foxconn has threatened to walk away from a crucial funding deal.
Foxconn argued that the deal has been breached because Lordstown got a delisting notice from NASDAQ.
Lordstown said if the deal doesn’t happen, it may go bankrupt.

Signage outside Lordstown Motors Corp. headquarters in Lordstown, Ohio, on Saturday, May 15, 2021.
Dustin Franz | Bloomberg | Getty Images

Electric vehicle startup Lordstown Motors disclosed on Monday that a funding deal with Foxconn is in jeopardy – and that it may go bankrupt if the deal doesn’t happen. Lordstown’s shares fell sharply on the news and closed down over 23% on the day.
Lordstown said in a Monday regulatory filing that it received a letter from Foxconn on April 21 alleging that the startup was in breach of an investment deal because its stock had fallen under $1 per share for 30 consecutive trading days, triggering a delisting notice from NASDAQ.

The embattled startup struck a deal to sell its Ohio factory to the Taiwanese contract-manufacturing giant last year. Following that deal, which closed in May 2022, the two companies agreed to a second deal in which Foxconn would invest up to $170 million in Lordstown, amounting to a 19.3% stake.
Foxconn paid the first $52.7 million due under that deal last year, but the remainder – and the deal itself – is now in jeopardy.
Under the terms of the deal, Foxconn is supposed to invest $47.3 million within 10 days of regulatory approval by the Committee on Foreign Investment in the United States. That approval was secured on April 25, Lordstown said, meaning that Foxconn is obliged to make that investment by May 8.
Lordstown said it’s concerned that further investment won’t come in before that deadline, and that Foxconn doesn’t seem to be making a good faith effort to complete an EV plan that is one of the deal’s milestones.
The two companies had agreed to finalize a plan to jointly develop a new EV by May 7, after which Foxconn is obliged to invest an additional $70 million. According to Lordstown, that plan hasn’t been finalized because Foxconn isn’t making “commercially reasonable efforts” to finish it.

In a statement to CNBC, Lordstown said that Foxconn’s actions are “completely unwarranted” and have resulted in “material — and what is becoming irreparable — harm to the company.”
Lordstown warned in the filing that it may be forced to file for bankruptcy protection if the Foxconn deal falls through. The company still had $221.7 million on hand as of the end of 2022, but it lost over $100 million in the fourth quarter.
Foxconn didn’t immediately respond to a request for comment. More

An advocacy group backed by Facebook received a $34 million donation as it campaigned against antitrust legislation.
A person who works with the group, American Edge, confirmed to CNBC that the donation came from Facebook.
New documents show that the advocacy group had a massive fundraising haul during the key time period as lawmakers on Capitol Hill were attempting to take on tech giants.

Facebook Chairman and CEO Mark Zuckerberg.
Erin Scott | Reuters

An advocacy group backed by Facebook received a $34 million donation from an anonymous donor as it waged a battle against antitrust legislation that would have more tightly regulated the tech industry.
A person who works with the group, American Edge Project, told CNBC that the $34 million was from Facebook. This person declined to be named in order to speak freely about the group’s finances.

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The nonprofit raised the massive amount almost two years ago, according to the organization’s latest 990 tax forms. The documents reflect the nonprofit’s finances starting on Nov. 1, 2020, and carrying into Oct. 31, 2021. These disclosures are the most recent tax records available for public viewing and do not list names of the group’s donors.
A Meta spokesman declined to comment and referred CNBC to American Edge instead.
Doug Kelly, American Edge’s CEO, told CNBC in a statement that “the threats to America’s technological edge have a profound impact on our national security and economic well being and we’re leading the charge to make sure everyone is aware.”
The new documents show the tech advocacy group scored its biggest fundraising haul yet when bipartisan lawmakers on Capitol Hill were attempting to take on tech giants, including through antitrust legislation that didn’t pass Congress and a hearing in March 2021 featuring tech CEOs such as Facebook’s Mark Zuckerberg. Facebook changed its name to Meta in late 2021.
The American Edge Project launched its first pro-tech industry ad in 2020. The group’s previous 990 forms, from 2019 through late 2020, showed it raised all of its money from a single anonymous $4 million donation during that period. Facebook confirmed in 2020 to The Washington Post that it was contributing to the group. The person who works with American Edge told CNBC that the $4 million was also entirely from Facebook.

American Edge launched a wave of TV and digital ads from late 2020 through 2021, taking on antitrust proposals. A TV spot funded by the group suggested that small-business innovation could be affected if such legislation made its way through Congress.
In June 2021, the House Judiciary Committee passed a package of sweeping tech antitrust reforms. The measures proposed new rules on the largest online platforms, like requiring them to have capabilities for users to easily transfer their data to other services, shifting the burden of proof in merger cases onto dominant tech platforms, blocking platforms from operating businesses with conflicts of interest and from advantaging their own products on platforms they run.
The Senate later introduced a version of one of the bills, the American Innovation and Choice Online Act, in October 2021, which aimed to bar self-preferencing on dominant tech services. That bill advanced out of the Senate Judiciary Committee in January 2022.
Taken together, the bills were poised to create a much more uncertain legal environment for Facebook and its peers, including by making it harder to acquire firms that could help their businesses grow.
Almost all of these bills did not get a full House or Senate vote after Big Tech companies and their industry groups opposed the pieces of legislation, saying they would impose unfair restrictions and result in negative effects for consumers. For example, Chamber of Progress, backed by Apple, Amazon, Google and Meta, has warned that the Senate bill would significantly alter Amazon Prime’s offerings like two-day shipping and make it harder to offer low-cost basics from its first-party brand, for fear of being charged with illegal self-preferencing.
American Edge spent over $5 million between TV and digital ads in 2021, according to data from AdImpact. It spent over $10 million on TV ads last year, AdImpact says. The group went into 2022 with over $13 million in net assets, according to its 990 forms.
The $34 million donation also came as American Edge announced it was adding former Rep. Greg Walden, R-Ore., and former Sen. Heidi Heitkamp, D-N.D., as advisory board co-chairs to “lead the coalition’s efforts on internet openness, accessibility and free expression,” according to the press release. Walden is still listed on the group’s website as a leader of an advisory board, while Heitkamp is no longer listed.
A 2022 report by the watchdog Tech Transparency Project says Facebook isn’t just a “contributor” to American Edge, as the company confirmed to The Washington Post, but potentially its “sole funder.” The Tech Transparency Project receives funding from the George Soros-backed Open Society Foundations, Craig Newmark Philanthropies, Bohemian Foundation and Omidyar Network, according to its website.
American Edge’s website lists Facebook as a member of their supportive coalition. Other listed members include Bear Hill Advisors, the Center for Individual Freedom, NetChoice, the Connected Commerce Council, the National Black Chamber of Commerce and the National Small Business Association.
Facebook itself has spent over $58 million since the start of 2020 on federal lobbying, according to data compiled by the nonpartisan OpenSecrets.
Beyond the $34 million donation, the only other contribution listed on the tax disclosure was an another anonymous donation – of $25,000. The multimillion-dollar contribution allowed American Edge to spend just over $19 million on what the forms refer to as media placement and strategic services.
The 990 forms, which were signed and filed by the group in 2022, also show that powerful consulting firms that work for American Edge also received over $3 million combined from the organization. Cavalry LLC, a firm founded by former strategists of Senate Minority Leader Mitch McConnell, R-Ky., was paid $1.1 million by American Edge from November 2020 through October 2021. The Washington Post reported that John Ashbrook, a founding partner at Cavalry and a former McConnell advisor, is helping guide the group.
Global Strategy Group, a political and corporate consulting firm that was founded by three Democratic strategists, received $910,000 from American Edge over that same time period. GSG has a history of working with Big Tech. Amazon previously employed the group while the company fought unionization efforts. Amazon itself has donated to a similar group while that nonprofit took on tech-related legislation.
The Washington Post reported that Jim Papa, a partner at Global Strategy Group who was an aide to former President Barack Obama, was also helping the organization. Papa says on his GSG profile page that among his current and former clients is FWD.us, a fellow 501(c)(4) nonprofit that was co-founded by Zuckerberg and actively lobbies on immigration-related issues.
A GSG representative did not return requests for comment. More