WEBVTT - Wealthy Endowments Should Subsidize Education: Ken Langone 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:33.159 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Our 0:00:33.200 --> 0:00:36.960 next guest, Doug ditches and collected used cardboard when he 0:00:37.000 --> 0:00:41.160 was a teenager. Today he's a billionaire and business icon. 0:00:41.200 --> 0:00:44.440 I'm talking about Ken Langone, co founder of home Depot 0:00:44.520 --> 0:00:47.120 and former director of the New York Stock Exchange UH 0:00:47.159 --> 0:00:51.040 and founder and chairman of Infamed Associates. Keim. Thank you 0:00:51.120 --> 0:00:54.000 so much for being with us. You have a new 0:00:54.040 --> 0:00:57.280 book out. It has an unambiguous title, I Love Capitalism, 0:00:57.280 --> 0:01:02.640 exclamation point and American Story. What made you write this book? Now? 0:01:04.200 --> 0:01:07.600 It was very interesting. I've been approached by some people 0:01:07.640 --> 0:01:11.560 in the publishing industry about three or four years ago. 0:01:11.760 --> 0:01:14.640 I had a book to write, and I thanked him 0:01:14.640 --> 0:01:17.840 and I said, really, not my thing. And then the 0:01:17.880 --> 0:01:22.200 presidential election showed up in two thousand and sixteen, and 0:01:22.240 --> 0:01:26.399 I happened to be watching Bernie Sanders, and I was 0:01:26.480 --> 0:01:29.960 shocked at the number of young people that were passionately 0:01:30.319 --> 0:01:35.200 and enthusiastically following his message. And it's scared the hell 0:01:35.240 --> 0:01:38.959 out of me, because if people that young give up 0:01:39.080 --> 0:01:40.920 on what brought us to the party and what made 0:01:40.920 --> 0:01:46.280 America great, we really have trouble. Uh. Capitalism to me 0:01:46.480 --> 0:01:50.520 is as magnifficent, very unique engine that only America has 0:01:50.840 --> 0:01:53.880 in where we have it and the results that are 0:01:53.920 --> 0:01:57.080 all around us, you can look and see better lives. 0:01:57.120 --> 0:02:01.200 A poor kid like me, a kid that mediocre student. 0:02:01.560 --> 0:02:05.080 Uh mother and father didn't go past the eighth grade, 0:02:06.560 --> 0:02:12.079 lived from paycheck to paycheck. Uh not easy, but I 0:02:12.240 --> 0:02:14.400 never knew I didn't have anything because I always had 0:02:14.440 --> 0:02:19.280 a warm house and uh plenty of good food. But 0:02:19.360 --> 0:02:22.440 my parents had to work like hell. And here I 0:02:22.480 --> 0:02:25.280 am today, and by the way, whatever success I have, 0:02:25.400 --> 0:02:28.440 and I'll leave it for others to judge that it 0:02:28.520 --> 0:02:31.440 only happened because I had so many people, so many 0:02:31.480 --> 0:02:34.640 many people helped me along the way. I'm not self made. 0:02:34.680 --> 0:02:38.400 I'm anything but self made. But this is a magnificent country. 0:02:38.440 --> 0:02:40.840 And I just thought it was up to me to 0:02:40.880 --> 0:02:43.280 take a stand and say, hey, wait a minute. Let's 0:02:43.280 --> 0:02:45.320 not kill the baby with the bath water. Let's that's 0:02:45.320 --> 0:02:48.040 where the baby out with the bath water, I should say. 0:02:48.800 --> 0:02:52.040 So that's what made me write the book. Ken lang Gone, 0:02:52.720 --> 0:02:57.320 Just so people understand, you persuaded Ross Perro to hire 0:02:57.360 --> 0:03:00.800 you to lead his initial public offering for electronic Data 0:03:00.880 --> 0:03:05.000 Systems co founder of home Depot. I wonder if you 0:03:05.000 --> 0:03:09.040 could just speak a little bit about that June day 0:03:09.120 --> 0:03:14.600 in ninety seven when you graduated from Bucknell. And there's 0:03:14.639 --> 0:03:17.800 a wonderful picture in the book of you and your parents, 0:03:17.880 --> 0:03:22.720 John and Angie Langne, and how you got into Bucknell 0:03:23.440 --> 0:03:27.040 and how you managed to graduate. Well, that's interesting. I 0:03:27.080 --> 0:03:31.960 got into buck Now almost by accident. I had gone up. 0:03:32.120 --> 0:03:34.040 I was a senior in high school. It was nineteen 0:03:34.080 --> 0:03:36.800 fifty three. It was the spring of the year. The 0:03:36.840 --> 0:03:38.960 Korean War was still on. I don't know how. Had 0:03:39.000 --> 0:03:40.920 just been elected. I was going to join the Marine 0:03:40.920 --> 0:03:43.560 Corps here for high school. My mother wouldn't saw it. 0:03:43.600 --> 0:03:46.880 I wouldn't be eighteen until September, and my mother wouldn't 0:03:47.040 --> 0:03:49.080 My brother was already in the military. I only had 0:03:49.080 --> 0:03:50.800 one brother. He was in the military, and my mother 0:03:50.920 --> 0:03:53.440 was adamant. She was not going to sign me and 0:03:53.680 --> 0:03:55.480 if I wanted to wait to lateeen and I wanted 0:03:55.480 --> 0:03:57.160 to go, she couldn't join me about it. But anyway, 0:03:57.160 --> 0:04:00.320 I want to Bucknell for a weekend to visit some ends. 0:04:01.040 --> 0:04:03.040 And it turns out it was we then called house 0:04:03.040 --> 0:04:05.040 party weekend, and boy, I had a hell of a time. 0:04:05.520 --> 0:04:07.000 And I thought, my god, if this is what they 0:04:07.040 --> 0:04:09.080 do in college, and I might want to think about college, 0:04:09.720 --> 0:04:14.680 and and on. And Eisenhower didn't cooperate because he ended 0:04:14.720 --> 0:04:17.360 the Korean War, so there was no water go up 0:04:17.800 --> 0:04:21.200 for and while the weekend I was up at buck 0:04:21.240 --> 0:04:24.480 Now the kids I was seeing the but I used 0:04:24.520 --> 0:04:26.960 to have Saturday classes, and the kids I was here 0:04:27.000 --> 0:04:28.840 to see told me to go see the gold and 0:04:28.880 --> 0:04:32.279 the building up as a guy there registrar, he wasn't 0:04:32.279 --> 0:04:34.960 called at Deana, it's called the Registrar's name was George Faint. 0:04:35.800 --> 0:04:37.120 And I went over and I saw him. Any what 0:04:37.160 --> 0:04:38.360 are you doing you? And I was all My friends 0:04:38.360 --> 0:04:40.039 said I should come and talk to you. What about 0:04:40.040 --> 0:04:42.480 I I don't know, Well, tell me about yourself. I 0:04:42.560 --> 0:04:44.320 was long, I'm in high school and what are you 0:04:44.360 --> 0:04:46.600 going to do? I don't know. I'm thinking about going 0:04:46.640 --> 0:04:49.520 to the Marine Corps. Will I have you applied to college? 0:04:49.520 --> 0:04:52.480 And I said no, Well you want to go to college? 0:04:52.520 --> 0:04:54.720 I said, well, I'm not sure. I thought we had. 0:04:54.960 --> 0:04:56.760 We ended up having a talk for about an hour. 0:04:57.360 --> 0:04:59.359 The following week, he sent me a letter and he said, 0:05:00.080 --> 0:05:01.520 if you want to come to buck now, we'd love 0:05:01.600 --> 0:05:03.840 to have you. But you're gonna have to work much 0:05:03.839 --> 0:05:06.160 harder in college. And you did in high school. Well 0:05:06.200 --> 0:05:08.320 that wasn't hard because I didn't do it. Damn practically 0:05:08.320 --> 0:05:11.760 nothing in high school. But thank god I had a 0:05:11.800 --> 0:05:14.360 good mind. I just didn't put it to much use. 0:05:14.920 --> 0:05:17.200 And so I ended up going to buck Bell and 0:05:17.279 --> 0:05:21.479 I almost flunked out stories in the book, And but 0:05:21.640 --> 0:05:23.760 for a professor who saw something to me, I didn't 0:05:23.760 --> 0:05:26.960 see it myself. He he got all my other professors 0:05:27.000 --> 0:05:29.120 together and they worked to pull me out of this 0:05:29.200 --> 0:05:32.760 nose dive, and I ended up graduating from Buckdell and 0:05:32.839 --> 0:05:37.520 Free are years. I actually graduated in February fifty seven, 0:05:38.160 --> 0:05:40.680 but the ceremony was in June, and I wanted my 0:05:40.800 --> 0:05:43.800 parents to see the graduation. And that's when I went 0:05:43.839 --> 0:05:47.840 back for the graduation, and that's where that picture came from. 0:05:47.880 --> 0:05:51.640 So it was my parents. My parents just couldn't believe 0:05:51.640 --> 0:05:54.000 they had a son who went to college, graduating college. 0:05:54.720 --> 0:05:58.640 It was, it was, it was, it was. It was 0:05:58.680 --> 0:06:01.880 just special. That's why I sorry. I'm sorry. I'm bringing 0:06:01.960 --> 0:06:06.200 up ken Um. You have an amazing story and it's 0:06:06.200 --> 0:06:09.919 a fabulous book. Everybody should read it. I'm wondering, you know, 0:06:10.080 --> 0:06:13.120 I want to talk about what you were saying when 0:06:13.200 --> 0:06:15.440 you said, you know, you saw Britie Sanders and people 0:06:15.440 --> 0:06:19.880 who are kind of challenging the American capitalistic dream. And 0:06:19.920 --> 0:06:22.719 I'm wondering whether you think anything has changed at a 0:06:22.760 --> 0:06:24.800 time when there's one and a half trillion dollars of 0:06:24.839 --> 0:06:28.920 student debt hanging out there and uh and sort of 0:06:28.960 --> 0:06:33.960 the gap between wealthy and poor people has widened. Let 0:06:33.960 --> 0:06:38.279 me show you how much I'm committed to the problem. 0:06:38.320 --> 0:06:40.400 I'm shaman of the n Y you laying own health. 0:06:42.360 --> 0:06:45.080 The Dean and CEO Bob Grossman, and I have one 0:06:45.680 --> 0:06:50.039 remaining major passion. We want to tell every kid that 0:06:50.160 --> 0:06:54.279 comes to our medical school they will no longer pay tuition. 0:06:55.920 --> 0:06:59.479 That will only happen if we can get wealthy people 0:06:59.560 --> 0:07:02.479 to con tribute to our endowment. That we can afford 0:07:02.560 --> 0:07:07.880 to do that now about the trillion dollar, trillion and 0:07:07.960 --> 0:07:14.120 a half dollars of debt. Number one, my father insisted. 0:07:14.160 --> 0:07:16.600 My father was a plumber. But while I was in 0:07:16.720 --> 0:07:19.800 high school, my father insisted I helped him so that 0:07:20.120 --> 0:07:21.760 when I got out of college high school. When I 0:07:21.800 --> 0:07:23.720 got out of high school, I didn't go to college. 0:07:23.720 --> 0:07:27.480 I'd have a trade a plumber. A lot of kids 0:07:27.520 --> 0:07:31.040 that are going to college today and and burdening themselves 0:07:31.040 --> 0:07:35.200 with debt would be better served learning a trade, learning 0:07:35.200 --> 0:07:38.840 a skill. We have an incredible shortage in this city 0:07:38.960 --> 0:07:42.640 of plumbers, carpenters, electricians, and they have great They are 0:07:42.720 --> 0:07:46.760 hundred thousand, hundred thousand dollars a year jobs. These are 0:07:46.800 --> 0:07:50.240 not low paying jobs. First of all, let's start with 0:07:50.360 --> 0:07:55.680 the belief that college isn't for everybody, and you don't 0:07:55.720 --> 0:07:59.680 have to go to college to be successful. Many of 0:07:59.760 --> 0:08:03.200 the people I know I never saw the inside of 0:08:03.200 --> 0:08:07.000 a college, and they were enormously successful. So I think 0:08:07.040 --> 0:08:09.560 we need to take a step back and ask ourselves 0:08:09.560 --> 0:08:12.800 the question, is this the magic pill? No, I don't 0:08:12.840 --> 0:08:16.520 think it is. But if it is, let's figure a 0:08:16.560 --> 0:08:19.720 way out to make it affordable for kids. And I 0:08:19.760 --> 0:08:21.720 don't know the answer to that, except I do know 0:08:22.200 --> 0:08:26.080 that the more money that you raised philanthropically, like Buck Noll, 0:08:26.640 --> 0:08:28.920 like New York University, or I was in a finance 0:08:29.000 --> 0:08:32.920 committee of the university last week. The more endowment we 0:08:32.920 --> 0:08:35.920 can generate, the more income we have that we can 0:08:35.960 --> 0:08:41.600 offer more student subsidization of their courts. There's no easy answer, 0:08:42.840 --> 0:08:45.120 ken Lan gone, would you say that one of the 0:08:45.160 --> 0:08:48.720 magic pills for your life has been your wife? Elaine? 0:08:49.160 --> 0:08:53.360 Oh boy and half, big time, big time talk about 0:08:53.360 --> 0:08:56.080 being us. How big this she is? I'm telling you 0:08:56.160 --> 0:08:59.520 right now, big time. Every crazy idea I had, she 0:08:59.640 --> 0:09:01.520 was always here, you know. And when they didn't work, 0:09:01.600 --> 0:09:03.920 she was there. And when they did work, she was there. 0:09:04.920 --> 0:09:09.560 You know. She's she's my anchor to Winwood. Absolutely. Hey. Look, 0:09:09.920 --> 0:09:12.840 and by the way, every marriage has bumps on the road, 0:09:12.960 --> 0:09:15.400 but that's part of living. Every life has bumps on 0:09:15.400 --> 0:09:19.959 the road. And and and where where? How we how 0:09:19.960 --> 0:09:21.760 do we live? We'd blow to sit down on a 0:09:21.800 --> 0:09:24.280 Sunday and rainy afternoon like it was this past weekend 0:09:24.520 --> 0:09:27.800 and watch a movie. Simple stuff. Anybody can do it, 0:09:29.480 --> 0:09:32.440 um can I just I want to? I want to 0:09:32.600 --> 0:09:34.959 end on a slightly different note. I know that you 0:09:35.040 --> 0:09:39.400 interest in Palenteer, a company that Peter Thiel founded, and 0:09:39.440 --> 0:09:42.679 there's been some discussion that it could potentially be heard 0:09:42.720 --> 0:09:46.440 by the sort of resumption of her Rand's sanctions. What's 0:09:46.440 --> 0:09:47.760 your take on this and do you think it will 0:09:47.760 --> 0:09:52.080 affect the valuations there? I don't, frankly understand. It's a 0:09:52.120 --> 0:09:55.280 complicated situation where I ran, I know this much about 0:09:55.280 --> 0:09:58.640 Palenteer and why I'm excited about it. I know that 0:09:58.760 --> 0:10:04.079 American lives I've been saved by Palenteer. That's a dramatic statement. 0:10:04.520 --> 0:10:07.440 I know that American lives have been saved by what 0:10:07.559 --> 0:10:13.680 Palenteer does. I know that terrorist attacks in America have 0:10:13.880 --> 0:10:19.200 been stopped before they happened because of Palenteer. And I'm 0:10:19.320 --> 0:10:22.360 I'm a proud investor in Palenteer. If I didn't make 0:10:22.400 --> 0:10:24.959 any money you a Palenteer, I'd be fine because what 0:10:25.000 --> 0:10:29.320 they're doing to me is an enormous social good. I 0:10:29.440 --> 0:10:33.320 am a devoted believer in what Palenteer does. I think 0:10:33.360 --> 0:10:36.880 it's a social good. We gotta leave it there. Ken 0:10:36.960 --> 0:10:41.560 lang Gone the co founder of the Home Depot, and 0:10:41.720 --> 0:10:46.480 his new book is entitled I Love Capitalism, an American Story. 0:10:46.800 --> 0:11:04.280 Thank you very much, Ken, langgoing. President Trump has said 0:11:04.280 --> 0:11:08.320 the US is going to withdraw from the Iran Nuclear Agreement, 0:11:08.600 --> 0:11:12.160 and after that announcement, we're getting worried today that sanctions 0:11:12.240 --> 0:11:14.960 are being imposed on a governor of the Central Bank 0:11:15.120 --> 0:11:17.960 of Iran for his role moving quote millions of dollars 0:11:17.960 --> 0:11:22.400 to Hezbollah on behalf of Islamic Revolutionary God Corpse Force. 0:11:22.679 --> 0:11:24.800 This according to the Treasury Department. Joining US now to 0:11:24.840 --> 0:11:26.880 talk a little bit more about what else we can 0:11:26.920 --> 0:11:30.079 expect in the wake of this decision by President Trump 0:11:30.120 --> 0:11:33.680 is Daniel Weger, vice president in the Global Financial Crime 0:11:33.679 --> 0:11:37.720 Compliance division at Lexus Nexus Risk Solutions, a part of 0:11:37.720 --> 0:11:40.920 the ri l X Group based in New York. Daniel, 0:11:40.920 --> 0:11:43.400 thank you so much for joining us UM. You have 0:11:43.480 --> 0:11:48.760 extensive experience working with government agencies with these matters. How 0:11:49.000 --> 0:11:50.959 much do you think that we're going to see these 0:11:51.000 --> 0:11:53.000 types of headlines coming out? I mean, are there gonna 0:11:53.000 --> 0:11:56.560 be quite a few additional sanctions revealed in the next 0:11:56.559 --> 0:11:59.360 couple of weeks. Thank you for having me this morning. 0:11:59.520 --> 0:12:02.120 I think it's going to be a constantly changing environment 0:12:02.120 --> 0:12:04.880 over the next several months, not only as the Treasury 0:12:05.080 --> 0:12:09.040 um imposes UM numerals and regulations, but also as they 0:12:09.120 --> 0:12:13.440 reinstate old licenses UM sunsets and existing licenses UM for 0:12:13.520 --> 0:12:15.719 companies that have engaged with Iran. So it will be 0:12:15.800 --> 0:12:19.679 a constantly changing environment. Well, Daniel. Over the weekend, I 0:12:19.720 --> 0:12:22.640 believe the chief executive A Seaman, said that his company 0:12:22.679 --> 0:12:26.240 could not do any new business in Iran after the 0:12:26.320 --> 0:12:29.480 United States decided to pull out of this deal. And 0:12:29.720 --> 0:12:33.839 indeed there are about forty billion dollars worth of aircraft 0:12:33.920 --> 0:12:40.600 deals for new planes from Boeing as well as air Bus. Uh. 0:12:40.760 --> 0:12:43.880 Do you believe that that that will remain something in place? 0:12:45.080 --> 0:12:47.280 So the Treasury is going to have to examine request 0:12:47.320 --> 0:12:51.600 from companies on an individual basis for licenses and exceptions UM. 0:12:51.640 --> 0:12:54.000 There's also a wind down period place that runs for 0:12:54.040 --> 0:12:56.360 the next several months for companies to wind down existing 0:12:56.720 --> 0:13:00.360 engagements and transactions. But it's certain that to many of 0:13:00.400 --> 0:13:03.000 those deals and any deals that are inflighting enough finalized 0:13:03.040 --> 0:13:05.600 could be in jeopardy. Daniel. I'm struck by what you 0:13:05.640 --> 0:13:09.320 said that the environment is going to be constantly changing. 0:13:09.679 --> 0:13:12.040 So how do companies make sure that they actually comply 0:13:12.120 --> 0:13:15.280 with all of the new sanctions. It's an excellent question. 0:13:15.440 --> 0:13:19.800 The companies like lectus Nectus resolutions focus on providing companies 0:13:19.840 --> 0:13:23.600 with data from government lists as well as information on 0:13:23.720 --> 0:13:30.240 companies and entities throughout the globe to help companies identify customers, counterparties, 0:13:30.600 --> 0:13:34.120 supply chain entities that could bring them risk by way 0:13:34.120 --> 0:13:38.360 of having transactions themselves with irany entities. Now, if you're 0:13:38.400 --> 0:13:42.040 a non US company but the product that you sell 0:13:42.160 --> 0:13:48.200 has ten percent or more of US originating parts, you'd 0:13:48.200 --> 0:13:52.439 be covered by these new sanctions correct um. It's difficult 0:13:52.480 --> 0:13:55.160 to make a single rule on that because there are 0:13:55.160 --> 0:13:57.360 two aspects and two issues of play here. One is 0:13:57.400 --> 0:14:02.000 the sanctions aspect, which prohibits broadly prohibits transactions services are 0:14:02.040 --> 0:14:05.080 goods to be transferred to listed and named entities, But 0:14:05.120 --> 0:14:09.280 there's also issues around the commodities involved so UM components 0:14:09.280 --> 0:14:12.600 of the goods UM goods that are dual use UM 0:14:12.720 --> 0:14:15.800 or armaments or could be used in such products are 0:14:15.880 --> 0:14:19.480 subject to additional restrictions. So for companies UH. Fortunately, most 0:14:19.560 --> 0:14:22.960 have complex structures in place to abide by these rules. 0:14:22.960 --> 0:14:25.040 But it is a multi layered set of rules that 0:14:25.360 --> 0:14:27.280 intertwined with each other and create a great deal of 0:14:27.840 --> 0:14:31.200 confusion for companies that are operating that space. What are 0:14:31.240 --> 0:14:35.200 you saying in terms of the oil industry and companies 0:14:35.240 --> 0:14:40.240 that have longstanding agreements in the region to provide oil 0:14:40.280 --> 0:14:44.360 field services, what is their situation going to be like? Well, 0:14:44.680 --> 0:14:47.680 it would be good to delineate between US companies and 0:14:47.720 --> 0:14:50.200 those that are global UM but which have a presence 0:14:50.400 --> 0:14:54.160 UM either through trading on US exchanges or the sale 0:14:54.160 --> 0:14:56.160 of US goods or as you mentioned before, the use 0:14:56.200 --> 0:14:59.360 of component US goods, because the implications for both will 0:14:59.360 --> 0:15:03.080 be somewhat differ for US companies UM. This period of 0:15:03.120 --> 0:15:06.960 relaxed Iranian sanctions has not actually given much relief to 0:15:07.160 --> 0:15:10.080 US persons or entities to engage in transactions with Iran, 0:15:10.200 --> 0:15:12.560 so for them it will be somewhat less complicated. But 0:15:12.640 --> 0:15:14.640 as you go down the supply chain, as you deal 0:15:14.720 --> 0:15:19.480 with transactional counterparties for financial institutions, UM, global institutions and 0:15:19.480 --> 0:15:22.000 global companies have been engaging in that space and can 0:15:22.040 --> 0:15:25.680 bring risk UM either for themselves or for their US 0:15:25.720 --> 0:15:29.760 company counterparties in such transactions. So, Daniel, I want to 0:15:29.760 --> 0:15:32.800 shift gears a little bit to tap into your vast 0:15:32.880 --> 0:15:35.200 knowledge after having worked at the U S Department of 0:15:35.240 --> 0:15:38.040 Homeland Security, US Custom Service, that's just a part of 0:15:38.040 --> 0:15:40.320 the Department of Treasury and the New York High Intensity 0:15:40.360 --> 0:15:44.440 Financial Crime Area. I want to talk about something happening domestically, 0:15:44.880 --> 0:15:48.920 namely Michael Cohen and the financial records that have been 0:15:48.960 --> 0:15:53.200 widely reported about Essential Consultants, his shell company. And some 0:15:53.240 --> 0:15:56.360 people are saying that the revelation of some of this 0:15:56.440 --> 0:16:00.440 information is illegal because banks are not allowed to share 0:16:00.440 --> 0:16:04.200 this information publicly. What's your take on this? So, the 0:16:04.520 --> 0:16:08.960 Bank Secrecy Act and other related and implementing regulations provide 0:16:09.040 --> 0:16:13.520 for requirements for US financial institutions and other regulated entities 0:16:13.560 --> 0:16:17.160 such as payment processors and money services businesses, casino, etcetera, 0:16:17.640 --> 0:16:21.000 to provide reports to the Treasury, specifically to FINCE in 0:16:21.040 --> 0:16:24.760 the Financial Crimes Enforcement Network part of the Treasury um 0:16:24.840 --> 0:16:28.160 highlighting what they believe to be suspicious or potentially suspicious 0:16:28.160 --> 0:16:31.560 activity by customers. And that information has afforded a great 0:16:31.600 --> 0:16:36.000 deal of secrecy, both to protect the privacy uh and 0:16:36.040 --> 0:16:38.040 the rights of the person or the entity which is 0:16:38.480 --> 0:16:41.520 being referred on the basis of mere suspicion, but also 0:16:41.560 --> 0:16:44.280 to protect the banks and to encourage them to continue 0:16:44.280 --> 0:16:47.560 to file such reports. And it's important to note that 0:16:47.960 --> 0:16:50.680 such reports do not. They're not referenced in court filings, 0:16:50.680 --> 0:16:53.160 they're not designed to being. In fact, they're they're restricted 0:16:53.160 --> 0:16:56.840 from being a referenced It's incumbent upon investigators to review 0:16:56.920 --> 0:17:00.760 them as lead material, to analyze financial records more holistically, 0:17:01.240 --> 0:17:04.040 and then to present an analysis the activity in accordance 0:17:04.040 --> 0:17:08.720 with judicial standards. Does the role of the US dollar 0:17:08.800 --> 0:17:11.520 as the world's reserve currency, does it make it easier 0:17:11.760 --> 0:17:16.520 for US regulators and investigators to actually track that kind 0:17:16.560 --> 0:17:20.000 of misuse of funds. That's a great point. The the 0:17:20.080 --> 0:17:23.000 US dollar, because of its pre eminence nets space, does 0:17:23.080 --> 0:17:27.080 provide an avenue for enforcement and prosecution that has a 0:17:27.160 --> 0:17:30.800 very global reach. And US enforcement and regulatory agencies have 0:17:30.920 --> 0:17:34.439 shown a strong desire through their billions of dollars in 0:17:34.560 --> 0:17:37.919 enforcement penalties and fines that have been levied against corporations 0:17:37.920 --> 0:17:41.800 and banks. So, just to just to wrap up here, 0:17:41.800 --> 0:17:45.040 as we hear all about some of these payments and such, 0:17:45.320 --> 0:17:48.840 what's your big takeaway of some of the suspicious of 0:17:49.200 --> 0:17:54.760 activity around the election? Well, um representing specifically focus on 0:17:54.920 --> 0:17:58.480 the financials um the reference of shell companies. All of 0:17:58.520 --> 0:18:02.840 these things by them selves are are simply suspicion or 0:18:02.840 --> 0:18:06.679 potentially suspicious and things like shell companies are simply a 0:18:06.720 --> 0:18:11.240 flag that require companies and financial institutions to dive deeper 0:18:11.320 --> 0:18:14.520 to engage and enhance due diligence, to understand the people 0:18:14.560 --> 0:18:18.159 behind those entities, the purpose of payment um and it's 0:18:18.200 --> 0:18:21.320 really important that companies, both corporate who operate in the 0:18:21.359 --> 0:18:24.960 global marketplace as well as banks understand their obligations and 0:18:24.960 --> 0:18:28.920 their tremendous exposure UH to enforcement activities if they don't 0:18:29.200 --> 0:18:32.000 exert the right amount of effort on such compliance programs. 0:18:32.280 --> 0:18:34.080 I want to thank you very much for joining us. 0:18:34.320 --> 0:18:38.480 Daniel Wager is a vice president Global financial Crime Compliance 0:18:38.880 --> 0:18:43.000 for Lexus Nexus Risk Solutions, a part of the r 0:18:43.160 --> 0:18:47.359 E l X Group. Talking about Iran and U S sanctions, 0:19:03.600 --> 0:19:07.480 the approaching legalization of cannabis around the United States and 0:19:07.640 --> 0:19:10.640 in Canada, of course, could it be igniting a variety 0:19:10.680 --> 0:19:13.440 of deals. Well, in many cases it already has done so. 0:19:13.880 --> 0:19:17.200 Ken Shay is our senior analyst for Global Food, Beverages 0:19:17.359 --> 0:19:22.160 and Tobacco for Bloomberg Intelligence, and he joins US now. Ken, 0:19:22.320 --> 0:19:25.119 thanks very much for being with us. Okay, so the 0:19:25.200 --> 0:19:28.960 caveat is you're not an expert in the Canadian cannabis market. 0:19:29.160 --> 0:19:33.320 But you know about what happens when a market is 0:19:33.400 --> 0:19:38.480 open for business and you see the seeds pun intended 0:19:38.960 --> 0:19:43.600 of consolidation. Tell us about your outlook and about the industry. 0:19:44.040 --> 0:19:47.640 Oh yeah, sure thing him could be with you today, Yes, 0:19:47.720 --> 0:19:50.640 you know, I look at this industry from a consumer 0:19:50.680 --> 0:19:53.159 products lends an industry that I've been covering for a 0:19:53.160 --> 0:19:57.600 while now, and the idea is that, like in the US, Canada, 0:19:58.359 --> 0:20:01.439 I believe that the growth in the cannabis industry is 0:20:01.480 --> 0:20:04.880 presenting a significant threat but also opportunity for a lot 0:20:04.880 --> 0:20:09.480 of those companies. What we've seen all the last year 0:20:09.600 --> 0:20:12.119 or so, particularly in Canada is the excitement of the 0:20:12.160 --> 0:20:17.199 markets with regard to the pending legalization national legalization of 0:20:17.240 --> 0:20:20.760 both medical and recreational usage, and that's really creating a 0:20:20.760 --> 0:20:22.640 lot of change in the market over there right now. 0:20:23.480 --> 0:20:26.520 You know, I was struck by the volume of pot 0:20:26.600 --> 0:20:28.960 headlines yesterday. I mean really it was just like fast 0:20:29.000 --> 0:20:32.560 and furious. We saw the consolidation of Canadian companies Aurora 0:20:32.600 --> 0:20:37.600 Cannabis and med Relief. Also, though we saw one of 0:20:37.640 --> 0:20:42.680 the errors of the jim Bean Whiskey bourbon empire um 0:20:42.840 --> 0:20:46.040 coming out and saying he thinks that marijuana is the 0:20:47.080 --> 0:20:49.960 looker industry in the nineteen twenties. What's your take on this? 0:20:50.000 --> 0:20:51.280 I mean, do you feel like things are sort of 0:20:51.440 --> 0:20:55.360 escalating at this point? I really do, and high Lisa, Yes, 0:20:55.400 --> 0:20:58.520 I do, Um, And you know, I think what really 0:20:58.560 --> 0:21:01.440 drives that home is really I asked you, I guess. Uh. 0:21:01.680 --> 0:21:06.960 The beer spirits and wine Giant Consolation Brands went on 0:21:07.119 --> 0:21:09.320 board a nine point nine perus an equity stake in 0:21:09.520 --> 0:21:13.200 Cannapa Growth, one of the leading UH growers of cannabis 0:21:13.200 --> 0:21:16.919 and Canada. And I believe, just like our friends over 0:21:16.920 --> 0:21:19.960 a gym being, believe that there really is going to 0:21:19.960 --> 0:21:23.960 be a substitute effect um between cannabis and alcoholic beverage. 0:21:23.960 --> 0:21:25.800 I mean, if you think about it, it's a mood altar, right, 0:21:25.840 --> 0:21:28.240 I mean, and I think a lot of the usage 0:21:28.240 --> 0:21:31.560 recreationally will be looked that way. And that's just not 0:21:31.680 --> 0:21:34.760 Pine in the sky. I mean, that's what Constellation has said, 0:21:35.160 --> 0:21:38.440 and most in Chorus has suggested that's looking at cannabis 0:21:38.440 --> 0:21:42.679 as a uh you know, as a potential opportunity. And 0:21:43.000 --> 0:21:45.800 so I think, to um, the big answer here is 0:21:45.840 --> 0:21:49.879 that I think the next big wave of mergers and acquisitions, 0:21:49.920 --> 0:21:52.639 particularly in Canada. You know the growers now, but I 0:21:52.640 --> 0:21:55.320 think the second wave will be the big consumer package 0:21:55.320 --> 0:21:57.440 goods companies again has the bushes of the world the 0:21:57.520 --> 0:22:00.639 most in cores, the Diaggio's that take a look at 0:22:00.640 --> 0:22:04.360 what Consolation did and maybe pursue the same strategy. Can 0:22:04.440 --> 0:22:06.240 do you believe that there will be a time when 0:22:06.240 --> 0:22:09.000 a company such as Altair or Philip Morris will be 0:22:09.040 --> 0:22:12.399 in this business? Yes, I do, pim Um. You know, 0:22:12.440 --> 0:22:16.159 we learned back in the late seventies when upon discovery 0:22:16.200 --> 0:22:19.040 of a lot of internal documents, we know that tobacco 0:22:19.119 --> 0:22:23.840 companies were very interested in pursuing the marijuana markets. As 0:22:23.880 --> 0:22:26.479 we know now, it didn't become legally at illegal at 0:22:26.480 --> 0:22:29.280 the federal level back then, so it couldn't. But we believe, 0:22:30.000 --> 0:22:32.840 uh that they are looking at very closely. As a 0:22:32.840 --> 0:22:35.959 matter of fact, Um, but one of the largest tobacco 0:22:36.080 --> 0:22:40.720 leaf suppliers to the big tobacco companies, Alliance One, already 0:22:40.760 --> 0:22:46.240 owns a Canadian uh cannabis grower and so if you 0:22:46.320 --> 0:22:49.200 think about it, what that means is that a significant 0:22:49.200 --> 0:22:52.159 supplier of tobacco leaf to the big tobacco companies like 0:22:52.200 --> 0:22:56.720 Philip Morris International and British American Tobacco is also capable 0:22:56.760 --> 0:23:00.720 of supplying them marijuana leaf if it needs to. So yeah, 0:23:00.760 --> 0:23:02.960 I think they are definitely looking at it. Ken, I'm 0:23:03.000 --> 0:23:06.800 sure you're aware of the increase in the popularity of 0:23:06.960 --> 0:23:11.640 vaping and the popularity of a company Jewel and its product. 0:23:11.920 --> 0:23:14.080 Do you believe that they're going to be patent wars 0:23:14.200 --> 0:23:20.640 over the exclusivity of the technology that allows for those 0:23:20.720 --> 0:23:25.520 kinds of devices. Yes, I think there'll be some activity there, 0:23:25.520 --> 0:23:27.960 But you know, one of those, a hugely successful product 0:23:28.080 --> 0:23:31.720 like Jewel is threatening the status quo in this case 0:23:31.760 --> 0:23:34.919 the big not only the big vapor products of the 0:23:34.920 --> 0:23:37.880 big tobacco companies, both of the cigarette market in itself. 0:23:37.920 --> 0:23:41.040 I think you will see some challenges. That said, I mean, 0:23:41.080 --> 0:23:46.720 Altaria's Newmark subsidiary is coming out with a product that 0:23:46.880 --> 0:23:50.920 is very much like Jewel, um, you know, a non 0:23:51.000 --> 0:23:55.399 refillable vaporizer as they call it, and um, you know, 0:23:55.480 --> 0:23:57.159 so I think they're gonna I think most of that 0:23:57.359 --> 0:24:00.440 will be in the marketplace, but you know, as it 0:24:00.440 --> 0:24:03.040 gets closer and closer to what Jewel is, perhaps there 0:24:03.080 --> 0:24:07.680