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Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.

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Speaker 2: If you're counting, the score is law firms four, Trump

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Speaker 2: Administration zero. You might remember President Trump's executive orders punishing

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Speaker 2: four law firms with connections to his perceived political enemies,

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Speaker 2: trying to restrict their lawyer's access to government buildings, to

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Speaker 2: cancel their client's government contracts, and to revoke their lawyer's

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Speaker 2: security clearances. Four lower courts struck down the orders as unconstitutional,

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Speaker 2: and if today's oral arguments at the DC Circuit are

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Speaker 2: any indication, the federal appeals court will hand another win

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Speaker 2: to the law firms. My guest is former federal prosecutor

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Speaker 2: James Pierce, senior counsel at the Washington Litigation Group. What's

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Speaker 2: at stake in this case before the DC Circuit Court,

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Speaker 2: I mean.

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Speaker 1: I think, concisely put, it was whether the current administration

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Speaker 1: could attack law firms, essentially retaliate against law firms based

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Speaker 1: on the president's conclusion that those law firms had almost

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Speaker 1: provided safe harbor to individuals the president considered to be

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Speaker 1: his adversaries. And so beyond that, beyond just the four

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Speaker 1: law firms involved, I think there were a much broader

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Speaker 1: concern about the chilling effect on the legal profession, and

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Speaker 1: then even beyond the idea of the legal profession, as

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Speaker 1: one of the briefs in the case I think squarely

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Speaker 1: tied up the ability of courts to get the best,

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Speaker 1: most zealous advocacy that they could in court cases, which

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Speaker 1: of course affects all of us who may at some

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Speaker 1: point in our lives need legal representation.

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Speaker 2: Was the law firms argument essentially based on the First Amendment.

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Speaker 1: Yes, I mean there's a little bit of a coveyat

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Speaker 1: I should provide here. The law firms argument was that

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Speaker 1: these executive orders targeted them in violation of the First

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Speaker 1: Amendment as well the six Amendment, which provides a right

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Speaker 1: to council and separation of powers concerns. The focus of

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Speaker 1: the argument today was actually not as much on a

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Speaker 1: lot of the parts of the executive orders that restricted

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Speaker 1: access to federal contracting or access to federal buildings. A

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Speaker 1: lot of it was on the stripping of security clearances,

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Speaker 1: which again is that I think a consequence of First

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Speaker 1: Amendment retaliatory targeting. But there was a lot of question

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Speaker 1: about what role, if any, do courts have in reviewing

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Speaker 1: sort of a justiciability question reviewing a president's determination of

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Speaker 1: whether individuals should get access to or should hold security clearances.

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Speaker 2: The law firms were represented by Paul Clement, former Solicitor General.

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Speaker 2: I mean, what was his basic argument and how was

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Speaker 2: it received.

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Speaker 1: He began his argument by making what I thought was

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Speaker 1: the rhetorically powerful point that the executive orders violate quote,

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Speaker 1: the better part of the Bill of Rights, alluding to

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Speaker 1: what I have already mentioned, the First Amendment, the sixth Amendment,

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Speaker 1: right to counsel, separation of powers. And there weren't a

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Speaker 1: lot of questions until towards the end of his argument

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Speaker 1: because a lot of the focus was on the operation

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Speaker 1: of security clearances, again, which I actually took to be

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Speaker 1: a good sign for Paul Clement and for the law

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Speaker 1: firms that he's representing, because it suggests to me that

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Speaker 1: the appellate judges had many of the same reservations that

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Speaker 1: led the district court judges to rule for the law firms.

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Speaker 1: But we're focusing on a much more narrow question, which

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Speaker 1: is this security clearance question doesn't mean for sure that

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Speaker 1: the panel will rule for the law firms. But if

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Speaker 1: I were the law firms, and if I were Paul Clement,

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Speaker 1: I would feel pretty good coming out of the argument today.

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Speaker 2: What was the government's response, And when it comes to

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Speaker 2: national security, isn't that usually an executive branch function?

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Speaker 1: Yes, So the government had consistently said, the determination of

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Speaker 1: whether any individuals, let alone whether they're lawyers at a

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Speaker 1: law firm, of whether that individual can hold a security

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Speaker 1: clearance is a decision that is entrusted entirely to the

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Speaker 1: executive branch, and more specifically to the president. And the

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Speaker 1: president can do that for whatever reason, or frankly, for

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Speaker 1: no reason at all. And they were hypotheticals that the

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Speaker 1: government got that were things like, look if the president said,

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Speaker 1: I don't trust Chinese Americans, Asian Americans, African Americans, and

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Speaker 1: even though I don't think that these individuals would jeopardize

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Speaker 1: classified information, I just don't like them, and therefore I

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Speaker 1: determined they cannot have security clearances. Could courts really have

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Speaker 1: no way to get involved? And the government's answer was yes,

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Speaker 1: courts have nothing to say there because questions of national

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Speaker 1: security are entirely entrusted to the president. Now that's I

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Speaker 1: think a quite troubling answer for a lot of reasons,

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Speaker 1: and one that Paul Clement pushed back on. But at

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Speaker 1: the end of the day, the government had very little

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Speaker 1: to say on a lot of the other parts of

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Speaker 1: the executive order, like again the restrictions on federal contracting,

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Speaker 1: the restrictions on access to federal buildings. There was a

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Speaker 1: brief argument to say, look, law firms are just involved

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Speaker 1: in business and business type of relationships don't implicate the

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Speaker 1: First Amendment, but that occupied a very small part of

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Speaker 1: the government's argument today in its brief and candidly, I

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Speaker 1: don't think the government quite had its heart in it,

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Speaker 1: and I would not expect it's to prevail on those grounds.

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Speaker 2: Was there a question of whether the executive orders were

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Speaker 2: retaliatory in nature.

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Speaker 1: The government didn't outright concede that the orders were retaliatory.

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Speaker 1: And the way this sort of took shape in terms

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Speaker 1: of how the case was argued is that the executive

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Speaker 1: orders consisted of five sections, and the first section of

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Speaker 1: each of the orders, that there were four orders against

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Speaker 1: the four different law firms, was basically kind of the

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Speaker 1: setting out of the purpose of why that particular law

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Speaker 1: firm had come into focus for the executive branch and

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Speaker 1: for the president. You know, whether it was associations with

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Speaker 1: Robert Muller or Andrew Weissman or other individuals deemed political adversaries,

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Speaker 1: and there was some jousting about whether the hearts of

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Speaker 1: the executive order that did things like strip security clearances

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Speaker 1: and limit access should or could be read without reference

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Speaker 1: to that first section, the section that kind of laid

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Speaker 1: out what was It's hard to see anything other than

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Speaker 1: a retaliatory focus, and so the government was arguing that

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Speaker 1: the courts should sever it out, should consider it, which

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Speaker 1: again is not an explicit concession that it was retaliatory,

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Speaker 1: but I think there were certainly the acknowledgment or the

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Speaker 1: recognition underneath it, and the district courts had all consistently

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Speaker 1: found that these were retaliatory orders and that the first

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Speaker 1: section of the executive orders in each of them.

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Speaker 2: The law firms won all four cases in the lower courts.

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Speaker 1: Yes, that's right, Wilmer, Hale, Perkins, Cooey, Susman, Godfried, and

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Speaker 1: gener and Block. Four different judges all in the District

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Speaker 1: of Columbia. Slight differences in the nature of the injunctions

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Speaker 1: blocking the executive orders, but the law firms prevailed in

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Speaker 1: all four of those cases.

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Speaker 2: Having lost four times. Did the Justice Department change its

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Speaker 2: argument in any way from the lower court arguments?

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Speaker 1: The short answers know, there was certainly a change in

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Speaker 1: how they emphasized or really what they emphasized. As I mentioned,

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Speaker 1: I think already they really placed a lot more emphasis

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Speaker 1: on security clearances when the case was up on an appeal.

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Speaker 1: And then, as you may know, the government noticed an appeal,

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Speaker 1: and then shortly before its appellate brief was due it

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Speaker 1: had to file the first brief. As the party lodging

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Speaker 1: the appeal, it actually moved filed a motion to dismiss

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Speaker 1: the appeal, to say it was abandoning its arguments. And

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Speaker 1: then maybe a day or two later, and with some

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Speaker 1: public statements potentially brought the President and others in the

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Speaker 1: White House I think may be Stephen Miller, the government

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Speaker 1: reverse course and said, no, no, just kidding, we actually

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Speaker 1: do on an appeal, which is extremely unusual. I spent

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Speaker 1: over a decade in the Justice Department, and I've never

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Speaker 1: never heard of anything like that or had colleagues that

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Speaker 1: I had spoken with. So to me, that suggested a

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Speaker 1: real lukewarm approach to this appeal. And as I said,

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Speaker 1: no real change in the substance, but some change in

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Speaker 1: the emphasis of the.

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Speaker 2: Arguments practice speak. If an administration cuts off security clearance

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Speaker 2: of someone, I mean, are there procedures they have to follow.

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Speaker 1: Another case argued today of a specific lawyer, an individual

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Speaker 1: named Mark Zaid whose security clearance was revoked and he

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Speaker 1: was arguing that that too was unlawful, and he prevailed

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Speaker 1: in front of a district court. I only got a

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Speaker 1: chance to hear some of that argument, but channeling some

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Speaker 1: of what came out during the law firms argument, the

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Speaker 1: judges were more skeptical of kind of a blanket suspension

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Speaker 1: of security clearances on the basis of association, and that also,

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Speaker 1: I think led to the hypotheticals about for all Asian

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Speaker 1: Americans right, but for individualized treatment or individualized assessment. The government,

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Speaker 1: in its argument today and in the briefs have talked

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Speaker 1: about how there's a thirteen factor test that is tip

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Speaker 1: in the ordinary process is considered you know, sort of trustworthiness,

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Speaker 1: other aspects. So there is a process. It's a bit

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Speaker 1: of an open question in the Mark Ai case, will

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Speaker 1: I think, certainly go some ways towards resolving the extent

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Speaker 1: to which courts ken second guess an executive branch determination

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Speaker 1: that is done on a at least putatively individualized basis.

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Speaker 2: The panel consisted of two Obama appointees and one Trump appointee.

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Speaker 2: Did it seem like the Trump appointee was more receptive

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Speaker 2: to the government's arguments, not on.

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Speaker 1: The overall outcome, I mean my sense coming out of

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Speaker 1: the argument. So there were the three judges, Chief Judge Schwinavasen,

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Speaker 1: Judge Pillard, and then Judge Raw. Judge Row being an

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Speaker 1: appointee of President Trump from his first administration, and Judge

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Speaker 1: Row did raise some questions about the scope of Paul

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Speaker 1: Clement's arguments because he was arguing that anytime there's a

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Speaker 1: non individualized determination of security clearances, it should be justiciable,

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Speaker 1: and I think Judge Row was pushing back on that

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Speaker 1: in some respects. And in another point, Judge Row asked

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Speaker 1: the government, if we disagree with you on your top

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Speaker 1: line position that the security clearances or the other provisions

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Speaker 1: can be decided by court, you didn't raise any challenge

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Speaker 1: about the scope of the injunction, which to me suggested

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Speaker 1: Judge Row may have thought the district courts went a

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Speaker 1: bit too far in what they disallowed. The Executive branch

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Speaker 1: to do. But then Judge Row quickly followed up and said,

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Speaker 1: but Government, I don't see anywhere in your brief that

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Speaker 1: you have addressed that. And Judge Row, in other cases

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Speaker 1: I think has been more favorable towards the current administration.

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Speaker 1: I didn't read her, or or understand her to be

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Speaker 1: pressing those arguments than the way she has in the past.

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Speaker 1: So I'd be surprised if she might write separately on

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Speaker 1: sort of some particular points. But coming out of argument,

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Speaker 1: I would be surprised if she broke from the other

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Speaker 1: two who did seem quite skeptical of the government's position.

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Speaker 2: So you came away with a definite feeling that the

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Speaker 2: government is going to lose again here.

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Speaker 1: I did come out with that feeling. I could see,

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Speaker 1: as I said, Judge Row writing separately on some particular points.

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Speaker 1: Actually think that there's a good chance that all three

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Speaker 1: of them end up voting to uphold the District Court's

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Speaker 1: rulings for the law firms.

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Speaker 2: Thanks so much for joining me today. That's James Pierce

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Speaker 2: of the Washington Litigation Group coming up next on the

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Speaker 2: Bloomberg Law Show. A prominent player in the world of

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Speaker 2: short selling, activists is on trial in Los Angeles for

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Speaker 2: market manipulation. I'm June Grasso and this is Bloomberg. Andrew

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Speaker 2: Left is one of the most prominent players in the

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Speaker 2: world of short selling activists, sometimes called the bounty hunter

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Speaker 2: of Wall Street, with his viral posts and reports, often

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Speaker 2: claiming firms are overvalued or engaged in fraud, and hyping

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Speaker 2: his positions with frequent appearances on financial TV shows. But

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Speaker 2: now Left is appearing in a courtroom in Los Angeles

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Speaker 2: where he's being tried for using explosive social media posts

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Speaker 2: about dozens of companies to illegally move their stock and

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Speaker 2: make a quick profit. The fifty five year old denies

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Speaker 2: misleading investors. My guest is securities law expert James Park,

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Speaker 2: a professor at UCLA Law School. Jim, give us a

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Speaker 2: picture of who Andrew Left is.

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Speaker 3: He started out by publishing research reports on companies through

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Speaker 3: his platform Citrin Research, often making negative recommendations. I think

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Speaker 3: he's mainly known for correctly identifying problems at a company

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Speaker 3: called Valiant Pharmaceuticals that you may remember from a while ago,

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Speaker 3: a company that engaged in questionable practices with respect to

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Speaker 3: recognizing sales and so you know, he published a report

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Speaker 3: identifying some of the questionable practices. He also came up,

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Speaker 3: interestingly in the game Stop Saga from a few years ago,

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Speaker 3: where he had taken a short position I believe in

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Speaker 3: the company and retail investors basically rallied on Red to

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Speaker 3: squeeze the shorts. And so those are a couple places

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Speaker 3: where he's come up, and you know, with those successes,

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Speaker 3: he's gained a high profile. You know, he makes recommendations

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Speaker 3: with respect to companies, emails them out, has an online

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Speaker 3: platform as using social media a lot, is frequently invited

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Speaker 3: on various shows, and has a lot of medium appearances.

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Speaker 3: And so he's somebody with a higher profile than most

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Speaker 3: folks who are doing research and you know, taking short

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Speaker 3: positions potentially in companies.

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Speaker 2: The government is accusing him of manipulating the stock market.

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Speaker 2: Tell us about the charges here.

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Speaker 3: He was indicted for various counts of securities fraud, manipulation

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Speaker 3: and fraud. More generally, the manipulation argument is that he

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Speaker 3: would basically establish positions in a stock whether it was

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Speaker 3: long or short, issue a recommendation with respect to that position,

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Speaker 3: which he would disseminate to the public, presumably according to

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Speaker 3: the prosecutors with the intent to either inflate or deflate

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Speaker 3: the stock given his high profile, and then he would

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Speaker 3: quickly reverse his position. And I think the argument there

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Speaker 3: is that that shows he did not believe his recommendation,

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Speaker 3: that he was issuing these recommendations to artificially manipulate the

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Speaker 3: price of these stocks, and that his actions, which often

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Speaker 3: came very soon after the recommendation, indicated that he did

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Speaker 3: not sincerely believe, you know, his recommendation that you should

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Speaker 3: buy the stock or sell the stock, because he was

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Speaker 3: doing the reverse. And you know, there might have been

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Speaker 3: a dozen or so of these transactions, maybe more that

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Speaker 3: the prosecutors alleged he profited by around twenty million dollars

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Speaker 3: through this market manipulation.

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Speaker 2: So the opening statements, the prosecutor said he said whatever

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Speaker 2: he had to, whether it was accurate or not, to

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Speaker 2: get a mo market reaction, because that's what he was

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Speaker 2: looking for, to generate a market reaction, to generate panic,

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Speaker 2: Whereas Left's attorney said that he genuinely believed in his

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Speaker 2: stock calls quote, he tells the public what he believes

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Speaker 2: the truth, and then he trades on the truth to

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Speaker 2: make a profit. It's not fraud, that's trading. I mean,

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Speaker 2: does the prosecution have to prove that he didn't believe

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Speaker 2: what he was saying or more than.

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Speaker 3: That, I think that's fair that he didn't believe his opinions,

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Speaker 3: the opinions that he issued. Opinions can be false. That

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Speaker 3: if you do not believe in the opinion, then it's

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Speaker 3: it's false, and that can be the basis for securities

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Speaker 3: fraud claim. And you know, I think that's essentially what

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Speaker 3: the prosecution has to show with a high level of certainty,

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Speaker 3: because it is a criminal case beyond a reasonable doubt,

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Speaker 3: that you know, he intentionally issued information that he knew

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Speaker 3: was not true and he was doing that with the

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Speaker 3: motivation into profit. That's basically what the prosecution is going

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Speaker 3: to have to show at trial.

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Speaker 2: Is this an aggressive legal theory for the prosecution? Is

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Speaker 2: it an uphill battle for prosecutors to.

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Speaker 3: Prove this it's not a commonly prosecuted fact pattern. I

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Speaker 3: think that's fair to say. You know, do the prosecutors

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Speaker 3: have a very well developed case? I think they have

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Speaker 3: a lot of evidence, right, They have a lot of

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Speaker 3: evidence about not only his recommendations, of course, which are public,

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Speaker 3: but what he did and there is you know, some

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Speaker 3: email evidence that could be interpreted in a way that

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Speaker 3: the jury might be able to conclude that you know,

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Speaker 3: he knew that the information was false. Now that that's

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Speaker 3: up to the jury, and emails have a lot of

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Speaker 3: ways that they can be interpreted.

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Speaker 1: You know.

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Speaker 3: Market manipulation cases are are tough, right, It's tough to

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Speaker 3: prove the intent because a lot of the actions that

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Speaker 3: could potentially be manipulate relative you know, maybe motivated by

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Speaker 3: legitimate reason. You know, he may legitimately believe part of

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Speaker 3: his recommendations, some of his recommendations, you know, maybe he

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Speaker 3: changed his mind right very soon after. And so, you know,

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Speaker 3: market manipulation is challenging. We've talked, you know a few

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Speaker 3: years ago about the Bill Huang case. That's one where

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Speaker 3: I noted that it's hard to establish manipulation, and the

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Speaker 3: prosecution did in that case. And so I think that

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Speaker 3: the cases is novel and interesting because you know, manipulation

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Speaker 3: is not prosecuted as much as say insider trading, for example.

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Speaker 3: It's it's a little bit more straightforward. When I've taken

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Speaker 3: non public information, I'm an insider, I trade on it.

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Speaker 3: That is usually more straightforward than a situation where somebody

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Speaker 3: is is engaging in various training activity and around recommendations

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Speaker 3: that they've issued, And so I think it's just less

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Speaker 3: common to bring cases like this.

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Speaker 2: So one of the witnesses for the prosecution was this

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Speaker 2: CEO of the cannabis company Kronos Group, Mike Gorenstein, and

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Speaker 2: he testified how Kronos was thrown into chaos after Left's

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Speaker 2: citron Research published and tweeted a negative report, the tweet

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Speaker 2: which said Kronos was quote all hype with possible securities fraud.

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Speaker 2: And then the prosecutor said, shortly after the tweet, around

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Speaker 2: twenty four minutes, according to the indictment, Left started closing

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Speaker 2: out his short position. Obviously, Left does not have to

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Speaker 2: take the stand in his own defense, no defendant does.

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Speaker 2: But without taking the stand, how will he be able

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Speaker 2: to explain what was going on there in those twenty

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Speaker 2: four minutes?

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Speaker 3: Yeah, I don't know how his operation works, whether he

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Speaker 3: does all the research himself or whether there's somebody else

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Speaker 3: who does that. I think that, you know, ideally he

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Speaker 3: would explain, you know, what was my basis for making

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Speaker 3: this this statement about this company? What did I look

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Speaker 3: at and why did I quickly close out the position.

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Speaker 3: I think that's also a question that could be asked,

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Speaker 3: and it might be difficult to establish that without the

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Speaker 3: person who's making the recommendation taking the stand.

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Speaker 2: Stay with me, Jim. Coming up next on the Bloomberg

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Speaker 2: Laws Show, I'll continue this conversation with UCLA law professor

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Speaker 2: James Park. Is this trial a reckoning for short sellers?

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Speaker 2: I'm June Grosso and you're listening to Bloomberg. A trial

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Speaker 2: in Los Angeles is putting a spotlight on the short

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Speaker 2: selling industry. Andrew Left is one of the most prominent

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Speaker 2: players and is accused of using explosive social media posts

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Speaker 2: about dozens of companies to illegally move their stock and

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Speaker 2: make a quick profit. He denies any wrongdoing. I've been

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Speaker 2: talking to Professor James Park of UCLA Law School. Jim,

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Speaker 2: I've been reading some headlines that say is short selling

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Speaker 2: facing a reckoning referring to this trial. Do you think

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Speaker 2: it is?

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Speaker 3: I don't think so. You know, some of the transactions

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Speaker 3: were long positions. Now you know, he is maybe known

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Speaker 3: as a short seller, but he does make long recommendations

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Speaker 3: as well. There's a Facebook transaction where he says it's

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Speaker 3: going to one hundreds of sixty dollars a share, and

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Speaker 3: he sells out it much much less than that after

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Speaker 3: the price goes up, and so, you know, you might

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Speaker 3: think of it as more perhaps a case involving the

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Speaker 3: use of social media, the use of kind of online recommendations.

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Speaker 3: Is that the place where you could have a bit

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Speaker 3: of a chilling effect, And so I think you might

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Speaker 3: even think of the case a bit broader than it

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Speaker 3: being about, you know, somebody who is specifically selling companies

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Speaker 3: short and making allegations that the price should go down.

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Speaker 3: I think it's a bit broader than that. It is

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Speaker 3: the combination of you know, do short sellers sometimes use

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Speaker 3: social media? Sure, I don't know that they do that

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Speaker 3: to the extent that mister Left did, And that might

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Speaker 3: be kind of what the case ultimately is about, is

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Speaker 3: that technology has you know, made it difficult to regulate

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Speaker 3: conduct that might manipulate markets, because before social media you

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Speaker 3: couldn't move a stock price like this, But now you know,

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Speaker 3: there's some individuals who can.

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Speaker 2: Just the indictment of Left sort of spooked the short

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Speaker 2: selling industry. His indictment is the culmination of an investigation

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Speaker 2: of short sellers by criminal prosecutors in DCN Los Angeles.

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Speaker 2: That started in twenty nineteen, so short sellers were aware

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Speaker 2: of the prosecutorial scrutiny. Some of Leff's biggest competitors have

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Speaker 2: already exited the market, some came out with more detailed,

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Speaker 2: longer disclaimers. Has the industry cleaned itself up a bit?

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Speaker 3: No, I think it's it's tough being a short seller.

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Speaker 3: It's always been tough. Nobody likes you. And you know,

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Speaker 3: there's long been scrutiny of short sellers and their statements.

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Speaker 3: You know one that in mind. You know, Bill Ackman

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Speaker 3: years ago, like in the early two thousands, was investigated

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Speaker 3: by the New York Attorney General's Office and maybe the

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Speaker 3: SEC about about a report he published about a company

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Speaker 3: called Mbia. And you know, I think that short sellers

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Speaker 3: that are sophisticated should know that their statements are going

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Speaker 3: to be scrutinized and that they cannot release information or

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Speaker 3: facts that they know are false. That's part of the

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Speaker 3: business right is that you're violating Rule ten B five

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Speaker 3: if you issue false information relating to the purchaser sale

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Speaker 3: of a security. Probably some other state law theories as well,

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Speaker 3: And so there's always been scrutiny. Taking it to a

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Speaker 3: criminal level, I think though, does raise some additional reason

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Speaker 3: to be cautious with these types of statements. So I

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Speaker 3: think that in that regard, you know, when you have

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Speaker 3: a criminal case that really gets people's attention. And he

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Speaker 3: is known primarily as somebody who recommends short positions, has

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Speaker 3: taken positions. He's an activist investor, and so I think

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Speaker 3: that's right that it is something that activist short investors

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Speaker 3: will be aware of.

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Speaker 2: Prosecutors have focused on the stocks of a few companies

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Speaker 2: that they say Left tweeted about and then trade it

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Speaker 2: on the social media site formerly known as Twitter, and

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Speaker 2: Chronos Group, a cannabis company, and prosecutors have called stock

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Speaker 2: analysts who disagreed with the negative reports that left issued,

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Speaker 2: and on cross examination, the defenses point seems to be

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Speaker 2: that disagreement over stock doesn't necessarily constitute fraud, which is true.

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Speaker 2: But it's more than disagreement, isn't it. It's whether you misrepresent.

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Speaker 3: Yeah, I think the analyst recommendation or the analysts testimony

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Speaker 3: is probably serving as a baseline. You know, this is

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Speaker 3: kind of the these are the facts that were out there,

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Speaker 3: and you know, without specific facts kind of contradition that

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00:24:00,760 --> 00:24:04,440
Speaker 3: if you're just kind of saying this stuff without any

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Speaker 3: basis and you're only doing it to manipulate the stock price,

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Speaker 3: that that's going to be problematic. So you're right, disagreement

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Speaker 3: is not broad. People have the ability to disagree. But

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Speaker 3: I think it shows the context of how the stock

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Speaker 3: was understood and if you are deliberately issuing false information

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Speaker 3: that that is essentially what the case is is about.

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Speaker 3: But the testimony by the stock analyst by itself is

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Speaker 3: not going to be able to establish that these statements

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Speaker 3: were false, that he knew that they were false.

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Speaker 2: This was a prosecution that was brought during the Biden

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Speaker 2: administration and the Trump administration has dropped a lot of

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Speaker 2: those and you know, dropped really the concentration on white

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Speaker 2: collar crime. Is there any reason you think why they

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Speaker 2: kept this case you and not know the answer, I'm

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Speaker 2: just like querying.

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Speaker 3: Yeah, it's a very interesting question, and it's not been

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Speaker 3: so transparent as to how they're making decisions. That that's

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Speaker 3: true in any administration, right, prosecutors will make decisions based

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Speaker 3: upon their evaluation of the case and the evidence involved.

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Speaker 3: And one possibility is, hey, we think this is a

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Speaker 3: good case. We think the evidence is strong. We think that,

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Speaker 3: you know, this is a good case that you know,

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Speaker 3: and that he should be punished. I think that's one

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Speaker 3: view of the reason the case is going forward. You know,

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Speaker 3: is there another view that kind of feeds into the

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Speaker 3: narrative of well, you know, maybe you know short sellers

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Speaker 3: are bad for corporate interests or big companies, and so

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Speaker 3: we might view them unfavorably for some political reason, you know,

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Speaker 3: Is that somewhere in the background. It could be I

436
00:25:39,000 --> 00:25:41,840
Speaker 3: don't really know much. And it's also very possible that

437
00:25:41,880 --> 00:25:44,240
Speaker 3: this has just not drawn the attention of the folks

438
00:25:44,240 --> 00:25:47,320
Speaker 3: in Washington, that it's it's really a case that the

439
00:25:47,440 --> 00:25:51,720
Speaker 3: US Attorney's office here brought and is simply proceeding.

440
00:25:52,160 --> 00:25:54,879
Speaker 2: Well, you're here, I want to ask you about another case.

441
00:25:55,640 --> 00:25:59,960
Speaker 2: According to Bloomberg sources, US authorities are moving to result

442
00:26:00,080 --> 00:26:04,320
Speaker 2: of the fraud chargers against Indian billionaire got Tom A

443
00:26:04,480 --> 00:26:08,720
Speaker 2: Donnie and in this criminal case that's hung over his

444
00:26:08,880 --> 00:26:11,800
Speaker 2: head for more than a year. A. Donnie is also

445
00:26:11,840 --> 00:26:15,439
Speaker 2: in talks over a potential fifteen to twenty million dollars

446
00:26:15,480 --> 00:26:18,720
Speaker 2: settlement of a civil fraud case that the securities and

447
00:26:18,800 --> 00:26:22,840
Speaker 2: Exchange Commission brought against him and others in November of

448
00:26:23,000 --> 00:26:26,760
Speaker 2: twenty twenty four. Again, according to sources, is this just

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00:26:26,800 --> 00:26:28,880
Speaker 2: another white collar case they're dropping.

450
00:26:29,320 --> 00:26:32,960
Speaker 3: I think it's fair to say that this administration views

451
00:26:33,000 --> 00:26:36,200
Speaker 3: the Foreign corupt Practices Act differently than the last administration.

452
00:26:36,359 --> 00:26:40,919
Speaker 3: The Foreign Corrupt Practices Act prohibits publicly traded companies in

453
00:26:40,960 --> 00:26:47,000
Speaker 3: the US from paying bribes overseas to get business. And

454
00:26:47,320 --> 00:26:50,560
Speaker 3: my understanding of the allegation years that the company was

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00:26:50,600 --> 00:26:54,400
Speaker 3: building some clean energy projects in India paid a lot

456
00:26:54,440 --> 00:26:58,080
Speaker 3: of bribes and that was the prosecution for violating the

457
00:26:58,119 --> 00:27:01,439
Speaker 3: Foreign corupt Practices Act, as well as some disclosure issues

458
00:27:01,440 --> 00:27:05,800
Speaker 3: that you claim to be a socially responsible company, but

459
00:27:05,920 --> 00:27:08,760
Speaker 3: you are paying bribes, right, so that's a securities law

460
00:27:08,840 --> 00:27:12,639
Speaker 3: violation as well. And you know, I think on both

461
00:27:12,800 --> 00:27:17,680
Speaker 3: theories that this administration is just more skeptical about enforcing

462
00:27:17,720 --> 00:27:21,040
Speaker 3: the Foreign Corrupt Practices Act. It's you know, it's hard

463
00:27:21,040 --> 00:27:24,440
Speaker 3: to define what a bribe is. And you know, some

464
00:27:24,520 --> 00:27:28,919
Speaker 3: may say, more broadly, are we disadvantaging companies that you know,

465
00:27:29,000 --> 00:27:32,960
Speaker 3: have US ties by not allowing them to compete for

466
00:27:33,040 --> 00:27:36,560
Speaker 3: business and foreign jurisdictions? And certainly just sort of the

467
00:27:37,160 --> 00:27:41,680
Speaker 3: claim that there is a misrepresentation with respect an ESG

468
00:27:41,880 --> 00:27:44,399
Speaker 3: matter is something that this this administration has done a

469
00:27:44,400 --> 00:27:46,439
Speaker 3: one to eighty from the last. So I think there

470
00:27:46,440 --> 00:27:48,439
Speaker 3: are a lot of reasons why we might speculate that

471
00:27:48,520 --> 00:27:50,359
Speaker 3: the case was dropped. And also there may be some

472
00:27:50,480 --> 00:27:54,280
Speaker 3: jurisdictional issues in terms of getting personal jurisdiction over some

473
00:27:54,440 --> 00:27:57,440
Speaker 3: of the individuals, so and so there may be a

474
00:27:57,560 --> 00:27:58,280
Speaker 3: number of reasons.

475
00:27:58,560 --> 00:28:01,760
Speaker 2: You may be right about that, because none of the defendants,

476
00:28:01,800 --> 00:28:05,440
Speaker 2: including a Donnie and his nephew, have appeared in court

477
00:28:05,560 --> 00:28:09,080
Speaker 2: so far over the charges, so the case has been

478
00:28:09,119 --> 00:28:13,360
Speaker 2: effectively stalled. Thanks so much for your insights, Jim. That's

479
00:28:13,359 --> 00:28:17,320
Speaker 2: Professor James Park of UCLA Law School, and that's it

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Speaker 2: for this edition of The Bloomberg Law Show. Remember you

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00:28:20,000 --> 00:28:22,440
Speaker 2: can always get the latest legal news on our Bloomberg

482
00:28:22,560 --> 00:28:26,159
Speaker 2: Law podcasts. You can find them on Apple Podcasts, Spotify,

483
00:28:26,359 --> 00:28:31,400
Speaker 2: and at www dot Bloomberg dot com, Slash podcast, Slash Law,

484
00:28:31,800 --> 00:28:34,399
Speaker 2: and remember to tune into The Bloomberg Law Show every

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00:28:34,440 --> 00:28:38,320
Speaker 2: weeknight at ten pm Wall Street Time. I'm Jim Grosso,

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00:28:38,480 --> 00:28:40,080
Speaker 2: and you're listening to Bloomberg