There’s an uproar over diversity in hiring
The Supreme Court’s decision on Thursday to strike down affirmative action in colleges and universities sent shock waves throughout higher education. But the implications of the 6-3 decision, which found that race-conscious admissions programs were illegal, promise to be much broader.
Many in corporate America fear that years of efforts to promote diversity are now vulnerable to legal challenges. While this particular case may not overturn such initiatives, lawyers and officials say, future initiatives that go before the Supreme Court may do so.
What the Supreme Court found: Affirmative action programs cannot be combined with the Equal Protection Clause of the Constitution, Chief Justice John Roberts wrote for the majority. They added, the Harvard and University of North Carolina programs “lack sufficiently focused and measurable objectives that warrant the use of race, inevitably employ race in a negative way, include racial stereotyping.” and lacks meaningful endpoints.”
Schools may still take race into account in some ways, including on the personal essay, although Mr. Roberts cautioned that each applicant should be evaluated “on the basis of his or her experiences as an individual—not on the basis of race.” But no.”
The impact on business can be profound. corporate America Has adopted diversity, equality and inclusion policies, especially in the wake of protests over the killing of George Floyd in 2020. But Thursday’s decision has left the door open for the employees – and conservative activists. legal challenges for those policies.
Although the number of alleged reverse discrimination claims filed with federal regulators declined between 2011 and 2021, recently started growing, according to USA Today. Two weeks ago, a federal jury ordered Starbucks to pay $25.6 million to a former regional manager who said she was fired because she was white.
So have more than 60 large companies, including GM and Meta. warned the Supreme Court The end of affirmative action in higher education will make it harder to create a diverse workforce. Data shows the number of black and Latino students attending universities has increased States declined sharply Which has already ended such programs.
The decision also dealt a blow to efforts to improve board diversity through quotas, a month after a federal court repealed a California law Enforcement of such order on companies situated therein. A federal appeals court is considering Challenge the Nasdaq Rule along the same lines.
Corporate diversity efforts are not exactly the same as university, Some experts say. Doug Briley, labor law expert at Ropes & Gray, told DealBook that the equal protection clause doesn’t apply to private employers. And others argue that companies are allowed to actively seek the widest possible pool of job candidates in order to hire the best applicants.
Still, Mr. Briley said, challengers will feel emboldened to sue, knowing that the Supreme Court is receptive to their claims.
Corporate executives were considering their next move ahead of the decision. They may include new ways of diversifying the appointment, such as using different language to achieve the same goals.
And some employers plan to persevere: “Salesforce’s commitment to equality has not wavered, and we will continue to work toward our representation goals, regardless of today’s decision.” Lori Castillo Martineztweeted the company’s chief equality officer.
But diversity advocates fear some companies may abandon such efforts in the face of new legal challenges: “Don’t let your corporate lawyer just say, ‘Oh, that’s a thing,'” Alvin Tillery, of Northwestern University. professor and a corporate diversity consultant, told The Washington Post.
What’s going on over here
Eurozone inflation presents a mixed picture. Data published this morning showed that price growth eased to 5.5 per cent in May. But it also reflects a month-on-month increase in “core” inflation. This will likely prompt the European Central Bank to raise interest rates further. Meanwhile, the Commerce Department will release a report on personal consumption expenditures, a closely watched measure of US inflation, at 8:30 a.m. Eastern.
The FTC is reportedly planning to file a major antitrust case against Amazon. Upcoming lawsuit will focus on e-commerce giants main online marketArguing that it unfairly benefits online merchants who use the company’s logistics software, according to Bloomberg. It would be the biggest move yet against Amazon by the agency’s leader Leena Khan, who as a law student outlined ways to challenge the company’s dominance.
The Koch Political Network raised over $70 million to stop Donald Trump. Some of the money raised by Americans for Prosperity Action, a group backed by Charles Koch, will help support the challenger to the former president for the 2024 Republican presidential nomination. It’s unclear who that might be, with wavering support being given to Florida Governor Ron DeSantis.
Washington has warned American companies about the Chinese anti-espionage law. The National Counterintelligence and Security Center is warning that a newly amended law, which takes effect on Saturday, could give Beijing Greater access and control of companies’ data, according to The Wall Street Journal. The notice comes after China raided the offices of consulting companies linked to Western countries, citing security concerns.
Warren questions Goldman over its SVB roles
Months after the collapse of the Silicon Valley bank, Goldman Sachs’ role in its final days – both as the lender’s advisor and buyer of its debt, potentially setting Goldman up for large profits – came under scrutiny, including from federal authorities. Is. Now, Senator Elizabeth Warren, Democrat of Massachusetts and expert on financial regulation, is demanding answers from Goldman, DealBook is the first to report.
“This dual role — in which Goldman profited when the economy suffered — is reminiscent of the company’s behavior during the 2008 financial crisis, when it was forced to sell mortgage-backed securities and charge against them,” Warren wrote in an article Thursday. The bet was profitable.” Letter to David Solomon, CEO of a Wall Street firm
The letter reflects growing scrutiny of Goldman’s role. The firm sought to help Silicon Valley Bank shore up its finances ahead of a possible credit rating downgrade by Moody’s in two ways: by buying SVB’s $21.4 billion worth of debt, and by advising on a planned $2.25 billion stock sale. . (The equity raise failed when the debt sale forced SVB to take a $1.8 billion write-down, spooking investors.)
On the debt side, Goldman bought SVB’s loan book at a deep discount, and later tried to make a profit by reselling it. Although this is a fairly common move, it bears significant scrutiny here, given the consequences of the SVB collapse. DealBook previously reported that Goldman had offered its client the opportunity to hire another advisor for the loan deal, although SVB declined.
“Goldman Sachs appears to have benefited from almost every stage of the Silicon Valley bank collapse,Warren wrote. It asked Goldman to disclose any underwriter fees it received for advising on the failed capital raise, what the company paid for the SVB loans and what happened to the value of that loan in the weeks following the bank’s collapse.
Goldman spokesman Tony Fratto told DealBook: “We are reviewing the letter. But it is well known that banks do not charge fees when capital raising is cancelled.” He said the company earned $50 million from loan sales.
Doubts loom over markets despite strong first half performance
Shares are expected to rally on Friday after an impressive first six months of the year as returns far exceeded Wall Street’s predictions.
Nasdaq Composite poised for best-ever first-half performance In its 52 year history, driven by investor enthusiasm for tech companies that are working on artificial intelligence. The boom in tech stocks — which some veteran investors have warned could happen a bubble Manufacturing – also helped propel the S&P 500 into a bull market this month.
Other winners include Japanese stocks and bitcoin, which have soared more than 80 percent this year despite a crackdown on crypto firms.
On the other end of the spectrum… Last year’s big winners — energy stocks, commodities and crude — are in the deep red. One big reason: China’s economy have not retaliated As expected, after the covid restrictions were lifted.
More warning signs abound. Central banks haven’t finished raising interest rates as they battle persistently high inflation, potentially even further pressure on corporate profits, And concerns about economic development have not gone away.
John Lynch, chief investment officer at Comerica Wealth Management, predicted further disappointment in the future. “After further volatility this summer, we expect the S&P 500 to be valued near current levels (4,150-4,200) by the end of the year,” he wrote in his mid-year outlook. This would mean a drop of about 5 percent by Thursday’s market close.
How oligarchs buy influence
As Vladimir Putin sought to assert his control over Yevgeny Prigozhin’s Wagner mercenary group this week, DealBook was reminded of the Russian president’s past efforts to rein in the country’s billionaires. He made a fortune after the collapse of the Soviet Union and had to remain loyal to Putin; those who were not were banished – or worse,
The strategy of the oligarchy also includes influence buying in the West. A documentary Released this week by Britain’s Channel 4, it shows how Alexander Lebedev, a former KGB spy who became a wealthy banker, and his son, Evgeny, ingratiated themselves into the country’s establishment.
The allegations include:
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He bought two newspapers to mix with the elite and influence opinion. When Boris Johnson was Mayor of London, he used the name The Evening Standard to strengthen it.
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When Johnson became prime minister, he nominated Evgeni to the House of Lords, despite warnings from Britain. intelligence services,
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Johnson attended a party at Lebedev’s estate in Italy in 2018, without a security detail or other UK government officials. At the time, Italy’s intelligence services were monitoring the property because they believed it was being used for espionage.
Johnson and Evgeni Lebedev denied the allegations, But experts say this relationship is not general and has wider implications. “Evgeni Lebedev is sort of a caricature of a broader trend, but an important trend,” Oliver Bullough, author of “Moneyland: The Inside Story of the Crooks and Kleptocrats Who Rule the World,” told DealBook. “It’s not just that Boris Johnson dismissed advice on Lebedev, he also tried to suppress a report on Russia from Parliament’s Intelligence and Security Committee.”
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Chinese fast-fashion giant Sheen denies a report that it has applied for an initial public offering in the United States. (Axios)
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inflection A.I.A chatbot start-up created by the co-founders of LinkedIn and Google’s DeepMind raised $1.3 billion from investors including Bill Gates and Nvidia. (Bloomberg)
Policy
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America this morning under pressure from the Netherlands new rules announced Further restricting exports of chip-making equipment to China. (Reuters)
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Issuance of renminbi-denominated debt reached $10.4 billion so far this year, a record, helping to internationalize China’s currency. (Bloomberg)
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