WEBVTT - Google, LiveNation, Uber and Other Catalysts 0:00:13.440 --> 0:00:17.080 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:17.079 --> 0:00:20.720 by the Litigation and Policy team at Bloomberg Intelligence, the 0:00:20.760 --> 0:00:26.080 investment research platform of Bloomberg LP. This podcast series examines 0:00:26.120 --> 0:00:30.280 the intersection of business policy and law, and today we'll 0:00:30.280 --> 0:00:33.680 be looking at the litigation and policy catalysts that we're 0:00:33.680 --> 0:00:36.840 watching in May twenty twenty four and that we think 0:00:36.880 --> 0:00:40.559 will impact companies across a number of different sectors. My 0:00:40.640 --> 0:00:44.680 name's Elliott Stein. I'm a senior litigation analyst covering litigation 0:00:44.880 --> 0:00:47.640 in the financial sector, and I'll be your host for 0:00:47.720 --> 0:00:51.800 today May second, twenty twenty four. If you have any 0:00:51.880 --> 0:00:54.400 questions about any of the matters that we'll be talking 0:00:54.440 --> 0:00:57.480 about on this episode, please do not hesitate to reach 0:00:57.520 --> 0:01:01.200 out to us at your convenience with your question. All right, 0:01:01.240 --> 0:01:04.880 So we'll be discussing a handful of sectors today. First, 0:01:04.920 --> 0:01:09.360 we'll start with a few antitrust matters. Our antitrust analyst 0:01:09.480 --> 0:01:13.200 Jenrie is listening to closing arguments in the DOJ versus 0:01:13.200 --> 0:01:17.080 Google Search case, but in her place, our colleague Justin 0:01:17.200 --> 0:01:20.520 Teresi will update us on that case, as well as 0:01:20.520 --> 0:01:24.760 a potential DOJ action against Live Nation and a key 0:01:24.840 --> 0:01:30.800 hearing in Epic versus Apple over app store rules. After that, 0:01:30.920 --> 0:01:33.800 I'll talk about a few cases in the financials sector 0:01:33.840 --> 0:01:37.760 that I'm watching, including a case against BNP Pariba and 0:01:37.880 --> 0:01:43.959 Society General alleging violations of sanctions on Cuba. I'll also 0:01:43.959 --> 0:01:46.959 talk about a case against BNP accusing it of aiding 0:01:47.160 --> 0:01:51.360 genocide in Sudan, and I'll also talk about what I 0:01:51.440 --> 0:01:56.240 expect to happen in litigation challenging the CFPB's rule capping 0:01:56.320 --> 0:02:00.680 credit card late fees. Well then bringing Nathan Dean, our 0:02:00.760 --> 0:02:05.280 financials policy analyst in Washington, DC, and Nasan will talk 0:02:05.320 --> 0:02:10.320 about possible regulatory action terrain in executive compensation for bankers, 0:02:10.639 --> 0:02:13.560 and he'll also talk about the impact of the DEA's 0:02:13.960 --> 0:02:19.079 anticipated move to replassify marijuana as a Schedule three drug 0:02:19.200 --> 0:02:23.880 instead of Schedule one. After that, Matt Schuttenhelm, our TMT 0:02:24.040 --> 0:02:27.959 litigation and policy analysts, will discuss the Supreme Court rule 0:02:28.000 --> 0:02:32.239 in that is anticipated to limit judicial deference to regulators, 0:02:32.880 --> 0:02:36.000 and Matt will also update us on important litigation in 0:02:36.080 --> 0:02:41.120 California's Supreme Court that could affect Lyft and Uber, and 0:02:41.320 --> 0:02:44.560 last but not least, our healthcare policy analyst Dwyane Wright 0:02:44.919 --> 0:02:49.040 will discuss congressional hearings on May one that focused on 0:02:49.160 --> 0:02:54.359 United Health's sprawling portfolio and the Change Healthcare cyber attack 0:02:54.520 --> 0:02:58.880 in particular. All of this research, of course, is available 0:02:58.960 --> 0:03:02.679 on the Bloomberg term at BI go And just a 0:03:02.760 --> 0:03:05.480 quick word about Bloomberg Intelligence for those who don't know. 0:03:05.800 --> 0:03:09.200 We are the investment research platform on the Bloomberg terminal, 0:03:09.280 --> 0:03:13.240 providing in depth research on industries, companies, and markets and 0:03:13.320 --> 0:03:16.840 delivering key data from BI analysts in their given industries. 0:03:17.600 --> 0:03:19.880 All right, so it's all that. Let's get started with 0:03:19.919 --> 0:03:24.200 the content justin let's bring you in big shoes today 0:03:24.360 --> 0:03:28.399 to fill filling it for our antitrust guru gen Read. 0:03:28.520 --> 0:03:30.880 But I know you are up to the task, So 0:03:31.240 --> 0:03:34.760 let's start with Live Nation. There seem to be rumors 0:03:34.760 --> 0:03:37.960 going around that Live Nation is going to be the 0:03:38.000 --> 0:03:41.560 focus of a lawsuit by the Justice Department. But my 0:03:41.640 --> 0:03:43.720 question to you is it wasn't this resolved a few 0:03:43.760 --> 0:03:44.320 years back? 0:03:45.480 --> 0:03:48.280 Hi Elliott, You're right, huge shoes to fill, but glad 0:03:48.280 --> 0:03:50.440 to take a take an effort to do that today 0:03:50.480 --> 0:03:54.400 on behalf of jen So yeah, you know, nothing's ever final. 0:03:54.480 --> 0:03:56.920 It seems like in this particular area, and there's never 0:03:57.000 --> 0:04:00.480 a dull moment. We're hearing that DOJ might move to 0:04:00.520 --> 0:04:04.080 file a monopolization suit against Live Nations this month, and 0:04:04.120 --> 0:04:06.880 whether the deliberations on whether or not they choose to 0:04:06.920 --> 0:04:10.160 do so are certainly confidential, but several news reports have 0:04:10.200 --> 0:04:12.640 been stating that it's likely to happen this month in May, 0:04:12.920 --> 0:04:15.400 and this aligns with our expectations given what we do 0:04:15.560 --> 0:04:19.000 know about this investigation. But to your point, Elliott, you're right, 0:04:19.160 --> 0:04:22.560 Live Nation entered consent orders with DOJ both in twenty 0:04:22.600 --> 0:04:26.040 ten and twenty nineteen related to its acquisition of ticket 0:04:26.080 --> 0:04:30.640 Master and otherwise other anticompetitive contact that was alleged in 0:04:30.760 --> 0:04:34.720 violation of antitrust laws. So what's being what's happening now 0:04:34.839 --> 0:04:37.040 is that it's being alleged, or we anticipate it will 0:04:37.080 --> 0:04:40.080 be alleged that there's been violations of those consent orders, 0:04:40.320 --> 0:04:42.320 and if those are proven, there could be a fine. 0:04:42.640 --> 0:04:44.880 But the main risk here to Live Nation if this 0:04:44.920 --> 0:04:47.080 does happen is it will be an effort by DOJ, 0:04:47.320 --> 0:04:50.039 we think, to break up the company, and at least 0:04:50.120 --> 0:04:52.279 in doing so, they'll probably move for a sale of 0:04:52.279 --> 0:04:55.720 Ticketmaster away from the rest of Live Nation's assets. So 0:04:55.760 --> 0:04:58.640 those issues are arising from the dominance that Live Nation 0:04:58.800 --> 0:05:01.800 has in a number of areas as an entertainment business 0:05:02.120 --> 0:05:05.039 and the alleged tying of its services together to block 0:05:05.040 --> 0:05:08.240 out some rivals from participating in that sphere. So Live 0:05:08.320 --> 0:05:11.560 Nation itself has four distinct businesses, a ticketing arm that 0:05:11.600 --> 0:05:15.320 we all know as Ticketmaster, a concert promotion business and 0:05:15.440 --> 0:05:18.560 division that owns or manages venues, along with an artist 0:05:18.600 --> 0:05:23.040 management business. When Live Nation acquired Ticketmaster, it promised not 0:05:23.120 --> 0:05:25.720 to tie its products together or to seek to force 0:05:25.800 --> 0:05:29.680 any venues to use Ticketmaster for ticketing services, But in 0:05:29.760 --> 0:05:32.920 twenty nineteen it was found that Live Nation did just that, 0:05:33.400 --> 0:05:37.640 essentially bullying venues into using Ticketmaster or otherwise facing a 0:05:37.680 --> 0:05:41.440 boycott Bylive Nation with respect to the other lines of businesses, 0:05:41.480 --> 0:05:45.880 which include events and artists tours, effectively shutting them out 0:05:45.920 --> 0:05:49.520 of that concert space altogether. Even though Live Nation signed 0:05:49.520 --> 0:05:52.880 a DJ order prohibiting this conduct, According to venues and 0:05:53.000 --> 0:05:56.240 many others in the industry, Live Nation just hasn't abided 0:05:56.320 --> 0:05:59.320 by the terms. It's also accused of locking out other 0:05:59.360 --> 0:06:03.279 ticket service by entering long term exclusive agreements with venues 0:06:03.279 --> 0:06:07.240 and artists. Exclusive agreements can violate antitrust laws if they 0:06:07.279 --> 0:06:11.440 foreclose rivals from a substantial share of access. So I 0:06:11.440 --> 0:06:13.600 think DOJ can bring a suit that they'll be very 0:06:13.680 --> 0:06:16.400 fairly straightforward at this point and very strong with a 0:06:16.440 --> 0:06:20.480 good success, with a good chance of success on liability. 0:06:20.839 --> 0:06:24.600 A divestiture orders like telling Type Live Nation that it 0:06:24.640 --> 0:06:27.000 needs to basically sell off it ticke a master line 0:06:27.120 --> 0:06:29.920 is rare and it certainly asks a lot of a judge. 0:06:30.200 --> 0:06:32.120 But we think if there's any case in which DOJ 0:06:32.320 --> 0:06:34.479 might win one of these orders, it's got to be 0:06:34.520 --> 0:06:38.240 this one. So moving on to Epic versus Apple, So 0:06:38.480 --> 0:06:40.520 this gave it been going on for a long time now. 0:06:40.640 --> 0:06:44.640 Epic's been battling Apple for years over Apple's policies with 0:06:44.680 --> 0:06:47.920 respect to how it operates the App Store. Epic objects 0:06:47.960 --> 0:06:50.920 the commission fees Apple collects from developers with paid for 0:06:51.120 --> 0:06:54.000 apps and the requirement that Apple and the requirement that 0:06:54.040 --> 0:06:56.400 they have to use Apple's payment services in the app 0:06:56.440 --> 0:07:00.679 store itself. Epic also objects to Apple's walled GOP model, 0:07:00.720 --> 0:07:04.479 which prohibits it prohibits any distribution of apps on iOS 0:07:04.480 --> 0:07:07.720 devices other than through the App Store. Epic lost the 0:07:07.800 --> 0:07:10.600 trial and on appeal to Apple on all antitrust claims 0:07:10.640 --> 0:07:13.400 with federal and state, but the judge had the Apple's 0:07:13.440 --> 0:07:17.760 anti steering rules violated a California unfair business practices law. 0:07:18.240 --> 0:07:22.840 These rules essentially banned developers from communicating with users that 0:07:22.840 --> 0:07:25.160 they can buy the app or make in app purchases 0:07:25.200 --> 0:07:28.240 more cheaply on a developer's website instead of getting it 0:07:28.320 --> 0:07:31.520 through the App store itself. The judge in that case 0:07:31.560 --> 0:07:35.120 and joined Apples anti steering rules for both parties thought 0:07:35.200 --> 0:07:38.440 Supreme Court review and were denied at that time. So 0:07:38.640 --> 0:07:40.560 this could have been a pretty huge hit to Apple's 0:07:40.600 --> 0:07:44.920 resource revenues. But when it complied with the injunction, what 0:07:45.040 --> 0:07:47.600 it did with it altered its rule to allow developers 0:07:47.640 --> 0:07:51.560 to it alters. It altered its rule to allow developers 0:07:51.600 --> 0:07:54.800 to steer, but added twelve percent and twenty seven percent 0:07:54.840 --> 0:07:57.400 fees for any app sales made outside of the App 0:07:57.440 --> 0:08:01.960 Store via the developer's websites. That's thus preserving its App 0:08:02.000 --> 0:08:06.160 store revenues. This technically didn't violate the order itself, but 0:08:06.200 --> 0:08:09.160 it certainly violated the spirit of the order and makes 0:08:09.160 --> 0:08:11.760 it so the developers really can't lower their prices for 0:08:11.840 --> 0:08:16.000 consumers epics challenge Apple's compliance, and the judge agreed as 0:08:16.040 --> 0:08:19.560 a preliminary matter that Apple's compliance plan does in fact 0:08:19.600 --> 0:08:22.320 violate the spirit of the order. She's holding. A hearing 0:08:22.360 --> 0:08:24.920 on this issue on may A's probably will go a 0:08:24.920 --> 0:08:27.880 few days longer if needed. We believe Apple will have 0:08:27.920 --> 0:08:29.920 to come up with a new plan to comply with 0:08:30.000 --> 0:08:34.119 the injunctions that involves lowering fees charged developers for these purchases. 0:08:34.559 --> 0:08:37.840 Fairly quick decision on this one is expected, possibly within 0:08:37.960 --> 0:08:41.240 days after the hearing, and last, but definitely not least, 0:08:41.280 --> 0:08:45.240 moving on to Google's antitrust issues, DUJ and a group 0:08:45.280 --> 0:08:48.080 of states sued Google in fourth quarter of twenty twenty 0:08:48.360 --> 0:08:52.400 from monopolistic conduct with respect to search and certain search advertising. 0:08:52.840 --> 0:08:56.280 A trial on liability was held last September, and closing 0:08:56.400 --> 0:08:59.680 arguments are being held today and tomorrow. The decision is 0:08:59.800 --> 0:09:02.120 likely to be issued sometime in the second half, and 0:09:02.200 --> 0:09:05.120 we lean toward DOJ winning on this one. The primary 0:09:05.160 --> 0:09:08.520 allegation is that Google blocked out search engine competitors like 0:09:08.600 --> 0:09:11.640 Bing and Duck dust Go by paying off third parties 0:09:11.679 --> 0:09:15.319 to install Google Search as a default search engine pretty 0:09:15.360 --> 0:09:18.240 much wherever a search engine is needed. So, for instance, 0:09:18.280 --> 0:09:20.839 if Apple and Mozilla, it paid Apple and Mozilla to 0:09:20.920 --> 0:09:24.680 install Google Search and Safari and Firefox browsers, and it 0:09:24.720 --> 0:09:28.240 paid OEMs like Samsung to sell Android phones with the 0:09:28.240 --> 0:09:31.640 Google Search app pre installed and also set as default 0:09:32.040 --> 0:09:35.760 default elsewhere, these payments amounted to well over twenty billion 0:09:35.800 --> 0:09:39.480 dollars a year. We leaned toward DJ winning this one 0:09:39.480 --> 0:09:42.280 as well, because the agency presents a pretty strong evidence 0:09:42.280 --> 0:09:45.440 at trials about how sticky and imported default search position 0:09:45.600 --> 0:09:48.720 is and also the agreements that prevented Being and others 0:09:48.720 --> 0:09:52.080 from developing into The agreements that involved prevented Being and 0:09:52.160 --> 0:09:55.480 other search engines from developing it to better search engines 0:09:55.679 --> 0:09:58.080 because they lacked the volume of search is necessary to 0:09:58.120 --> 0:10:01.480 gather the data needed to improve. So that's a roundup 0:10:01.520 --> 0:10:03.720 of what we have our anti trust cases here looking 0:10:03.720 --> 0:10:04.319 forward to May. 0:10:05.040 --> 0:10:08.040 Hey, so justin just on the DOJ versus Google case. 0:10:08.880 --> 0:10:11.120 You know, so what happens next if Google indeed does 0:10:11.240 --> 0:10:14.840 lose on liability based on you know, following the closing 0:10:14.920 --> 0:10:15.720 arguments this week. 0:10:16.000 --> 0:10:18.080 Yeah, that's a that's a great question, elliot. If Google 0:10:18.160 --> 0:10:20.520 does lose on liability, there's going to be a second, 0:10:20.760 --> 0:10:23.600 separate hearing on the remedy itself. So there's a few 0:10:23.600 --> 0:10:26.239 different options at play here, which can include a prohibition 0:10:26.320 --> 0:10:29.640 on paying third parties for the default search position, or 0:10:29.679 --> 0:10:32.640 a forced sharing of search data which would theoretically help 0:10:32.720 --> 0:10:34.679 other search engines get a little bit better than they 0:10:34.679 --> 0:10:38.400 are now. So it's also possible choice screen. It's possible 0:10:38.920 --> 0:10:41.480 possibly could be choice screens for new phones and computers 0:10:41.520 --> 0:10:43.920 that has been done on the EU, or a combination 0:10:44.000 --> 0:10:47.240 of any of these measures. DJ might seek a breakup 0:10:47.240 --> 0:10:49.280 of the company, but we doubt that would be ordered 0:10:49.280 --> 0:10:51.720 at this point, so we'd expect the decision in the 0:10:51.760 --> 0:10:54.320 liability phase second half of this year, and if needed, 0:10:54.440 --> 0:10:56.400 probably going to be hearing on a remedy late in 0:10:56.400 --> 0:10:58.120 the year at a decision in the first half of 0:10:58.120 --> 0:10:58.680 twenty five. 0:11:00.200 --> 0:11:03.160 Great, all right, thanks justin all right, I will jump 0:11:03.200 --> 0:11:05.880 in here and talk about a few cases that I'm 0:11:05.920 --> 0:11:08.440 watching in the financial sector. There's actually quite a bit 0:11:08.480 --> 0:11:12.240 going on in May. I'll start with litigation challenging the 0:11:12.320 --> 0:11:16.120 cfpp's credit card late fee rule. For those who don't 0:11:16.120 --> 0:11:20.439 follow this issue closely, the CFPB is the consumer Financial 0:11:20.480 --> 0:11:24.080 Protection Bureau that is the main regulator for the consumer 0:11:24.120 --> 0:11:27.920 finance sector. In March, the agency issued a rule that 0:11:27.960 --> 0:11:31.680 would effectively reduce the typical late fee that credit card 0:11:31.720 --> 0:11:35.600 issuers charge from thirty two dollars down to eight dollars. 0:11:36.080 --> 0:11:39.160 That would eliminate roughly ten billion dollars in credit card 0:11:39.240 --> 0:11:42.640 late fees for credit card issuers with at least one 0:11:42.679 --> 0:11:51.640 million open head accounts. Morgan City Bank America and this 0:11:51.760 --> 0:11:54.320 is important because the rule has an effective date of 0:11:54.400 --> 0:11:57.880 May fourteenth, and credit card issuers want to avoid the 0:11:57.920 --> 0:12:01.120 costs of complying with the rule if the rule is 0:12:01.160 --> 0:12:04.440 indeed going to be struck down by the courts. So 0:12:04.600 --> 0:12:07.679 based on developments this week, it looks like the trial 0:12:07.760 --> 0:12:11.840 court in the case will rule on a preliminary injunction 0:12:12.000 --> 0:12:15.200 motion by May tense, and we think the trial court 0:12:15.240 --> 0:12:18.400 is likely to grant that motion, and even if it doesn't, 0:12:18.840 --> 0:12:21.520 we think the Fifth Circuit Court of Appeals will put 0:12:21.520 --> 0:12:24.840 the rule on hold while the appeals court reviews the 0:12:24.880 --> 0:12:29.120 trial court's decision on that motion. Ultimately, we think the 0:12:29.160 --> 0:12:33.200 bank trade groups have compelling arguments and a friendly judicial 0:12:33.280 --> 0:12:36.840 environment for striking down the rule entirely, but as an 0:12:36.840 --> 0:12:39.160 immediate catalyst, look for the rule to be put on 0:12:39.200 --> 0:12:43.720 hold by the May fourteenth effective date. All right, let 0:12:43.760 --> 0:12:46.839 me now turn to some company specific cases that I'm 0:12:46.880 --> 0:12:51.600 watching this month. Just yesterday on May first, French Banks BNP, 0:12:51.800 --> 0:12:55.960 Pariba and Society General. We're in an appeals court to 0:12:56.080 --> 0:13:00.320 argue for preserving dismissal of a case against them used 0:13:00.320 --> 0:13:06.120 them of violating US sanctions on Cuba. Under US law, anyone, 0:13:06.240 --> 0:13:11.040 including non US entities, that knowingly traffic in property that 0:13:11.280 --> 0:13:15.920 was confiscated by the Cuban government honor after January first, 0:13:15.960 --> 0:13:20.520 nineteen fifty nine, when the Fidel Castro's revolution started, those 0:13:20.559 --> 0:13:23.200 companies can be held liable for money damages to a 0:13:23.320 --> 0:13:27.760 US national who owns the claim to such property. The 0:13:27.840 --> 0:13:32.080 suits here were filed by family members of the former 0:13:32.160 --> 0:13:35.240 owners of a pair of Cuban banks that were seized 0:13:35.280 --> 0:13:40.079 by Castro's government in nineteen sixty. In terms of what's 0:13:40.120 --> 0:13:42.480 at stake, we think about three billion dollars could be 0:13:42.520 --> 0:13:45.640 an issue here, based on the value of the seized 0:13:45.760 --> 0:13:50.040 banks in the value in nineteen sixty of the seised banks, 0:13:50.520 --> 0:13:54.280 plus interest that has compounded since then. BNP and SoC 0:13:54.520 --> 0:13:58.480 Gen one dismissal of this case in the trial court 0:13:58.840 --> 0:14:02.240 and based on oral arguments in the appeals court yesterday. 0:14:02.520 --> 0:14:06.720 We don't expect the cases to be revived. The banks 0:14:06.720 --> 0:14:09.920 of Good arguments that they didn't know that their transactions 0:14:10.160 --> 0:14:13.880 with the Cuban National Bank were linked to confiscated assets, 0:14:13.920 --> 0:14:16.880 and claims that issue in the case were likely brought 0:14:17.080 --> 0:14:20.080 too late, so we expect the ruling by the appeals 0:14:20.080 --> 0:14:22.880 court sometime in the second half of twenty twenty four. 0:14:22.920 --> 0:14:25.640 And again we think the banks are well positioned to win, 0:14:26.800 --> 0:14:29.840 all right. Sticking with French banks. Let me turn to 0:14:29.960 --> 0:14:34.680 another case, this one also involving BNP Pariba. This case 0:14:34.920 --> 0:14:39.160 is a proposed class action by potentially twenty five thousand 0:14:39.320 --> 0:14:43.600 victims of genocide by the Government of Sudan, who accused 0:14:43.640 --> 0:14:47.920 BNP of aiding and abetting the Sudanese government between nineteen 0:14:48.040 --> 0:14:52.320 ninety seven and twenty eleven when the alleged genocide took place. 0:14:52.640 --> 0:14:56.800 So last month, the trial court denied BNP's motion for 0:14:56.880 --> 0:14:59.720 summary judgment, which would have ended the case without a 0:14:59.800 --> 0:15:05.400 t trial. So BNP can still try to undermine the 0:15:05.440 --> 0:15:09.680 case by denying plaintiffs' class certification, and that's what we'll 0:15:09.720 --> 0:15:12.400 be watching for this month, as there's a hearing on 0:15:12.480 --> 0:15:16.520 class certification on May seven. We think BNP is a 0:15:16.520 --> 0:15:19.280 slight favorite. We give it about a sixty percent chance 0:15:19.480 --> 0:15:22.960 to defeat class certification since the case poses a lot 0:15:22.960 --> 0:15:27.520 of individualized issues that make it unsuitable for class status. 0:15:27.800 --> 0:15:31.000 Those issues include things like, you know, many different types 0:15:31.040 --> 0:15:35.880 of injuries suffered by the reported class, as well as 0:15:35.920 --> 0:15:39.280 who caused the injuries and how and where the injuries 0:15:39.520 --> 0:15:44.840 were incurred. So if BNP does beat class certification, the 0:15:44.880 --> 0:15:49.320 case will effectively be over since individual plaintiffs are unlikely 0:15:49.400 --> 0:15:52.360 to pursue claims on their own, you know, given the 0:15:52.400 --> 0:15:57.240 costs that are attendant to bringing lawsuits. If BNP loses 0:15:57.240 --> 0:16:00.560 on class certification, however, then with I think the most 0:16:00.600 --> 0:16:03.640 likely outcome is that the case settles, and predicting a 0:16:03.680 --> 0:16:07.520 settlement amount is a little difficult at this point. As 0:16:07.600 --> 0:16:11.920 one comparable, there was a one point two five billion 0:16:12.040 --> 0:16:15.760 dollar Holocaust settlement by Swiss banks in nineteen ninety eight, 0:16:16.280 --> 0:16:19.400 and by our calculations, that would extraperate to roughly a 0:16:19.440 --> 0:16:23.240 seventy million dollars settlement for BNP in this case, just 0:16:23.320 --> 0:16:26.520 based on the number of potential class members. But you know, 0:16:26.560 --> 0:16:29.360 we can't rule out a settlement that's higher than that, 0:16:30.000 --> 0:16:35.360 potentially for several hundred million dollars. And then just lastly, 0:16:35.440 --> 0:16:37.120 the last case I want to talk about. I'll be 0:16:37.160 --> 0:16:41.280 watching Appellet oral arguments on May eighth in a four 0:16:41.400 --> 0:16:46.080 billion dollar Credit Swiez whistleblower case allegend tax evasion. In 0:16:46.120 --> 0:16:48.240 the interest of time, because I think I've spoken too 0:16:48.240 --> 0:16:51.280 long already, I won't go into detail about that case, 0:16:51.320 --> 0:16:53.880 but I do think Credit Sweese, which of course is 0:16:53.920 --> 0:16:57.520 now owned by UBS, is likely to win in that case. 0:16:58.240 --> 0:17:01.760 But I should note that the the US government separately 0:17:02.080 --> 0:17:06.359 is probing the bank for potential tax evasion violations as well, 0:17:06.720 --> 0:17:10.239 and so the possibility of fines lingers related to that, 0:17:10.800 --> 0:17:13.720 though I don't think that such fines would be more 0:17:13.760 --> 0:17:16.800 than about two hundred million dollars. So a lot to 0:17:16.840 --> 0:17:19.600 watch in the financial sector. I'm going to stop now, 0:17:20.280 --> 0:17:24.000 but let's stay on financials and bringing Nathan Dean to 0:17:24.080 --> 0:17:28.360 talk financials policy. Nathan. We saw news reports this week 0:17:28.400 --> 0:17:31.480 that the OCC and the FDIC are in the final 0:17:31.520 --> 0:17:35.959 stages of releasing their proposal on executive compensation for bankers. 0:17:37.040 --> 0:17:38.800 I don't know I should bankers be concerned that their 0:17:38.840 --> 0:17:41.119 pay is now going to be restricted or deferred in 0:17:41.160 --> 0:17:43.880 some way. Not yet. Not yet. 0:17:43.960 --> 0:17:46.760 That's the answer is not yet, and so what So 0:17:46.800 --> 0:17:48.600 there's two things to note here. One is what the 0:17:48.640 --> 0:17:51.239 Bloomberg News reports are saying, and they are saying that 0:17:51.280 --> 0:17:53.640 the OCC the Office of the Control of their Currency 0:17:54.040 --> 0:17:56.800 and the FDIC will propose sometime in the next few 0:17:56.840 --> 0:18:00.600 months an updated version of a twenty sixteen propose that 0:18:00.720 --> 0:18:04.159 goes back to twenty ten's Dodd Frank. You are fourteen 0:18:04.200 --> 0:18:06.640 years after Dodd Frank and this proposal still hasn't been 0:18:07.119 --> 0:18:09.480 decided upon. Now, what this proposal does, and I'm just 0:18:09.480 --> 0:18:12.600 gonna use the twenty sixteen as a foundation, is that 0:18:12.640 --> 0:18:14.800 if you're at a bank and it's above fifty billion 0:18:14.840 --> 0:18:17.600 in assets, and you're either a named executive so think 0:18:17.640 --> 0:18:20.280 C suite, or maybe the top fifty individuals of a bank, 0:18:20.640 --> 0:18:24.560 or a significant risk taker, and those ideally are the 0:18:24.640 --> 0:18:28.600 traders that have a decent amount of ability to trade, 0:18:28.920 --> 0:18:31.600 You're gonna see your bonus to have a deferral amount 0:18:31.680 --> 0:18:35.560 in a deferral period. So if you have a short 0:18:35.640 --> 0:18:38.000 term bonus, it could be deferred somewhere between three to 0:18:38.040 --> 0:18:40.800 four years, and it could be you know, forty to 0:18:40.840 --> 0:18:44.920 sixty percent of your variable compensation defer that amount. If 0:18:44.960 --> 0:18:47.520 you have a long term bonus, you know that the 0:18:47.560 --> 0:18:51.080 deferral per periods ironically are a little bit smaller, just 0:18:51.119 --> 0:18:53.359 one to two years, and that could be forty to 0:18:53.359 --> 0:18:56.960 fifty percent of that amount. So we're gonna wait and 0:18:57.000 --> 0:18:59.520 see if this gets updated. But the OCC and the 0:18:59.560 --> 0:19:02.920 FDA are putting this out because we think this is 0:19:02.960 --> 0:19:06.119 a political exercise and that bankers actually don't need to 0:19:06.160 --> 0:19:08.639 be concerned about this for all. So the way this 0:19:08.680 --> 0:19:11.080 bonus works, or sorry, this proposal works, is that it's 0:19:11.080 --> 0:19:14.840 actually a six agency proposal. So it's the OCC and 0:19:14.920 --> 0:19:19.240 the FDIC, but it's also the FED, the SEC, the FHFA, 0:19:19.280 --> 0:19:23.119 and the NCUA, the National Credit Union Administration, and you 0:19:23.200 --> 0:19:25.879 need all six of them to agree on the same proposal. 0:19:25.960 --> 0:19:28.200 So what happens if the OCC and the FDIC move 0:19:28.240 --> 0:19:31.240 out and the FED, because Jerome Paula has already said 0:19:31.240 --> 0:19:34.760 this year, this isn't really on their radar, doesn't do anything. Well, 0:19:34.760 --> 0:19:37.480 you get regulatory arbitrage, and we don't think that any 0:19:37.520 --> 0:19:39.879 of the regulators want to go forward with that, because 0:19:39.920 --> 0:19:42.479 then you're going to get into a situation where certain 0:19:42.520 --> 0:19:45.880 bankers that certain banks would be covered, but other bankers, 0:19:45.920 --> 0:19:49.040 potentially at the same bank would not be covered. And 0:19:49.080 --> 0:19:50.720 then you would have bankers saying, well, why do I 0:19:50.760 --> 0:19:53.960 need to report to the OCC overseen entity of Bank 0:19:54.000 --> 0:19:56.320 of Let's just say Bank of America. I want to 0:19:56.359 --> 0:19:59.040 be overseen by the FED portion of Bank of America, 0:19:59.160 --> 0:20:01.800 and it would just get very MESSI So the reason 0:20:01.800 --> 0:20:04.040 why the OCC and the FDAC are doing this is 0:20:04.080 --> 0:20:07.960 because progressive pressure from Capitol Hill has been on them 0:20:07.960 --> 0:20:10.679 for the last two years, and then specifically in the 0:20:10.720 --> 0:20:13.920 FDIC Chairman Martin Gruenberg's case, he's been telling folks in 0:20:13.960 --> 0:20:16.840 the House Financial Services Committee that this proposal is coming, 0:20:17.080 --> 0:20:19.400 it's coming, it's coming by the end of twenty twenty three. 0:20:19.800 --> 0:20:22.960 It hasn't and it's unlikely to do so. So I 0:20:23.000 --> 0:20:25.120 think the FDIC and the OCC are saying, you know what, 0:20:25.520 --> 0:20:27.280 we're tired of waiting for the FED. We're just going 0:20:27.359 --> 0:20:29.439 to put it out there and maybe put some pressure 0:20:29.480 --> 0:20:33.280 on the FED. Now, what will happen is well, that 0:20:33.320 --> 0:20:36.600 really depends if President Biden wins reelection. If he wins reelection, 0:20:37.240 --> 0:20:40.720 you could potentially see the regulators have another go at 0:20:40.720 --> 0:20:43.320 this in twenty twenty five. But even then, you know, 0:20:43.440 --> 0:20:45.400 a lot of folks think that the reason why six 0:20:45.440 --> 0:20:48.480 agencies have to agree, that's somewhat of a poison pill 0:20:48.480 --> 0:20:51.439 type aspect. So you know, we'll see if it actually 0:20:51.440 --> 0:20:53.720 gets done or not. But if you're a banker, I 0:20:53.720 --> 0:20:55.680 don't think you need to be too concerned about it 0:20:55.720 --> 0:20:58.320 at all for the next few years. Now, moving over 0:20:58.440 --> 0:21:01.600 to marijuana reschedulization, if you trade in marijuana equities, you 0:21:01.600 --> 0:21:04.840 know exactly what I'm referring to. These marijuana equities have 0:21:04.880 --> 0:21:07.960 hot sauces. I describe them anything that happens in Washington. 0:21:08.320 --> 0:21:11.160 These equities go up fifteen to twenty percent. Sometimes they 0:21:11.200 --> 0:21:14.280 decline fifteen to twenty percent. And we saw that happen 0:21:14.359 --> 0:21:17.119 earlier this week when the Associated Press, followed up by 0:21:17.160 --> 0:21:21.440 Bloomberg News, reported that the DEA will release a proposal 0:21:21.480 --> 0:21:25.120 in the near future shifting marijuana status from a Schedule 0:21:26.600 --> 0:21:29.560 one drug to a Scheduled three drug. So Schedule one 0:21:29.640 --> 0:21:32.720 drug today is something like heroin or cocaine. Moving it 0:21:32.760 --> 0:21:34.760 to Schedule three puts it on par with tile and 0:21:34.800 --> 0:21:38.520 all with codeine, for example. Now, this really only has 0:21:38.760 --> 0:21:42.680 one major impact on marijuana equities Remember, marijuana is still 0:21:42.720 --> 0:21:46.040 federally illegal. It is not a legal drug at the 0:21:46.080 --> 0:21:49.160 federal status. So despite the fact that there are thirty 0:21:49.160 --> 0:21:51.359 eight thirty nine states and entities out there that have 0:21:51.400 --> 0:21:55.199 decriminalized marijuana, it's still federally illegal and we don't anticipate 0:21:55.200 --> 0:21:58.879 that changing anytime soon. But moving it from Schedule one 0:21:58.960 --> 0:22:02.080 to Schedule three invokes something known as to eighty e 0:22:02.359 --> 0:22:07.399 tax relief, specifically for these marijuana equities. Generally, the tax 0:22:07.480 --> 0:22:10.359 rate for these entities will go from around forty percent 0:22:10.720 --> 0:22:13.119 down to somewhere five to seven eight percent. We have 0:22:13.200 --> 0:22:15.840 research that my colleague Andrew Silverman has on that we 0:22:15.840 --> 0:22:18.760 could get you if you have any questions on that. Now, 0:22:19.000 --> 0:22:21.600 the problem is is that they have announced they've made 0:22:21.600 --> 0:22:25.920 this announcement, and these marijuana equities moved up. In fact, 0:22:26.000 --> 0:22:30.200 the etfmsos went up twenty five percent at one point 0:22:30.280 --> 0:22:34.160 before it was halted. But now what, Well, they've made 0:22:34.200 --> 0:22:37.040 this announcement, there's going to be a proposal, and that 0:22:37.080 --> 0:22:40.080 proposal has to go through the Administrative Procedures Act. And 0:22:40.160 --> 0:22:43.840 so our view is is that if the proposal is released, 0:22:43.840 --> 0:22:45.480 say in the next few weeks, and that's a big 0:22:45.520 --> 0:22:48.840 if because it could be another month or two until 0:22:48.840 --> 0:22:51.040 it comes out. But if it's released in the next 0:22:51.040 --> 0:22:55.119 few weeks, it's feasible that the Biden administration can finalize 0:22:55.119 --> 0:22:58.080 this by the end of the year. However, any blips 0:22:58.119 --> 0:23:01.800 on the process, any delay or anything like that, you're 0:23:01.840 --> 0:23:04.280