1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:33,159 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Our 7 00:00:33,200 --> 00:00:36,960 Speaker 1: next guest, Doug ditches and collected used cardboard when he 8 00:00:37,000 --> 00:00:41,160 Speaker 1: was a teenager. Today he's a billionaire and business icon. 9 00:00:41,200 --> 00:00:44,440 Speaker 1: I'm talking about Ken Langone, co founder of home Depot 10 00:00:44,520 --> 00:00:47,120 Speaker 1: and former director of the New York Stock Exchange UH 11 00:00:47,159 --> 00:00:51,040 Speaker 1: and founder and chairman of Infamed Associates. Keim. Thank you 12 00:00:51,120 --> 00:00:54,000 Speaker 1: so much for being with us. You have a new 13 00:00:54,040 --> 00:00:57,280 Speaker 1: book out. It has an unambiguous title, I Love Capitalism, 14 00:00:57,280 --> 00:01:02,640 Speaker 1: exclamation point and American Story. What made you write this book? Now? 15 00:01:04,200 --> 00:01:07,600 Speaker 1: It was very interesting. I've been approached by some people 16 00:01:07,640 --> 00:01:11,560 Speaker 1: in the publishing industry about three or four years ago. 17 00:01:11,760 --> 00:01:14,640 Speaker 1: I had a book to write, and I thanked him 18 00:01:14,640 --> 00:01:17,840 Speaker 1: and I said, really, not my thing. And then the 19 00:01:17,880 --> 00:01:22,200 Speaker 1: presidential election showed up in two thousand and sixteen, and 20 00:01:22,240 --> 00:01:26,399 Speaker 1: I happened to be watching Bernie Sanders, and I was 21 00:01:26,480 --> 00:01:29,960 Speaker 1: shocked at the number of young people that were passionately 22 00:01:30,319 --> 00:01:35,200 Speaker 1: and enthusiastically following his message. And it's scared the hell 23 00:01:35,240 --> 00:01:38,959 Speaker 1: out of me, because if people that young give up 24 00:01:39,080 --> 00:01:40,920 Speaker 1: on what brought us to the party and what made 25 00:01:40,920 --> 00:01:46,280 Speaker 1: America great, we really have trouble. Uh. Capitalism to me 26 00:01:46,480 --> 00:01:50,520 Speaker 1: is as magnifficent, very unique engine that only America has 27 00:01:50,840 --> 00:01:53,880 Speaker 1: in where we have it and the results that are 28 00:01:53,920 --> 00:01:57,080 Speaker 1: all around us, you can look and see better lives. 29 00:01:57,120 --> 00:02:01,200 Speaker 1: A poor kid like me, a kid that mediocre student. 30 00:02:01,560 --> 00:02:05,080 Speaker 1: Uh mother and father didn't go past the eighth grade, 31 00:02:06,560 --> 00:02:12,079 Speaker 1: lived from paycheck to paycheck. Uh not easy, but I 32 00:02:12,240 --> 00:02:14,400 Speaker 1: never knew I didn't have anything because I always had 33 00:02:14,440 --> 00:02:19,280 Speaker 1: a warm house and uh plenty of good food. But 34 00:02:19,360 --> 00:02:22,440 Speaker 1: my parents had to work like hell. And here I 35 00:02:22,480 --> 00:02:25,280 Speaker 1: am today, and by the way, whatever success I have, 36 00:02:25,400 --> 00:02:28,440 Speaker 1: and I'll leave it for others to judge that it 37 00:02:28,520 --> 00:02:31,440 Speaker 1: only happened because I had so many people, so many 38 00:02:31,480 --> 00:02:34,640 Speaker 1: many people helped me along the way. I'm not self made. 39 00:02:34,680 --> 00:02:38,400 Speaker 1: I'm anything but self made. But this is a magnificent country. 40 00:02:38,440 --> 00:02:40,840 Speaker 1: And I just thought it was up to me to 41 00:02:40,880 --> 00:02:43,280 Speaker 1: take a stand and say, hey, wait a minute. Let's 42 00:02:43,280 --> 00:02:45,320 Speaker 1: not kill the baby with the bath water. Let's that's 43 00:02:45,320 --> 00:02:48,040 Speaker 1: where the baby out with the bath water, I should say. 44 00:02:48,800 --> 00:02:52,040 Speaker 1: So that's what made me write the book. Ken lang Gone, 45 00:02:52,720 --> 00:02:57,320 Speaker 1: Just so people understand, you persuaded Ross Perro to hire 46 00:02:57,360 --> 00:03:00,800 Speaker 1: you to lead his initial public offering for electronic Data 47 00:03:00,880 --> 00:03:05,000 Speaker 1: Systems co founder of home Depot. I wonder if you 48 00:03:05,000 --> 00:03:09,040 Speaker 1: could just speak a little bit about that June day 49 00:03:09,120 --> 00:03:14,600 Speaker 1: in ninety seven when you graduated from Bucknell. And there's 50 00:03:14,639 --> 00:03:17,800 Speaker 1: a wonderful picture in the book of you and your parents, 51 00:03:17,880 --> 00:03:22,720 Speaker 1: John and Angie Langne, and how you got into Bucknell 52 00:03:23,440 --> 00:03:27,040 Speaker 1: and how you managed to graduate. Well, that's interesting. I 53 00:03:27,080 --> 00:03:31,960 Speaker 1: got into buck Now almost by accident. I had gone up. 54 00:03:32,120 --> 00:03:34,040 Speaker 1: I was a senior in high school. It was nineteen 55 00:03:34,080 --> 00:03:36,800 Speaker 1: fifty three. It was the spring of the year. The 56 00:03:36,840 --> 00:03:38,960 Speaker 1: Korean War was still on. I don't know how. Had 57 00:03:39,000 --> 00:03:40,920 Speaker 1: just been elected. I was going to join the Marine 58 00:03:40,920 --> 00:03:43,560 Speaker 1: Corps here for high school. My mother wouldn't saw it. 59 00:03:43,600 --> 00:03:46,880 Speaker 1: I wouldn't be eighteen until September, and my mother wouldn't 60 00:03:47,040 --> 00:03:49,080 Speaker 1: My brother was already in the military. I only had 61 00:03:49,080 --> 00:03:50,800 Speaker 1: one brother. He was in the military, and my mother 62 00:03:50,920 --> 00:03:53,440 Speaker 1: was adamant. She was not going to sign me and 63 00:03:53,680 --> 00:03:55,480 Speaker 1: if I wanted to wait to lateeen and I wanted 64 00:03:55,480 --> 00:03:57,160 Speaker 1: to go, she couldn't join me about it. But anyway, 65 00:03:57,160 --> 00:04:00,320 Speaker 1: I want to Bucknell for a weekend to visit some ends. 66 00:04:01,040 --> 00:04:03,040 Speaker 1: And it turns out it was we then called house 67 00:04:03,040 --> 00:04:05,040 Speaker 1: party weekend, and boy, I had a hell of a time. 68 00:04:05,520 --> 00:04:07,000 Speaker 1: And I thought, my god, if this is what they 69 00:04:07,040 --> 00:04:09,080 Speaker 1: do in college, and I might want to think about college, 70 00:04:09,720 --> 00:04:14,680 Speaker 1: and and on. And Eisenhower didn't cooperate because he ended 71 00:04:14,720 --> 00:04:17,360 Speaker 1: the Korean War, so there was no water go up 72 00:04:17,800 --> 00:04:21,200 Speaker 1: for and while the weekend I was up at buck 73 00:04:21,240 --> 00:04:24,480 Speaker 1: Now the kids I was seeing the but I used 74 00:04:24,520 --> 00:04:26,960 Speaker 1: to have Saturday classes, and the kids I was here 75 00:04:27,000 --> 00:04:28,840 Speaker 1: to see told me to go see the gold and 76 00:04:28,880 --> 00:04:32,279 Speaker 1: the building up as a guy there registrar, he wasn't 77 00:04:32,279 --> 00:04:34,960 Speaker 1: called at Deana, it's called the Registrar's name was George Faint. 78 00:04:35,800 --> 00:04:37,120 Speaker 1: And I went over and I saw him. Any what 79 00:04:37,160 --> 00:04:38,360 Speaker 1: are you doing you? And I was all My friends 80 00:04:38,360 --> 00:04:40,039 Speaker 1: said I should come and talk to you. What about 81 00:04:40,040 --> 00:04:42,480 Speaker 1: I I don't know, Well, tell me about yourself. I 82 00:04:42,560 --> 00:04:44,320 Speaker 1: was long, I'm in high school and what are you 83 00:04:44,360 --> 00:04:46,600 Speaker 1: going to do? I don't know. I'm thinking about going 84 00:04:46,640 --> 00:04:49,520 Speaker 1: to the Marine Corps. Will I have you applied to college? 85 00:04:49,520 --> 00:04:52,480 Speaker 1: And I said no, Well you want to go to college? 86 00:04:52,520 --> 00:04:54,720 Speaker 1: I said, well, I'm not sure. I thought we had. 87 00:04:54,960 --> 00:04:56,760 Speaker 1: We ended up having a talk for about an hour. 88 00:04:57,360 --> 00:04:59,359 Speaker 1: The following week, he sent me a letter and he said, 89 00:05:00,080 --> 00:05:01,520 Speaker 1: if you want to come to buck now, we'd love 90 00:05:01,600 --> 00:05:03,840 Speaker 1: to have you. But you're gonna have to work much 91 00:05:03,839 --> 00:05:06,160 Speaker 1: harder in college. And you did in high school. Well 92 00:05:06,200 --> 00:05:08,320 Speaker 1: that wasn't hard because I didn't do it. Damn practically 93 00:05:08,320 --> 00:05:11,760 Speaker 1: nothing in high school. But thank god I had a 94 00:05:11,800 --> 00:05:14,360 Speaker 1: good mind. I just didn't put it to much use. 95 00:05:14,920 --> 00:05:17,200 Speaker 1: And so I ended up going to buck Bell and 96 00:05:17,279 --> 00:05:21,479 Speaker 1: I almost flunked out stories in the book, And but 97 00:05:21,640 --> 00:05:23,760 Speaker 1: for a professor who saw something to me, I didn't 98 00:05:23,760 --> 00:05:26,960 Speaker 1: see it myself. He he got all my other professors 99 00:05:27,000 --> 00:05:29,120 Speaker 1: together and they worked to pull me out of this 100 00:05:29,200 --> 00:05:32,760 Speaker 1: nose dive, and I ended up graduating from Buckdell and 101 00:05:32,839 --> 00:05:37,520 Speaker 1: Free are years. I actually graduated in February fifty seven, 102 00:05:38,160 --> 00:05:40,680 Speaker 1: but the ceremony was in June, and I wanted my 103 00:05:40,800 --> 00:05:43,800 Speaker 1: parents to see the graduation. And that's when I went 104 00:05:43,839 --> 00:05:47,840 Speaker 1: back for the graduation, and that's where that picture came from. 105 00:05:47,880 --> 00:05:51,640 Speaker 1: So it was my parents. My parents just couldn't believe 106 00:05:51,640 --> 00:05:54,000 Speaker 1: they had a son who went to college, graduating college. 107 00:05:54,720 --> 00:05:58,640 Speaker 1: It was, it was, it was, it was. It was 108 00:05:58,680 --> 00:06:01,880 Speaker 1: just special. That's why I sorry. I'm sorry. I'm bringing 109 00:06:01,960 --> 00:06:06,200 Speaker 1: up ken Um. You have an amazing story and it's 110 00:06:06,200 --> 00:06:09,919 Speaker 1: a fabulous book. Everybody should read it. I'm wondering, you know, 111 00:06:10,080 --> 00:06:13,120 Speaker 1: I want to talk about what you were saying when 112 00:06:13,200 --> 00:06:15,440 Speaker 1: you said, you know, you saw Britie Sanders and people 113 00:06:15,440 --> 00:06:19,880 Speaker 1: who are kind of challenging the American capitalistic dream. And 114 00:06:19,920 --> 00:06:22,719 Speaker 1: I'm wondering whether you think anything has changed at a 115 00:06:22,760 --> 00:06:24,800 Speaker 1: time when there's one and a half trillion dollars of 116 00:06:24,839 --> 00:06:28,920 Speaker 1: student debt hanging out there and uh and sort of 117 00:06:28,960 --> 00:06:33,960 Speaker 1: the gap between wealthy and poor people has widened. Let 118 00:06:33,960 --> 00:06:38,279 Speaker 1: me show you how much I'm committed to the problem. 119 00:06:38,320 --> 00:06:40,400 Speaker 1: I'm shaman of the n Y you laying own health. 120 00:06:42,360 --> 00:06:45,080 Speaker 1: The Dean and CEO Bob Grossman, and I have one 121 00:06:45,680 --> 00:06:50,039 Speaker 1: remaining major passion. We want to tell every kid that 122 00:06:50,160 --> 00:06:54,279 Speaker 1: comes to our medical school they will no longer pay tuition. 123 00:06:55,920 --> 00:06:59,479 Speaker 1: That will only happen if we can get wealthy people 124 00:06:59,560 --> 00:07:02,479 Speaker 1: to con tribute to our endowment. That we can afford 125 00:07:02,560 --> 00:07:07,880 Speaker 1: to do that now about the trillion dollar, trillion and 126 00:07:07,960 --> 00:07:14,120 Speaker 1: a half dollars of debt. Number one, my father insisted. 127 00:07:14,160 --> 00:07:16,600 Speaker 1: My father was a plumber. But while I was in 128 00:07:16,720 --> 00:07:19,800 Speaker 1: high school, my father insisted I helped him so that 129 00:07:20,120 --> 00:07:21,760 Speaker 1: when I got out of college high school. When I 130 00:07:21,800 --> 00:07:23,720 Speaker 1: got out of high school, I didn't go to college. 131 00:07:23,720 --> 00:07:27,480 Speaker 1: I'd have a trade a plumber. A lot of kids 132 00:07:27,520 --> 00:07:31,040 Speaker 1: that are going to college today and and burdening themselves 133 00:07:31,040 --> 00:07:35,200 Speaker 1: with debt would be better served learning a trade, learning 134 00:07:35,200 --> 00:07:38,840 Speaker 1: a skill. We have an incredible shortage in this city 135 00:07:38,960 --> 00:07:42,640 Speaker 1: of plumbers, carpenters, electricians, and they have great They are 136 00:07:42,720 --> 00:07:46,760 Speaker 1: hundred thousand, hundred thousand dollars a year jobs. These are 137 00:07:46,800 --> 00:07:50,240 Speaker 1: not low paying jobs. First of all, let's start with 138 00:07:50,360 --> 00:07:55,680 Speaker 1: the belief that college isn't for everybody, and you don't 139 00:07:55,720 --> 00:07:59,680 Speaker 1: have to go to college to be successful. Many of 140 00:07:59,760 --> 00:08:03,200 Speaker 1: the people I know I never saw the inside of 141 00:08:03,200 --> 00:08:07,000 Speaker 1: a college, and they were enormously successful. So I think 142 00:08:07,040 --> 00:08:09,560 Speaker 1: we need to take a step back and ask ourselves 143 00:08:09,560 --> 00:08:12,800 Speaker 1: the question, is this the magic pill? No, I don't 144 00:08:12,840 --> 00:08:16,520 Speaker 1: think it is. But if it is, let's figure a 145 00:08:16,560 --> 00:08:19,720 Speaker 1: way out to make it affordable for kids. And I 146 00:08:19,760 --> 00:08:21,720 Speaker 1: don't know the answer to that, except I do know 147 00:08:22,200 --> 00:08:26,080 Speaker 1: that the more money that you raised philanthropically, like Buck Noll, 148 00:08:26,640 --> 00:08:28,920 Speaker 1: like New York University, or I was in a finance 149 00:08:29,000 --> 00:08:32,920 Speaker 1: committee of the university last week. The more endowment we 150 00:08:32,920 --> 00:08:35,920 Speaker 1: can generate, the more income we have that we can 151 00:08:35,960 --> 00:08:41,600 Speaker 1: offer more student subsidization of their courts. There's no easy answer, 152 00:08:42,840 --> 00:08:45,120 Speaker 1: ken Lan gone, would you say that one of the 153 00:08:45,160 --> 00:08:48,720 Speaker 1: magic pills for your life has been your wife? Elaine? 154 00:08:49,160 --> 00:08:53,360 Speaker 1: Oh boy and half, big time, big time talk about 155 00:08:53,360 --> 00:08:56,080 Speaker 1: being us. How big this she is? I'm telling you 156 00:08:56,160 --> 00:08:59,520 Speaker 1: right now, big time. Every crazy idea I had, she 157 00:08:59,640 --> 00:09:01,520 Speaker 1: was always here, you know. And when they didn't work, 158 00:09:01,600 --> 00:09:03,920 Speaker 1: she was there. And when they did work, she was there. 159 00:09:04,920 --> 00:09:09,560 Speaker 1: You know. She's she's my anchor to Winwood. Absolutely. Hey. Look, 160 00:09:09,920 --> 00:09:12,840 Speaker 1: and by the way, every marriage has bumps on the road, 161 00:09:12,960 --> 00:09:15,400 Speaker 1: but that's part of living. Every life has bumps on 162 00:09:15,400 --> 00:09:19,959 Speaker 1: the road. And and and where where? How we how 163 00:09:19,960 --> 00:09:21,760 Speaker 1: do we live? We'd blow to sit down on a 164 00:09:21,800 --> 00:09:24,280 Speaker 1: Sunday and rainy afternoon like it was this past weekend 165 00:09:24,520 --> 00:09:27,800 Speaker 1: and watch a movie. Simple stuff. Anybody can do it, 166 00:09:29,480 --> 00:09:32,440 Speaker 1: um can I just I want to? I want to 167 00:09:32,600 --> 00:09:34,959 Speaker 1: end on a slightly different note. I know that you 168 00:09:35,040 --> 00:09:39,400 Speaker 1: interest in Palenteer, a company that Peter Thiel founded, and 169 00:09:39,440 --> 00:09:42,679 Speaker 1: there's been some discussion that it could potentially be heard 170 00:09:42,720 --> 00:09:46,440 Speaker 1: by the sort of resumption of her Rand's sanctions. What's 171 00:09:46,440 --> 00:09:47,760 Speaker 1: your take on this and do you think it will 172 00:09:47,760 --> 00:09:52,080 Speaker 1: affect the valuations there? I don't, frankly understand. It's a 173 00:09:52,120 --> 00:09:55,280 Speaker 1: complicated situation where I ran, I know this much about 174 00:09:55,280 --> 00:09:58,640 Speaker 1: Palenteer and why I'm excited about it. I know that 175 00:09:58,760 --> 00:10:04,079 Speaker 1: American lives I've been saved by Palenteer. That's a dramatic statement. 176 00:10:04,520 --> 00:10:07,440 Speaker 1: I know that American lives have been saved by what 177 00:10:07,559 --> 00:10:13,680 Speaker 1: Palenteer does. I know that terrorist attacks in America have 178 00:10:13,880 --> 00:10:19,200 Speaker 1: been stopped before they happened because of Palenteer. And I'm 179 00:10:19,320 --> 00:10:22,360 Speaker 1: I'm a proud investor in Palenteer. If I didn't make 180 00:10:22,400 --> 00:10:24,959 Speaker 1: any money you a Palenteer, I'd be fine because what 181 00:10:25,000 --> 00:10:29,320 Speaker 1: they're doing to me is an enormous social good. I 182 00:10:29,440 --> 00:10:33,320 Speaker 1: am a devoted believer in what Palenteer does. I think 183 00:10:33,360 --> 00:10:36,880 Speaker 1: it's a social good. We gotta leave it there. Ken 184 00:10:36,960 --> 00:10:41,560 Speaker 1: lang Gone the co founder of the Home Depot, and 185 00:10:41,720 --> 00:10:46,480 Speaker 1: his new book is entitled I Love Capitalism, an American Story. 186 00:10:46,800 --> 00:11:04,280 Speaker 1: Thank you very much, Ken, langgoing. President Trump has said 187 00:11:04,280 --> 00:11:08,320 Speaker 1: the US is going to withdraw from the Iran Nuclear Agreement, 188 00:11:08,600 --> 00:11:12,160 Speaker 1: and after that announcement, we're getting worried today that sanctions 189 00:11:12,240 --> 00:11:14,960 Speaker 1: are being imposed on a governor of the Central Bank 190 00:11:15,120 --> 00:11:17,960 Speaker 1: of Iran for his role moving quote millions of dollars 191 00:11:17,960 --> 00:11:22,400 Speaker 1: to Hezbollah on behalf of Islamic Revolutionary God Corpse Force. 192 00:11:22,679 --> 00:11:24,800 Speaker 1: This according to the Treasury Department. Joining US now to 193 00:11:24,840 --> 00:11:26,880 Speaker 1: talk a little bit more about what else we can 194 00:11:26,920 --> 00:11:30,079 Speaker 1: expect in the wake of this decision by President Trump 195 00:11:30,120 --> 00:11:33,680 Speaker 1: is Daniel Weger, vice president in the Global Financial Crime 196 00:11:33,679 --> 00:11:37,720 Speaker 1: Compliance division at Lexus Nexus Risk Solutions, a part of 197 00:11:37,720 --> 00:11:40,920 Speaker 1: the ri l X Group based in New York. Daniel, 198 00:11:40,920 --> 00:11:43,400 Speaker 1: thank you so much for joining us UM. You have 199 00:11:43,480 --> 00:11:48,760 Speaker 1: extensive experience working with government agencies with these matters. How 200 00:11:49,000 --> 00:11:50,959 Speaker 1: much do you think that we're going to see these 201 00:11:51,000 --> 00:11:53,000 Speaker 1: types of headlines coming out? I mean, are there gonna 202 00:11:53,000 --> 00:11:56,560 Speaker 1: be quite a few additional sanctions revealed in the next 203 00:11:56,559 --> 00:11:59,360 Speaker 1: couple of weeks. Thank you for having me this morning. 204 00:11:59,520 --> 00:12:02,120 Speaker 1: I think it's going to be a constantly changing environment 205 00:12:02,120 --> 00:12:04,880 Speaker 1: over the next several months, not only as the Treasury 206 00:12:05,080 --> 00:12:09,040 Speaker 1: um imposes UM numerals and regulations, but also as they 207 00:12:09,120 --> 00:12:13,440 Speaker 1: reinstate old licenses UM sunsets and existing licenses UM for 208 00:12:13,520 --> 00:12:15,719 Speaker 1: companies that have engaged with Iran. So it will be 209 00:12:15,800 --> 00:12:19,679 Speaker 1: a constantly changing environment. Well, Daniel. Over the weekend, I 210 00:12:19,720 --> 00:12:22,640 Speaker 1: believe the chief executive A Seaman, said that his company 211 00:12:22,679 --> 00:12:26,240 Speaker 1: could not do any new business in Iran after the 212 00:12:26,320 --> 00:12:29,480 Speaker 1: United States decided to pull out of this deal. And 213 00:12:29,720 --> 00:12:33,839 Speaker 1: indeed there are about forty billion dollars worth of aircraft 214 00:12:33,920 --> 00:12:40,600 Speaker 1: deals for new planes from Boeing as well as air Bus. Uh. 215 00:12:40,760 --> 00:12:43,880 Speaker 1: Do you believe that that that will remain something in place? 216 00:12:45,080 --> 00:12:47,280 Speaker 1: So the Treasury is going to have to examine request 217 00:12:47,320 --> 00:12:51,600 Speaker 1: from companies on an individual basis for licenses and exceptions UM. 218 00:12:51,640 --> 00:12:54,000 Speaker 1: There's also a wind down period place that runs for 219 00:12:54,040 --> 00:12:56,360 Speaker 1: the next several months for companies to wind down existing 220 00:12:56,720 --> 00:13:00,360 Speaker 1: engagements and transactions. But it's certain that to many of 221 00:13:00,400 --> 00:13:03,000 Speaker 1: those deals and any deals that are inflighting enough finalized 222 00:13:03,040 --> 00:13:05,600 Speaker 1: could be in jeopardy. Daniel. I'm struck by what you 223 00:13:05,640 --> 00:13:09,320 Speaker 1: said that the environment is going to be constantly changing. 224 00:13:09,679 --> 00:13:12,040 Speaker 1: So how do companies make sure that they actually comply 225 00:13:12,120 --> 00:13:15,280 Speaker 1: with all of the new sanctions. It's an excellent question. 226 00:13:15,440 --> 00:13:19,800 Speaker 1: The companies like lectus Nectus resolutions focus on providing companies 227 00:13:19,840 --> 00:13:23,600 Speaker 1: with data from government lists as well as information on 228 00:13:23,720 --> 00:13:30,240 Speaker 1: companies and entities throughout the globe to help companies identify customers, counterparties, 229 00:13:30,600 --> 00:13:34,120 Speaker 1: supply chain entities that could bring them risk by way 230 00:13:34,120 --> 00:13:38,360 Speaker 1: of having transactions themselves with irany entities. Now, if you're 231 00:13:38,400 --> 00:13:42,040 Speaker 1: a non US company but the product that you sell 232 00:13:42,160 --> 00:13:48,200 Speaker 1: has ten percent or more of US originating parts, you'd 233 00:13:48,200 --> 00:13:52,439 Speaker 1: be covered by these new sanctions correct um. It's difficult 234 00:13:52,480 --> 00:13:55,160 Speaker 1: to make a single rule on that because there are 235 00:13:55,160 --> 00:13:57,360 Speaker 1: two aspects and two issues of play here. One is 236 00:13:57,400 --> 00:14:02,000 Speaker 1: the sanctions aspect, which prohibits broadly prohibits transactions services are 237 00:14:02,040 --> 00:14:05,080 Speaker 1: goods to be transferred to listed and named entities, But 238 00:14:05,120 --> 00:14:09,280 Speaker 1: there's also issues around the commodities involved so UM components 239 00:14:09,280 --> 00:14:12,600 Speaker 1: of the goods UM goods that are dual use UM 240 00:14:12,720 --> 00:14:15,800 Speaker 1: or armaments or could be used in such products are 241 00:14:15,880 --> 00:14:19,480 Speaker 1: subject to additional restrictions. So for companies UH. Fortunately, most 242 00:14:19,560 --> 00:14:22,960 Speaker 1: have complex structures in place to abide by these rules. 243 00:14:22,960 --> 00:14:25,040 Speaker 1: But it is a multi layered set of rules that 244 00:14:25,360 --> 00:14:27,280 Speaker 1: intertwined with each other and create a great deal of 245 00:14:27,840 --> 00:14:31,200 Speaker 1: confusion for companies that are operating that space. What are 246 00:14:31,240 --> 00:14:35,200 Speaker 1: you saying in terms of the oil industry and companies 247 00:14:35,240 --> 00:14:40,240 Speaker 1: that have longstanding agreements in the region to provide oil 248 00:14:40,280 --> 00:14:44,360 Speaker 1: field services, what is their situation going to be like? Well, 249 00:14:44,680 --> 00:14:47,680 Speaker 1: it would be good to delineate between US companies and 250 00:14:47,720 --> 00:14:50,200 Speaker 1: those that are global UM but which have a presence 251 00:14:50,400 --> 00:14:54,160 Speaker 1: UM either through trading on US exchanges or the sale 252 00:14:54,160 --> 00:14:56,160 Speaker 1: of US goods or as you mentioned before, the use 253 00:14:56,200 --> 00:14:59,360 Speaker 1: of component US goods, because the implications for both will 254 00:14:59,360 --> 00:15:03,080 Speaker 1: be somewhat differ for US companies UM. This period of 255 00:15:03,120 --> 00:15:06,960 Speaker 1: relaxed Iranian sanctions has not actually given much relief to 256 00:15:07,160 --> 00:15:10,080 Speaker 1: US persons or entities to engage in transactions with Iran, 257 00:15:10,200 --> 00:15:12,560 Speaker 1: so for them it will be somewhat less complicated. But 258 00:15:12,640 --> 00:15:14,640 Speaker 1: as you go down the supply chain, as you deal 259 00:15:14,720 --> 00:15:19,480 Speaker 1: with transactional counterparties for financial institutions, UM, global institutions and 260 00:15:19,480 --> 00:15:22,000 Speaker 1: global companies have been engaging in that space and can 261 00:15:22,040 --> 00:15:25,680 Speaker 1: bring risk UM either for themselves or for their US 262 00:15:25,720 --> 00:15:29,760 Speaker 1: company counterparties in such transactions. So, Daniel, I want to 263 00:15:29,760 --> 00:15:32,800 Speaker 1: shift gears a little bit to tap into your vast 264 00:15:32,880 --> 00:15:35,200 Speaker 1: knowledge after having worked at the U S Department of 265 00:15:35,240 --> 00:15:38,040 Speaker 1: Homeland Security, US Custom Service, that's just a part of 266 00:15:38,040 --> 00:15:40,320 Speaker 1: the Department of Treasury and the New York High Intensity 267 00:15:40,360 --> 00:15:44,440 Speaker 1: Financial Crime Area. I want to talk about something happening domestically, 268 00:15:44,880 --> 00:15:48,920 Speaker 1: namely Michael Cohen and the financial records that have been 269 00:15:48,960 --> 00:15:53,200 Speaker 1: widely reported about Essential Consultants, his shell company. And some 270 00:15:53,240 --> 00:15:56,360 Speaker 1: people are saying that the revelation of some of this 271 00:15:56,440 --> 00:16:00,440 Speaker 1: information is illegal because banks are not allowed to share 272 00:16:00,440 --> 00:16:04,200 Speaker 1: this information publicly. What's your take on this? So, the 273 00:16:04,520 --> 00:16:08,960 Speaker 1: Bank Secrecy Act and other related and implementing regulations provide 274 00:16:09,040 --> 00:16:13,520 Speaker 1: for requirements for US financial institutions and other regulated entities 275 00:16:13,560 --> 00:16:17,160 Speaker 1: such as payment processors and money services businesses, casino, etcetera, 276 00:16:17,640 --> 00:16:21,000 Speaker 1: to provide reports to the Treasury, specifically to FINCE in 277 00:16:21,040 --> 00:16:24,760 Speaker 1: the Financial Crimes Enforcement Network part of the Treasury um 278 00:16:24,840 --> 00:16:28,160 Speaker 1: highlighting what they believe to be suspicious or potentially suspicious 279 00:16:28,160 --> 00:16:31,560 Speaker 1: activity by customers. And that information has afforded a great 280 00:16:31,600 --> 00:16:36,000 Speaker 1: deal of secrecy, both to protect the privacy uh and 281 00:16:36,040 --> 00:16:38,040 Speaker 1: the rights of the person or the entity which is 282 00:16:38,480 --> 00:16:41,520 Speaker 1: being referred on the basis of mere suspicion, but also 283 00:16:41,560 --> 00:16:44,280 Speaker 1: to protect the banks and to encourage them to continue 284 00:16:44,280 --> 00:16:47,560 Speaker 1: to file such reports. And it's important to note that 285 00:16:47,960 --> 00:16:50,680 Speaker 1: such reports do not. They're not referenced in court filings, 286 00:16:50,680 --> 00:16:53,160 Speaker 1: they're not designed to being. In fact, they're they're restricted 287 00:16:53,160 --> 00:16:56,840 Speaker 1: from being a referenced It's incumbent upon investigators to review 288 00:16:56,920 --> 00:17:00,760 Speaker 1: them as lead material, to analyze financial records more holistically, 289 00:17:01,240 --> 00:17:04,040 Speaker 1: and then to present an analysis the activity in accordance 290 00:17:04,040 --> 00:17:08,720 Speaker 1: with judicial standards. Does the role of the US dollar 291 00:17:08,800 --> 00:17:11,520 Speaker 1: as the world's reserve currency, does it make it easier 292 00:17:11,760 --> 00:17:16,520 Speaker 1: for US regulators and investigators to actually track that kind 293 00:17:16,560 --> 00:17:20,000 Speaker 1: of misuse of funds. That's a great point. The the 294 00:17:20,080 --> 00:17:23,000 Speaker 1: US dollar, because of its pre eminence nets space, does 295 00:17:23,080 --> 00:17:27,080 Speaker 1: provide an avenue for enforcement and prosecution that has a 296 00:17:27,160 --> 00:17:30,800 Speaker 1: very global reach. And US enforcement and regulatory agencies have 297 00:17:30,920 --> 00:17:34,439 Speaker 1: shown a strong desire through their billions of dollars in 298 00:17:34,560 --> 00:17:37,919 Speaker 1: enforcement penalties and fines that have been levied against corporations 299 00:17:37,920 --> 00:17:41,800 Speaker 1: and banks. So, just to just to wrap up here, 300 00:17:41,800 --> 00:17:45,040 Speaker 1: as we hear all about some of these payments and such, 301 00:17:45,320 --> 00:17:48,840 Speaker 1: what's your big takeaway of some of the suspicious of 302 00:17:49,200 --> 00:17:54,760 Speaker 1: activity around the election? Well, um representing specifically focus on 303 00:17:54,920 --> 00:17:58,480 Speaker 1: the financials um the reference of shell companies. All of 304 00:17:58,520 --> 00:18:02,840 Speaker 1: these things by them selves are are simply suspicion or 305 00:18:02,840 --> 00:18:06,679 Speaker 1: potentially suspicious and things like shell companies are simply a 306 00:18:06,720 --> 00:18:11,240 Speaker 1: flag that require companies and financial institutions to dive deeper 307 00:18:11,320 --> 00:18:14,520 Speaker 1: to engage and enhance due diligence, to understand the people 308 00:18:14,560 --> 00:18:18,159 Speaker 1: behind those entities, the purpose of payment um and it's 309 00:18:18,200 --> 00:18:21,320 Speaker 1: really important that companies, both corporate who operate in the 310 00:18:21,359 --> 00:18:24,960 Speaker 1: global marketplace as well as banks understand their obligations and 311 00:18:24,960 --> 00:18:28,920 Speaker 1: their tremendous exposure UH to enforcement activities if they don't 312 00:18:29,200 --> 00:18:32,000 Speaker 1: exert the right amount of effort on such compliance programs. 313 00:18:32,280 --> 00:18:34,080 Speaker 1: I want to thank you very much for joining us. 314 00:18:34,320 --> 00:18:38,480 Speaker 1: Daniel Wager is a vice president Global financial Crime Compliance 315 00:18:38,880 --> 00:18:43,000 Speaker 1: for Lexus Nexus Risk Solutions, a part of the r 316 00:18:43,160 --> 00:18:47,359 Speaker 1: E l X Group. Talking about Iran and U S sanctions, 317 00:19:03,600 --> 00:19:07,480 Speaker 1: the approaching legalization of cannabis around the United States and 318 00:19:07,640 --> 00:19:10,640 Speaker 1: in Canada, of course, could it be igniting a variety 319 00:19:10,680 --> 00:19:13,440 Speaker 1: of deals. Well, in many cases it already has done so. 320 00:19:13,880 --> 00:19:17,200 Speaker 1: Ken Shay is our senior analyst for Global Food, Beverages 321 00:19:17,359 --> 00:19:22,160 Speaker 1: and Tobacco for Bloomberg Intelligence, and he joins US now. Ken, 322 00:19:22,320 --> 00:19:25,119 Speaker 1: thanks very much for being with us. Okay, so the 323 00:19:25,200 --> 00:19:28,960 Speaker 1: caveat is you're not an expert in the Canadian cannabis market. 324 00:19:29,160 --> 00:19:33,320 Speaker 1: But you know about what happens when a market is 325 00:19:33,400 --> 00:19:38,480 Speaker 1: open for business and you see the seeds pun intended 326 00:19:38,960 --> 00:19:43,600 Speaker 1: of consolidation. Tell us about your outlook and about the industry. 327 00:19:44,040 --> 00:19:47,640 Speaker 1: Oh yeah, sure thing him could be with you today, Yes, 328 00:19:47,720 --> 00:19:50,640 Speaker 1: you know, I look at this industry from a consumer 329 00:19:50,680 --> 00:19:53,159 Speaker 1: products lends an industry that I've been covering for a 330 00:19:53,160 --> 00:19:57,600 Speaker 1: while now, and the idea is that, like in the US, Canada, 331 00:19:58,359 --> 00:20:01,439 Speaker 1: I believe that the growth in the cannabis industry is 332 00:20:01,480 --> 00:20:04,880 Speaker 1: presenting a significant threat but also opportunity for a lot 333 00:20:04,880 --> 00:20:09,480 Speaker 1: of those companies. What we've seen all the last year 334 00:20:09,600 --> 00:20:12,119 Speaker 1: or so, particularly in Canada is the excitement of the 335 00:20:12,160 --> 00:20:17,199 Speaker 1: markets with regard to the pending legalization national legalization of 336 00:20:17,240 --> 00:20:20,760 Speaker 1: both medical and recreational usage, and that's really creating a 337 00:20:20,760 --> 00:20:22,640 Speaker 1: lot of change in the market over there right now. 338 00:20:23,480 --> 00:20:26,520 Speaker 1: You know, I was struck by the volume of pot 339 00:20:26,600 --> 00:20:28,960 Speaker 1: headlines yesterday. I mean really it was just like fast 340 00:20:29,000 --> 00:20:32,560 Speaker 1: and furious. We saw the consolidation of Canadian companies Aurora 341 00:20:32,600 --> 00:20:37,600 Speaker 1: Cannabis and med Relief. Also, though we saw one of 342 00:20:37,640 --> 00:20:42,680 Speaker 1: the errors of the jim Bean Whiskey bourbon empire um 343 00:20:42,840 --> 00:20:46,040 Speaker 1: coming out and saying he thinks that marijuana is the 344 00:20:47,080 --> 00:20:49,960 Speaker 1: looker industry in the nineteen twenties. What's your take on this? 345 00:20:50,000 --> 00:20:51,280 Speaker 1: I mean, do you feel like things are sort of 346 00:20:51,440 --> 00:20:55,360 Speaker 1: escalating at this point? I really do, and high Lisa, Yes, 347 00:20:55,400 --> 00:20:58,520 Speaker 1: I do, Um, And you know, I think what really 348 00:20:58,560 --> 00:21:01,440 Speaker 1: drives that home is really I asked you, I guess. Uh. 349 00:21:01,680 --> 00:21:06,960 Speaker 1: The beer spirits and wine Giant Consolation Brands went on 350 00:21:07,119 --> 00:21:09,320 Speaker 1: board a nine point nine perus an equity stake in 351 00:21:09,520 --> 00:21:13,200 Speaker 1: Cannapa Growth, one of the leading UH growers of cannabis 352 00:21:13,200 --> 00:21:16,919 Speaker 1: and Canada. And I believe, just like our friends over 353 00:21:16,920 --> 00:21:19,960 Speaker 1: a gym being, believe that there really is going to 354 00:21:19,960 --> 00:21:23,960 Speaker 1: be a substitute effect um between cannabis and alcoholic beverage. 355 00:21:23,960 --> 00:21:25,800 Speaker 1: I mean, if you think about it, it's a mood altar, right, 356 00:21:25,840 --> 00:21:28,240 Speaker 1: I mean, and I think a lot of the usage 357 00:21:28,240 --> 00:21:31,560 Speaker 1: recreationally will be looked that way. And that's just not 358 00:21:31,680 --> 00:21:34,760 Speaker 1: Pine in the sky. I mean, that's what Constellation has said, 359 00:21:35,160 --> 00:21:38,440 Speaker 1: and most in Chorus has suggested that's looking at cannabis 360 00:21:38,440 --> 00:21:42,679 Speaker 1: as a uh you know, as a potential opportunity. And 361 00:21:43,000 --> 00:21:45,800 Speaker 1: so I think, to um, the big answer here is 362 00:21:45,840 --> 00:21:49,879 Speaker 1: that I think the next big wave of mergers and acquisitions, 363 00:21:49,920 --> 00:21:52,639 Speaker 1: particularly in Canada. You know the growers now, but I 364 00:21:52,640 --> 00:21:55,320 Speaker 1: think the second wave will be the big consumer package 365 00:21:55,320 --> 00:21:57,440 Speaker 1: goods companies again has the bushes of the world the 366 00:21:57,520 --> 00:22:00,639 Speaker 1: most in cores, the Diaggio's that take a look at 367 00:22:00,640 --> 00:22:04,360 Speaker 1: what Consolation did and maybe pursue the same strategy. Can 368 00:22:04,440 --> 00:22:06,240 Speaker 1: do you believe that there will be a time when 369 00:22:06,240 --> 00:22:09,000 Speaker 1: a company such as Altair or Philip Morris will be 370 00:22:09,040 --> 00:22:12,399 Speaker 1: in this business? Yes, I do, pim Um. You know, 371 00:22:12,440 --> 00:22:16,159 Speaker 1: we learned back in the late seventies when upon discovery 372 00:22:16,200 --> 00:22:19,040 Speaker 1: of a lot of internal documents, we know that tobacco 373 00:22:19,119 --> 00:22:23,840 Speaker 1: companies were very interested in pursuing the marijuana markets. As 374 00:22:23,880 --> 00:22:26,479 Speaker 1: we know now, it didn't become legally at illegal at 375 00:22:26,480 --> 00:22:29,280 Speaker 1: the federal level back then, so it couldn't. But we believe, 376 00:22:30,000 --> 00:22:32,840 Speaker 1: uh that they are looking at very closely. As a 377 00:22:32,840 --> 00:22:35,959 Speaker 1: matter of fact, Um, but one of the largest tobacco 378 00:22:36,080 --> 00:22:40,720 Speaker 1: leaf suppliers to the big tobacco companies, Alliance One, already 379 00:22:40,760 --> 00:22:46,240 Speaker 1: owns a Canadian uh cannabis grower and so if you 380 00:22:46,320 --> 00:22:49,200 Speaker 1: think about it, what that means is that a significant 381 00:22:49,200 --> 00:22:52,159 Speaker 1: supplier of tobacco leaf to the big tobacco companies like 382 00:22:52,200 --> 00:22:56,720 Speaker 1: Philip Morris International and British American Tobacco is also capable 383 00:22:56,760 --> 00:23:00,720 Speaker 1: of supplying them marijuana leaf if it needs to. So yeah, 384 00:23:00,760 --> 00:23:02,960 Speaker 1: I think they are definitely looking at it. Ken, I'm 385 00:23:03,000 --> 00:23:06,800 Speaker 1: sure you're aware of the increase in the popularity of 386 00:23:06,960 --> 00:23:11,640 Speaker 1: vaping and the popularity of a company Jewel and its product. 387 00:23:11,920 --> 00:23:14,080 Speaker 1: Do you believe that they're going to be patent wars 388 00:23:14,200 --> 00:23:20,640 Speaker 1: over the exclusivity of the technology that allows for those 389 00:23:20,720 --> 00:23:25,520 Speaker 1: kinds of devices. Yes, I think there'll be some activity there, 390 00:23:25,520 --> 00:23:27,960 Speaker 1: But you know, one of those, a hugely successful product 391 00:23:28,080 --> 00:23:31,720 Speaker 1: like Jewel is threatening the status quo in this case 392 00:23:31,760 --> 00:23:34,919 Speaker 1: the big not only the big vapor products of the 393 00:23:34,920 --> 00:23:37,880 Speaker 1: big tobacco companies, both of the cigarette market in itself. 394 00:23:37,920 --> 00:23:41,040 Speaker 1: I think you will see some challenges. That said, I mean, 395 00:23:41,080 --> 00:23:46,720 Speaker 1: Altaria's Newmark subsidiary is coming out with a product that 396 00:23:46,880 --> 00:23:50,920 Speaker 1: is very much like Jewel, um, you know, a non 397 00:23:51,000 --> 00:23:55,399 Speaker 1: refillable vaporizer as they call it, and um, you know, 398 00:23:55,480 --> 00:23:57,159 Speaker 1: so I think they're gonna I think most of that 399 00:23:57,359 --> 00:24:00,440 Speaker 1: will be in the marketplace, but you know, as it 400 00:24:00,440 --> 00:24:03,040 Speaker 1: gets closer and closer to what Jewel is, perhaps there 401 00:24:03,080 --> 00:24:07,680 Speaker 1: could be some intellectual property. Um discussions. So, Ken, where 402 00:24:07,720 --> 00:24:13,560 Speaker 1: are we with respect to US legislation and legalization of marijuana. Well, 403 00:24:13,600 --> 00:24:16,440 Speaker 1: in the US, it's really hung up at the federal level. 404 00:24:16,760 --> 00:24:20,400 Speaker 1: As you may know, some twenty nine states have already 405 00:24:20,600 --> 00:24:23,840 Speaker 1: um legalized it for medical use and an additional eight 406 00:24:23,920 --> 00:24:26,800 Speaker 1: for recreational use, and that number just keeps on growing 407 00:24:27,640 --> 00:24:32,280 Speaker 1: um and but nevertheless, you know, without federal without a 408 00:24:32,280 --> 00:24:36,240 Speaker 1: federal mandate, it really is difficult for these operators to 409 00:24:36,800 --> 00:24:41,200 Speaker 1: grow UM. And what I mean is because for instance, 410 00:24:41,280 --> 00:24:44,639 Speaker 1: you can't um because it's a federal illegal product. You 411 00:24:44,680 --> 00:24:49,560 Speaker 1: can't bring cannabis products over state lines. When you, you you know, 412 00:24:50,240 --> 00:24:54,640 Speaker 1: generate income, you're not allowed on your taxes to deduct 413 00:24:54,640 --> 00:24:58,399 Speaker 1: normal operating expenses. So it's very difficult to make money 414 00:24:59,000 --> 00:25:01,960 Speaker 1: in the in the US in this business today. That said, 415 00:25:02,200 --> 00:25:04,760 Speaker 1: capital is still there for the companies that are in 416 00:25:04,800 --> 00:25:09,199 Speaker 1: the business, the thought being at some point enough public 417 00:25:09,240 --> 00:25:12,440 Speaker 1: support will force the hand at the federal level. So, 418 00:25:12,600 --> 00:25:15,400 Speaker 1: just given where we are today, do you know any 419 00:25:15,560 --> 00:25:20,360 Speaker 1: estimates for what the medical marijuana industry is worth, and 420 00:25:20,640 --> 00:25:23,040 Speaker 1: do you then have some kind of sense of what 421 00:25:23,160 --> 00:25:26,320 Speaker 1: it would be worth if you also have recreational use 422 00:25:26,359 --> 00:25:31,400 Speaker 1: thrown in? Well, both recreation and medical in the US 423 00:25:31,960 --> 00:25:36,080 Speaker 1: is an approxly five or six billion dollar business UM. 424 00:25:36,200 --> 00:25:39,879 Speaker 1: The majority of that is still medical UM. And in 425 00:25:39,960 --> 00:25:42,320 Speaker 1: terms of what it's worth, that's a good question because 426 00:25:42,359 --> 00:25:45,280 Speaker 1: there's a lot of capital institutional money on the sidelines 427 00:25:45,440 --> 00:25:48,560 Speaker 1: wants to invest in this business but just can't because 428 00:25:48,600 --> 00:25:50,720 Speaker 1: it's again it's illegal at the federal level, and there's 429 00:25:50,720 --> 00:25:54,520 Speaker 1: a lot of structural issues why they can't. But you know, 430 00:25:54,640 --> 00:25:59,720 Speaker 1: I think the industry was really wanted to push it along. Uh. 431 00:26:00,119 --> 00:26:02,240 Speaker 1: What I think what they ought to consider is because 432 00:26:02,280 --> 00:26:05,359 Speaker 1: the public support for the non th C cannabi oil 433 00:26:05,720 --> 00:26:09,440 Speaker 1: basically the extract from the cannabis plant can be applied 434 00:26:09,480 --> 00:26:15,840 Speaker 1: to so many positive uses, pain relief, glaucoma, etcetera, etcetera, UM, 435 00:26:16,000 --> 00:26:19,640 Speaker 1: that they ought to consider pushing that at the federal 436 00:26:19,920 --> 00:26:24,399 Speaker 1: acceptance level, illegalization level, and worry about the recreational side 437 00:26:24,920 --> 00:26:27,000 Speaker 1: down the road. I mean, you know, there's a lot 438 00:26:27,040 --> 00:26:31,679 Speaker 1: of there's a lot of opponents to recreational still, you know, 439 00:26:31,760 --> 00:26:33,880 Speaker 1: mothers again, drunk driving and so on, and someone there's 440 00:26:33,880 --> 00:26:37,440 Speaker 1: a lot of concerns that you know, um, more easier 441 00:26:37,480 --> 00:26:41,200 Speaker 1: access you know to this drug will could could lead 442 00:26:41,200 --> 00:26:44,040 Speaker 1: to some negative consequences. So what I'm saying is to 443 00:26:44,080 --> 00:26:46,719 Speaker 1: find out what this total market is worth. The easiest 444 00:26:46,720 --> 00:26:50,240 Speaker 1: way to do that is to kind of delineate between 445 00:26:50,280 --> 00:26:53,000 Speaker 1: the non t C S CBD oil opportunity, which I 446 00:26:53,000 --> 00:26:56,200 Speaker 1: think is huge, and the recreational side down the road. 447 00:26:58,080 --> 00:27:00,000 Speaker 1: Thank you so much for being with us. I'm sure 448 00:27:00,000 --> 00:27:02,959 Speaker 1: you're talking with you soon, based on the accelerating volume 449 00:27:03,119 --> 00:27:05,760 Speaker 1: of marijuana stories that we've been seeing these days. Ken Shay, 450 00:27:06,080 --> 00:27:10,359 Speaker 1: senior analyst covering the global food, beverages and tobacco industries 451 00:27:10,440 --> 00:27:29,440 Speaker 1: for Bloomberg Intelligence. Berkshire Hathaway Vice Chairman Charlie Mongers said 452 00:27:29,520 --> 00:27:33,040 Speaker 1: bitcoin is worthless artificial gold. He said, the fact that 453 00:27:33,119 --> 00:27:36,200 Speaker 1: it's clever computer science doesn't mean it should be widely used, 454 00:27:36,200 --> 00:27:40,320 Speaker 1: and that respectable people should encourage other people to speculate 455 00:27:40,440 --> 00:27:44,320 Speaker 1: on it. Well, that has not stopped more than people 456 00:27:44,359 --> 00:27:50,320 Speaker 1: from attending Coin Desks Consensus conference all about cryptocurrencies. They 457 00:27:50,320 --> 00:27:52,919 Speaker 1: paid at least two thousand dollars a ticket to attend 458 00:27:52,920 --> 00:27:55,600 Speaker 1: the three day conference and joining us now as one 459 00:27:55,640 --> 00:27:59,920 Speaker 1: of the speakers and attendees to Bermuda Premier David Burke 460 00:28:00,560 --> 00:28:02,960 Speaker 1: Premier birth Thank you very much, for being with us 461 00:28:03,080 --> 00:28:06,840 Speaker 1: and UM. I want to just offer you the opportunity 462 00:28:06,880 --> 00:28:10,560 Speaker 1: to talk about the criticism having to do with cryptocurrencies. 463 00:28:10,560 --> 00:28:15,119 Speaker 1: And as much as I believe Bermuda is leading the 464 00:28:15,320 --> 00:28:19,720 Speaker 1: charge in terms of legislation regarding cryptocurrencies with the Digital 465 00:28:19,840 --> 00:28:26,359 Speaker 1: Asset Business Act, what was your goal in putting that forward? Well, 466 00:28:26,480 --> 00:28:29,320 Speaker 1: thank you him. I would say that there are a 467 00:28:29,359 --> 00:28:34,040 Speaker 1: wide range of UH cryptocurrencies they're called UM and and 468 00:28:34,359 --> 00:28:36,800 Speaker 1: that deal with lots of different things in the digital 469 00:28:36,800 --> 00:28:39,320 Speaker 1: asset space. What we want to make sure that we 470 00:28:39,360 --> 00:28:41,280 Speaker 1: provide in Bermuda, and knowing that there's going to be 471 00:28:41,360 --> 00:28:44,160 Speaker 1: innovation in this space, and knowing that this space UM 472 00:28:44,200 --> 00:28:47,280 Speaker 1: is going to revolutionize the way that financial services UM 473 00:28:47,360 --> 00:28:49,959 Speaker 1: are delivered throughout the world, we just want to make 474 00:28:50,000 --> 00:28:53,160 Speaker 1: sure that companies that we build on our existing regulations 475 00:28:53,160 --> 00:28:55,760 Speaker 1: that we've been so successful with an insurance and to 476 00:28:55,840 --> 00:28:58,600 Speaker 1: make sure that we transfer those regulations to a digital 477 00:28:58,640 --> 00:29:01,760 Speaker 1: asset space so that players that are serious players that 478 00:29:01,840 --> 00:29:04,680 Speaker 1: want to be in a well regular jurisdiction and abide 479 00:29:04,680 --> 00:29:07,400 Speaker 1: within the law can be and can have a home 480 00:29:07,480 --> 00:29:10,480 Speaker 1: in Bermuda. And you were just saying that Bermuda was 481 00:29:10,640 --> 00:29:15,040 Speaker 1: the first to craft these crypto asset regulations in particular, 482 00:29:15,280 --> 00:29:18,160 Speaker 1: and the goal here is for companies to incorporate and 483 00:29:18,320 --> 00:29:22,160 Speaker 1: operate in Bermuda. How successful have you been so far 484 00:29:22,200 --> 00:29:26,000 Speaker 1: in attracting crypto asset companies? Um? Well, this conference has 485 00:29:26,040 --> 00:29:30,000 Speaker 1: proven incredibly successful. UM. We had the speaking engagement yesterday 486 00:29:30,200 --> 00:29:32,520 Speaker 1: and there were companies that were literally about to go 487 00:29:32,600 --> 00:29:35,120 Speaker 1: somewhere else that are are reconsidering their view and coming 488 00:29:35,120 --> 00:29:39,040 Speaker 1: to Bernuda. So one one pushback maybe people would say, 489 00:29:39,360 --> 00:29:43,480 Speaker 1: is you know, maybe you craft regulations that are regulations, 490 00:29:43,520 --> 00:29:46,000 Speaker 1: but perhaps aren't as strenuous as might be seen in 491 00:29:46,040 --> 00:29:48,360 Speaker 1: a place like the United States. UM. What do you 492 00:29:48,440 --> 00:29:50,360 Speaker 1: say to that? UM? What I would say is that 493 00:29:50,400 --> 00:29:52,720 Speaker 1: if you look at Bermuda's history, we've always been a 494 00:29:52,760 --> 00:29:56,680 Speaker 1: place with excellent regulation. There's only two places that have 495 00:29:56,720 --> 00:30:01,040 Speaker 1: regulatce worre equivalents with both EU UM and the United States, 496 00:30:01,080 --> 00:30:03,479 Speaker 1: and that's Bermuda in Switzerland. We play UM in a 497 00:30:03,520 --> 00:30:06,840 Speaker 1: different class in other countries when it comes to regulation, 498 00:30:06,880 --> 00:30:08,800 Speaker 1: and we're going to lead the way. So our regulation 499 00:30:08,880 --> 00:30:13,920 Speaker 1: is tough. How do you want to implement this new 500 00:30:14,680 --> 00:30:18,760 Speaker 1: Digital Business Act? What is the I know that you're 501 00:30:18,800 --> 00:30:21,600 Speaker 1: looking at. I think Finance is one of the exchanges 502 00:30:21,960 --> 00:30:24,480 Speaker 1: that has already said that they're interested in coming. They're 503 00:30:24,480 --> 00:30:27,560 Speaker 1: going to come to Bermuda. What kind of infrastructure, legal 504 00:30:27,600 --> 00:30:31,120 Speaker 1: infrastructure do you offer? UM, Well, Bermuda has been successful 505 00:30:31,160 --> 00:30:34,880 Speaker 1: for a long time and UH servicing international companies. UH. 506 00:30:34,960 --> 00:30:37,760 Speaker 1: The thing I said yesterday is that it takes longer 507 00:30:37,840 --> 00:30:39,880 Speaker 1: to probably get to j f K than it does 508 00:30:39,920 --> 00:30:42,120 Speaker 1: for the flight from JFK to Bermuda. But you can 509 00:30:42,200 --> 00:30:44,320 Speaker 1: land in Bermuda in the You can leave New York 510 00:30:44,320 --> 00:30:46,880 Speaker 1: in the morning. You can land in Bermuda by noon. 511 00:30:46,960 --> 00:30:51,880 Speaker 1: You can see. But what what what in the I 512 00:30:51,880 --> 00:30:53,800 Speaker 1: guess what I want to understand is what in these 513 00:30:53,880 --> 00:31:00,200 Speaker 1: draft regulations specifically would allow UH Internet coin offerings or 514 00:31:00,600 --> 00:31:05,720 Speaker 1: digital currencies to operate in Bermuda. UM. The regulations basically 515 00:31:05,720 --> 00:31:08,760 Speaker 1: govern the entire suite of digital asset providers. So if 516 00:31:08,800 --> 00:31:11,440 Speaker 1: you are someone who UM is an exchange, if you're 517 00:31:11,440 --> 00:31:13,360 Speaker 1: someone who's a wallet provider, if you're someone who's a 518 00:31:13,360 --> 00:31:15,840 Speaker 1: customer provider, or if you're someone in the business of 519 00:31:15,880 --> 00:31:18,880 Speaker 1: issuing digital assets for others. It is an entire suite 520 00:31:18,880 --> 00:31:21,600 Speaker 1: of regulations that is built on our money service business. 521 00:31:21,920 --> 00:31:24,560 Speaker 1: UM regulations and It flows from the way of which 522 00:31:24,560 --> 00:31:29,240 Speaker 1: we've always regulated companies, requiring mind management and control in Bermuda, 523 00:31:29,320 --> 00:31:32,360 Speaker 1: requiring a physical presence and making sure that the Bermuda 524 00:31:32,400 --> 00:31:35,240 Speaker 1: Monetary authority has access to the people. But what we're 525 00:31:35,280 --> 00:31:37,400 Speaker 1: also going to do is give the regulator a tie in, 526 00:31:37,480 --> 00:31:40,040 Speaker 1: so it's required at any point in time there's any 527 00:31:40,080 --> 00:31:43,760 Speaker 1: suspicious activity, the regulator can actually freeze assets which may 528 00:31:43,760 --> 00:31:47,640 Speaker 1: exist in the digital space. So I'm just wondering. I mean, 529 00:31:47,760 --> 00:31:50,800 Speaker 1: we hear a lot of pain which is talking about 530 00:31:50,840 --> 00:31:55,040 Speaker 1: Warren Buffets, colorful words about bitcoin. A lot of people 531 00:31:55,040 --> 00:31:57,280 Speaker 1: are convinced that this is just a bunch of quacks 532 00:31:57,360 --> 00:32:00,440 Speaker 1: who are trying to create something that will eve operating. 533 00:32:00,560 --> 00:32:03,160 Speaker 1: Is the next Tulip boom um. What do you say 534 00:32:03,200 --> 00:32:05,120 Speaker 1: to that? I mean, how much? What is the proportion 535 00:32:05,280 --> 00:32:07,960 Speaker 1: of you know, quackery or I c o s that 536 00:32:07,960 --> 00:32:12,560 Speaker 1: are essentially just fraud versus something real. I can't necessarily 537 00:32:12,600 --> 00:32:14,560 Speaker 1: speak to what is fraud. What I can speak to 538 00:32:14,640 --> 00:32:16,640 Speaker 1: is the fact that there is real money that is 539 00:32:16,640 --> 00:32:18,760 Speaker 1: going to this space. And you've seen real money coming 540 00:32:18,760 --> 00:32:22,280 Speaker 1: in from Wall Street firms and otherwise investing in digital 541 00:32:22,280 --> 00:32:25,479 Speaker 1: assets and investing in this But I just want to 542 00:32:25,480 --> 00:32:30,880 Speaker 1: clarify here because there's a difference between uh bitcoin and blockchain. 543 00:32:31,360 --> 00:32:33,440 Speaker 1: Where is the where is the opportunity here? Well, the 544 00:32:33,440 --> 00:32:36,200 Speaker 1: opportunity is for people who are going to use blockchain 545 00:32:36,240 --> 00:32:39,680 Speaker 1: technology to build a digital asset business. So that doesn't 546 00:32:39,680 --> 00:32:41,760 Speaker 1: mean that you have to rely on bitcoin or anything 547 00:32:41,760 --> 00:32:45,400 Speaker 1: else you are looking at saying, we recognize that digital 548 00:32:45,440 --> 00:32:47,840 Speaker 1: assets are going through the future. We're going to design 549 00:32:47,880 --> 00:32:51,719 Speaker 1: innovative financial products, whether it's distributed energy, whether it's a 550 00:32:51,720 --> 00:32:54,480 Speaker 1: distributed banking that is going to be more efficient in 551 00:32:54,560 --> 00:32:58,040 Speaker 1: delivering services, and we want those companies to use Bermuda 552 00:32:58,120 --> 00:33:00,680 Speaker 1: as the innovation hub where they can hast out those 553 00:33:00,680 --> 00:33:04,520 Speaker 1: products in our regulatory sandbox and scale them globally. Okay, 554 00:33:04,560 --> 00:33:07,600 Speaker 1: So let's say that you are an investor who is 555 00:33:07,680 --> 00:33:11,000 Speaker 1: intrigued with the notion of cryptocurrencies, and you go and 556 00:33:11,040 --> 00:33:14,760 Speaker 1: you establish your own digital wallet, and you somehow managed 557 00:33:14,800 --> 00:33:19,080 Speaker 1: to acquire a variety of digital currencies. Then one day 558 00:33:19,200 --> 00:33:22,080 Speaker 1: you go and you can't get access to your wallet, 559 00:33:22,240 --> 00:33:25,920 Speaker 1: or you find that the ledger that exists does not 560 00:33:26,080 --> 00:33:29,280 Speaker 1: match what you had the day before. Is there a 561 00:33:29,360 --> 00:33:32,720 Speaker 1: regulatory regime in Bermuda that you can go to that 562 00:33:32,800 --> 00:33:37,560 Speaker 1: will then investigate and if necessary, prosecute any problems related 563 00:33:37,600 --> 00:33:40,760 Speaker 1: to that kind of situation. Absolutely, those are things which 564 00:33:40,800 --> 00:33:43,280 Speaker 1: are spelled out inside of our Digital Asset Business Act, 565 00:33:43,520 --> 00:33:46,800 Speaker 1: and we're going to require providers inside of the space 566 00:33:47,080 --> 00:33:50,360 Speaker 1: to have the security measures in place which are necessary. 567 00:33:50,400 --> 00:33:52,360 Speaker 1: But there's also problems that need to be solved in 568 00:33:52,360 --> 00:33:54,160 Speaker 1: this space. And one of the key points Pim is 569 00:33:54,200 --> 00:33:56,880 Speaker 1: what you spoke about is custody. So the company that 570 00:33:57,280 --> 00:34:00,480 Speaker 1: on Friday at the Ethereal conference announced they're moving to Bermuda, 571 00:34:00,720 --> 00:34:03,840 Speaker 1: um Omega one is looking to solve that problem and 572 00:34:03,880 --> 00:34:06,400 Speaker 1: to find a secure place to keep the keys because 573 00:34:06,400 --> 00:34:09,640 Speaker 1: everything is race on who based on who holds the 574 00:34:09,680 --> 00:34:11,560 Speaker 1: private key, So we need to make sure that we 575 00:34:11,600 --> 00:34:14,080 Speaker 1: have a way to secure those private keys. And that's 576 00:34:14,120 --> 00:34:16,480 Speaker 1: why we're going to innovate in Bermuda because there are 577 00:34:16,480 --> 00:34:18,440 Speaker 1: problems that have to be solved in this space. Why 578 00:34:18,440 --> 00:34:21,880 Speaker 1: do you think other countries have been slow to adopt 579 00:34:21,880 --> 00:34:24,560 Speaker 1: a regulatory framework for crypto assets? Well, what I would 580 00:34:24,560 --> 00:34:27,520 Speaker 1: say is it's a question when you're talking about New York, sorry, 581 00:34:27,520 --> 00:34:29,120 Speaker 1: if you're talking about the United States, you know you 582 00:34:29,160 --> 00:34:30,920 Speaker 1: have the different states, you have the federal level, then 583 00:34:30,960 --> 00:34:33,040 Speaker 1: you have the SEC, the c SEC all the rest. 584 00:34:33,080 --> 00:34:36,440 Speaker 1: In Bermuda, we have one government, one regulator um and 585 00:34:36,480 --> 00:34:38,880 Speaker 1: so we can be a lot more swift. But the 586 00:34:38,880 --> 00:34:41,279 Speaker 1: fact is that we are just building on what we've 587 00:34:41,320 --> 00:34:44,880 Speaker 1: done already. So we've done this successfully already with insurance, 588 00:34:45,040 --> 00:34:47,759 Speaker 1: we've done this successfully in the fund space, and now 589 00:34:47,760 --> 00:34:50,160 Speaker 1: we're just moving the regulation of which we have that 590 00:34:50,400 --> 00:34:54,080 Speaker 1: very high level regulation into a new area of financial services, 591 00:34:54,120 --> 00:34:56,839 Speaker 1: which is digital assets. Thank you so much for being here. 592 00:34:56,960 --> 00:35:00,080 Speaker 1: Really fascinating to hear what you have to say. The R. 593 00:35:00,480 --> 00:35:04,320 Speaker 1: David Burt, he is the Premier of the Bermuda government, 594 00:35:04,400 --> 00:35:06,800 Speaker 1: joining us here in the eleven three oh studios. He 595 00:35:06,960 --> 00:35:11,839 Speaker 1: was here for the Consensus eighteen conference that has been 596 00:35:11,880 --> 00:35:15,640 Speaker 1: taking place starting Sunday in New York City. Yeah, the 597 00:35:15,640 --> 00:35:20,160 Speaker 1: New York Hilton attendees. And the bitcoin right now is 598 00:35:20,200 --> 00:35:25,840 Speaker 1: down three to be exact. Yeah, it's interesting. There's a 599 00:35:25,920 --> 00:35:29,240 Speaker 1: question right of how much sort of cryptocurrencies get conflated 600 00:35:29,520 --> 00:35:32,520 Speaker 1: with bitcoin providers that are being used by the likes 601 00:35:32,520 --> 00:35:36,880 Speaker 1: of HSBC to do trade finance. So definitely a fascinating conversation. 602 00:35:40,719 --> 00:35:43,280 Speaker 1: Thanks for listening to the Bloomberg p m L podcast. 603 00:35:43,640 --> 00:35:47,520 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 604 00:35:47,640 --> 00:35:51,080 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 605 00:35:51,120 --> 00:35:54,680 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa 606 00:35:54,719 --> 00:35:57,880 Speaker 1: Abramowits one before the podcast. You can always catch us 607 00:35:57,880 --> 00:36:03,760 Speaker 1: worldwide on Bloomberg Radio pek