Shein faces boycott over forced labor allegations | ConvergeOne files for bankruptcy | Amazon fined $525M for patent infringement (2024)

In today’s Portfolio Intelligence Daily, where we highlight under the radar investment themes and idiosyncratic company risks:

• Shein faces boycott over Uyghur forced labor allegations
• ConvergeOne files for bankruptcy
• Amazon fined $525 million for patent infringement

Auquan’s analyst team curates these summaries from our intelligence engine, which uses retrieval augmented generation (RAG AI) to uncover unique insights at scale, typically involving emerging markets, supply chains, financially-material ESG risks, and the impact of regulatory changes.

The latest news from Auquan:

Shein faces boycott over Uyghur forced labor allegations

Shein, the fashion powerhouse, is embroiled in controversy over Uyghur labor allegations and calls for a boycott have surged during Ramadan.

• Shein, a global fast-fashion giant based in China, faces a boycott campaign amid allegations of Uyghur forced labor.
• Justice for All, a human rights organization, calls on Muslim women to boycott Shein during Eid al-Fitr, alleging its involvement in Uyghur forced labor.
• Shein denies allegations, stating a zero-tolerance policy for forced labor and compliance with U.S. law regarding cotton sourcing.
• Concerns persist over Shein's sourcing practices, including the use of Xinjiang cotton, prohibited under the Uyghur Forced Labor Prevention Act, with calls for enhanced U.S. efforts against imports linked to forced labor.

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ConvergeOne files for bankruptcy

IT firm ConvergeOne filed for Chapter 11 bankruptcy due to unmanageable debt despite a revenue increase.

• Bloomington MN-based IT services firm ConvergeOne files for Chapter 11 bankruptcy due to unsustainable debt despite revenue growth.
• CFO Salvatore Lombardi cites liquidity challenges from high interest expenses, increased debt, and customer delays.
• ConvergeOne plans to transfer majority equity to top lenders, aims for financial restructuring to reduce debt and enhance liquidity.
• CEO Jeffrey Russell sees bankruptcy as an opportunity to strengthen the company's financial foundation, gain new loans, and invest in growth.

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Amazon fined $525 million for patent infringement

Amazon Web Services (AWS) owes tech company Kove $525 million for violating its data-storage patents.

• The jury found that AWS infringed on three Kove patents crucial to its cloud-computing storage capabilities.
• Kove's attorney, Courtland Reichman, emphasized the importance of protecting IP rights for startups against tech giants.
• The lawsuit, filed in 2018 in the U.S. District Court for the Northern District of Illinois, claimed Kove's technology preceded the cloud era.
• Despite AWS denying the allegations and arguing patent invalidity, the jury sided with Kove on all three patents, though they did not find AWS's actions to be willful infringement.

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