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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud,

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Speaker 1: and on Bloomberg dot com slash podcasts. During congressional testimony

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Speaker 1: last month, now former FBI agent Peter Struck defended himself

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Speaker 1: repeatedly against accusations of bias against President Trump. I understand

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Speaker 1: that my sworn testimony will not be enough for some people.

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Speaker 1: After all, Americans are skeptical of anything coming out of Washington.

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Speaker 1: But the fact is, after months of investigations, there's simply

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Speaker 1: no evidence of bias in my professional actions. Joining me

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Speaker 1: is Brad Moss, a partner at Mark Zade. So Brad

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Speaker 1: Struck is now infamous, we might say, for texting negative

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Speaker 1: comments about Trump. But the Inspector General found no evidence

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Speaker 1: that bias affected the investigation, and the FBI office that

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Speaker 1: handles employee discipline had only recommended a demotion and a

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Speaker 1: sixty day suspension. So how does this going intervening and

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Speaker 1: firing Struck reflect on the FBI? Sure, so it was

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Speaker 1: certainly a departure from standard practice you live. It was

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Speaker 1: arguably and quite possibly legals. So FBI employees are with

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Speaker 1: limited exceptions. Basically, at Well employees, they don't have any

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Speaker 1: statutory process protections. They're excluded from the protection of the

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Speaker 1: Congress has created a certain has provided to certain fetter employees.

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Speaker 1: They can be fired at well with or without cause.

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Speaker 1: But the FBI typically for existing employees, will put them

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Speaker 1: through before firing and put them through a disciplinary process

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Speaker 1: with appeal rights, and they go before the Office of

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Speaker 1: Professional Responsibility, and particularly Candice Will who heads that office.

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Speaker 1: I have been representing individuals before this agency as well

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Speaker 1: as the rest of the Hells New for eleven years.

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Speaker 1: In eleven years, I've never convinced Candice Will to rescind

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Speaker 1: a proposed termination. She is very strict and has a

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Speaker 1: very high regard for the ethical obligations of the agency.

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Speaker 1: The fact that she was persuaded that Mrs has an

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Speaker 1: agent struct should not be fired, that she believed the

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Speaker 1: sixty days suspension was sufficient speaks volumes about the sufficiency

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Speaker 1: of the allegations against him, and the fact that the

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Speaker 1: Deputy Director intervened to overrule her is very unusual. It's

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Speaker 1: something I've never seen before. Does so? President Trump has

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Speaker 1: been tweeting that this should be the end of the

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Speaker 1: Muller investigation. Does does structs firing undercut the Muller investigation

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Speaker 1: in any way? No, this is just posturing by the

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Speaker 1: President and his legal team. They've been trying to run

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Speaker 1: this line for months now. Peter Struck was, in his

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Speaker 1: role as a counter intelligence chief, the person who initiated

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Speaker 1: the partly counter intelligence probe. He had that authority. It

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Speaker 1: has since come under different people's authorities. He was not

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Speaker 1: running it for a very long time. He was kicked

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Speaker 1: off the Mueller team the moment Mueller learned of the text.

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Speaker 1: His involvement at the beginning in no way renders the

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Speaker 1: rest of the investigation improper just because of his private

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Speaker 1: personal views of the president. This is where this is

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Speaker 1: just posturing for the president's base. It's posturing for the

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Speaker 1: possibility of eventual appeachment proceedings during the next Congress, nothing more.

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Speaker 1: As a matter of law, there's nothing to this argument.

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Speaker 1: Let's turn now to the first trial for the Mueller team,

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Speaker 1: the Paul Manafort trial. The prosecution rested yesterday after ten

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Speaker 1: days of testimony from twenty seven witness witnesses. The defense

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Speaker 1: rested today without calling any witnesses. This often happens in

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Speaker 1: a defense case, but what do you think about happening

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Speaker 1: in a case this big with such a high profile

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Speaker 1: legal team. Yeah, this is not entirely out of the

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Speaker 1: ordinary for a white collar kind of bank fraud and

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Speaker 1: tax fraud case like what we have here, because it's

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Speaker 1: all about documentation, and so what the Manafort defense team

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Speaker 1: is banking on is that there will be at least

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Speaker 1: a sufficient amount of reasonable doubt amongst one or more

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Speaker 1: jurors that even with all this evidence that was presented,

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Speaker 1: that they were able to undercut it enough and justify

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Speaker 1: the jurors refusing to find Mr Manafort guilty weather as

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Speaker 1: a outright uniform, as a unanimous not guilty verds, or

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Speaker 1: even just a hung jury. That's what they're banking on

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Speaker 1: at this point. There's no real witnesses they would want

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Speaker 1: to risk putting on, especially Mr. Manafort, because they wouldn't

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Speaker 1: want to subject them to cross examination by the prosecutors. Brad,

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Speaker 1: there was that very strange the other day, uh, where

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Speaker 1: the judge had this jury dismissed until the afternoon, and

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Speaker 1: then there was there was a secret as sealed motion

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Speaker 1: that the defense put forward. Do you have any inkling

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Speaker 1: as to what that may be. Yeah, there was a

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Speaker 1: lot of rumors running around. People are trying to figure

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Speaker 1: out what exactly was going on on. There was comments

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Speaker 1: about some one of the security officers had to bring

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Speaker 1: out a juror jury whiteboard and bring it into the

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Speaker 1: judge's chambers. It's not quite clear what occurred. It may

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Speaker 1: have been that there was a concern raised that one

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Speaker 1: of the jurors had been indicating to other jurors that

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Speaker 1: he or she had seen something about the trial on TV,

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Speaker 1: which would be a violation of their obligation while serving

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Speaker 1: on the jury. They're supposed to basically be secluded from

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Speaker 1: the outside world of media. They're not supposed to discuss

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Speaker 1: it with others. They're not supposed to watch TV reports

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Speaker 1: about the trial. It may have been like something along

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Speaker 1: those lines, and there was a discussion about whether or

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Speaker 1: not the juror had to be booted off. But without

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Speaker 1: really knowing, without seeing what was in that field motion

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Speaker 1: were effectively all speculating about a minute here of tomorrow,

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Speaker 1: we're gonna have closing arguments. Do you expect anything unusual

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Speaker 1: from either side. Uh, not really. It's only because bringing

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Speaker 1: out if the if the defense had some smoking gun,

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Speaker 1: some huge piece of evidence, they would have presented it

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Speaker 1: in their case. Closing arguments are just about summarizing it

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Speaker 1: the things you did already, all the information that was

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Speaker 1: presented for the prom prosecutors side and for the defense,

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Speaker 1: outlining how the prosecutors didn't meet their burdens. I don't

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Speaker 1: expect any major fireworks, and I don't expect the jury

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Speaker 1: to take that long to deliberate. Well, we shall see

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Speaker 1: about that. You never know about jury's doing you. That's

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Speaker 1: Brad Moss. He's a partner at mark Z. The Securities

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Speaker 1: and Exchange Commission is looking into Tesla's CEO Elon Musk's

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Speaker 1: recent bombshell tweets about potential plans to take Tesla private.

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Speaker 1: Speaking with Bloomberg on Monday, former SEC attorney Theresa Goody

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Speaker 1: discussed the SEC response to Musk's disclosures. Fundamentally, this is

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Speaker 1: a disclosure issue, and I don't think that Twitter should

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Speaker 1: be acceptable for most purposes. It's unreasonable to me for

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Speaker 1: investors that have to troll and look through the social

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Speaker 1: media of all of the different officers and directors of

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Speaker 1: companies joining me in our Bloomberg eleven three studios in

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Speaker 1: New York is Matt Robinson. Bloomberg knew his financial regulation reporter,

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Speaker 1: so Matt elon Musk tweets on August seven that he

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Speaker 1: had funding secure to take Tesla private. That leads to

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Speaker 1: confusion wild trading, and then in a blog post on Monday,

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Speaker 1: he tries to clarify the tweet. What did he say

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Speaker 1: and did it clarify the funding? So he updated investors

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Speaker 1: with some information about conversations he's had with you know,

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Speaker 1: sovereign wealth funds in Saudi Arabia UM in terms of

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Speaker 1: like their interest in taking a private So I think, um,

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Speaker 1: you know, there's obviously been It's only been a week.

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Speaker 1: It feels a bit longer than that since he tweeted

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Speaker 1: this UM. But you know, what the agency in, what

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Speaker 1: the SEC folks want to know is what was his intention?

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Speaker 1: Did he really think it was you know, the funding

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Speaker 1: was secured? Did he did he really have that? UM?

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Speaker 1: And also the first part of that tweet it's only

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Speaker 1: a couple of words, but am considering so this is

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Speaker 1: also something that he's been you know, it sounds like

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Speaker 1: it's a softer statement. You know, I've had conversations. So

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Speaker 1: what the agency is interested in is you know, intention

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Speaker 1: and what what did he mean by that? You know,

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Speaker 1: how far along were they? Um? So that's that's the

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Speaker 1: kind of thing that they're they're focused on because it's

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Speaker 1: a you know, the SEC is a they care about,

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Speaker 1: you know, the factual statements that you know, executives make.

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Speaker 1: So how are they going to find out his intent?

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Speaker 1: So that so they're gonna look through They're gonna want

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Speaker 1: to talk to individuals at those meetings. What was the

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Speaker 1: context of those meetings, you know what was discussed? I

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Speaker 1: mean where figures you know, put out. They're also going

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Speaker 1: to be interested in communications he has in and around

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Speaker 1: that tweet, any emails tied to these taking the company private,

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Speaker 1: you know a couple of months ago. They're gonna want

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Speaker 1: to see you know, there's gonna be a lot of

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Speaker 1: discoverable evidence in terms of like, you know, what backs

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Speaker 1: us up? So he has his story about Okay, this

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Speaker 1: is this is the timeline of events. These are these

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Speaker 1: the conversations I had with investors. The SEC is gonna

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Speaker 1: want to corroborate all of that. So the SEC started

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Speaker 1: looking into this almost immediately after the tweet. Do you

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Speaker 1: have any insight as to why Musk would have on

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Speaker 1: this mean? Was he not considering that the SEC is watching? Well,

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Speaker 1: so the SEC has a rule that came out a

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Speaker 1: couple of years ago, um, about using social media to

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Speaker 1: inform investors, And the agency said it's fine, They said

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Speaker 1: that it's okay, it's it's it's something that you know,

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Speaker 1: executives can can use to inform people about their company. So, um,

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Speaker 1: you know, I think that said, I think if knowing

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Speaker 1: that you can put out a lot of different things

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Speaker 1: on social media, but as I said, you know, they

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Speaker 1: want to make sure that what you're saying, you know,

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Speaker 1: is in fact true, so it's not going to be

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Speaker 1: just a vague or confusing comment. So is the intent

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Speaker 1: that he has to have to manipulate the market? Right?

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Speaker 1: That that's it, So that it's a pretty high bar

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Speaker 1: intent to manipulate shares because it's like if you know,

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Speaker 1: often in cases like this, you know, if if an

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Speaker 1: executive says, oh, I have a contract with ABC company,

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Speaker 1: and the SEC calls that company and they're like, no,

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Speaker 1: we don't that that's clear violation, right because you said

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Speaker 1: one thing that you had this contract, but you didn't

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Speaker 1: this funding secured. Okay, well you had conversations. Was that

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Speaker 1: really really the case? Did you really have that nailed down?

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Speaker 1: And I mean, when does a does an executive have

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Speaker 1: to make this kind of disclosure? In other words, at

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Speaker 1: what point in the negotiations? It doesn't even seem right

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Speaker 1: now like it's nailed down. You know, that's a it's

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Speaker 1: a materiality, you know. Basically to your point about when

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Speaker 1: do you have to tell investors about something important is

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Speaker 1: very squishy. You know they're there, it's just you know,

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Speaker 1: you can talk to a lot of lawyers about what

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Speaker 1: they think should be disclosed, you know, um separately, like

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Speaker 1: you know what a company's under investigation. Some companies never

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Speaker 1: disclose it until they're ready to pay the fine the

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Speaker 1: next day, and some companies do as soon as they

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Speaker 1: get a subpoena. So there's no hard rule. So now

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Speaker 1: what in your report you said the sec was already

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Speaker 1: investigating Musque or Tesla. What were they investigating him for?

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Speaker 1: What are they investigating him for? So this is part

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Speaker 1: of a longer standing probe. And and one thing in

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Speaker 1: mind is that these these take years. I mean, the

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Speaker 1: average SEC investigation takes two years because they have a

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Speaker 1: lot of evidence to gather. They have to you know,

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Speaker 1: they fight with defense attorneys about what they're going to get,

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Speaker 1: you know, then they have to digest it. So they've

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Speaker 1: been you know, from our reporting, we've we've we've said

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Speaker 1: that they've been looking at just sort of general um,

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Speaker 1: you know, general statements by the executives. I mean, even

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Speaker 1: before last week, there was a lot of questions about

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Speaker 1: production of Model threes and you know, you know how

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Speaker 1: viable it was to hit some of these aggressive sales targets.

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Speaker 1: There were also lawsuits by shareholders already over the tweet

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Speaker 1: to tell me about those, so that those are you know,

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Speaker 1: I sort of expected every time you have like a

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Speaker 1: big event or you know, a lot of um, you know,

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Speaker 1: kind of the market goes haywire. There are some class

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Speaker 1: action lawyers who want to see if there's they can

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Speaker 1: bring bring a case, so they're gonna be looking. They

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Speaker 1: use the same securities laws obviously as the SEC does,

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Speaker 1: so they're going to be trying to make a similar case.

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Speaker 1: Tell me more about the what's called the read Hastings Rule,

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Speaker 1: how it came about out and why the SEC thinks

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Speaker 1: you know that tweets are okay. So a couple of

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Speaker 1: years ago read Hastings, Uh, you know of Netflix put

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Speaker 1: out some information on Facebook about I think, um, you know,

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Speaker 1: movie subscribers and how you know, sort of exceeding expectations.

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Speaker 1: That that created a lot of questions about you know,

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Speaker 1: was he able to do that? Should he have put

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Speaker 1: that into an a K. So the SEC said, no,

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Speaker 1: that that's fine. You know, the agency is trying to say,

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Speaker 1: you know, you know, you don't have to put it

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Speaker 1: all in a company document, you know. I think from

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Speaker 1: their standpoint, they say, you know, if it's it's in

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Speaker 1: the public realm, maybe more people are going to see

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Speaker 1: it anyway, rather than digging it up in an SEC filing. Now,

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Speaker 1: if Mosque, if this really gets going, this going private

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Speaker 1: uh initiative, would an SEC investigation hold that up? No? Um,

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Speaker 1: I you know, even if say, for instance, you know,

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Speaker 1: he takes the company private next month, say say that

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Speaker 1: happens anything that you know, this investigation would continue because

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Speaker 1: the statements he made was while the company was public.

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Speaker 1: So I don't I don't foresee any issues where the

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Speaker 1: SEC is going to hold things up. They just want

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Speaker 1: to make sure that all the disclosures what Musk is

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Speaker 1: telling investors, you know, it's factually accurate. So what what's

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Speaker 1: the timeline? Now? What what's happening at at Tesla as

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Speaker 1: far as going private? You're smiling, and you know what's

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Speaker 1: the timeline? If you know, like in terms of the

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Speaker 1: timeline of a biout, it it sounds like, um, you know,

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Speaker 1: they're they're very far away from getting sort of any

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Speaker 1: sort of contingency or any sort of plan on that.

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Speaker 1: I mean in terms of the sec you know, there's

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Speaker 1: very early stages. You know, they're there. They need you know,

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Speaker 1: for instance, as I said, they had a meeting with

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Speaker 1: Saudi Um sermon, well, fund well, you can't just subpoena

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Speaker 1: someone your foreign national. You have to go you know,

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Speaker 1: you have to see Okay, well what can I get information?

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Speaker 1: You know? How am I? So that alone, just getting

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Speaker 1: them to talk to you, that's going to take a while.

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Speaker 1: So there's a lot of information they still have to

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Speaker 1: wrap their arms around. And what about the board of

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Speaker 1: directors And about fifteen seconds, what what are they how

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Speaker 1: are they react? Dagn what are they're doing? So they're

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Speaker 1: looking at um, you know, setting up a committee about

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Speaker 1: about doing a potential bio. Okay, thanks so much, Matt.

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Speaker 1: That's Matt Robinson, Bloomberg News financial regulation reporter. Thanks for

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Speaker 1: listening to the Bloomberg Law Podcast. You can subscribe and

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Speaker 1: listen to the show on Apple Podcasts, SoundCloud, and on

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Speaker 1: Bloomberg dot com slash podcast. I'm June Brosso. This is

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Speaker 1: Bloomberg