fortune--2020-07-01--The downfall of Wirecard is stirring an epic shareholder revolt in Germany

Like so many German retail investors, Fabian Schmidt saw Wirecard as a near can’t-miss stock opportunity. A 37-year-old resident anesthesiologist, Schmidt trades stocks in his spare time as he looks to save up money to buy a bigger house for his growing family.
Schmidt went all in on Wirecard in May despite a series of news articles that again called into question the company’s finances. Short-sellers and investigative journalists at the Financial Times, in particular, had been sounding the alarm that the finances of the fast-growing fintech just didn’t add up.
Schmidt, though, grew convinced the Dax 30-listed juggernaut, which at one point surpassed Deutsche Bank in market cap, was on the road to hitting its growth targets. The smooth and confident former CEO sold him.
“I found Markus Braun quite convincing,” Schmidt told Fortune. “He was saying the short-sellers are out to get us. They’re trying to profit off of us.”
Schmidt recalled Braun’s assurances: “We are a very stable enterprise. We are a member of the Dax, and we’ve been rated positively by our auditor, Ernst & Young.”
What sealed it for Schmidt was a vote of confidence from BaFin, Germany’s Federal Financial Supervisory Authority, which oversees listed companies and financial firms. “Braun cited BaFin,” Schmidt said ruefully. “That meant a lot to me.”
Investors lost their shirts
Despite Tuesday’s rally, shares in Wirecard are down more than 90% since June 17.
Last week, the payment-processing specialist had to admit that the $2.1 billion that mysteriously vanished from its books probably never existed, sending shares crashing.
That’s when Schmidt bailed on the stock, losing thousands. But after seeing what happened next, he vowed not to walk away quietly.
On June 22, investigators stepped in to probe what role Braun and other executives might have played in the financial fraud. A day later Wirecard filed for insolvency protection.
Wirecard’s longtime auditors at EY are now feeling the heat too. In its defense, EY insists Wirecard pulled off an “elaborate and sophisticated fraud,” but that’s not enough to chill the controversy over how the firm missed the cover-up in the first place.
Read more: If Ernst & Young auditors had done this one thing, they might have uncovered Wirecard’s $2 billion fraud years sooner.
In recent days, Germany’s regulators have been pulled into the scandal as well. From Brussels to Bonn, there are calls to overhaul the overseers.
A national reckoning
The fall of Wirecard has triggered a national reckoning in Germany’s investor community. By one attorney’s estimate, a record number of shareholders are expected to join in a class-action lawsuit against Wirecard—more than even the numbers who took Volkswagen to court during Dieselgate in the past decade.
One of the Wirecard litigants is Schmidt.
“BaFin is what really shocked me,” he grumbled. “They literally did nothing. I was as stupid as they were” to not check into the allegations of financial wrongdoing at the company. “But they should have looked closer. It’s their job. This is what makes me so angry. This is why I went to the law firm. ‘If you are organizing a big lawsuit,’ I told them, ‘then count me in.’”
BaFin did not respond to Fortune‘s requests for comment. Wirecard said in an email response it is “currently not making any further statements.”
According to Marc Schiefer, an attorney at the German law firm TILP Rechtsanwaltsgesellschaft mbH, which is spearheading the legal push against Wirecard, more than 30,000 shareholders have asked to join the lawsuit.
“Some people just lost their whole retirement savings,” he told Fortune. In recent days, TILP has expanded its legal claim to include current and former Wirecard board members, including Braun, and EY.
The audit firm maintains they were the ones who were misled.
For Schmidt, his big fight is to see changes in the way German regulators oversee the companies on their watch. “What makes this story so unique to me—the failure of regulators to do their jobs,” he says.


fortune--2020-06-30--Why police violence against Black people persists—and what can be done about it

Fintechs aren ’ t the answer for financial justice , says one lender

We hear the call in demonstrations taking place in big cities and small towns across the country: “Say their names!” “George Floyd!”
And then, “Breonna Taylor” in Louisville. And “Rayshard Brooks” in Atlanta.
And Tamir Rice, and Philando Castile, and Eric Garner, and Stephon Clark, and Laquan McDonald. And so many more.
Beyond the individual deaths, the sheer length of the list of Black people killed by police really stuns. It shows that the central questions should be not just what happened to any individual victim, but why did it happen? And why does it keep happening, across the country, year after year?
The two main drivers of this situation are the twin toxins of race and fear.
Race runs through the American psyche in deep ways, all rooted to slavery, white supremacy, and Jim Crow. Decades ago, research established that the dominant American stereotypes of Black people cast them as criminal, dangerous, and violent. But the past 20 years of work by social psychologists has yielded insights that might help explain why police are quicker to use deadly force in an encounter with a Black person.
It’s now been documented that when people see Black faces, their visual systems process things differently. They become quicker to see (or think they see) weapons, and become more likely to think about crime. Similarly, when scientists prime experimental subjects with suggestions of crime and violence and then show them pictures of groups of people, the subjects’ eyes move automatically to the Black faces. Blackness, the researchers said, operates as a “visual tuning device.”
Similarly, other research shows that when people see Black children, they tend to see them as older, larger, more muscular, and more threatening than white children, uniformly overestimating their age and bulk. For example, the Cleveland officer who shot 12-year-old Tamir Rice to death fewer than three seconds after driving up next to him described him as approximately 18 years old and 185 pounds.
Add to this the poison of fear—on both sides of any police encounter.
Anyone who speaks with African Americans about police learns that, for most of them, they have either personally experienced or heard repeatedly from family and friends stories of demeaning treatment, physical abuse, guns pulled, or “less than lethal” weapons used on them, often for small matters or nothing at all. Black parents, knowing that a traffic stop can morph into a deadly encounter in a heartbeat, teach their children how to survive these incidents in “the talk” given to every child of color before parents allow them to drive. For some Black Americans, the threat and danger posed by police in even the most routine matters means they hesitate to call the police when most white people would without hesitation.
But why would there be fear on the part of the police? After all, they display bravery and physical courage all the time; as former President Barack Obama said, they are the ones who “run toward the danger.” Most of the rest of us run away.
This is all true. But the presence of bravery does not mean fear disappears. In fact, present day police training and police culture do much to amp up fear among our officers.
From the academy onward, officers learn from trainers, speakers, and veterans that every encounter with a civilian carries the potential for lethal violence. Not just an extremely small percentage of such encounters, as I documented in my book A City Divided, but every one of them. Academy, in-service, and private training heighten the sense of lethal danger by showing recruits and officers countless videos from squad car dashcam recorders of police officers murdered and assaulted. These videos capture events that are (thankfully) exceedingly rare, and could serve as useful training tools concerning tactical mistakes. But the sheer volume of what trainers show them sends a different message: Everywhere, all the time, civilians will try to kill, maim, and assault you.
The response to this has been to cultivate the idea of the warrior officer. The warrior is ready, at all times, to respond to the constant lethal threats, present everywhere, with righteous violence. It’s a war; we are the soldiers.
It is no wonder that when the police perceive a threat, they often respond with violence; it is also not surprising that sometimes, even if the officer’s fear was real, the threat was not. This helps to explain why, in my years of research on police conduct and use of force, the phrase “I was in fear for my life” comes up so often in cases in which police shoot people who turn out to possess no weapons.
There are ways we can move forward from this dangerous, tragic state of affairs and create an environment of real public safety that actually serves and protects everyone.
First, don’t abolish the police. Instead, unbundle what tasks police now do, and ask which of those tasks actually need a police response. A report of a gunfight? Yes. A person in mental health crisis, or an issue with a homeless person or a drug overdose? Mobile units of other professionals, like social workers or mental health counselors, should come to the scene. Not just the funding, but the responsibility, for these issues should be taken from police and given to others more suited.
Second, we must have greater accountability for police misconduct, and transparency about misconduct’s consequences. Police departments are like many other organizations: A small percentage of workers cause a large percentage of the problems. The problem is not, or not only, those “bad apples”; it’s the apple barrel—the department as a whole—that tolerates them and allows them to remain, tainting the entire organization and rotting its culture.
Third, if union contracts make it too difficult to get rid of those who don’t belong in uniform, that is the fault of not just the unions but the cities and political leaders that negotiated those agreements. Those agreements must change.
Fourth, use of force law must change. The U.S. Supreme Court and some state laws set the bar far too low, allowing more use of force, even deadly force, than is necessary. This can be done through changes in state law, and even by policy in individual departments.
Unless we are willing to look beyond individual cases, to ask why we keep hearing about unnecessary deaths at police hands, all we’ll get are more names to add to our already horrifying long list. And no one wants that.
David A. Harris is Semenko chair at the University of Pittsburgh School of Law, author of A City Divided: Race, Fear, and the Law in Police Confrontations, and host of the Criminal Injustice podcast.


fortune--2020-06-30--‘Second stimulus check calculator’ tells you what you’d receive if the HEROES Act passes

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There’s been much talk in recent weeks about whether lawmakers in D.C. will pursue further economic stimulus measures meant to help American households and businesses through the ongoing coronavirus pandemic.
That would likely mean another round of stimulus checks going out to American taxpayers, who received as much as $1,200 each through the $2.2 trillion CARES Act passed by Congress in March. So far, the most concrete plan offered for additional stimulus is the HEROES Act—a $3 trillion follow-up bill, proposed by congressional Democrats, that would provide even more generous direct payments than the CARES Act.
Despite initially describing the HEROES Act as “dead on arrival” after it passed a House vote in May, President Trump is reportedly now in favor of more stimulus checks, with the idea that they would bolster the economy and boost his chances of reelection this fall. And with the CARES Act’s federal unemployment benefits due to expire at the end of July, many believe more government assistance will be necessary to prevent the economy from deteriorating further.
So how much would Americans be in line to receive via a new round of stimulus checks? A new “Second Stimulus Check Calculator”—the brainchild of graduate students Jasmine Mah and Mateusz Tkaczyk—looks to provide the answer.
Using the HEROES Act’s proposed stimulus payment measures as a template, the calculator allows users to input their tax filing status, annual income, and number of dependents to determine how much they would be eligible to receive.
So while an unmarried individual earning up to $75,000 per year with no dependents would be in line to receive another $1,200 check from the government, a married couple earning up to $150,000 combined with three or more children in their household would be eligible for the maximum $6,000 payment—thanks to the HEROES Act’s more lucrative, $1,200-per-dependent provision.
The calculator also factors in provisions in the bill that, as with the CARES Act, would see the value of each recipient’s stimulus check gradually decrease for individuals earning more than $75,000 and married couples making more than $150,000.
Of course, with the HEROES Act still needing to make its way through a Republican-led Senate before becoming a reality, the final version of the bill—if there is one—could look dramatically different.
But in the meantime, you can give the calculator a try and see how much you could be due, should that second stimulus check finally arrive in the mail.


fortune--2020-06-30--It’s official: This was the best quarter for stocks since 1998

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Wall Street capped its best quarter since 1998 Tuesday with more gains, a fitting end to a stunning three months for investors as the market screamed back toward its record heights after a torrid plunge.
The S&P 500 climbed 1.5%, bringing its gain for the quarter to nearly 20%. That rebound followed a 20% drop in the first three months of the year, the market’s worst quarter since the 2008 financial crisis. The plunge came as the coronavirus pandemic ground the economy to a halt and millions of people lost their jobs.
“It’s the first time you’ve had back-to-back (quarters) like this since the 1930s,” said Willie Delwiche, investment strategist at Baird. “It’s pretty unprecedented.”
The whiplash that ripped through markets in the second quarter came as investors looked beyond dire unemployment numbers and became increasingly hopeful that the economy can pull out of its severe, sudden recession relatively quickly. The hopes looked prescient after reports during the quarter showed that employers resumed hiring again and retail sales rebounded as governments relaxed lockdown orders meant to slow the spread of the coronavirus.
The quarter’s gains were ignited by promises of massive amounts of aid from the Federal Reserve and Congress. Low interest rates generally push investors toward stocks and away from the low payments made by bonds, and the Federal Reserve has pinned short-term interest rates at their record low of nearly zero.
But most of Wall Street says not to expect anything close to a repeat of the rocking second quarter. A rise in infections has several states pausing their lifting of restrictions. The surge in confirmed new cases, which has prompted the European Union to bar U.S. travelers from entry, is seeding doubts that the economic recovery can happen as quickly as markets had forecast. That helps explain why the market’s momentum cooled somewhat in June.
On Tuesday Dr. Anthony Fauci, the nation’s top infectious-disease expert, warned that the number of daily new reported infections could surge to 100,000 if Americans don’t start following public health recommendations.
Beyond the coronavirus, analysts also point to the upcoming U.S. elections and other risks that could upset markets. If Democrats sweep Congress and the White House, which many investors see as at least possible, it could mean higher tax rates, which could weaken corporate profits.
The S&P 500 gained 47.05 points to 3,100.29 on Tuesday. The Dow Jones Industrial Average rose 217.08 points, or 0.9%, to 25,812.88. It had briefly been down 120 points. The Nasdaq composite climbed 184.61 points, or 1.9%, to 10,058.77.
The S&P 500 has rallied back to within nearly 8.4% of its record set in February, after being down nearly 34% in late March. At one point earlier this month, it had climbed as close as 4.5%.
Technology, health care and financial companies powered much of the market’s broad gains Friday. The buying accelerated after a report showed stronger-than-expected improvement in consumer confidence this month.
“Broadly speaking, the market is reacting to economic data that is better than expected,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management.
Schutte said the market is being supported by the likelihood that there won’t be a nationwide shutdown again, aggressive monetary policy and hopes for a vaccine sooner rather than later. “The path of least resistance is still two steps forward, one step back,” he said.
The quarter featured steady gains in technology stocks, which climbed 27.6%, second only to the consumer discretionary sector’s 30.2% gain. And airlines and cruise operators traded wildly after being battered for much of the first quarter.
Apple, once again the most valuable company in the S&P 500, gained 43.5% for the second quarter, American Airlines climbed 7.2% for the quarter, while Royal Caribbean Cruises vaulted 56.4%. Still, they each remain down nearly 60% for the year.
Crude oil had a similar rebound as stocks through the second quarter, though it’s still well below where it was before the pandemic struck. Energy companies mounted a solid comeback, with three of them — Apache, Halliburton and Marathon Oil — showing the biggest percentage gains in the S&P 500 for the quarter.
A barrel of U.S. crude oil slid 43 cents to settle at $39.27 Tuesday, but it’s still nearly double where it was at the end of the first quarter. It’s also in a different world from April, when prices in one corner of the U.S. crude market briefly went below zero amid worries that collapsing demand would leave nowhere to store all the unused oil. Brent crude oil fell 56 cents to settle at $41.15 a barrel.
The yield on the 10-year Treasury rose to 0.66% from 0.63% late Monday. It too has rallied back from its lows when recession worries were at their height. It set a record low in March when it briefly dipped below 0.50%, according to Tradeweb. The yield tends to move with investors’ expectations for the economy and inflation.
European stocks closed mixed, and Asian markets finished higher.


fortune--2020-06-30--Civil rights groups urge Microsoft to end NYPD partnership

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Eighteen activist and civil rights groups are urging Microsoft to end a technology partnership with the New York City Police Department.
The privacy advocacy group Surveillance Technology Oversight Project published a letter from the coalition on Tuesday describing Microsoft’s work with the NYPD on the so-called Domain Awareness System as contributing to the “warrantless spying” of citizens.
The groups alleged that while Microsoft “sought public accolades” for a recent decision to temporarily stop selling facial-recognition technologies to law enforcement, the company “never profited from that technology to begin with.”
More concerning, the groups believe, is Microsoft’s deal with the NYPD to provide tools that aggregate and analyze data from license plate readers and video cameras, among other sources. The police are “set to spend $31.4 million” this year on the project, which debuted in 2012, the letter said.
“The DAS is the backbone of the NYPD’s surveillance of communities of color, putting countless New Yorkers at risk of police encounters, false arrests, and even police violence,” the letter said.
Microsoft declined to comment to Fortune.
The killing of Black Minneapolis resident George Floyd while being restrained by a white police officer has reignited questions about law enforcement using artificial intelligence technologies. Activists and some A.I. researchers are concerned about A.I. technologies being prone to bias and police departments misusing them.
In recent weeks, tech giants IBM, Amazon, and Microsoft have paused the sale of facial-recognition technologies to police departments. Now activists are calling on the tech giants to stop selling other kinds of software to law enforcement over fears that the tools may be used to over-police nonwhite communities.
“Microsoft can’t ask to be applauded for its values while it still profits off the surveillance-to-prison pipeline,” the letter said. “Please join us in saying that no city should be surveilled the way the DAS tracks New York and end your sale and support of this product.”
Organizations that signed the letter include Fight for the Future, Immigrant Defense Project, Oakland Privacy, the Reverend Al Sharpton–founded National Action Network, and TechActivist.Org.


fortune--2020-06-30--This company plans to offer balloon rides from Alaska to the edge of space

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A company wants to use an advanced balloon to fly customers from Earth’s surface in Alaska to the highest reaches of the planet’s atmosphere.
Florida-based startup firm Space Perspective plans to use the Pacific Spaceport Complex in Kodiak to serve as one of the launch sites for the vehicle, called the Spaceship Neptune, The Anchorage Daily News reported Sunday.
The balloon rides will be manned by a flight crew taking eight passengers in a pressurized capsule suspended beneath a hydrogen balloon the size of a football stadium.
Each passenger could pay an estimated $125,000 for a six-hour journey.
Mark Lester, CEO of Alaska Aerospace Corp., said the high-altitude rides will be available from Kodiak in a few years and will support Alaska tourism.
“You will have people from around the world who want to come to Alaska and see the northern lights from the edge of space,” Lester said.
Alaska Aerospace and Space Perspective will test and refine spaceport operations and secure spaceflight licenses from the Federal Aviation Administration.
Space Perspective plans to complete an unmanned test flight from the Shuttle Landing Facility at NASA’s Kennedy Space Center in Florida next year.
Passengers will begin with a two-hour ascent to about 19 miles (31 kilometers) above Earth. They will then be able to post on social media about the experience or send data.
“Neptune then makes a two-hour descent under the balloon and splashes down, where a ship retrieves the passengers,” along with the capsule and balloon, Alaska Aerospace said.
Capsule recovery would occur in the waters around Kodiak Island and the Aleutian Island chain, depending upon the seasonal wind patterns.
The balloon design is derived from technology NASA has used for decades to fly large research telescopes, Space Perspective said.


fortune--2020-06-30--Awkwafina and Zendaya are among the 819 people invited to join the Academy of Motion Picture Arts an

Awkwafina and Zendaya are among the 819 people invited to join the Academy of Motion Picture Arts and Sciences

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Cynthia Erivo, John David Washington, Eva Longoria, Zendaya and Awkwafina are among the 819 people who have been invited to join the Academy of Motion Picture Arts and Sciences. The organization that puts on the Oscars announced the new invitees Tuesday. If they accept, which most do, those in the new class will have voting privileges at this year’s Oscars.
The massive 2020 list includes a diverse swath of people from all sectors of the industry, from acting to publicity to costume design. Invited actors include Ana De Armas (“Knives Out”), Brian Tyree Henry (“If Beale Street Could Talk”), Florence Pugh (“Little Women”), Lakeith Stanfield (“Sorry to Bother You”), Beanie Feldstein (“Booksmart”) and Constance Wu (“Crazy Rich Asians”). Directors like Lulu Wang (“The Farewell”), Ari Aster (“Midsommar”), Terence Davies (“The House of Mirth”) and Matthew Vaughn (“Layer Cake”) are also on the list.
A handful of actors from this year’s best picture winner “Parasite,” including Jang Hye-Jin, Jo Yeo-Jeong, Park So-Dam and Lee Jung-Eun, were also invited to join. The Academy said that 49% of the new invitees are international and represent some 68 countries.
Other notable invitees include TV mogul Ryan Murphy, who produced the documentary “A Secret Love,” country singer Tim McGraw, who was in “The Blind Side” and lyricist Bernie Taupin who contributed to the Elton John biopic “Rocketman.”
Academy president David Rubin said that the organization is “delighted to welcome these distinguished fellow travelers in the motion picture arts and sciences.”
Diversifying its ranks continues to be a main focus for the film academy, which film in 2016 committed to doubling its female and minority membership by 2020. It has since surpassed those goals and continues to infuse membership classes with both women and people from underrepresented communities. Women make up 45% of the 2020 class and people of color comprise 36% of the total of invitees this year. The academy has also announced a new five-year plan that includes implementing inclusion standards for nominees.
“We look forward to continuing to foster an Academy that reflects the world around us in our membership, our programs, our new Museum, and in our awards,” said academy CEO Dawn Hudson in a written statement.
This will also be the first year that talent agent members will be able to vote on the awards.
The 93rd Academy Awards are set to take place on April 25, 2021, two months later than originally planned due to COVID-19’s effects on the industry.


fortune--2020-06-30--Bozoma Saint John joins Netflix as CMO

Bozoma Saint John joins Netflix as CMO

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Bozoma Saint John, the marketing expert who’s guided brands including Apple and Uber, will join Netflix as chief marketing officer.
“I’m thrilled to join Netflix, especially at a time when storytelling is critical to our global, societal well-being,” Saint John said in a statement to Adweek. “I feel honored to contribute my experience to an already dynamic legacy, and to continue driving engagement in the future.”
Saint John most recently served as CMO of Endeavor; at Netflix, she succeeds Jackie Lee-Joe, who has only held the post for a year. (Netflix told Deadline that Lee-Joe is leaving the role for personal reasons.)
Previously, Saint John was head of consumer marketing for Apple Music—a job where the press hailed her as a “breakout star” and “rockstar”—and then chief brand officer for Uber (the ride-hailing giant tapped her for the role as it sought to recover from its crisis over treatment of women at the company).
“Bozoma Saint John is an exceptional marketer who understands how to drive conversations around popular culture better than almost anyone,” Netflix chief content officer Ted Sarandos said in a statement to Deadline. “As we bring more great stories to our members around the world, she’ll define and lead our next exciting phase of creativity and connection with consumers.”
A streaming service won’t be entirely new to Saint John, who is set to be the subject of her own documentary series Bozoma: Being Badass on Starz.
Saint John will start work at Netflix in August.


fortune--2020-06-30--Facebook bans violent ‘boogaloo’ groups

Facebook bans violent ‘boogaloo’ groups

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Facebook has banned an extremist anti-government network loosely associated with the broader “boogaloo” movement, a slang term supporters use to refer to a second Civil War or a collapse of civilization.
But the platform didn’t try to name the group, underscoring the difficulty of grappling with an amorphous network linked to a string of domestic terror plots that appears to obfuscate its existence. Among other complications, its internet-savvy members tend to keep their distance from one another, frequently change their symbols and catch phrases and mask their intentions with sarcasm.
The move by Facebook designates this group as a dangerous organization similar to the Islamic State group and white supremacists, both of which are already banned from its service. The social network is not banning all references to “boogaloo” and said it is only removing groups, accounts and pages when they have a “clear connection to violence or a credible threat to public safety.”
The loose movement is named after “Breakin’ 2: Electric Boogaloo,” a 1984 sequel to a movie about breakdancing. “Boogaloo” supporters have shown up at protests over COVID-19 lockdown orders, carrying rifles and wearing tactical gear over Hawaiian shirts — themselves a reference to “big luau,” a homophone for “boogaloo” sometimes favored by group members. Facebook said the movement dates back to 2012 and that it has been tracking it closely since last year.
Earlier in June, Steven Carrillo, an Air Force sergeant with ties to the boogaloo movement, fatally shot a federal security officer and wounded his partner outside a U.S. courthouse, ambushed and killed a California sheriff’s deputy and injured four other officers in Oakland, California. According to the criminal complaint, Carrillo posted in a Facebook group, “It’s on our coast now, this needs to be nationwide. It’s a great opportunity to target the specialty soup bois. Keep that energy going.”
The statement was followed by two fire emojis and a link to a YouTube video showing a large crowd attacking two California Highway Patrol vehicles. According to the FBI “soup bois” may be a term that followers of the boogaloo movement used to refer to federal law enforcement agents.
While the “boogaloo'” term has been embraced by white supremacist groups and other far-right extremists, many supporters insist they aren’t racist or truly advocating for violence.
Violent and extremist groups are increasingly turning to encrypted communications networks and fringe social platforms with no content moderation to congregate, which makes them more difficult to track.
As part of Tuesday’s announcement, Facebook said it has removed 220 Facebook accounts, 95 Instagram accounts, 28 Pages and 106 groups that that comprise the violent Boogaloo-affiliated network. It also took down 400 other groups and 100 pages that hosted similar content as the violent network but were maintained by accounts outside of it.
The company said it has so far found no evidence of foreign actors amplifying “boogaloo”-related material.
Social media companies are facing a reckoning over hate speech on their platforms. , Reddit, an online comment forum that is one of the world’s most popular websites, on Monday banned a forum that supported President-Donald Trump as part of a crackdown on hate speech.
Live-streaming site Twitch, which is owned by Amazon, also temporarily suspended Trump’s campaign account for violating its hateful conduct rules. YouTube, meanwhile, banned several prominent white nationalist figures from its platform, including Stefan Molyneux, David Duke and Richard Spencer.
Civil rights groups have called on large advertisers to stop Facebook ad campaigns during July, saying the social network isn’t doing enough to curtail racist and violent content on its platform and several major advertisers have signed on to the boycott.


fortune--2020-06-30--3 lies and a truth about face masks during the coronavirus pandemic

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Wearing face masks has become a peculiarly political issue in the United States. In the midst of the coronavirus pandemic, public health agencies like the Centers for Disease Control (CDC) have made it clear that wearing a cloth face mask is one of the easiest ways to protect yourself from COVID-19 and, more significantly, to make sure you don’t spread the coronavirus to anyone else since many infected people may not experience active COVID-19 symptoms.
Yet videos and anecdotal tales abound of Americans furious with local mandates to wear face masks in public spaces, including in commercial establishments and grocery stores. The anti-mask arguments range from preservation of personal liberty to alleged violations of laws like the Americans With Disabilities Act (ADA) to ostensible scientific evidence that wearing a mask can do more harm than good.
Those assertions largely don’t pass muster.
Lie: Face mask exemption cards exist
The chaos of a pandemic is ripe territory for snake oil salesmen. The coronavirus is a classic case study, as outlined by the Federal Trade Commission (FTC) and the Food and Drug Administration (FDA).
But the quackery has grown beyond fake COVID cure-alls to fake “exempt” cards, a fraudulent way to avoid having to comply with local face mask requirements, according to the Department of Justice (DOJ).
Some groups have been selling boxes of cards under the guise of a made-up federal agency called the “Freedom to Breathe Agency,” using the Justice Department’s official insignia. The cards claim that the “Americans with Disability [sic] Act” exempts a card-carrier from having to comply with a private business’s face mask requirements.
Credit: U.S. Department of Justice U.S. Department of Justice
The DOJ issued a statement last week warning the public not to fall for the charade.
“Do not be fooled by the chicanery and misappropriation of the DOJ eagle,” said U.S. Attorney Matthew Martin of the Middle District of North Carolina. “These cards do not carry the force of law. The ‘Freedom to Breathe Agency,’ or ‘FTBA,’ is not a government agency.”
Lie: The Americans With Disabilities Act prohibits businesses from requiring face masks
The fake exemption cards underscore a common argument by those opposed to wearing masks: that the ADA makes mandatory mask requirements illegal.
Although there is some nuance to the issue for people with legitimate health conditions that make it difficult to wear a mask, this is largely not the case.
The CDC recommends that “all people 2 years of age and older wear a cloth face covering in public settings and when around people outside of their household, especially when other social distancing measures are difficult to maintain.” The exceptions include those with developmental disabilities, younger children, people doing high-intensity activities that could make it difficult to breathe, among others. But even in those cases, the agency lists alternative options such as face shields and responsible social distancing measures.
What you can’t do is simply claim that the ADA absolves you from a mask-wearing requirement. According to the Southeast ADA Center, if “a person with a disability is not able to wear a face mask, state and local government agencies and private businesses must consider reasonable modifications to a face mask policy so that the person with the disability can participate in, or benefit from, the programs offered or goods and services that are provided.”
There are no hard-and-fast rules about what such modifications may look like within the text of the ADA itself. But they may include contactless pickup at a grocery store, the option to wear a loose cloth covering rather than a full mask, or appointments offered via phone or video. None of those modifications would have to be made for someone without an actual disability preventing them from wearing a mask. (So, no, you can’t just claim to have a breathing problem and expect a store to comply.)
And there are further nuances to businesses providing a reasonable accommodation under the ADA. For instance, a business may not have to make those accommodations if it would fundamentally alter their ability to perform services, place an undue burden on their business, or pose a direct threat to other customers or employees.
Lie: Wearing a face mask will increase my carbon dioxide levels
Some people have expressed concerns that wearing a face mask will force them to breathe in toxic amounts of exhaled carbon dioxide. The data show otherwise.
Some level of carbon dioxide may indeed be trapped between someone’s nose and mouth and his or her mask. But not nearly the level that would lead to hypoxia or other forms of carbon dioxide poisoning, per the Cleveland Clinic.
For one thing, carbon dioxide molecules are far smaller than the droplets containing the coronavirus, which face masks are meant to contain. Unless you were wearing an airtight mask (rather than a cloth or surgical one) for an extended period, it would be more or less impossible to breathe in too much exhaled CO2 from a mask.
One nurse recorded a striking practical demonstration on Twitter.
We have so many people who lack even the most basic, elementary school-level science literacy in this country, who cite "decreased oxygen intake" or "carbon dioxide retention" as a reason it to not wear a mask in public. #wearyourmask#DoBetter#PublicHealth#TrustANurse pic.twitter.com/Sw1FZ17HVb — Dapper in a PAPR, RN (@MurseWordsworth) June 27, 2020
Truth: Face masks have proved to be one of the most effective methods of containing the coronavirus
The reality is that COVID-19 is a disease that spreads through the air via close contact, and that social distancing and wearing face masks (on top of washing your hands and disinfecting surfaces) remain the most effective ways of stopping the coronavirus in its tracks.
Multiple studies, along with on-the-ground realities of areas which prioritize mask-wearing and social distancing versus those that don’t, have supported this thesis.
A review of more than 172 COVID-19 studies across 16 countries sponsored by the World Health Organization (WHO) found that “face mask use could result in a large reduction in risk of infection,” to the tune of 14% to 16%. Social distancing on top of masks reduced the risk of infection spread even more.
The coronavirus pandemic is still evolving day by day. Such is the nature of a new virus. But a steadily growing body of evidence shows that the mild inconvenience of wearing a mask is dwarfed by its public health benefits, and that arguments to the contrary fall flat.


fortune--2020-06-30--After Apple’s stratospheric rise, investors are facing a new threat: Simple math

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The spectacular performance of Apple stock over the past half-decade created a problem for folks pondering whether to board this seemingly unstoppable express right now. Put simply, America’s greatest enterprise has gotten so expensive that for the next five years, investors will be lucky to make plodding, mid-single-digit returns.
Just over three months ago, it appeared that the Apple phenomenon was faltering when the COVID-19 selloff drove its shares down 30% from their all-time high of $325 in mid-February to $224. Next came a rebound that had fans believing that Apple’s big price is no immovable object when confronted with the irresistible force of its runaway momentum. From March 23 to June 20, the iPhone maker climbed 62% to $362, beating the previous record and adding $600 billion to its valuation, approximately equal to the combined market caps of Netflix, Tesla, and Adobe. That jump must mark the biggest value spike in the annals of world capitalism.
Given that Apple’s share price now stands far above its levels for most of the past five years, it’s reasonable to ask whether it’s still a bargain. To answer that question, let’s examine the factors that enabled Apple to deliver such stupendous returns over the past half-decade, and handicap whether those levers can conceivably provide the same lift in the years ahead.
From the end of March 2015 (the second quarter of its fiscal year) to March of this year, Apple delivered total annual returns of roughly 20%: 18% from capital gains and 2% from dividends. It was able provide such sumptuous rewards not because the basics––its earnings––expanded rapidly, but because its shares were extremely cheap, giving its stock repurchases lots of bang-for-the-buck and leaving plenty of runway for growth in its P/E multiple, the share price investors are willing to pay for each dollar in profits.
In March of 2015, Apple had earned $50.4 billion over the previous four quarters, and its market cap stood at $758 billion. Hence, its multiple was just 15. A figure that low implies that investors viewed its total dollar earnings as staying flat for a long time, or even declining. In fact, Apple’s net profits only rose to $57.24 billion through March of 2020 based on the most recent four quarters, or 13.6%. That’s a gain of just 2.5% a year, beating inflation by around a point. A growth juggernaut Apple was not.
But Apple had a powerful tool for lifting its earnings per share. This matchless cash machine requires so little capital investment that it can, and still does, plow all of its earnings into dividends and buybacks, the latter being by far its biggest driver. At that P/E of 15, every dollar in repurchases raised Apple’s EPS by 6.7¢ because its shares were so inexpensive in comparison to its profits. And its average P/E remained in the 15 bargain range, based on average earnings of around $50 billion a year, until the moonshot in its stock price started in mid-2019.
During most of those five years, Apple was spending three-quarters of its earnings on buybacks. From 2015 to 2020, that campaign lowered its count 24.5% from 5.834 billion to 4.4 billion shares. The big shrink raised EPS by around one-third over that period. So buybacks alone increased EPS by an average of 5.5% annually, over twice the contribution from earnings.
All told, buybacks and earnings growth combined to swell earnings per share around 48%, or 8% a year, from $8.60 to $12.73. Of course, repurchases packed by far the greater firepower.
But Apple’s share price jumped by far more, by 176% from $130 to $362. The additional juice came from an almost doubling of Apple’s P/E multiple from 15 to 28. It was that explosion in investors’ sudden willingness to pay more and more for each dollar in earnings that proved the biggest factor in delivering those big five-year returns.
Let’s add it up. Of Apple’s total returns from March 2015 through March 2020 of 20%, earnings gains contributed 2.5 points, repurchases 5.5, and dividends 2, for a total of 10%. Multiple expansion alone provided a 10-point boost, matching the other three factors combined.
Of course, those same four drivers will also determine how Apple’s shares perform over the next half-decade. But this time, investors don’t start with the edge of buying in cheap. Let’s posit that Apple’s P/E remains steady at 28. That’s an optimistic projection since that multiple is well above today’s not modest 22. That lofty valuation takes multiple expansion pretty much off the table as a long-run driver, although the P/E could spike temporarily if we enter bubble land, always a possibility.
Assuming the P/E remains flat at 28, all gains need to come from the other three components: earnings growth, buybacks, and dividends. We’ll assume that earnings continue on their five-year trend by advancing 2.5% a year. If that sounds like a low bar, consider that to generate 2.5% profit growth, Apple needs to add around $7 billion in new sales every year, and keep doing it year in and year out.
If Apple spends its usual 75% of earnings on buybacks, repurchases will raise EPS another 2.6%. That’s less than half the kick they supplied for most of the past five years. The third contributor is the dividend of around 1%. Stack the building blocks, and earnings add 2.5%, buybacks 2.6%, and dividends 1%, for a total of 6.1%. Hence, the new Apple math, dictated by its current high price that makes a higher P/E unlikely and buybacks less potent, points to future returns that are about one-third of its 20% gains over the past five years.
Of course, it’s possible that Apple will expand profits a lot faster than 2.5% a year. Its champions cite strong growth in its wearables and services franchises. On the negative side, sales in its flagship iPhones, and total profits, declined in the March quarter. No, Apple was so appealing a few years ago because it was a slow-growth stalwart that was dirt cheap. It’s still a slow-growth stalwart, but now it’s premium priced. As an enterprise, Apple’’s as superb as its fans claim. The only thing mediocre about Apple is the outlook for its stock.


fortune--2020-07-01--Facebook admits another blunder with user data

The best stocks of 2020 so far have made pandemic investors much richer

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Facebook mistakenly shared some users’ personal data with outside developers for a longer period of time than promised, in a breach of policies the social network implemented following the Cambridge Analytica scandal of 2018.
The company previously said that third-party app developers would be blocked from accessing user data if a person didn’t interact with the developer’s app for 90 days. At that point, the developer would be required to ask users for permission to re-access their data, including information like email addresses, birthdays and hometowns.
That failed to happen in some instances, Facebook said Wednesday in a blog post. If a user of a third party app was also connected to a Facebook friend through that app, developers are allowed to pull data from both users at once. But a flaw in the company’s system meant developers who pulled data from one active user could also see data from that user’s friend, even if the friend had not opened the app in more than 90 days, a spokesperson said. The issue applies to apps from some 5,000 developers, but the company didn’t disclose how many users might be affected.
“We fixed the issue the day after we found it,” Facebook wrote in a blog post. “We’ll keep investigating and will continue to prioritize transparency around any major updates.”
The flaw was discovered by a Facebook engineer two weeks ago, and the company says it doesn’t have reason to believe any of the data was misused, the spokesperson said.
Facebook has a long history of blunders when it comes to sharing user data with third parties. The 90-day limit was imposed in response to the revelation more than two years ago that Cambridge Analytica, a political data-analytics firm, had purchased the personal information of millions of Facebook users that was harvested without their knowledge through quiz apps using the social network’s login feature.
At the time, Facebook clamped down on many of its data-sharing products and implemented new rules requiring users to more clearly grant outside apps permission to collect their information. It also signed a $5 billion privacy settlement with the Federal Trade Commission in mid-2019 following an investigation that resulted from the Cambridge Analytica disclosures.


fortune--2020-07-01--Actor Ray Fisher says Joss Whedon was ‘abusive’ on the set of ‘Justice League’

Actor Ray Fisher says director Joss Whedon’s behavior was “abusive” on the set of the 2017 film “Justice League.”
“Joss Wheadon’s on-set treatment of the cast and crew of Justice League was gross, abusive, unprofessional, and completely unacceptable,” Fisher, who played the young superhero Cyborg in the DC Comics film, tweeted Wednesday.
Fisher added that Whedon was “enabled, in many ways, by Geoff Johns and Jon Berg,” two producers on the film who were executives running DC Films for Warner Bros. Pictures at the time.
Whedon has not responded to Fisher on social media, and emails from The Associated Press to representatives seeking comment from him and from Warner Bros. were not immediately returned.
Berg told Variety that it was “categorically untrue that we enabled any unprofessional behavior.”
Whedon, known for his writing and directing on Marvel’s “Avengers” films and television’s “Buffy the Vampire Slayer,” was brought in during post-production to replace director Zack Snyder on “Justice League.” He oversaw extensive reshoots, editing and visual effects on the film.
At the time of his departure, Warner Bros. said Snyder was stepping away to be with his family following the death of his 20-year-old daughter.
In May, Warner Bros. announced that Snyder’s long director’s cut of “Justice League” would appear next year on the streaming service HBO Max, something fans had lobbied for since the film’s original release with the hashtag ReleaseTheSnyderCut.
Fisher showed a sign of his displeasure with Whedon earlier this week when he tweeted a video of himself praising the director as a “great guy” during a panel at San Diego Comic-Con in 2017, with the comment, “I’d like to take a moment to forcefully retract every bit of this statement.”


fortune--2020-07-01--Lawsuit accuses property managers of ageist Facebook ads

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Some of the nation’s leading property management companies deliberately excluded older people from seeing Facebook advertisements for dozens of apartment complexes in the Washington, D.C., area, a housing watchdog alleged in a lawsuit filed Wednesday.
The Housing Rights Initiative billed its federal class action as the first lawsuit to accuse residential property management companies of engaging in “digital discrimination” in housing advertising.
Anyone over 50 was deemed to be too old to receive housing ads on Facebook for the 10 companies named as defendants in the lawsuit filed in Maryland, the New York-based nonprofit said.
“They knowingly decided not to advertise their rental properties to older people when they recruited prospective tenants via Facebook because they wanted to steer away older people from their properties and attract younger tenants,” the suit says.
Facebook isn’t named as a defendant in the nonprofit’s lawsuit, but the federal government has accused the social media giant of discrimination for allowing landlords and real estate brokers to systematically exclude non-Christians, immigrants, minorities and other groups from seeing ads for houses and apartments.
The companies named as defendants include Bozzuto Management Co., of Greenbelt, Maryland; Greystar Management Services LP, of Charleston, South Carolina; Kettler Management Inc., of McLean, Virginia; and Wood Residential Services LLC, of Rockville, Maryland.
Steve Hallsey, managing director of Wood Residential Services’ parent company, said the company “is proud of its history of diversity and inclusion to provide housing to all.”
“This lawsuit has absolutely no merit and we believe it will be rejected by the courts,” Hallsey said in statement.
Representatives of other companies didn’t immediately respond to requests for comment.
“This lawsuit is not about one or two small players who inadvertently misused digital tools,” the suit says. “Instead, it involves several leaders in the industry — marquee names like Bozzuto, Greystar, and Kettler — that manage hundreds of thousands of apartments nationally and that knowingly paid substantial sums of money to Facebook to categorically withhold their ads from older people.”
Facebook and its advertisers know the age of users because they must disclose their birth dates as a condition of joining the online platform. Facebook uses that information to encourage advertisers to target ads based on a user’s age, the suit claims.
“The default setting for ads is 18 to 65+, which means that anyone who is 18-years-old or older could receive the ad. But Facebook has strongly encouraged advertisers to narrow the age range of the individuals who will receive their ads to make them more effective,” the suit says.
The housing watchdog is seeking unspecified damages and asking the court to permanently bar the 10 companies from advertising on Facebook until the social media platform “no longer uses a discriminatory algorithm to determine the recipients of advertisements.”
In March 2019, Facebook said it would overhaul its ad-targeting systems to prevent discrimination in housing, credit and employment ads as part of a legal settlement with groups including the American Civil Liberties Union and the National Fair Housing Alliance.
Later that month, the U.S. Department of Housing and Urban Development filed civil charges accusing Facebook of promoting housing discrimination. That case is still pending.


fortune--2020-07-01--A bipartisan coalition of senators want to limit sending military-grade equipment to police

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Every night the images of nationwide protests play out on local and national news, and in the mornings they’re displayed colorfully on the front pages of newspapers: The American police officer posing as a soldier, clad in a military-grade helmet, shield, and mask, clinging to a rifle, perhaps riding in an armored vehicle, confronting citizens armed with bandanas, surgical masks, and water bottles.
Over the past 30 years, Americans have grown accustomed to this presentation of the police as SWAT teams, distinguishable only in uniform from those being deployed around the world, show their force during protests, drug searches, and other special emergencies.
That’s largely because of the 1033 program, a federal plan that authorizes the Department of Defense (DoD) to pawn off its outdated equipment, from grenade launchers to bayonets to armored vehicles, to local police units for just the cost of shipping.
Since its permanent inception in 1997 (it began as a temporary response to the war on drugs in 1990), $7.4 billion worth of property has been transferred from the U.S. military to more than 8,000 law enforcement agencies, according to the Law Enforcement Support Office, a DoD group that oversees the program. In 2019 alone, about $293 million worth of military equipment was transferred to police around the country.
Now a new, bipartisan piece of legislation, introduced by senators Brian Schatz (D-Hawaii), Lisa Murkowski (R-Alaska), Kamala Harris (D-Calif.), and Rand Paul (R-Ky.), would prohibit the transfer of military equipment to law enforcement agencies through the program. Banned items would include tear gas, armor-piercing firearms and ammunition, bayonets, grenade launchers and grenades, combat-tracked vehicles, and drones. The legislation still allows for the military to transfer office supplies and body armor.
The bill, Schatz told Fortune, would also require the Department of Defense to submit annual reports to Congress with detailed accounting of any transfers made.
This detailed accounting, he said, was key. But accountability has long been a problem for the program.
In 2017, an investigation by the Government Accountability Office found that shipments of $1.2 million in military-grade equipment including night-vision goggles, simulated rifles, and simulated pipe bombs, were authorized to go to a fake police department set up as part of the investigation. In total, the DoD agreed to ship 100 controlled items to the fictitious agency. The investigation concluded that the program had little oversight or accounting for controlled items like aircraft, armored vehicles, and firearms. The DoD implemented a vetting program through the National Crime Information Center database in response to the report’s release.
But the flow of information is still lackluster. A recent study, led by Louisiana State University political science professor Anna Gunderson, made an attempt to look at data made public by the Department of Defense around the transfer of weapons to determine if the program has been effective in increasing public or police safety. The study found such large gaps in reporting that it was unable to come to any serious conclusions.
Gunderson told Fortune that when she started writing her paper two years ago she realized that the data wasn’t consistent: She found large gaps and discrepancies in the recorded pricing for the same items. She was surprised to learn that several local police forces had been suspended from the program because they had lost high-grade military equipment sent to them or couldn’t account for it. There was no reporting on whether officers who received equipment were trained to use it—there is currently no requirement for training.
In 2014, after the unrest in Ferguson, Mo., the program came under scrutiny. A Freedom of Information Act request sent by NPR revealed the first publicly available data about where equipment was going, and the Obama administration subsequently created a new policy to stop the most aggressive weapons—aircrafts and tanks—from going to police departments. The policy also required “a clear and persuasive explanation of the need for the controlled equipment,” as well as reporting and oversight for items distributed.
But the order was immediately overturned by the Trump administration, which cited two reports based on the 2014 FOIA data that concluded that the equipment had aided in police safety.
“Those restrictions went too far,” then Attorney General Jeff Sessions said of the gear that he referred to as lifesaving. “We will not put superficial concerns above public safety.”
Subsequent data, however, said Gunderson, showed that those studies were fundamentally flawed. “The bottom line is that we have no evidence that militarization affects crime in the way that we thought it had. Any finding that we have is based on this flawed data, so we can’t really say for sure that there’s any influence,” she said.
A slew of recent studies, including one by Gunderson, have concluded that the proliferation of military gear does not increase public or police safety, but rather it incentivizes officers to use undue force and disproportionately hurts Black Americans.
One 2017 study found a significant correlation between equipment transfers from the 1033 program to police departments and fatalities from officer-involved shootings. Not only did the program cause the police to act more violently, the analysis concluded, but it actually increased the use of violence toward the police.
Another study, by Princeton University’s Jonathan Mummolo, studied SWAT team deployment data in Maryland and found that militarized police units were more often deployed in neighborhoods with large percentages of Black residents, even after controlling for local crime rates. The “vast majority” of SWAT deployments were for nonemergency situations like serving search warrants, the data showed. When a SWAT team did show up in response to a violent crime, he found a 6.5% increase in within-agency violent crimes, on average, hurting officer safety.
Mummolo also conducted three nationwide surveys on how police militarization impacts police reputation with the public. He found that showing people photos of militarized police forces led to a 3.2 point drop in the desire to have police patrols in respondents’ own neighborhoods and a 4 point drop in the desire for police funding.
“Militarized policing can impose reputational costs on law enforcement, likely in unintended ways,” wrote Mummolo. “This is troubling, since prior work shows that negative views of police inhibit criminal investigations and are associated with stunted civic participation.”
Schatz, meanwhile, says that his bill has bipartisan support, and he’s hopeful it can pass. “The data is clear,” he told Fortune. “Giving police departments military weapons does nothing to keep people safe. Instead, it has led to more police shootings and deaths.”
When asked for comment about accountability and the bill, the Department of Defense told Fortune to look at the frequently asked questions already posted on its site, where a broad oversight policy is outlined. The department did not respond to specific questions.
It’s important to note that only a small percentage of the items shipped to police departments under the 1033 program are “controlled,” and the vast majority of items include things like office chairs, vests, and other “uncontrolled” goods. There are also a number of other programs that police precincts use to obtain military gear from the federal government that operate under far more obscurity than 1033.
The 1122 program allows state and local governments to purchase discounted military gear from the Pentagon to support “counter drug, homeland security, and emergency response operations.” There is no data about the program readily available online.
“The reason we hear so much about 1033 is that you can literally Google it and pull up the data, but that’s not the case for these other programs,” said Gunderson.
Earlier this month, Schatz released further legislation to increase oversight on two other similar programs, the Department of Justice’s Byrne JAG grant program and the Department of Homeland Security’s Preparedness grants, which provide money to aid in law enforcement and are used to purchase military-grade weapons for local police forces.


fortune--2020-07-01--The best stocks of 2020 so far have made pandemic investors much richer

Actor Ray Fisher says Joss Whedon was ‘ abusive ’ on the set of ‘ Justice League ’

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The first half of 2020 was a wild ride for investors, between a (short-lived) bear market and an ensuing record-setting recovery, with unprecedented volatility in between.
Through the mid-year point, results for the biggest U.S. indexes were an equally wild mix. Amid the coronavirus carnage in the markets, the Dow Jones Industrial Average fell 9.6% and the S&P 500 declined 4%. On the other hand, the tech-heavy Nasdaq rose 12.1%. Gold did even better, up 17.4%.
But those gains are nothing compared to the best performers on the stock market, where the top ten S&P 500 stocks eclipsed those numbers, and the best Nasdaq stocks went even further—with returns that more than doubled their value, at a minimum.
Perhaps surprisingly, several pandemic darling stocks such as Netflix, whose subscribers surged with people stuck at home, didn’t even crack the top 10—even though Netflix stock returned nearly 41% in the first half of 2020.
In the S&P 500, the first half’s best performing stocks included Clorox (up nearly 45% as its sanitizing wipes sold out everywhere) and Amazon (rising more than 49% as people relied more on e-commerce), as well as electronic payments company PayPal (up 61%) and semiconductor giant Nvidia (up almost 62%).
In an even bigger surprise, the two biggest winners in the S&P 500 were both health care stocks—though their performance can’t entirely be credited to a coronavirus boost. The best-performing S&P 500 stock was DexCom, a maker of smart glucose monitors for diabetes patients, which rose more than 85%, followed by Regeneron (up 66%), which is trying to replicate its success with Ebola treatments in finding an antidote for COVID-19.
Those returns, however, were all overshadowed by the best performers in the Nasdaq. (For this article, we looked only at companies with at least $10 billion in market value). While Tesla came in at No. 5, with a first-half return of over 158%, that performance was dwarfed by its upstart competitor, Nikola, which came in first, soaring 554%. Nikola has had an eventful year; it just began taking pre-orders for its new electric pickup truck, and its share price soared after it joined the Nasdaq in June via a reverse merger.
Coming in second among Nasdaq stocks, of course, was Zoom Video—the virtual meeting software company that has been the talk of the pandemic among corporate employees and home fitness enthusiasts alike, rising nearly 273%.
Even strong contenders like Peloton Interactive, whose stock more than doubled in value as its at-home bikes and workout classes were a quarantine hit, didn’t quite make the list.
On the flip side, a good many other stocks—as might be expected— have had a terrible 2020 so far. The worst performers among the S&P 500 include the major cruise lines like Norwegian (down 72%) and Carnival (down nearly 68%), along with a smattering of energy companies and airlines.
One noteworthy anomaly among the losers is beauty company Coty. That stock fell more than 60% in the first half of the year—and that’s even after Coty stock surged this week on news that it would take a 20% stake in Kim Kardashian’s cosmetics brand.


fortune--2020-07-01--Reinventing the hospital for the modern, inequitable era

Good afternoon, readers.
For the rest of July, The Capsule will be going daily rather than weekly. Yes, that means you’ll get the day’s health news every afternoon in your inbox for the rest of the month (except for this Friday, July 3, in observance of Independence Day).
Fortune and IBM Watson Health have joined forces to create a new ranking of America’s top 100 hospitals. Based on 11 important criteria such as clinical outcomes, patient experience, and financial health, among others, this list attempts to suss out the health providers that are truly serving patients and communities well even if they don’t have brand name recognition. I encourage you to parse it through.
The rankings’ release was accompanied by a fascinating conversation on Tuesday moderated by Fortune editor-in-chief Clifton Leaf with experts such as IBM vice president and chief health officer Dr. Kyu Rhee, American Medical Association GVP and chief health equity officer Dr. Aletha Maybank, St. Joseph Mercy Hospital president Alonzo Lewis, American Heart Association CEO Nancy Brown, and Stanford Health Care president and CEO David Entwistle.
The main question: How do you build the hospital of the future—not just with cool gadgetry and cutting-edge data science, but with the help of communities at large in order to address the widespread medical inequities highlighted by the coronavirus pandemic?
St. Joseph Mercy’s Lewis became the organization’s president mere weeks before the COVID-19 outbreak began in earnest and constrained hospital capacity. “We have an incredibly engaged medical staff. It made it very easy for me to step into the leadership role,” he said. “Often times you’ll see our senior leadership team on the front lines with colleagues to see what’s creating adverse outcomes and figure out what we can do about it.”
A large part of the problem is that hospitals and the medical community have been slow to pick up on a more holistic view of health care, including the socioeconomic factors that can have a profound impact on how Black and brown people interact with the system.
“The AMA needed to have a more explicit focus on health equity and what that meant for the AMA and for the field of medicine overall,” said Maybank, who is the first chief health equity officer at the nation’s largest physician trade group.
“How are we addressing the systems we know create harm for our patients? Racism, classism, sexism, all of these things that we know affect outcomes. My work is really: How do we make these injustices visible? COVID has made a lot of those injustices visible to more people.”
But turning this realization into action requires a multi-pronged approach, according to the panelists. “As a physician you learn a lot about the physiology of disease. But when you’re out in the real world you realize health care is a team sport,” says IBM’s Rhee.
“Leveraging that requires understanding the community. How do we bring hospitals and communities together, including by sharing datasets?”
Delving deeper into local community information is a fundamental matter of trust. And that sort of trust stems from better physician education and a more refined approach to incorporating on-the-ground information into a hospital’s business model.
“From my perspective, there’s a parallel that needs to happen in medical education of helping physicians understand the totality of health,” said Maybank. That could include having members of the local community on local hospital boards.
For Maybank, the ultimate question is: “How do we embed equity” into our system of care.
Read on for the day’s news, and see you again tomorrow.
Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
Lululemon gets into the digital fitness game with $500 million deal for Mirror. Athleisure firm Lululemon is wading into the digital health space—with a pretty sizable gambit. The company's first-ever acquisition is a $500 million deal to buy Mirror, the interactive fitness firm that offers virtually streaming classes and has boomed in the midst of a pandemic that's shut down many gyms. The M&A is expected to close within this fiscal quarter. (New York Times)
INDICATIONS
Pfizer stock soars on early COVID-19 vaccine data. Shares of Pfizer soared nearly 5% in Wednesday trading as the company and its smaller partner BioNTech announced promising, if very preliminary, data for a COVID-19 vaccine. The drug giant gained billions in market value on news that all two dozen participants in an early-stage trial of the vaccine developed so-called "neutralizing antibodies" with no serious side effects, a key milestone for any drug candidate. The companies release a fair amount of data supporting their claims, setting up the stage for more advanced trials. (MarketWatch)
THE BIG PICTURE
3 lies and a truth about wearing face masks. As coronavirus cases continue to spike in most of the country, some governors have taken to rolling back re-entry measures, closing down bars, and mandating masks. The latter point seems to inspire some of the most ire and a hodgepodge of conspiracy theories. I waded through several of the common untruths (one may even call them "lies") that have taken hold. Spoiler alert: "The Freedom to Breathe Agency" isn't a real federal entity, and wearing a cloth face mask won't cause carbon dioxide poisoning. (Fortune)
Oklahoma endorses Obamacare's Medicaid expansion in the midst of the pandemic. Speaking of spiking COVID cases—Oklahoma voters defied their own state leaders to narrowly pass a ballot referendum to expand Medicaid, the public health program for poor and disabled Americans, under Obamacare. The move will extend health insurance to at least 200,000 low-income state residents as the pandemic takes a greater toll in the state. It will also set up a regulatory battle on whether or not Medicaid in the state can be turned into a lump-sum "block grant" which critics say would cost people their insurance, and which state officials have requested from the Trump administration. (Politico)
REQUIRED READING
What small businesses need to know about the PPP extension, by Anne Sraders
'Zero chance' of a V-shaped recovery as coronavirus cases soar, by Lance Lambert
The EU will open its border back up to China, but not the U.S., by Katherine Dunn
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fortune--2020-07-01--A dose of good news: Pfizer shares surge on coronavirus vaccine trial

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Add multinational giant Pfizer to the list of pharmaceutical companies that have seen their shares jump on a dose of good, coronavirus-related news.
Pfizer’s stock was up more than 5% on Wednesday afternoon, after the company reported positive results in an early trial for a potential COVID-19 vaccine.
The trial, which Pfizer is conducting alongside German biopharma firm BioNTech, found that the most advanced of four vaccine candidates being vetted “is able to produce neutralizing antibody responses in humans” against the coronavirus, according to BioNTech CEO Ugur Sahin.
Kathrin Jansen, Pfizer’s head of vaccine research and development, said the company is “encouraged by the clinical data” and is planning to publish the clinical data “in a peer-reviewed journal as quickly as possible.”
While some of the trial subjects experienced side effects, including “low-grade fever,” after receiving doses of the vaccine, Pfizer said that “no serious adverse events were reported” as a result of the trial.
The positive news could lead to a larger trial for the vaccine potentially involving up to 30,000 subjects, Pfizer and BioNTech said. That trial could begin by late July, pending regulatory approval. Eventually, the pharmaceuticals would be prepared to manufacture “up to 100 million doses of the vaccine by the end of 2020 and potentially more than 1.2 billion doses by the end of 2021,” they said.
Pfizer and BioNTech are far from the only pharma players currently working on a preventative vaccine for COVID-19. More than a dozen different potential vaccines are either currently in human trials or expected to begin them soon.
Among the most advanced is a vaccine being developed by Moderna Therapeutics. Like Pfizer, Cambridge, Mass.-based Moderna saw its stock soar after announcing positive early-stage trial results in mid-May.


fortune--2020-07-01--Conservative social media darling Parler discovers that free speech is messy

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John Matze, CEO of Parler, a buzzy Twitter clone for conservatives, has a message for users trying to test the boundaries of the service’s free speech ethos: Free speech has its limits.
Posting pictures of fecal matter is prohibited, he wrote this week after seeing far too much fecal matter. He also reminded users that they can’t post pornography, like a digitally altered picture that went viral, showing a naked President Trump getting a spray tan. And obscene usernames are forbidden—free speech be damned.
Over the past few months, a growing number of conservatives who feel unfairly censored by Twitter and Facebook have flocked to the friendlier pixels of Parler. President Trump, Sen. Ted Cruz, and Fox News commentator Sean Hannity, along with conservative media organizations like Breitbart News and the Washington Examiner, have all joined recently.
But as the number of users climbs above 1 million, Parler is coming to terms with just how complicated policing the service can be. Despite the supposed hands-off philosophy, Matze is increasingly hands-on—much like Twitter CEO Jack Dorsey and, to a lesser extent, Facebook CEO Mark Zuckerberg, who steps in reluctantly. “As soon as the press started picking up, we had a ton of violations,” says Matze. “We had a queue of over 7,000 violations, and we only had three people” to police the entire site.
These days, the focus at Parler is squarely on adding more moderators. Last week, the company recruited 100 volunteers, who Matze says are longtime users who understand Parler’s rules. The goal is to have 1,000 of them by the end of next week.
Matze, a 27-year-old software developer, and his fellow software developer partner, Jared Thomson, created Parler in 2018 as a safe space for speech, no matter how unpopular. Too many social media companies suppressed conservatives, in their opinion, and lacked transparency about how they used personal data.
The breakthrough for Parler, based in Henderson, Nev., came in recent months after Twitter began cracking down on hate speech and misinformation. Twitter added warnings to President Trump’s tweets about mail-in voting and for saying “when the looting starts, the shooting starts” about the recent protests for racial justice.
In contrast, Facebook left Trump’s comments untouched, setting off a firestorm of criticism and prompting hundreds of companies to pause advertising on Facebook. Under pressure, Facebook last week tightened some of its rules and promised to start flagging posts by politicians who violate them.
As for Parler, Matze makes clear that Trump’s recent inflammatory comments would be welcome. In his view, they don’t cross the line into “fighting words,” which are prohibited on the service, or “symbolically mean someone should be attacked or killed”—another red line. “It has to have a clear and immediate threat of violence, and it has to be a provocation to violence,” Matze says. “I don’t think people are actively going to listen to what he said and go out into the street and start shooting up people. That clearly didn’t happen and wasn’t his intent.”
Additionally, Parler wants nothing to do with determining whether user posts are true or not. That means leaving people who read them to figure it out, whether about vaccines, Islam, or voting: “From our standpoint, we believe that no one should have the power or authority to tell anybody else what they can and cannot say based off their definition of their version of the truth.”
Matze’s rules for Parler are based merely on what he says is required by law. But he also lumps in rules set by the Federal Communications Commission that ban obscenity, even though they apply only to broadcasters and not websites. Additionally, he says the company kicks off users who spam others (technically, their spam isn’t illegal).
As a result, Parler has limits. In fact, a number of Parler users recently complained on Twitter that they had been booted from the service. Some of those users, Matze acknowledged, had been banned accidentally, in many cases because the company mistakenly decided they were using the names and photos of others (verified users must go by their real identities, just like on Twitter). Conservative conspiracy theorist Mark Dice was among those who were accidentally banned. To make amends, Matze personally apologized by phone to those impacted.
However, Parler kicked off others for misusing the service and posting profanity ad nauseam, Matze says, or repeatedly using the “N-word.” White supremacists are frequently ejected, not because of their hate-filled posts but rather because they have violated rules prohibiting spamming, indecency, and obscenity. “People assume when they hear ‘free speech’ that you can go on and post nasty, disgusting, obscene stuff in the comments,” Matze says. “That’s just false.”
Matze says he’s looking into cracking down on white supremacists more comprehensively, a tricky move considering that President Trump and other Republicans sometimes echo their messaging. But for now, absent spamming and the like, they’re tolerated. Matze says any rules the company uses to address this would be solely driven by existing laws. “We’ve thought about banning the group under antiterrorism laws, but we haven’t done research on how legally enforceable that is,” Matze says.
Although growing quickly, Parler isn’t much of a business. It survives mostly on the undisclosed amount of money it raised from private investors including conservative commentator Dan Bongino. Recently, the company started testing ads on its service, but it doesn’t make much cash from them.
In the meantime, Matze says he plans to tweak some of his site’s rules that some critics have said are anti–free speech. For example, he promised to adjust language in the site’s terms of service that puts users on the hook for any legal costs that Parler incurs because of their posts.
Ultimately, Matze hopes that Parler will grow and diversify by attracting—gasp—liberals. If successful, it would be quite an accomplishment for a service known as a MAGA haven. “Conservatives like our rules right now because they’re comfortable,” Matze says. “But as we get more left-leaning people on there, the right will go, ‘We thought this was a home for us’…but they have free speech, too.”


fortune--2020-07-01--These 10 journalists are among countless under attack for seeking the truth

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Journalists the world over work tirelessly to make sure those in power are held accountable for abuses, crimes, and ills. As a result, they sometimes find themselves charged with crimes, such as libel, terrorism, or something more vague. They’re detained, sometimes for life, often in life-threatening conditions. In the worst cases, they’re disappeared or murdered as punishment for doing their jobs.
To call attention to the mistreatment of journalists, Fortune is part of a collective of media organizations that copublishes a monthly ranked list of the 10 most urgent press freedom cases (below). The lists are compiled by the One Free Press Coalition in partnership with the Committee to Protect Journalists (CPJ) and the International Women’s Media Foundation (IWMF). (You can read last month’s list here.)
Filipino-U.S. dual citizen sentenced in cyber libel case.
On June 15, a Manila court convicted Maria Ressa, editor of the privately owned Rappler news website, and Reynaldo Santos, a former researcher at the outlet, of cyber libel. The criminal offense requires each journalist to pay $7,950 in fines and moral damages as well as serve a jail term of six months to six years. Both are free on bail pending their appeal. The case arose from a public-interest article Rappler published in 2012 about a local businessman’s alleged ties to a former judge, who was later impeached for corruption, and purported links to drug and human trafficking rings.
Award-winning human rights reporter imprisoned 10 years.
June 15 marked 10 years since Azimjon Askarov, who is ethnically Uzbek, was arrested on trumped-up charges that included incitement to ethnic hatred and complicity in the murder of a police officer. A Kyrgyz court heard the final appeal in his case in May and upheld his life sentence. His health is deteriorating in detention, with limited access to medication and mistreatment by prison officials. His wife, Khadicha Askarova, has written to Kyrgyzstan’s President pleading for his release.
Nearly four months without updates from imprisoned journalist in deteriorating health.
No one has received news from freelance reporter Solafa Magdy since March 9. She has been imprisoned alongside her husband for six months and endured deliberate medical neglect while at heightened risk of contracting COVID-19 due to overcrowding and inhumane conditions in Egypt’s prisons. Officials have again delayed trial for charges of “membership of a banned group” and “spreading false news” for her multimedia reporting on human rights and illegal immigration.
Four journalists detained five years, now sentenced to death.
On April 11, Yemeni journalists Abdulkhaleq Amran, Akram al-Waleedi, Hareth Hameed, and Tawfiq al-Mansouri were sentenced to death by the Ansar Allah group, known as the Houthis, after nearly five years in detention. The journalists were charged with spreading false news “in support of the crimes of Saudi aggression and its allies against the Republic of Yemen.” In June, the UN joined over 150 organizations calling for their release. Their lawyer plans to appeal.
Four years pass without information regarding journalist’s disappearance.
July 22 marks four years since reporter Jean Bigirimana went missing in the middle of the day after leaving his home in Bujumbura. He had received a phone call from a source in the country’s national intelligence service. He was working as a newspaper and online journalist with the independent Iwacu Press Group and previously with the pro-government radio station Rema FM. He has not been seen or heard from since 2016.
Investigation idling in case of journalist murdered at her home one year ago.
June 11 marked one year since unknown attackers shot and killed reporter Norma Sarabia in her Huimanguillo residence, yet there has been little movement in the investigation announced on Twitter by the state attorney general’s office at the time. Sarabia, 46, was a correspondent in the Tabasco town near the border with Guatemala for newspapers Diario Presente and Tabasco HOY. She is one of 54 journalists killed in Mexico between 1992 and 2020.
Journalist in poor health being held in pretrial detention without court date.
Plainclothes security officers in Giza arrested veteran journalist and freelance columnist Mohamed Monir on June 15 and ordered pretrial detention for 15 days, a period that can be renewed or extended at the court’s request. Egypt’s national security prosecutor charged Monir with joining a terrorist group, spreading false news, and misusing social media. The 65-year-old suffers from diabetes, high blood pressure, and severe heart problems. He had recently written for Al Jazeera and criticized the government’s handling of the COVID-19 pandemic.
Officials reveal journalist died in custody last August.
In June, Cameroonian military announced that news anchor Samuel Wazizi died last August, days after being transferred from police to military custody and held incommunicado. They denied any torturous treatment and alleged that Wazizi died of “severe sepsis.” Lawyers say he was accused of hosting separatist fighters on his farm, an allegation he dismissed. He had worked as a freelance photographer and cameraman as well as a news anchor for privately owned broadcaster Chillen Muzik and TV (CMTV) covering military atrocities.
Authorities bring additional allegations against editor in pretrial detention.
Since his arrest on terrorism charges in June 2019, authorities have also charged Abdulmumin Gadzhiev with participation in an extremist organization and extended his pretrial detention. The new allegation could add 10 years in prison to the potential 20 years Gadzhiev faces on the original charges. He had been working as editor of the religious section of the independent Chernovik newspaper.
Calls for continued investigation into journalist’s death at the hands of government.
Democrats in the U.S. House of Representative are reportedly working on new legislation to push for the release of secret findings regarding the full extent of Saudi Arabia’s role in Jamal Khashoggi’s killing. The Washington Post columnist died inside the Kingdom’s Saudi consulate in 2018. Calls remain for the executive branch to release an intelligence report as well as for an independent criminal investigation and probe into the crown prince’s ordering of the extrajudicial killing.
Fortune would like to hear your voice. Email us at feedback@fortune.com.


fortune--2020-07-01--Demand for stolen credit cards has dropped in the pandemic

Marketplaces, even cybercriminal ones, are subject to the laws of supply and demand.
Like more reputable merchants, purveyors of stolen goods have been hit by the coronavirus pandemic. As COVID-19 ravaged the world this year—forcing businesses to close and people to stay at home—demand for stolen credit card data has dropped on dark web shops.
With fewer opportunities to shop at brick-and-mortar stores, and thereby reap a return on investment, the market value of “card present” data has fallen. Such purloined information includes copied magnetic strip data that can be turned by crooks into fraudulent payment cards. The median price of stolen card-present data has more than halved in recent months, said Stas Alforov, head of R&D for Gemini Advisory, a New York-based cybersecurity firm.
Whereas in December, the median price per stolen credit card was around $12.50, according to Gemini’s data, in June, each was fetching $6.30. Such a steep price drop-off is atypical even outside the usual end-of-year holiday shopping season, when all sales—legitimate and fraudulent—tend to be highest, Alforov said.
Shady retailers have adapted to the downturn in demand by running discounts. “It’s just like if you walk into a Burlington Coat Factory or a Macy’s. Nobody is chasing down the racks that have full-price deals on them. Everyone is looking for the discount racks,” Alforov told Fortune on a call.
Meanwhile, as more consumers shift their spending online, stolen data related to web-based payments has gotten a boost. The market value of “card not present” data—information found on online checkout pages—has ticked up to $9 from around $8 at the end of last year, based on Gemini’s data.
As economies reopen and the effects of unemployment become clearer, the world may see a rebound in “carding” fraud. Indeed, as Brian Krebs, an independent cybersecurity journalist who reported on the trend on Tuesday, warned, we should expect recent cybercrime trends to take a turn, “likely for the worse.”
“Just as various individuals are happy to be back and dining at restaurants and going out to local bars, in the same way, criminals are very excited to get back to business as usual,” Alforov told me.
Robert Hackett
Twitter: @rhhackett
Email: robert.hackett@fortune.com
THREATS
(Your love keeps lifting me) higher and hire. Expecting a global surge in coronavirus-related unemployment this year, Microsoft is planning to offer digital skills training to 25 million people around the world. The education program will combine technology and insights from the company's software and Azure cloud computing businesses as well as its subsidiaries LinkedIn and Github. The initiative will also provide a marketing opportunity for its Microsoft Teams videoconferencing software.
By the light of the northern star. Evidently, Google has not given up on virtual reality hardware, despite the epic flop of Google Glass. The search giant has acquired North, formerly known as Thalmic Labs, a Canadian startup that develops "smart" glasses, confirming a report by the Globe and Mail. In a post announcing the deal, North said it will not ship its latest gadget, Focals 2.0. Meanwhile, Facebook released a proof-of-concept for a pair of VR headset that looks like a thin pair of sunglasses.
Enter Sandman. Slightly askance of VR, there's been activity in augmented reality world. Niantic, the Google spinout and Pokémon Go creator, is partnering with Punchdrunk, creators of the trippy, immersive theatrical sensation Sleep No More. Niantic also has an AR adaptation of the hit board game Settlers of Catan in the works. Outside of gaming news, there's reason to believe Apple's upcoming iOS 14 iPhone software is laying the groundwork for its long-rumored AR glasses.
YouTube killed the TV star. Google's YouTube upped the price of its monthly YouTube TV subscription offering to $65 from $50, amounting to an additional $180 per year. The bundle is adding eight new ViacomCBS channels with more to come: BET, CMT, Comedy Central, MTV, Nickelodeon, Paramount Network, TV Land, and VH1. In a blog post, Christian Oestlien, YouTube’s VP of product management, said the "new price reflects the rising cost of content."
Please Mr. Postman. Settling charges that it violated U.S. securities laws in its pursuit of investment for a digital token offering, encrypted chat app-maker Telegram agreed to pay a $18.5 million civil penalty and return $1.22 billion to investors. Telegram's retrenchment marks a big win in the one of the highest-profile cases for the U.S. Securities and Exchange Commission, which has spent the last couple years cracking down on unregistered cryptocurrency ventures.
Zoom in. Now enhance.
ACCESS GRANTED
Earlier this month, Senator Sherrod Brown (D-Ohio) threw down a gauntlet on Big Tech by introducing a new draft privacy bill that would outlaw most collecting and sharing of personal data by corporations. The bill would force companies like Facebook to rethink the foundation for their ad-supported free services.
In an op-ed for Wired, Sen. Brown anticipates objections to his plan, one of a number of GDPR-style pieces of legislation now floating around Congress. To companies that claim it will "stifle innovation and interrupt their business model," he replies: "Yes, if your business model is built on exploiting people, we want to stop it."
Be honest—have you ever read a privacy disclosure? Even once?
Facebook’s data privacy policy is more than 4,000 words. It contains dozens of links to hundreds of pages of complex terms and agreements. Even if you had the time to read it, you’d need a law degree and a data science background to understand which rights you’re signing away and what frightening experiments Facebook is cooking up with your private life as raw material.
FORTUNE RECON
Robot lawyers are thriving during the pandemic by Jeremy Kahn
The EU will open its borders to countries adept at fighting COVID-19. China qualifies. The U.S. does not by Katherine Dunn
Netflix will move $100 million into Black-owned banks by Lucas Shaw
A venture capitalist parodied by HBO’s ‘Silicon Valley’ is now facing criminal charges and perhaps even jail time by Lucinda Shen
Semiconductors are the engine of the global economy—and America isn’t making enough of them by Keith Jackson
ONE MORE THING
Facebook claims it is taking action to curb QAnon, an Internet hoax that peddles extremist, right-wing conspiracy theories. But a recent investigation by the Guardian found the media giant's flagship site continues to recommend QAnon-affiliated groups to users, attracting thousands of followers to those groups in just a month. Reddit, on the other hand, effectively eradicated the nonsense after carrying out a site-wide purge two years ago.
C'mon Zuck. Learn from the little alien guy.


fortune--2020-07-01--PPP extension: What small businesses need to know now

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For any close follower of the Paycheck Protection Program over the past three months, what happened last night was nothing unusual. With less than four hours before the PPP was set to expire at 11:59 p.m. ET on June 30, the Senate unanimously passed a bill to extend the PPP application deadline until Aug. 8. The bill passed the the House on Wednesday, and now heads to President Trump for a signature.
The bill’s extension of the PPP comes after the program was set to end with over $130 billion left of unused funds for the taxpayer program. As of Tuesday night, the latest data from the Small Business Administration shows the program lent more than $520 billion in emergency loans to over 4.8 million American small businesses. The loans are intended to help businesses keep employees on the payroll, can range up to $10 million per loan, and can become grants.
It was a bit of a nail-biter over whether or not the Senate would be able to pass the bill unanimously on Tuesday night, as Sen. Rick Scott (R-Fla.) raised an objection but approved the passage. Sen. Ben Cardin (D-Md.), who has been actively working to make further changes to the program (including proposing a new bill for what would essentially be PPP round 3), stood firm: “We need to act. We need to act tonight,” he said on the Senate floor. “The resources are there, the need is there, we just need to change the date,” Cardin said.
Here’s what new and current borrowers need to know.
Can you apply now?
Not yet, but likely soon. The bill passed the House and needs to be signed by the President.
As of Tuesday, many lenders from fintechs to national and regional banks had stopped accepting new applications in an effort to ensure they would be able to process all the applications they’d already received and get them through the SBA’s systems in time.
There are, however, those like U.K.-based fintech Funding Circle, which told Fortune in an email that it’s “currently paused on PPP lending until the extension is fully passed by Congress and signed by the President, which will trigger the SBA to reopen the E-Tran system.” But the fintech’s head of communications also noted: “In the meantime, we are taking applications. We are planning to restart processing PPP applications as soon as that is complete.”
On Tuesday, Sen. Marco Rubio (R-Fla.) wrote on Twitter that he was on board with the extension but that the real work involved getting funds to a more targeted group.
I have no objection to extending the #PPP deadline until August 8th.
But the vast majority of #SmallBusiness that wanted to benefit from the program have already used it.
What we really need to pass very soon is targeted help for those who need a second round of aid. — Marco Rubio (@marcorubio) June 30, 2020
The senator also wrote in a tweet that he has “confirmed with multiple members of the administration that after #PPP applications period expires [on Tuesday], they support using the over $100 billion left untapped to target new relief for #smallbusiness.”
Indeed, the relative lack of demand for the program in the past few weeks (compared with the mad dash for funds in round one), coupled with recent studies from groups like the National Federation of Independent Business, suggests most of those who wanted a PPP loan as is have applied. (The NFIB study in June found only 3% of businesses surveyed that hadn’t applied for a loan still wanted to before the deadline).
Atlantic Union Bank, a regional bank based in Virginia, stopped accepting PPP loans before the deadline yesterday. CEO John Asbury told Fortune in an email: “We are assessing the situation and whether extending the program deadline increases demand for the PPP loan. We decided to stop accepting applications because of the lack of demand, and the need to focus on the forgiveness process for our customers.” Asbury added: “It is unclear whether an extension creates new demand or not. If we believe that the demand exists we’d be more inclined to reopen the acceptance process.”
An extension of the PPP until Aug. 8 would basically buy Congress time to pass other legislation to further target funds in whatever form that takes. So far, members of Congress have proposed legislation to send the $130 billion in leftover aid to especially hard-hit businesses: One bill proposed by Senate Democrats would dole out the funds to businesses with fewer than 100 employees that had also taken an over 50% revenue hit owing to the crisis (the House also has a similar bill). The Washington Post first reported on details of a new proposal from Senator Rubio that would include parceling off $25 billion in funds for businesses with fewer than 10 employees, among other changes.
Update, July 1: This article has been updated to reflect the passage of the bill by the House on July 1.