Gov. Ron DeSantis of Florida signed the Individual Freedoms Act this year.Credit…Chris O’Meara/Associated Press
Challenging a Florida law on diversity
A federal judge late yesterday blocked a key provision of Florida’s “Stop WOKE” Act aimed at private businesses. The ruling came in a case brought by two Florida companies and a diversity consultant. They argue that the law, which limits discussion of “white man’s privilege” and other racial bias issues during diversity training offered by private employers, was an infringement of free speech.
The law, which is officially called the Individual Freedom Act and was signed by Gov. Ron DeSantis this year, has become one of the latest flash points between big business and lawmakers. It has, in part, made Florida ground zero in the growing debate about how far both businesses and lawmakers can go in taking a stance on divisive social issues — and enforcing certain policies — in the workplace.
“It’s the No. 1 issue I hear about from C.E.O.s these days,” Bill George, a professor of management at Harvard, told DealBook recently.
The Florida law seeks to determine how all sorts of organizations, including private businesses, can address race, gender and nationality. It prohibits employers in the state from forcing workers to attend diversity training that would make them feel uncomfortable or guilty about their race because of historical events. Also banned: any talk of advantages, or disadvantages, based on race. Florida argues that by limiting these discussions, it is actually protecting speech overall.
But the judge, Mark Walker, in his preliminary injunction, said the law was something you might find in an alternate universe. “In the popular television series ‘Stranger Things,’ the ‘upside down’ describes a parallel dimension containing a distorted version of our world,” Walker wrote. “Now, like the heroine in ‘Stranger Things,’ this court is once again asked to pull Florida back from the upside down.”
Judge Walker said the restrictions in the bill were overly broad and “naked viewpoint-based regulation,” aimed at particular ideas that DeSantis and other Florida lawmakers don’t like. The legislation, he wrote, “does not target trainings because they are mandatory,” but rather “because of the speech delivered in them.”
Gregory Magarian, a law professor at Washington University, said he agreed with the judge’s ruling. He said Florida’s position that the speech in question creates a hostile environment and can therefore be restricted under Title VII of the 1964 Civil Rights Act “doesn’t hold any water, for reasons that Judge Walker explains very well.”
“For an employer to convey ideas to employees that may make some employees uncomfortable is entirely different from situations where employers create or enable pervasive, identity-based harassment,” Magarian told DealBook.
Is this the end of the Stop WOKE Act? Not quite. Judge Walker’s ruling is preliminary. But Joel Paul, a professor of constitutional law at the University of California, Hastings College of the Law, said it appeared to be well argued. “When you say that a law is viewpoint-based, the burden shifts to Florida to provide why the government has a credible interest in restricting this type of speech,” Paul told DealBook. “I don’t have a clue what that governmental interest would be.”
HERE’S WHAT’S HAPPENING
The leaders of Russia and China will attend the G20 summit. Joko Widodo, president of Indonesia, the host country for the Group of 20 summit in November, confirmed that President Vladimir Putin and President Xi Jinping intend to make the trip. It would be the first face-to-face meeting between Putin and other world leaders since Russia’s invasion of Ukraine.
The I.M.F. forecasts an additional $1.3 trillion in revenue for major oil and gas exporters such as Saudi Arabia, Qatar, Abu Dhabi and Kuwait over the next four years. The latest figure comes just days after Saudi Aramco booked a record-breaking quarterly profit of $48.4 billion.
The public should have more information about the Mar-a-Lago search affidavit, a federal judge said. The judge ordered the government to propose redactions for a possible release of the sealed affidavit used to justify the F.B.I.’s search last week of Donald Trump’s home in Florida for classified government documents.
A financier who fell out with China’s elite gets a stiff prison sentence. A Chinese Canadian billionaire, Xiao Jianhua, whom the authorities picked up from his luxury Hong Kong apartment in 2017, pleaded guilty to bribery and other financial crimes. He was sentenced to 13 years in prison and his company was fined $8 billion. The Canadian embassy in Beijing had complained that its representatives were shut out of the courtroom during the trial.
A meme-stock payday
Five months after Ryan Cohen disclosed a 9.8 percent stake in Bed Bath & Beyond and started an activist campaign against the company, he has sold out completely. Cohen is walking away with millions, even as his reputation as king of the meme-stock traders takes a hit. Shares of Bed Bath & Beyond were down more than 40 percent premarket on Friday.
Cohen’s investment firm disclosed yesterday that it had sold off the entirety of its stake, just days after Bed Bath & Beyond’s shares surged as much as 70 percent in response to an updated regulatory filing outlining Cohen’s ownership of stock options with strike prices of $60, $75 and $80 per share. Cohen first disclosed owning those options in March. The company subsequently executed a stock buyback, ultimately making him a significant shareholder, and requiring him to file new disclosure forms. Cohen’s name attached to the filings was enough to set off a retail trading frenzy.
The timing of Cohen’s filing this week is puzzling. Bed Bath & Beyond first disclosed it had acquired additional shares in April, and securities rules dictate that insider forms be filed within days of anyone crossing the 10 percent ownership threshold. It’s possible that Cohen realized his stake had increased to a level requiring such disclosures only at the point when he was ready to sell. Shares of Bed Bath & Beyond had fallen about 40 percent since Cohen signed a settlement agreement with the retailer, but had been ticking up in recent weeks. Under rules governing the share sales of significant shareholders, an increase in trading volume meant Cohen could sell more stock. So it is possible that Cohen made his filing about options just because he was looking to cash in at least some of his holdings. Either way, cashing out when he did looks like a genius move this morning.
Cohen appears to have made nearly $57 million on his Bed Bath & Beyond investment. He initially paid $121 million for the stake, which climbed in value to$178 million in the end. He did lose just over $1.6 million on his options bet. But it is more likely that he purchased those options as a show of commitment to the company. He sold a portion of his stake on Tuesday, at prices ranging from about $18 to $26, the same day the shares spiked amid excitement over the news of his options position. He sold more shares, including those options, on Wednesday.
Will this tarnish Cohen’s crown as meme-stock king? Shares of GameStop, the retailer where he is chairman, were down about 6 percent yesterday and another 10 percent in after-hours trading. Over on Reddit’s WallStreetBets, one poster noted Cohen’s tweet from June about Wall Street executives “making millions while shareholders are left holding the bag,” and said it had “aged like milk.”
Celebrities, NFTs and disclosure
Celebrities on the NFT bandwagon are under pressure to be more transparent about their financial interest in the products they endorse on social media. The nonprofit group Truth in Advertising this month sent letters to representatives of stars across sports and media — including Tom Brady, Shaquille O’Neal, Snoop Dogg, Drake, Jimmy Fallon and Gwyneth Paltrow — demanding full disclosure when they promote non-fungible tokens.
“Consumers really are following the investment advice of celebrities,” Bonnie Patten, executive director and co-founder of the group, told DealBook. “This is not a theoretical issue.”
The F.T.C. has issued guidance for social media influencers. “The general principle is that if there’s a connection between an endorser and a marketer that consumers would not expect, and it would affect how consumers evaluate the endorsement, that connection should be disclosed,” a spokeswoman for the commission said. The agency has not cracked down on celebrity promotions of crypto or NFTs specifically.
The letters do not allege that the celebrities broke specific rules, but they lay out the dangers of opaque promotions, asking the stars to avoid any further harm by updating fans. The group previously sent similar letters to representatives for Reese Witherspoon and Justin Bieber, who denied any wrongdoing. No other celebs have responded to the group’s campaign so far, but Patten said the goal was to “inform consumers they should not rely on these endorsements.”
Meanwhile, the Kansas City Chiefs quarterback Patrick Mahomes signed a more traditional deal to promote the NFT firm Dapper Labs and its “NFL All Day” video highlights platform, the company said yesterday. Terms were not disclosed.
“It would have been more favorable for his image to shut his mouth rather than talking nonsense as he had nothing better to say.”
— Kim Yo-jong, the sister of Kim Jong-un, the North Korean leader, responding harshly to President Yoon Suk-yeol of South Korea’s proposal of economic aid in exchange for nuclear disarmament.
How elastic are prices?
With inflation raging, along with fears that consumers will stop spending, corporate executives want investors to believe that higher prices won’t hurt their sales. To that end, there is a new buzzword coming from the mouths of executives, from McDonald’s to Coca-Cola to Hershey, on earnings calls in the past few weeks: “elasticity,” report The Times’s Jason Karaian and Veronica Majerol.
Price elasticity measures how sensitive buyers are to price changes. If a small rise in price leads to a big fall in demand, the item is said to be highly elastic. The number of mentions of “elasticity” on the earnings calls mimics the inflation rate: bumping along at a relatively low level of about 2 percent for years before reaching new heights in recent months, and soaring above 9 percent in June.
THE SPEED READ
The Big Ten Conference announced a record-breaking $7.5 billion media broadcast deal with Fox, CBS and NBC. (WSJ)
Biotech stocks are rallying as investors bet a recent batch of medical breakthroughs will prompt an M.&A. spree. (WSJ)
The disinformation campaign that has made the I.R.S. the center of a political firestorm. (The Times’s On Politics newsletter)
The E.U.’s Digital Markets Act doesn’t go into effect until next year, but regulators are already bracing for a barrage of legal challenges from Big Tech. (FT)
Best of the rest
What Tesla driver data can tell us about car crashes, and near-misses. (NYT)
A dozen woman claim they were sexually assaulted by America’s “most moral C.E.O.” (NYT)
Bernhard Warner contributed to today’s DealBook.
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