Los Angeles Times - 04.03.2020

LATIMES.COM/BUSINESS WEDNESDAY, MARCH 4, 2020C3

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Sepulveda Project

Shadow Hills, Mon.

Stink

Google

Encino, Mon.

Pulse Films Ltd

Intelligent Edge

Echo Park, Mon.

Liam Films Inc.

Sinister Sister

Van Nuys, Wed.

Ninth Vintage

The Prom

Hollywood, Thu.-Mon.

Netflix Productions

My Perfect Woman

Boyle Heights, Mon.-Tue.

Strawberry Productions Inc.

Bless This Mess

Tujunga Canyons, Mon.

20th Century Fox TV

Penny Dreadful

Santa Clarita, Mon.

Possible Productions Inc.

Made for Love

Northridge, Mon.-Tue.

Viacom Inc.

GLOW

North Hollywood, Wed.-Fri.

Glitter Pictures

I’m Sorry

Studio City, Wed.-Fri.

Queens

Swimming With Sharks

Beverly Hills, Thu.-Fri.

SWS Productions Inc.

Athena

Downtown L.A., Wed.-Sat.

Always Smiling Productions

NBC News/MSNBC

Santa Monica, Mon.-Wed.

NBC News

All Rise

Eagle Rock, Thu.-Sat.

Warner Bros. Television

One Love

Malibu, Mon.

Everybody Wants Us Inc.

Mommune

Porter Ranch, Mon.

Mommune

Watermark

Winnetka, Tue.-Fri.

Watermark Holding

Television

Overall shoot days were down 17% last week for TV, film and

commercial shoots in the Los Angeles area compared with the

same period last year, according to FilmL.A. Inc.

FilmL.A. Inc.; cities of Beverly Hills and Santa Clarita

Thomas Suh Lauder Los Angeles Times

Note: Permits are subject to

last-minute changes.

Production days for three main categories

Sampling of permitted shoots this week

-26% +30% -22%

Feb. 24-March 1, 2020 (405 total shoot days)

Feb. 25-March 3, 2019 (489 total shoot days)

207 90 108

281 69 139

Television Features Commercials

Commercials

Features

2

5

5

5

10

405

210

LOS ANGELES COUNTY

101

Los Angeles

60

118

710

110

105

Where the cameras roll

Fear and uncertainty

continued to control Wall

Street, with U.S. stocks fall-

ing sharply Tuesday after an

emergency interest-rate cut

by the Federal Reserve

failed to reassure markets

racked by worries that the

fast-spreading coronavirus

outbreak will cause a reces-

sion.

The Dow Jones industrial

average sank 785.91 points,

or 2.9%, to 25,917.41. It had

surged 5% on Monday as in-

vestors hoped for a broader

set of stimulus measures.

Although the cut gave

some investors exactly what

they had been asking for,

Federal Reserve Chairman

Jerome H. Powell acknowl-

edged that the solution to

the virus outbreak must

come from health experts,

not from central banks.

Some traders wonder

whether more aid is on the

way to stabilize the market,

while others called the Fed’s

move premature to begin

with. For more than a few,

the Fed’s steepest rate cut

since 2008 recalled the dark

days of the financial crisis

and only added to the dread.

Through it all, markets

still face the quandary that

has sent stock prices tum-

bling 11% since their record

highs of just two weeks ago:

No one knows how far the

virus will spread before au-

thorities can get it under

control, and how much the

outbreak will harm compa-

nies’ profits.

That uncertainty led to

jagged trading across mar-

kets Tuesday. Stocks rallied

briefly in the morning after

the Fed’s surprise move, but

it took just 15 minutes for the

gains to evaporate. The yield

on the 10-year Treasury fell

below 1% for the first time in

history as investors ratch-

eted back expectations for

the economy and inflation.

The VIX “fear index,” which

measures traders’ expecta-

tions of upcoming volatility

in the stock market, jerked

wildly up and down through-

out the day.

After popping to a 1.5%

gain shortly after the Fed’s

announcement, the Stand-

ard & Poor’s 500 index wa-

vered between modest gains

and losses for about an hour

before turning decisively

lower. The index ended the

day down 86.86 points, or

2.8%, at 3,003.37 — its eighth

drop in the last nine trading

days. The Nasdaq compos-

ite fell 268.07, or 3%, to

8,684.09.

Bond yields swung after

the Fed’s announcement.

The yield on the 10-year

Treasury slumped to 1.01%

from 1.08%, and during the

day it touched below the 1%

threshold for the first time.

The 10-year yield tends to fall

when expectations are for

weak economic growth and

inflation. Shorter-term

yields, which move more on

Fed actions, had even more

dramatic drops. The two-

year Treasury yield sank to

0.71% from 0.81%.

Index

Dow industrials

S&P 500

Nasdaq composite

S&P 400

Russell 2000

EuroStoxx 50

Nikkei(Japan)

Hang Seng(Hong Kong)

Close

Daily

change

Daily % YTD %

25,917.41 -785.91 -2.94 -9.18

3,003.37 -86.86 -2.81 -7.04

8,684.09 -268.08 -2.99 -3.22

1,835.19 -40.28 -2.15 -11.04

1,486.08 -32.41 -2.13 -10.93

3,110.55 +35.66 +1.16 -8.59

21,082.73 -261.35 -1.22 -10.88

26,284.82 -6.86 -0.03 -6.76

Major stock indexes

change change

Associated Press

MARKET ROUNDUP

Stocks fall; rate cut

only adds to dread

associated press

relying on high court deci-
sions that had upheld inde-
pendent agencies. The
Supreme Court agreed last
year to hear Seila Law vs.
CFPB and decide the issue
of executive power.
The court’s decision
could reach beyond the
CFPB. For more than a cen-
tury, Congress has created
agencies, such as the Fed-
eral Reserve and Securities
and Exchange Commission,
with a degree of independ-
ence from political control,
even though their heads are
appointed by the president.
In some instances, the direc-
tors have a fixed term or are
part of a governing board.
But some conservatives
cite the so-called “unitary
executive” theory and argue
that the Constitution re-
quires that all agency execu-
tives must come under the
direct, day-to-day control of
the president. This theory

has attracted the attention

of the court’s conservatives.

Solicitor Gen. Noel Fran-

cisco, representing the

Trump administration, did

not defend the CFPB on the

grounds that its appoint-

ment provision infringes on

the executive power of the

president. Instead, he ar-

gued on the side of the Or-

ange County law firm and

said the court should rule

that the CFPB director may

be removed at the wishes or

the whim of the president.

The Constitution gives

the president “unrestricted

authority to remove princi-

pal officers” across the gov-

ernment, he told the jus-

tices. “If the [CFPB] direc-

tor is insulated from presi-

dential oversight, then her

exercises of executive power

are insulated from demo-

cratic control. And that’s not

the structure that our Con-

stitution creates and re-

quires,” he said.

If there are no limits on

Congress, he added, it could

give Cabinet officers fixed

terms in office and forbid a

new president from remov-

ing them.

Washington attorney

Paul Clement, who served as

solicitor general under Pres-

ident George W. Bush, was

asked to defend the CFPB.

He said Congress may cre-

ate an agency somewhat in-

sulated from politics.

“Take the Fed, for exam-

ple,” he said. “We don’t want

the president to juice up in-

terest rates right before a

presidential election, so

we’re going to give that to

somebody who is insu-

lated.... In the current situa-

tion, you see people are try-

ing to make a political foot-

ball out of dealing with a

pandemic disease. So may-

be Congress decides: Let’s

have the head of [the Cen-

ters for Disease Control and

Prevention] be protected by

for-cause removal because

that’ll make sure people get

good advice and it doesn’t

become political. That is the

kind of sensible decision

that Congress has been

making for over 100 years.”

But Justice Brett M. Ka-

vanaugh noted that if a new

president were elected in

November, he or she could

be required to keep in place

Trump’s appointee for three

more years. Kavanaugh said

that was a strong reason for

striking down the current

provision and ruling that the

president may replace the

bureau’s director.

Currently, the CFPB is

headed by Kathy Kraninger,

a protege of acting White

House Chief of Staff Mick

Mulvaney. The agency was

created at the urging of

then-Harvard professor Eli-

zabeth Warren, now a sen-

ator from Massachusetts

and Democratic presiden-

tial contender.

Justices may boost executive powers

[Supreme Court,from C1]

TurboTax has long been
the leader in do-it-yourself
tax-filing software. But it
has faced increasing compe-
tition from a nimble start-
up, Credit Karma Inc., which
has become one of the pre-
ferred financial apps for
young people by giving out
free credit scores and help-
ing them find auto loans and
credit cards. And since 2017,
it has offered a completely
free tax-filing service.
Intuit Inc., the parent
company of TurboTax, took
note and agreed to spend
$7.1 billion to buy Credit
Karma last week. Several le-
gal experts say the deal
raises serious antitrust con-
cerns, and see parallels to a
2011 attempt by H&R Block
Inc. to acquire another DIY
tax software company that
regulators blocked.
The prospect for tech
deals may be even weaker
now, amid calls for greater
federal scrutiny. Increas-
ingly, legal experts are flag-
ging concerns about the
harms posed by large com-
panies buying smaller ones
before they develop into seri-
ous threats.
Intuit is the biggest pro-
vider of DIY tax-filing soft-
ware in the U.S., splitting
about 80% of the market
with H&R Block, according
to Bloomberg Intelligence
analyst Julie Chariell. Credit
Karma’s market share is
only 3%, but it’s growing fast.
Founded in 2007, the San
Francisco company has at-
tracted more than 100 mil-
lion users, including about
half of all U.S. millennials.
That’s twice as many as In-
tuit. Credit Karma’s free tax-
preparing business grew by
about 50% last year, accord-
ing to the company.
“There’s no question the
acquisition could and
should face scrutiny,” said
Aaron Edlin, a law and econ-
omics professor at UC
Berkeley. “There’s a huge
concern when the leading
firm in an industry such as
tax software buys another
firm that is competitive, par-
ticularly that’s offering free
tax software.”
Eleanor Fox, a law profes-
sor at New York University,
said regulators wouldn’t just
be looking at the companies’
size, but could also be con-

cerned about whether the

deal is “cornering a market.”

Intuit has told investors

the Credit Karma deal

should be finalized by the

second half of the year, a sign

that it’s optimistic it can

pass an antitrust review.

The company argues that

taxes are only one part of

Credit Karma’s offerings,

which mostly revolve around

selling financial products

based on the data it collects

from free services, including

tax filings. Intuit says the

deal isn’t about stifling com-

petition and that the two

companies would operate

separately.

When asked on a confer-

ence call about market con-

solidation, Intuit Chief Exe-

cutive Sasan Goodarzi said:

“This is all about playing of-

fense and delivering for cus-

tomers.”

Representatives for the

Justice Department, Intuit

and Credit Karma declined

to comment.

In Intuit’s latest annual

financial report, it lists Cred-

it Karma as a primary U.S.

competitor. Some custom-

ers certainly see it that way.

One person complained on

Twitter about TurboTax’s

charges. “My kids make like

2k last year but because she

made 401k contributions she

has to pay $80 to get a $200

refund. No thanks, @cred-

itkarma to the rescue.”

Matt Stoller, director of

research at the American

Economic Liberties Project,

called it “embarrassing”

that Intuit even proposed

the merger. “These kinds of

mergers are obviously illegal

and enforcers just don’t up-

hold the law,” he said.

In 2011, a court sided with

the Justice Department and

prevented H&R Block, the

second-largest player in dig-

ital do-it-yourself tax-prepa-

ration software, from buying

its third-place rival, the cre-

ator of the software “Tax-

Act.” In that case, Judge

Beryl Howell ruled that the

proposed merger would give

H&R Block and Intuit a

combined 90% control over

the tax market.

Barak Orbach, a law

professor at the University

of Arizona, said he believes

the Credit Karma acquisi-

tion will be approved be-

cause it could help create

competition with the tech gi-

ants, who are moving fur-

ther into financial products.

And, despite the tough

stance taken by regulators

against big tech companies,

T-Mobile US Inc. recently

won approval for its $26.5-

billion takeover of Sprint

Corp. after a state-led law-

suit that sought to block the

deal.

Even before the Credit

Karma acquisition, the gov-

ernment was scrutinizing

Intuit’s actions. The com-

pany is facing lawsuits and

regulatory inquiries into its

approach to the Internal

Revenue Service’s Free File

tax program. That federal

program — not to be con-

fused with software that’s

advertised as free — is

meant to provide low-in-

come people truly free tax

software. ProPublica has re-

ported that Intuit hid its fed-

eral free file program in

search results and redi-

rected people to its commer-

cial service. Intuit sub-

sequently agreed to stop the

practice.

The antitrust review of

Credit Karma will probably

hinge on a few points, said

James Tierney, who super-

vised the case against H&R

Block at the Justice Depart-

ment: “Is this company re-

straining Intuit’s pricing? If

you got rid of Credit Karma,

could Intuit raise prices?

That’s one question and the

other question might be, is

Credit Karma driving inno-

vation in the market?”

Tierney, now an attorney

at Orrick, said the Justice

Department was unlikely to

take Intuit by its word that

Credit Karma would op-

erate independently. “The

fact of the matter is that In-

tuit will control Credit

Karma and they have the

ability to do whatever they

want with it,” he said.

Intuit deal may face scrutiny

TurboTax parent’s

attempt to buy rival

Credit Karma raises

antitrust concerns.

bloomberg

TURBOTAXmaker Intuit and H&R Block control 80% of the DIY tax software

market. Intuit is optimistic its Credit Karma deal can pass an antitrust review.

Kimberly White

WASHINGTON — The
Supreme Court seemed pre-
pared Tuesday to preserve a
tool that federal securities
regulators used last year to
recoup $3.2 billion in ill-got-
ten gains in fraud cases.
At most, the justices
might impose some limits on
how the Securities and Ex-

change Commission seeks

repayment, or disgorge-

ment, of profits from people

who have been found to vio-

late securities law.

But no one on the court

appeared ready to say the

SEC lacks the power to ask a

federal court to order repay-

ment of money obtained

through fraud.

That was the argument

made by a lawyer for a hus-

band and wife who were or-

dered to cough up $27 mil-

lion after a federal court

found they engaged in a

fraudulent scheme to lure

Chinese investors to back a

cancer center in Southern

California.

“Isn’t it an equitable prin-

ciple that no one should be

allowed to profit from his

own wrong?” Justice Ruth

Bader Ginsburg asked

Gregory Rapawy, the lawyer

for Charles Liu and Xin

“Lisa” Wang.

Rapawy responded that

his clients should not be

worse off than they were. Liu

and Wang together reaped

profits of $8.2 million from

their scheme but were or-

dered to repay $27 million

based on what investors

poured into the fraudulent

project. The bulk of it was

used for marketing and

property development, Ra-

pawy said.

Liu and Wang are relying

on a unanimous Supreme

Court decision in 2017 that

already limited the SEC’s

ability to go after profits

when alleged fraud has been

going on for years before au-

thorities file charges.

The 2017 case left open

whether courts have the au-

thority to order disgorge-

ment of profits. The SEC

meanwhile has continued to

aggressively pursue defend-

ants’ profits in fraud cases. A

year ago, for instance, the

SEC persuaded a federal

judge in Florida to order de-

fendants in an alleged Ponzi

scheme to repay $892 million

in profits.

A decision in the Liu vs.

SEC case is expected by late

June.

Justices may rule in SEC’s favor

Supreme Court seems

prepared to preserve

tool used by securities

regulators to recoup

billions in fraud cases.

associated press