Speaker 1: This is bloombird law with June Brusso from bloombird radio.
Speaker 1: If you're the president of the United States, you can
Speaker 1: declass if I just by saying stick class even by
Speaker 1: thinking about it. Despite what former President Donald Trump said
Speaker 1: on Fox News this week, it's clear that not even
Speaker 1: a president can declassify documents just by saying it, certainly
Speaker 1: not by thinking it, and the Eleventh Circuit Court of
Speaker 1: Appeals definitively shot down most of trump's other arguments about
Speaker 1: the classified documents seized by the FBI from Maral Lago.
Speaker 1: My guest is national security expert Bradley Moss, a partner
Speaker 1: Mark Z Brad. Let's start with the basic question. What
Speaker 1: would trump have to have done to declassify a document?
Speaker 1: So this is this is a bit of a philosophical
Speaker 1: question at some part. In theory, up to the moment
Speaker 1: Joe Biden took the oath of office, Donald Trump could
Speaker 1: at any time have literally just stated that document in
Speaker 1: front of me that says we plan to attack Iran,
Speaker 1: I'm declassifying it and the document would be considered, quote unquote, declassified.
Speaker 1: But there are two problems here. One all the case
Speaker 1: law from the trump era. said that that declassification doesn't
Speaker 1: take effect as a subsequent follow up bureacratic steps. Specifically,
Speaker 1: it has to be notification to the agency that provided it,
Speaker 1: the documents have to be the marked, etcetera, etcetera. More importantly,
Speaker 1: for purposes of a criminal inquiry here, even if he
Speaker 1: declassified the document, the markings are still there and until
Speaker 1: the markings have been properly removed, the document has to
Speaker 1: be treated by any individual who sees it as if
Speaker 1: it is still classified. That's where Donald Trump's problem comes
Speaker 1: into play here. That's why the search warrant didn't ask
Speaker 1: for classified records. It asked for documents with classification marketing,
Speaker 1: because that becomes became the problem that if he took
Speaker 1: them without having proper early had them de marked, there
Speaker 1: still have to be treated as if they're classified. Trump
Speaker 1: many times, including this week on Fox, said he declassified
Speaker 1: these documents. There can be a process, but that doesn't
Speaker 1: have to be you know, the president, you make that decision.
Speaker 1: So when you send it it's the Classif we I
Speaker 1: declassified everything. But his lawyers have never made that claim
Speaker 1: in court or in court papers, have they? No, they
Speaker 1: have come right up to the line, but they've never
Speaker 1: actually come out and said he be classified these documents,
Speaker 1: and the reason they haven't done that is twofold one.
Speaker 1: That would require a sworn after dated from Donald Trump
Speaker 1: and or various staffers who were around who can attest
Speaker 1: to what happened. No one wants to put their name
Speaker 1: on that and potentially subject themselves the perjury charges. But
Speaker 1: too even if they did, all it does is address
Speaker 1: the idea that there were vague, you know, broad verbal orders,
Speaker 1: none of we are gonna most likely have anything to
Speaker 1: do specific to these particular one hundred documents and none
Speaker 1: of which has anything to do ultimately with the three
Speaker 1: criminal statutes in play that were the subject of the search.
Speaker 1: Warm they don't care if the documents were declassified. The
Speaker 1: markings are still there, they're still have to be treated
Speaker 1: as valid unless they were demarked, and it doesn't change
Speaker 1: the obstruction issue. That's the problem. That's why they're dancing
Speaker 1: around this. What I don't understand through all this is
Speaker 1: even if he had declassified these documents, it doesn't change
Speaker 1: the fact that they don't belong to him. Correct. So
Speaker 1: the only way he could theoretically have any possessory interest
Speaker 1: in these documents is if he had designated them under
Speaker 1: the Presidential Records Act as personal records and had done
Speaker 1: so prior to leaving office. There is zero evidence that's
Speaker 1: been produced that he ever did any such thing and
Speaker 1: if he had, he was supposed to have notified the
Speaker 1: archivists of the United States, and the artivists could have
Speaker 1: taken action under the Presidential Records Act to challenge that,
Speaker 1: because personal records are supposed to be non official, you know,
Speaker 1: not relevant to the ordinary business of government. These were
Speaker 1: top secret documents relating to foreign intelligence. That's not supposed
Speaker 1: to be a personal record, that's official government records. That
Speaker 1: would then the only circumstance in which he could theoretically
Speaker 1: have had any type of right to those documents. There's
Speaker 1: no indication you did any of that. If the judge
Speaker 1: did say to the government, you have to prove these
Speaker 1: are classified documents, would that be difficult for the government
Speaker 1: to do? NOPE, all they would have to do, besides
Speaker 1: literally showing the judge the documents with the markings on them,
Speaker 1: they would submit a declaration from a relevant security official
Speaker 1: saying I've reviewed the documents, I've cross checked against where
Speaker 1: those documents came from and the relevant security classification guides.
Speaker 1: They remain classified, the markings remain valid. There is no
Speaker 1: declassification order I've found anywhere. U S District Judge Raymond
Speaker 1: Deary said it's a matter of need to know. In
Speaker 1: other words, is he even going to be able to
Speaker 1: look at these documents explain that? Sure so, and this
Speaker 1: is very common for those of us who deal with
Speaker 1: classified information in civil litigation. This is a common problem
Speaker 1: under the existing case law and I'm not saying I
Speaker 1: agree with it. I'm saying this is what the case
Speaker 1: law says that my name is on a bunch of
Speaker 1: the cases that lost. But under the case law the government,
Speaker 1: the executive branch, makes the ultimate decision on whether or
Speaker 1: not a person has the relevant, quote unquote, need to
Speaker 1: know the information. So it's not just that you have
Speaker 1: the requisite clearance, because I have the clearance, my boss
Speaker 1: is a clearance. We get told we don't have the
Speaker 1: need to know all the time. If the government decides
Speaker 1: that you don't have a need to know this particular information,
Speaker 1: they can still refuse to provide you the access. So
Speaker 1: what trump's team is trying to do here? They're saying
Speaker 1: you see these records. We're challenging it as a civil matter.
Speaker 1: We want access to the documents to review it and
Speaker 1: decide how we're going to present our evidence that these
Speaker 1: were not classified. Of the markets aren't valid. The government
Speaker 1: saying Burns on you. You brought this action, present your evidence.
Speaker 1: You have no need to know in terms of seeing
Speaker 1: these particular documents with classification marketing, that's not our job
Speaker 1: to give it to you. It's not in our view,
Speaker 1: it's not in the interest of national security to provide
Speaker 1: you with that access. In every single case that has
Speaker 1: ever come up about this in a civil action has
Speaker 1: set over and over again the executive branch alone makes
Speaker 1: that decision. Judge Jalen cannon had barred the Justice Department
Speaker 1: from using some one hundred documents with classification markings, but
Speaker 1: on Wednesday a three judge panel of the Eleventh Circuit,
Speaker 1: including two judges appointed by trump, intervened and said the
Speaker 1: Justice Department can use those documents. Why did they intervene?
Speaker 1: This was the eleventh circuit bringing everyone back to reality
Speaker 1: on what the case law actually says and how this
Speaker 1: is actually supposed to work. Namely this was a civil litigant.
Speaker 1: Mr Trump who is now a private citizen, suing to
Speaker 1: try to regain access to, in control over, records that
Speaker 1: had been seized from him by the FBI. Pursue it
Speaker 1: to a search warrant and in the particular context of
Speaker 1: this appealed it concerned one documents with classification markets. At
Speaker 1: no point in the lower court litigation had he ever
Speaker 1: provided any evidence that the documents were not classified, that
Speaker 1: he had declassified him or that the markings were not valid.
Speaker 1: The burden was on him, and all of the case
Speaker 1: law that applies in this context, most of which has
Speaker 1: been dealt with in the context of either bring information
Speaker 1: or First Amendment Litigation for manuscripts the former employees, always
Speaker 1: makes clear that the burden to gain access to documentation
Speaker 1: that the government still thinks it is classified, that burden
Speaker 1: is going to be on the plaintiff to disprove essentially
Speaker 1: that the classification is valid, and Mr Trump had never
Speaker 1: done anything to create a genuine issue of material dispute
Speaker 1: on that front. That's why the circuit intervened. Did you
Speaker 1: see a rebuke to trump here? The panel said quote.
Speaker 1: For our part, we cannot discern why the plaintiff would
Speaker 1: have an individual interest in or need for any of
Speaker 1: the documents with classification markings. I thought it as more
Speaker 1: of a very polite and professional rebute to judge cannon
Speaker 1: more so than to Mr Trump. Mr Trump is trying
Speaker 1: to put forth whatever arguments he can, which is why
Speaker 1: he civil Litigan does in this context, trying to create
Speaker 1: a material controversy in order to try to delay in
Speaker 1: gain access to the records. The judge, Judge Cannon, should
Speaker 1: have known better, and that's what the Eleventh Circuit, I think,
Speaker 1: was really focusing on. It was more of a response
Speaker 1: of what were you thinking here? There's no possible basis
Speaker 1: in law for him to have a possessory interest in
Speaker 1: these documents. They also called trump's declassification argument a red herring.
Speaker 1: Explained that, sure so, the search warrant in the criminal
Speaker 1: provisions that are an issue do not rise and fall
Speaker 1: on whether or not the documents were declassified. It's certainly
Speaker 1: relevant in the context of the espionage espionage act claim,
Speaker 1: because there's only one case in which the government has
Speaker 1: ever pursued that type of charge for unclassified information relating
Speaker 1: to the national defense. But ultimately, as a matter of law,
Speaker 1: it doesn't matter if the documents were declassified, they were
Speaker 1: still contained information relating to the national defense. That's the
Speaker 1: espionage act charge and he obstructed the efforts by the
Speaker 1: FBI and Nara to recover them. The document and the
Speaker 1: search warrant only concerned documents with classification markings. It didn't
Speaker 1: hinge on the documents classified. Regular general impression of what's
Speaker 1: going on here. So what the trump team has tried
Speaker 1: to do here essentially is to drag out or delay
Speaker 1: this entire process. They're trying to throw, you know, a
Speaker 1: wrench into the criminal inquiry, to slow it all down,
Speaker 1: to drag out at whatever point Donald Trump may possibly, hypothetically,
Speaker 1: theoretically be indicted. The hope for them is that if
Speaker 1: they can slow down that part of the process and
Speaker 1: keep that delayed as long as possible, that even if
Speaker 1: there ultimately is an indictment, it will come late enough
Speaker 1: in the process that there won't be a trial before
Speaker 1: November and that either Donald trump or someone favorable to
Speaker 1: him will win the presidency and shut it all down.
Speaker 1: That's all this is. If this gets the trial and
Speaker 1: this gets to a jury verdict, it is almost certain,
Speaker 1: in my view, that donal trump will lose. That's why
Speaker 1: he's doing everything with the special master, with these various emotions.
Speaker 1: He's just trying to muck up the process. Thanks, Prad.
Speaker 1: That's Brad Moss of Mark said. Yeshiva University has decided
Speaker 1: to temporarily suspend all undergraduate club activities after the U
Speaker 1: S Supreme Court refused to step into a legal fight
Speaker 1: over recognition of a campus lgbt q student group. In
Speaker 1: an unsigned opinion, the Supreme Court said the New York
Speaker 1: School has other avenues for repeal it can pursue before
Speaker 1: the justices have to get involved. But in a descent
Speaker 1: joined by three other conservatives, Justice Samuel Alito predicted the
Speaker 1: university will ultimately prevail on the question of whether it's
Speaker 1: religious rights are being violated by having to recognize the
Speaker 1: Y you pride alliance joining me as Professor Richard Garnett
Speaker 1: of Notre Dame law school. So Rick, start by telling
Speaker 1: us about the supreme courts five to four decision. And
Speaker 1: it's a ruling not on the merits of the disagreement
Speaker 1: that yeshiva has with the regulators here. It was. It
Speaker 1: was about whether or not a New York state trial
Speaker 1: courts decision should be stayed. That is kind of put
Speaker 1: on hold in order for Yeshiva to be able to
Speaker 1: take its constitutional and other arguments to a higher court.
Speaker 1: So what the Supreme Court did is not say, you know,
Speaker 1: who's right about this disagreement with respect to the application
Speaker 1: of New York's law or what the First Amendment means.
Speaker 1: It just said that we're not going to block this
Speaker 1: lower state court. We're gonna tell yeshiva instead to pursue
Speaker 1: its available procedures in the New York system and then
Speaker 1: once they're done with the New York system, they can
Speaker 1: come back to us. I saw a lot of commentators
Speaker 1: say how unusual it was for the Supreme Court to basically,
Speaker 1: you know, lay out a roadmap for what yeshiva has
Speaker 1: to do. Did you find it unusual? It is unusual,
Speaker 1: not not unprecedented, but unusual. I mean it was pretty
Speaker 1: clear that only the dissenters, but you know, the court
Speaker 1: itself was pretty explicit about what they thought was still
Speaker 1: open and pretty explicit that they were ready and willing
Speaker 1: to look at the case again once the proper procedures
Speaker 1: have been followed, or what they think the proper procedures are.
Speaker 1: So I guess it's pretty reasonable to think that the
Speaker 1: the justices were signaling their views about the ultimate merits
Speaker 1: of the dispute. But you know it is pretty standard
Speaker 1: for the Supreme Court to sit back and let State
Speaker 1: Court proceedings work out in a chord with state law
Speaker 1: and state process before coming in. So the descent written
Speaker 1: by Justice Samuel Alito, at least four of us are
Speaker 1: likely to vote to grant Sir Sharrari if Shashiva's first
Speaker 1: amendment arguments are rejected on appeal and yeshiva would likely
Speaker 1: win if its case came before us. Isn't he deciding
Speaker 1: the case before it's even been argued? Well, you only
Speaker 1: need four justices to grant sert you know, and there
Speaker 1: were four justices on the descent there. So those four
Speaker 1: don't decide anything. They're just communicating that. You know, given
Speaker 1: our understanding of the case at present, if yeshiva asks
Speaker 1: us to take this case, we're going to vote to
Speaker 1: take it and you know for that to take it.
Speaker 1: But it was interesting that extra bit where justice leader
Speaker 1: does pretty clearly suggest to the parties below that he
Speaker 1: thinks it wouldn't just be the four on yeshiva side,
Speaker 1: and I think he's probably right about that. I mean
Speaker 1: I suspect that it wouldn't even be just five or
Speaker 1: even six, but that if the case were to actually
Speaker 1: get to the Supreme Court, that Yeshiva would win. But for,
Speaker 1: you know, whatever reasons, I'm not I'm not privy to them.
Speaker 1: Obviously a majority of the justices wanted to have this
Speaker 1: thing sort of play out more slowly and to play
Speaker 1: out fully in the State Court system before the Supreme
Speaker 1: Court comes in on the ultimate merits questions. Why do
Speaker 1: you think that it's such a clear cut case on
Speaker 1: the merits so that the doctrine that the supreme courts
Speaker 1: settled on in recent years is that a law that
Speaker 1: is not generally applicable but that burden's religion is subject
Speaker 1: to what's called strict scrutiny, and that's a very demanding standard.
Speaker 1: And it seems pretty clear that the New York anti
Speaker 1: discrimination regulation that's being applied here has lots of exceptions.
Speaker 1: There's all kinds of civic groups and clubs and other
Speaker 1: organizations that are not subject to this particular anti discrimination
Speaker 1: norm but yeshiva is, and so yeshiva is going to
Speaker 1: be able to say the application of this law is
Speaker 1: a burden on our religious freedom rights and because it's
Speaker 1: a burden that's being imposed by a law that's not general,
Speaker 1: then that burden has to be evaluated under this very
Speaker 1: demanding standard and generally speaking, when strict scrutiny is applied
Speaker 1: to a law, the law loses. And I think it'd
Speaker 1: be again more than just bob or even six justices
Speaker 1: who would think that that was true. Because if New
Speaker 1: York is willing to allow various other nonprofits to have
Speaker 1: internal rules that reflect their their values and their missions on,
Speaker 1: I think the court is going to say that they
Speaker 1: can't deny that to yeshiva. There's also a state law
Speaker 1: issue about whether yeshiva is even covered by this law,
Speaker 1: because the question is whether or not accounts as a
Speaker 1: religious institution, and the State Trial Court has said that
Speaker 1: yeshiva wasn't, and obviously yeshiva thinks that it is a
Speaker 1: religious institution. The Supreme Court wouldn't get involved probably in
Speaker 1: resolving with the State Court question, but that's going to
Speaker 1: be something to put the appellate courts in the state
Speaker 1: hash out. So the Lower Court judge ruled that yeshiva
Speaker 1: was incorporated as an educational institution, not a religious one.
Speaker 1: So so as a secular institution, it's bound by New
Speaker 1: York state human rights laws. If the Appellate Court affirms
Speaker 1: that as an interpretation of New York law, will the
Speaker 1: Supreme Court accept that? Yeah, because so if the appellate
Speaker 1: court in New York were to agree that that yeshiva
Speaker 1: is covered, then you sort of pivot to the First
Speaker 1: Amendment question. So in a sense the case has two layers. Right, UM,
Speaker 1: under New York law, should this anti discrimination rule even
Speaker 1: be applied to yeshiva? And the second question is, if
Speaker 1: the New York law does apply, well, does the First
Speaker 1: Amendment permit that application? And I think the question that
Speaker 1: Justice Alito and his colleagues, I think we're signaling their
Speaker 1: views on, was that latter constitutional question, that that even
Speaker 1: if the New York law does apply Um, under current
Speaker 1: free exercise doctrine, current First Amendment Doctrine Um, that application
Speaker 1: would probably be uh invalidated. So I'm wondering if the
Speaker 1: university has sort of tried to tread this line between
Speaker 1: welcoming lgbt Q students but refusing to recognize this club
Speaker 1: on religious grounds. Does that cut against yeshiva in any sense? Well,
Speaker 1: in order to get protection for religious freedom rights courts
Speaker 1: will ask whether the belief in question is sincere. So
Speaker 1: in some cases not, not very often, but in some
Speaker 1: cases a court might say that a party's inconsistent practices
Speaker 1: suggest that its objections are not really since here. I
Speaker 1: don't think that would happen here. You know, religious institutions
Speaker 1: are allowed to decide for themselves, Um, what their religious
Speaker 1: commitments are and Um Yeshiva's position could well be. Look,
Speaker 1: we have no we have no religious problem with welcoming people.
Speaker 1: The problem, the concern that we have is with officially
Speaker 1: recognizing a group, because that might be Um, that might
Speaker 1: count as kind of an institutional endorsement of the group's
Speaker 1: particular positions, which they might think Um, is different from simply,
Speaker 1: you know, welcoming people to come if they so chose.
Speaker 1: And of court is not gonna and we wouldn't want
Speaker 1: courts to do this. I don't think of court is
Speaker 1: not going to get into the question whether, you know,
Speaker 1: are yeshiva's religious liberty, religious positions it makes sense to us.
Speaker 1: Do they seem consistent to us to be line up
Speaker 1: with what you know, how we think their religion should
Speaker 1: be interpreted? Courts aren't going to get into that. So
Speaker 1: the school's taking this rather aggressive step of just suspending
Speaker 1: all the groups at school, while it follows the roadmap
Speaker 1: left by the Supreme Court, and a lawyer for the students,
Speaker 1: the gay students, said the university's action was divisive and
Speaker 1: shameful rather than accept one lgbt q peer support group
Speaker 1: on campus. It's a throwback to fifty years ago when
Speaker 1: the city of Jackson, Mississippi, closed all public swimming pools
Speaker 1: rather than comply with court orders to desegregate. Well, I
Speaker 1: guess we can talk about Um, who's being more aggressive.
Speaker 1: That's a pretty aggressive rhetorical stance to take with respect
Speaker 1: to ESCHIVA's actions. But but yeah, I mean they clearly
Speaker 1: decided that Um, and this, I suppose, confirms the sincerity
Speaker 1: of their position that Um, they genuinely do think that
Speaker 1: Um official recognition of this group, which again they believe
Speaker 1: is different from welcoming particular students, that official recognition would
Speaker 1: constitute an endorsement that's inconsistent with their religious character. and Um,
Speaker 1: you know they they're not going to violate court orders,
Speaker 1: but the way to Um be in compliance with that
Speaker 1: order is to not have groups officially recognized. Groups operating
Speaker 1: at all. I'm sure that's not the university's preference and Um,
Speaker 1: you know, once the litigation plays out, I suppose they
Speaker 1: can go back, you know, whether it's analogous to the
Speaker 1: kind of discrimination that the lawyer mentioned with respect to disaggregation.
Speaker 1: I guess people would disagree with that. I'm inclined to
Speaker 1: say that yeshiva would have a very different take on that.
Speaker 1: Does this Dispute Mirror the kinds of, you know, legal
Speaker 1: disputes we've seen that pit religious beliefs against local or
Speaker 1: state anti discrimination law? Yeah, sure, we were. When we're seeing,
Speaker 1: as you know, we're seeing more of these. You can
Speaker 1: think of the masterpiece cake shop decision, or there's a
Speaker 1: free speech decision that the Supreme Court has this year
Speaker 1: called three or three creative another wedding vendor case. Um,
Speaker 1: the fault in case from two years ago having to
Speaker 1: do with foster care certification in Philadelphia. This, this is
Speaker 1: the this is the arena in our current time. It
Speaker 1: wasn't always true where some of the more high profile
Speaker 1: classes between government regulations on the one hand and religious
Speaker 1: liberty interests on the other are are being seen. Now,
Speaker 1: you know, there's a there is a danger. I think
Speaker 1: that we focus on these classes more than many, many
Speaker 1: religious liberty cases that are out there that don't involve
Speaker 1: antidiscrimination law at all. But these are the ones that
Speaker 1: do seem to be the highest profile right now because
Speaker 1: it's it's just a fact that there is kind of
Speaker 1: a cultural or social or, I guess, the religious Um
Speaker 1: divide the country on some of these questions and they're
Speaker 1: they're going to continue. Yes, you know, all those cases
Speaker 1: you mentioned show why it's pretty clear which way the
Speaker 1: Supreme Court is going to rule on this, if it
Speaker 1: gets to the Supreme Court. Yes, I think that's true.
Speaker 1: And yet these cases are not contrary to with some
Speaker 1: people think. They're not always sort of liberals versus conservatives
Speaker 1: and so on. I mean, I think there has been
Speaker 1: an interest in trying to find kind of compromise positions
Speaker 1: where anti discrimination norms can be closely enforced in public
Speaker 1: contexts and certainly by government agencies and so on, while
Speaker 1: still giving religious institutions space to act in accord with
Speaker 1: their own religious beliefs. And you know, whether we're able
Speaker 1: to find, in kind of a consistent across the board way,
Speaker 1: those sort of compromised I guess that does remain, but
Speaker 1: I suspect that the justices will actually have a consensus
Speaker 1: on this one. Thanks Rick. That's Richard Gardner of Notre
Speaker 1: Dame law school. The Justice Department is laying out policy
Speaker 1: changes to crack down on corporate crime. It's centers on
Speaker 1: allowing more companies to voluntarily report misconduct and cooperate on
Speaker 1: remedial actions to avoid pleading guilty. Joining me is Chris Strom,
Speaker 1: Bloomberg legal reporter covering the Justice Department. So tell us
Speaker 1: about this new push by the Justice Department, where it
Speaker 1: comes from and how long it's been in the making. Well,
Speaker 1: the deputy attorney general, Lisa Monico, had made corporate enforcement
Speaker 1: a priority when she first came into her position. She
Speaker 1: has been in out of government and for a while
Speaker 1: she was working in the private sector and she knew
Speaker 1: what government priorities were, she understood what private sector concerns were,
Speaker 1: and so she came in and made an announcement that
Speaker 1: she was going to take a review of the department's
Speaker 1: Corporate Enforcement Priority these and Um she formed an advisory
Speaker 1: group and over to that, over the last year they've
Speaker 1: been looking at what it is that the department could do. Um,
Speaker 1: that would have more teeth in terms of getting companies
Speaker 1: to address misconduct but also be sensitive to a company concern.
Speaker 1: And so she has now announced that the department is
Speaker 1: implementing new policies and the primary push of the new
Speaker 1: policy will allow companies to avoid prosecution or having to
Speaker 1: plead guilty for misconduct as long as they come forward
Speaker 1: early and fully disclosed the misconduct that they've discovered to
Speaker 1: d o j and work with d o j to
Speaker 1: remediate the problem. So basically, they want companies to turn
Speaker 1: themselves in when they find there some wrongdoing. That's right.
Speaker 1: They want companies to police themselves. D O J for
Speaker 1: a while has focused on ending out that companies were
Speaker 1: committing crimes or participating in wrongdoing and going to them
Speaker 1: with more of a hammer and a prosecution approach, and
Speaker 1: what the department is trying to do now is encourage
Speaker 1: companies to police themselves and then work with the department
Speaker 1: so it doesn't have to be such an adversarial relationship.
Speaker 1: Now there's a lot of questions, a lot of concerns
Speaker 1: about how this is going to work in practice and
Speaker 1: will companies really be willing to come forward and disclose
Speaker 1: information and will the department really gives them leniency depending
Speaker 1: on what they admit to being misconduct. In your story
Speaker 1: you say they're going to shift the focus to prosecuting executives.
Speaker 1: In other words, no longer those you know. You'd hear
Speaker 1: the company pleads guilty to such and such. It's going
Speaker 1: to the individuals. Now the Justice Department is definitely interested
Speaker 1: in prosecuting individuals, whether their executives or company employees, who
Speaker 1: have committed wrongdoing, rather than trying to reach some kind
Speaker 1: of an agreement with a company and punish the company
Speaker 1: overall with some kind of a fine, because that can
Speaker 1: be seen as just being a slap on the wrist
Speaker 1: when you look at the amount of a fine compared
Speaker 1: to how much a company is worth, what kind of
Speaker 1: revenue and profits they have. And so the department wants
Speaker 1: to focus on holding individuals accountable more than just doing
Speaker 1: a broad prosecution of a company. And so the department
Speaker 1: also wants to get away from having to punish shareholders
Speaker 1: and people who didn't have anything to do with the
Speaker 1: misconduct and identify those who, in particular, will sponsible for
Speaker 1: the misconduct. So Monica. Monica described it as a combination
Speaker 1: of carrots and sticks. What are the carrots? So the
Speaker 1: carrots that the department is willing to offer is to
Speaker 1: allow companies to avoid pleading guilty, allow companies to avoid
Speaker 1: prosecution in exchange for coming forward and working with the
Speaker 1: department on a more cooperative basis. This assumes that the
Speaker 1: companies are investigating themselves, you know, during the average work
Speaker 1: day or or work week. I mean to find the
Speaker 1: misconduct within the company before d o j does correct
Speaker 1: what the department wants companies to do is to come
Speaker 1: up with monitoring and compliance programs on their own and
Speaker 1: to consistently monitor whether there's any misconduct taking place and
Speaker 1: to be able to catch it on their own and
Speaker 1: then come forward and disclose it too regulators. The department
Speaker 1: is willing to work with companies in order to help
Speaker 1: them develop a compliance program if that's what they want
Speaker 1: to do, but a lot of what the department is
Speaker 1: asking right now is for companies to police themselves. Chris,
Speaker 1: don't big companies now have compliance programs? Yes, there are
Speaker 1: many companies that have compliance programs. The department is arguing
Speaker 1: that some of these compliance programs are out of date
Speaker 1: or they sound good on paper but they're not really
Speaker 1: being used in practice, and so what will happen is
Speaker 1: that a company will be able to talk about all
Speaker 1: the compliance and in good business practices that they have
Speaker 1: and if there's a problem that is discovered, then they
Speaker 1: can point to that and say that they shouldn't suffer
Speaker 1: any penalties because they have these compliance programs. What Lisa
Speaker 1: Monica and the Justice Department are saying is that they
Speaker 1: need to be able to review the compliance program when
Speaker 1: making decisions about whether companies are going to be able
Speaker 1: to avoid pleading guilty or avoid prosecution, and they want
Speaker 1: to see a demonstrated commitment by companies over time that
Speaker 1: these companies are actually taking their compliance programs very seriously.
Speaker 1: And one thing in particular that the department wants to
Speaker 1: see is that companies clawback compensation or remove financial incentives
Speaker 1: for executives or employees who are found to have committed misconduct.
Speaker 1: And so if a company can show that over time
Speaker 1: they were taking action internally against individuals who had been
Speaker 1: in breach of certain practices, that will go a long
Speaker 1: way towards convincing the Justice Department that they've been actively
Speaker 1: trying to monitor compliance and enforce best business practices. And
Speaker 1: the department will a that into consideration. Have you talked
Speaker 1: to any corporate compliance officers to find out what their
Speaker 1: take is on this? Yes, we've reached out to corporate
Speaker 1: compliance officers. We've heard from them. In the process of
Speaker 1: the department putting together these new policies, there are a
Speaker 1: lot of concerns about exactly how this is going to work.
Speaker 1: The Department still needs to finalize some of its rules.
Speaker 1: Part of what the department is saying right now is
Speaker 1: that it is going to be coming forward with additional
Speaker 1: guidelines and additional rules for different components of the department.
Speaker 1: And so there's the overarching goal that the department has articulated,
Speaker 1: but then there's the issue of where the rubber meets
Speaker 1: the road for these companies and there are things that
Speaker 1: the companies want to see the department put forward in
Speaker 1: a more concrete fashion, especially with regard to the issue
Speaker 1: of compensation and are there certain thresholds that companies should
Speaker 1: be looking at when they are clawing back compensations? Are
Speaker 1: there certain monetary thresholds that the department is going to
Speaker 1: want to see companies meet? And B O J hasn't
Speaker 1: defined uh those kind of issues yet. It sounds like.
Speaker 1: This is a program that's going to take many years
Speaker 1: to get, you know, ingrained in corporations workings and also
Speaker 1: in the Justice Department, and by that time you may
Speaker 1: have a new justice department with new priorities. That's correct.
Speaker 1: This could be a situation where you find some companies,
Speaker 1: some corporate executives to simply wait out the Biden Justice
Speaker 1: Department to see what comes next. Certainly if, Um, you know,
Speaker 1: if President Biden is reelected or another Democrat comes in,
Speaker 1: you could see a lot of continuity between you know,
Speaker 1: democratic administration. That would then, you know, go against any
Speaker 1: companies that are trying to wait, wait this kind of
Speaker 1: a policy out. But UH, the department is making clear
Speaker 1: that there will be near term benefits for companies if
Speaker 1: they have good compliance programs and they show that that
Speaker 1: they're implementing them on a regular basis, and so they're
Speaker 1: trying to give companies incentives. This is always a, you know,
Speaker 1: it's a chicken and egg kind of conundrum that the
Speaker 1: department faces, where they always want to get companies to
Speaker 1: do better, and this is one way. This is this
Speaker 1: is the way that the Biden Justice Department has decided
Speaker 1: to approach the issue and yes, we will see if
Speaker 1: it works and if it can laughs over the long term.
Speaker 1: Marshall Miller, principal associate deputy attorney general, has amplified on
Speaker 1: these remarks this week and it said companies should find
Speaker 1: ways to reward employees for engaging in ethical behavior, not
Speaker 1: just for pushing profits higher. It's part of the same push.
Speaker 1: The Department still has to define more of what they
Speaker 1: want companies to do and how this is going to
Speaker 1: work in practice. And Marshall Miller, who is the principal
Speaker 1: associate deputy attorney general, spoke to a conference of business
Speaker 1: executives and said that it's not just about taking away
Speaker 1: compensation and financial incentives from people who are doing wrongdoing.
Speaker 1: It also matters if you reward people who are doing
Speaker 1: the right thing. And so what Mr Miller has made
Speaker 1: clear is that the department is also going to be
Speaker 1: looking at when companies reward employees and executives with additional compensation,
Speaker 1: additional financial incentives to do the right thing. So this
Speaker 1: is another example of something that you know, is not
Speaker 1: fully defined in terms of how the department is going
Speaker 1: to a approach these issues, so much as the department
Speaker 1: is going to continue to explain as it goes what
Speaker 1: the standards are that should be met and to that end,
Speaker 1: there are also department components that have not even defined
Speaker 1: certain policies that will govern non prosecution agreements with companies,
Speaker 1: and part of Lisa Monico's directive is for the components
Speaker 1: all across the department to write down these rules, and
Speaker 1: so it's going to take a little bit more time
Speaker 1: for individual components to come up with their own rules
Speaker 1: and those will be subject to review as well. So
Speaker 1: I found this very interesting. Miller warrant companies to have
Speaker 1: active policies to prevent employees from using personal mobile devices
Speaker 1: to circumvent corporate accountability. What does he want them to do?
Speaker 1: This stop people from using their iphones, ipads of computers
Speaker 1: at work. Yeah, this is a really fascinating aspect of
Speaker 1: where the department finds itself right now. We live in
Speaker 1: a world with ubiquitous technology and so people working at
Speaker 1: companies are going to have their corporate issue devices and
Speaker 1: they're going to have their personal devices. What Mr Miller
Speaker 1: is saying is that companies should be aware that when
Speaker 1: executives and employees are using their own personal devices, they
Speaker 1: might be doing things that are outside of the corporate
Speaker 1: compliance programs, outside of the corporate rules, they might be
Speaker 1: doing things that are actually violating some of the rules
Speaker 1: and Um procedures for a company. and Mr Miller is
Speaker 1: indicating that companies can be held responsible for activities that
Speaker 1: employees take on their own using their own personal devices,
Speaker 1: and it puts companies in a really difficult position because
Speaker 1: they need to figure out how to juggle not just
Speaker 1: compliance with their corporate issue devices and technology, but also
Speaker 1: making sure that they have some, you know, some rules
Speaker 1: and some compliance procedures in place for employees when they're
Speaker 1: using their own personal devices. Thanks, Chris. That's Bloomberg legal
Speaker 1: reporter Chris Strom, and that's it for this edition of
Speaker 1: the Bloomberg Law show. Remember you can always get the
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Speaker 1: ten B M Wall Street time. I'm June Grosso and
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