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

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Speaker 2: The Supreme Court signaled a divide over Republican calls to

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Speaker 2: require mail in ballots to arrive by election day. The

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Speaker 2: justices are reviewing a Mississippi law that allows mail in

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Speaker 2: ballots to be counted as long as they arrive within

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Speaker 2: five business days of election day. Federal law sets the

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Speaker 2: Tuesday after the first Monday in November as the quote

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Speaker 2: day for the election, and the issue is whether that

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Speaker 2: phrase means that ballots need to be both cast by

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Speaker 2: voters and received by state officials by that date, or

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Speaker 2: whether voters must drop them in the mail by then.

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Speaker 2: Several conservative justices, like Samuel Alito voice some of President

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Speaker 2: Trump's familiar complaints.

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Speaker 3: Confidence in election outcomes can be seriously undermined if the

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Speaker 3: apparent outcome come of the election on the day after

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Speaker 3: the polls close is radically flipped by the acceptance later

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Speaker 3: of a big stash of ballots that flipped the election.

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Speaker 4: Or Yeah, I think you've got.

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Speaker 3: Ballots that are delivered by somebody, by a neighbor, and

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Speaker 3: they received a month after the election, and they don't

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Speaker 3: have postmarks.

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Speaker 2: In defending Mississippi's law. The state solicitor general pointed out

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Speaker 2: that the Trump administration and its allies in the case

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Speaker 2: have not submitted a single case of fraud due to

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Speaker 2: late arriving male ballots, and the liberal justice is like

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Speaker 2: Sonya Soto Mayor, indicated they would uphold state laws with

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Speaker 2: post election day deadlines.

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Speaker 5: History is informative of what's been permitted by Congress, because

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Speaker 5: what we're looking for is what understanding Congress had with

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Speaker 5: respect to elections.

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Speaker 4: Correct, that's right, You're all right.

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Speaker 5: And it doesn't talk about the receipt of absentee ballots

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Speaker 5: after elections at all. So we look to the history

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Speaker 5: of whether Congress has accepted it.

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Speaker 2: Chief Justice John Roberts and Justice Amy Cony Barrett emerged

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Speaker 2: as pivotal votes among the court's conservative super majority. Roberts

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Speaker 2: suggested he wasn't convinced by the Trump administration's contentions that

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Speaker 2: late arriving ballots could be outlawed without also undermining early voting.

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Speaker 6: If day means includes a period after a particular day

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Speaker 6: of the election, does it include a particular day before

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Speaker 6: the day of the election, or does your logic require

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Speaker 6: a different.

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Speaker 4: Consideration.

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Speaker 2: A ruling likely to come by late June that bars

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Speaker 2: counting ballots arriving after election day would send officials scrambling

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Speaker 2: in fourteen states and DC that have grace periods for

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Speaker 2: ballots cast by mail, giving them just a few months

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Speaker 2: before the twenty twenty six mid term congressional elections to

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Speaker 2: change their ballot rules. Joining me is elections law expert

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Speaker 2: Richard Brefalt, a professor at Columbia Law School. So, Rich,

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Speaker 2: this isn't about mail in balloting in general, but about

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Speaker 2: the grace periods that some states have.

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Speaker 7: So this case has a challenge to a Mississippi law,

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Speaker 7: and about another dozen or so states have similar laws

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Speaker 7: concerning mail in ballots, which say that we will counter

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Speaker 7: ballot so long as it's mailed by election day, will

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Speaker 7: counter ballot up to a certain number of days after

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Speaker 7: election day. I think in Mississippi it's five days. Some

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Speaker 7: states are shorter, some states are longer. The idea for

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Speaker 7: the state laws is that you're voted by election day

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Speaker 7: if you vote on election day and mail it. But

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Speaker 7: if you do vote on election day mail or ballot,

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Speaker 7: it is almost certainly not going to get to the

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Speaker 7: Board of Elections on election day, maybe more than almost certainly.

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Speaker 7: It's certainly not. So these states give a grace period.

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Speaker 7: It basically say you can vote as late as election day,

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Speaker 7: provided that it's postmarked and election day or mailed on

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Speaker 7: election day. We will count it provided it gets to

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Speaker 7: us by a certain number of days after election day.

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Speaker 7: In Mississippi's case, it's five days. In their view, that's

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Speaker 7: consistent with a federal law that says there shall be

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Speaker 7: a single national election day for federal elections. So long

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Speaker 7: as you voted on election day, that's all you need

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Speaker 7: to do. We'll count it if it comes in within

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Speaker 7: a certain number of days after election day. The challengers

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Speaker 7: are saying, no, that's not good enough. When the federal

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Speaker 7: law says there's a single national election day, that means

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Speaker 7: the votes have to be cast and received by election day.

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Speaker 7: So that the Mississippi law which permits late received absentee ballots,

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Speaker 7: and any other state has a similar law, they have

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Speaker 7: violated the federal law.

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Speaker 2: The Fifth Circuits decision, which this is an appeal from.

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Speaker 7: Oh, so when this case was found now, as I say,

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Speaker 7: I think something like fourteen states have this provision or

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Speaker 7: its challengers first brought the district court threw it out

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Speaker 7: basically saying the election day means the day you vote,

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Speaker 7: not necessarily the day that the ballots are received and counted.

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Speaker 7: The Fifth Circuit disagreed and said, no, an election includes

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Speaker 7: not just the casting of the ballot, but its receipt

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Speaker 7: by the government elections agency. And so therefore the challengers

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Speaker 7: are right, and that's why the Supreme Court then agreed

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Speaker 7: to take the case.

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Speaker 2: Did it appear as if several of the conservative justices

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Speaker 2: have a problem with the Mississippi law.

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Speaker 7: Yeah, it looks to me that there's at the very

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Speaker 7: least three and possibly four, based on the oral argument,

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Speaker 7: who are willing to go along with the challengers and

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Speaker 7: say election means casting your ballot and have it received.

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Speaker 7: That's one process, and that election day means election day,

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Speaker 7: including receipt of the ballot based on their comments, and

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Speaker 7: it's always a little bit treacherous to rely on the

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Speaker 7: comments in oral argument. But Tom ms Alito and Gorstage

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Speaker 7: seemed very sympathetic or more than sympathetic to agree with

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Speaker 7: the position, and some of Justice Kavanaugh's questions seemed to

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Speaker 7: me to lean in that direction too, though he was

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Speaker 7: less clear cut. The liberal justices were clearly a hostile

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Speaker 7: to this and felt that Congress did not address this,

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Speaker 7: that this law, which is a nineteenth century law, was

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Speaker 7: adopted at a time we never even thought about it

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Speaker 7: in mail in belots in the way we have them now,

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Speaker 7: and that they would leave it to the states, and

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Speaker 7: if Congress doesn't like it, Congress can write a new law.

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Speaker 7: Justice Barrett asked a lot of questions. She was a

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Speaker 7: little hard to read. She seemed a little more skeptical

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Speaker 7: of the challengers than the other Republican and other Conservative justices,

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Speaker 7: and I think the Chief Justice said hardly anything, so

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Speaker 7: he was hard to read as well. So right now,

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Speaker 7: I don't know. It's hard to sum them up in

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Speaker 7: clearly three votes to strike this down, three votes to

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Speaker 7: sustain it, and three votes that are it's not so sure.

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Speaker 2: What is the real objection from the conservative justices to this.

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Speaker 7: Well, there's the formal technical objection that choose means choes

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Speaker 7: our vote means by their election doesn't means election, and

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Speaker 7: that's what it means. And there is I think a

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Speaker 7: latent objection that I think the challengers have emphasized very heavily,

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Speaker 7: which is that this does permit fraud, both fraud and

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Speaker 7: the appearance of fraud. This has been I think a

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Speaker 7: Republican criticism of mail in ballots less couple election cycles

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Speaker 7: is that the sense that Democrats use it more the

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Speaker 7: person seems to be head on election night, suddenly the

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Speaker 7: person who's behind comes ahead once the late received mail

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Speaker 7: in ballots are counted. Of course, it's kind of silly

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Speaker 7: because in most states count all the mail in ballots

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Speaker 7: afterwards and not just the ones that come in late.

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Speaker 7: But there's a sense that it's fraud, that there's a

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Speaker 7: problem of fraud, there's a problem of the appearance of fraud.

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Speaker 7: The post Office doesn't postmark everything, so maybe there will

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Speaker 7: be some late ballots. That there's no inherent endpoint, you know,

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Speaker 7: there was the usual sort of a parade of horribles.

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Speaker 7: Mississippi chooses five days, but there's nothing to prevent them

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Speaker 7: from choosing five weeks. No state does that, but that

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Speaker 7: there's no endpoint once you cross election day. So I

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Speaker 7: think it's the challenges it's largely text, plus I think

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Speaker 7: a concern that this is a rule that's better for

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Speaker 7: preventing fraud and for public confidence.

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Speaker 2: I mean, it sounds like they're buying into some of

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Speaker 2: the concerns about ballot harvesting and all that. Are those

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Speaker 2: concerns real.

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Speaker 7: Every study that's ever been a ballot fraud shows that

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Speaker 7: there is almost none I won't say none, but almost

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Speaker 7: not very very very little, and certainly a tiny amount

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Speaker 7: relative to the millions of people who mail in their ballots,

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Speaker 7: and maybe the millions are certainly the high hundreds of

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Speaker 7: thousands who mail them on election day. I mean, there's

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Speaker 7: some argument actually using election day because at that point

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Speaker 7: you have as much information as you're ever going to get.

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Speaker 7: There are sometimes late developments afore an election day, so

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Speaker 7: I mean this is a great period. If courts strikes

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Speaker 7: down the Mississippi law, people who vote by mail would

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Speaker 7: be very well advised to vote at least a week ahead,

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Speaker 7: if not more. It could be very chaotic in the

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Speaker 7: upcoming election because it only applies to federal elections, and

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Speaker 7: there's no federal law that requires state elections to be

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Speaker 7: held on any particular day or that would affect how

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Speaker 7: the states use ballot So obviously there's a big federal

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Speaker 7: election coming up in this coming November. Many states will

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Speaker 7: have elections the same day, and you're either going to

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Speaker 7: have some ballots that come in in fourteen states that

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Speaker 7: come in after election day, they'll be counted for one

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Speaker 7: vote but not the other. Or the states are going

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Speaker 7: to have to scramble to revise their laws. Guessing this

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Speaker 7: won't come down before jun It's already late March, and

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Speaker 7: no matter who wins, there's going to be descents identity,

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Speaker 7: and that usually means it takes a little bit more

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Speaker 7: time to write. So it's now, what is in March

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Speaker 7: twenty third? You know it's not going to be before June.

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Speaker 7: I think so. I think if the law is struck down,

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Speaker 7: I mean it's conceivable, I think unlikely that would say

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Speaker 7: it's not good for this election. There is this idea

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Speaker 7: that you don't change the laws too close to an election,

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Speaker 7: but I don't know that anyone argued for that.

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Speaker 2: So I knew, is it going to give the states

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Speaker 2: time enough? If it comes down in June. Let's say

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Speaker 2: the end of.

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Speaker 7: June, there's technically time enough the states can rewrite there.

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Speaker 7: If you could, in most states, the legislative session is

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Speaker 7: long over, so they'd have to come back into session

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Speaker 7: and rewrite it or do something now. Again, I think

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Speaker 7: it's fourteen states that have this a few more states

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Speaker 7: had it and eliminate it because I think of the

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Speaker 7: Republican pressure on mail and voting. I think several states

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Speaker 7: have already repealed it, but that was a state's choice.

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Speaker 7: This would be a national Supreme Court mandate to the

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Speaker 7: fourteen states that have chosen to give voters this option

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Speaker 7: to take it away.

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Speaker 2: I always hear that Democrats use mail in voting more

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Speaker 2: than Republicans. Is that changing.

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Speaker 7: I'm actually going to check a challenge you a little

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Speaker 7: bit on that. Traditionally it was Republicans tended to be

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Speaker 7: the stereotype. Is it was the Republican businessman who was

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Speaker 7: away from home kind of thing. But traditionally, I mean

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Speaker 7: further back in time, let's say in the twentieth century,

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Speaker 7: it was primarily Republicans. Didn't become more common for Democrats

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Speaker 7: until I think into the twenty first century when many

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Speaker 7: states began to liberalize their voting rules and to allow it.

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Speaker 7: And I think it's become more so lately, especially now

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Speaker 7: given Trump's attack on mail in ballots, and so I

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Speaker 7: think it's become more of an article of faith for

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Speaker 7: Republicans to oppose it.

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Speaker 4: It's a little unclear.

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Speaker 7: I think the better term many people would use is

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Speaker 7: that it may very well be less committed voters, because

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Speaker 7: in some ways it's kind of easier to get a

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Speaker 7: ballot and mail it rather than show up and wigh

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Speaker 7: online in election. I think the assumption is that the

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Speaker 7: partisan cut would be that it would hurt Democrats, but

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Speaker 7: I think the proof is actually pretty unclear, and it's

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Speaker 7: certainly no evidence that it's the late voting mail in

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Speaker 7: voters that they are any more democratic than the early

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Speaker 7: voting mail in voters. I mean, this would not end

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Speaker 7: mail in voting. It would just say if you want

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Speaker 7: to vote by mail, you've got to vote early.

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Speaker 2: And tell us what else President Trump is pushing before

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Speaker 2: the midterms.

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Speaker 7: Well, President Trump would certainly try and stop all mail

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Speaker 7: in voting, except for I think he says service overseas,

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Speaker 7: people who are ill and people traveling, so he would

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Speaker 7: go much further. And then, of course the so called

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Speaker 7: Save Act I think, would also require people to bring

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Speaker 7: proof of citizenship when they vote, proof of citizenship when

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Speaker 7: they register, I think, to attach proof of citizenship when

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Speaker 7: they send in a mail ballot, even for those who

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Speaker 7: are allowed to do it, and as I say, to

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Speaker 7: proof of citizenship when they go to vote. So if

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Speaker 7: the Supreme Court strikes down the Mississippi law, it will

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Speaker 7: make it more inconvenient for people to vote by mail

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Speaker 7: in fourteen states. Now should point out thirty six states

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Speaker 7: don't have this rule, so in those states, if you

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Speaker 7: want to vote by mail, you do have to vote early.

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Speaker 7: This would be I think a setback for people in

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Speaker 7: the other states, but it would not be as remotely

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Speaker 7: significant in terms of making it harder to vote as

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Speaker 7: the kinds of things that are going to.

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Speaker 2: Say that, as you said, we'll find out the Supreme

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Speaker 2: Court's decision by June. As you said, we'll find out

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Speaker 2: the Supreme Court's decision by the end of June. Thanks

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Speaker 2: so much, rich As always, that's Professor Richard Rfault of

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Speaker 2: Columbia Law School. Remember the tumultuous months in twenty twenty

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Speaker 2: two leading up to Elon Musk's acquisition of Twitter for

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Speaker 2: forty four billion dollars, with the billionaire flip flopping over

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Speaker 2: whether he'd buy the platform, resulting in hard font litigation

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Speaker 2: with Twitter's board of directors to force him to follow through. Well,

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Speaker 2: a San Francisco jury has found that Musk intentionally misled

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Speaker 2: Twitter shareholders when he tweeted that the social network had

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Speaker 2: too many fake accounts and tried to back out of

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Speaker 2: the deal. The amount of damages Musk must pay to

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Speaker 2: individual investors will be determined at a later date when

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Speaker 2: shareholders submit claims, although estimates are that it could reach

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Speaker 2: as high a S two point six billion dollars. My

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Speaker 2: guest is business law professor Eric Talley of Columbia Law School. Eric,

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Speaker 2: take us back to that period in twenty twenty two

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Speaker 2: when it seems all we were hearing about was Elon

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Speaker 2: Musk and Twitter.

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Speaker 1: Well, yeah, this is something that is fused into many

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Speaker 1: people's memories, including my own. Back in the spring of

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Speaker 1: twenty twenty two, Elon Musk went hard at a purchase

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Speaker 1: of Twitter. They weren't even asking for his entreaties, and

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Speaker 1: he basically appeared on their doorsteps.

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Speaker 4: I want to buy this company.

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Speaker 1: And after initially resisting, finally it looked like he was

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Speaker 1: offering a good enough price that it would just seem like,

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Speaker 1: you know, that the Twitter board would have been sort

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Speaker 1: of crazy not to consider it seriously. Moreover, he said,

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Speaker 1: not only am I offering this great price that I

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Speaker 1: want to sign up a deal that doesn't have any

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Speaker 1: financing contingencies, doesn't have any of the booby traps that

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Speaker 1: you often see in M and A transactions that can sometimes.

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Speaker 4: Allow a buyer to walk away.

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Speaker 1: And so at the end of the day, the Twitter board,

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Speaker 1: you know, basically leapt at this this offer of forty

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Speaker 1: two dollars a share, which was you know, once again

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Speaker 1: a sort of a takeoff on his recurrent four to

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Speaker 1: twenty meme that we've seen many other times and has

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Speaker 1: also gotten into hot water, even though you know, the

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Speaker 1: Twitter stock price was far below that at the time.

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Speaker 1: So he signed it up, and it became pretty clear

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Speaker 1: that shortly after he you know, he signed this deal

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Speaker 1: that had to you know, go through a shareholder approval process.

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Speaker 1: So there were some months that had that he began

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Speaker 1: to feel some regret that he might have overpaid. And

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Speaker 1: that's when mister Musk started to drop several hints, all

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Speaker 1: on Twitter, of course, that he thought this deal wasn't

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Speaker 1: going to go through, and so on a couple of

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Speaker 1: different occasions, mister Musk tweeted, first the deal is on hold.

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Speaker 1: We're not exactly sure why the deal was on hold,

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Speaker 1: and then relatedly tweeted that he had a concern about

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Speaker 1: so many of the spam bots that were evident account

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Speaker 1: holders on Twitter, and that they hadn't disclosed their existence

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Speaker 1: to him.

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Speaker 4: Or the magnitude of them to him.

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Speaker 1: I don't think anyone at the time viewed either of

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Speaker 1: these things as as sort of credible claims. Most people,

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Speaker 1: i think thought that they were his claims to try

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Speaker 1: to walk the price down a little bit so that

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Speaker 1: he could try to negotiate either a better deal or

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Speaker 1: walk away from the transaction completely. And it worked on

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Speaker 1: some level. The fact that you know, he had offered

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Speaker 1: forty two dollars per share should in principle mean that

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Speaker 1: if people think the deal is going to close, the

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Speaker 1: stock price should pretty quickly converge to something close to

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Speaker 1: forty two dollars a share. And by the summer of

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Speaker 1: twenty twenty two, it was sitting in the mid thirties,

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Speaker 1: evidently because a lot of people thought that mister Musk

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Speaker 1: somehow had some secret that was going to allow him

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Speaker 1: to walk away from the deal.

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Speaker 2: I mean, tell us what the jury found, because it

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Speaker 2: was sort of a split decision.

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Speaker 4: Yeah, it was a bit of a split verdict from

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Speaker 4: the jury.

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Speaker 1: The plaintiffs had brought forward a variety of claims, all

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Speaker 1: various forms of securities fraud. Probably the most simple sort

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Speaker 1: of claim that proved successful was the claim that these

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Speaker 1: tweets that mister Musk put out during the pendency of

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Speaker 1: the Twitter acquisition constituted misleading statements that were made recklessly

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Speaker 1: or possibly deliberately in contravention of rules against securities fraud

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Speaker 1: that would entitle them to damages. They also made another

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Speaker 1: claim that these tweets were actually part of a much

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Speaker 1: larger scheme to fraud the entire market. These were just

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Speaker 1: points on the map, but the map was a grander

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Speaker 1: map of putting together a significant scheme to defraud the

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Speaker 1: market over a many month long period. When the jury

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Speaker 1: came back, they basically accepted the idea that these individual

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Speaker 1: tweets were episodic moments of carelessness and recklessness by mister

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Speaker 1: Musk that would expose him to securities fraud liability. But

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Speaker 1: it wasn't part of a month's long scheme. This was

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Speaker 1: more of a kind of a you know, shooting from

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Speaker 1: the hip set of examples in which he made statements

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Speaker 1: that clearly moved the market. He should not have made them.

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Speaker 1: He knew better than to make them. And therefore they

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Speaker 1: constituted securities for auduct Now, you know, either way, the

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Speaker 1: jury got to a verdict of securities fraud. But it

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Speaker 1: does turn out that a scheme liability approach would probably

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Speaker 1: be in some ways more potent because the way that

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Speaker 1: you add up damages would allow plaintiffs as part of

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Speaker 1: this large class action to come forward and pick out

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Speaker 1: any period of time during this month long period to

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Speaker 1: point to to say I was defrauded during this period

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Speaker 1: of time. Now it's going to be those plaintiffs that

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Speaker 1: you know, basically, you know, bought before the correction or

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Speaker 1: sold after the correction, right right around the point where

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Speaker 1: he was making these statements. That will limit the award

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Speaker 1: a little bit. But people are still expecting that this

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Speaker 1: would be somewhere in the low billions of dollars, say

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Speaker 1: around two to two point five billion dollars, So it's

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Speaker 1: real exposure. The other reason why it's pretty important that

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Speaker 1: the jury found that the type of secures for liability

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Speaker 1: was these specific statements actually makes it a little bit

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Speaker 1: more challenging to appeal because these are more sort of

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Speaker 1: facts specific conclusions of a jury as opposed to statements

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Speaker 1: of law that a court could get wrong, and so

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Speaker 1: you know this type of securities fraud, the court pretty

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Speaker 1: much puts it in the hands of the jury. It's

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Speaker 1: up to the jury to figure out facts, and a

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Speaker 1: court on appeal is very reluctant to overturn a factual

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Speaker 1: finding that a jury has delivered up.

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Speaker 2: I'll continue this conversation with Columbia Law School professor Eric Tally.

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Speaker 2: Musk was on the stand for more than a day,

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Speaker 2: but unlike other cases where he testified, the jury returned

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Speaker 2: a verdict against him. After about four hours of deliberations.

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Speaker 2: A jury found Elon Musk libel for defrauding investors by

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Speaker 2: deliberately driving down Twitter's stock price in the tumultuous months

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Speaker 2: leading up to his twenty twenty two acquisition of the

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Speaker 2: social media company for forty four billion dollars. I've been

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Speaker 2: talking to Columbia Law School professor Eric Tally.

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Speaker 4: I think that a jury has delivered Eric.

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Speaker 2: He's often been called teflon Elon for winning high stakes

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Speaker 2: legal battles that many expected him to lose and in

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Speaker 2: which he testified. Here he was on the stand for

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Speaker 2: more than a day. So how can I put this?

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Speaker 2: Do you think the thrill is sort of gone.

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Speaker 1: Yeah, I think maybe the thrills worn off a little bit.

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Speaker 1: And it's also important to realize that, you know, his

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Speaker 1: Teflon status is as much myth as it is reality.

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Speaker 4: In some level.

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Speaker 1: It's true that he ultimately won on his compensation case

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Speaker 1: at the Delawarre Supreme Court, but that's after having lost

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Speaker 1: the first time around. He has gotten into hot water

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Speaker 1: earlier with tweets that he made about a supposed you know,

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Speaker 1: buyout of Tesla for four hundred and twenty dollars a

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Speaker 1: share go figure that wasn't going to happen, and even

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Speaker 1: the Twitter acquisition it ended up closing at forty two

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Speaker 1: dollars a share, not because he won, largely because he

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Speaker 1: basically just gave up an abandoned ship, right and so

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Speaker 1: on some level, the Teflon Elon thing I think.

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Speaker 4: Has always been a little bit overblown here.

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Speaker 1: However, I do sort of feel like there has been

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Speaker 1: a sense in which, you know, not only after Twitter acquisition,

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Speaker 1: but after you know, Musk's kind of arrival as a

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Speaker 1: semi government regulator in Doge and his kind of about

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Speaker 1: face that turned off a lot of Tesla consumers and

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Speaker 1: maybe members of the public. He probably just doesn't have

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Speaker 1: the same type of you know, charm and appeal that

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Speaker 1: he might have three or four years ago. And you know,

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Speaker 1: certainly that could have played a role, though. I got

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Speaker 1: to tell you, you know, as someone who is following

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Speaker 1: the Twitter acquisition incredibly closely, June, I couldn't understand.

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Speaker 4: These statements that he was making. They made no sense whatsoever.

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Speaker 1: And in fact, I now teach a class at Columbia

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Speaker 1: that is based largely on this episode right about why

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Speaker 1: is it the case that so many traders out there

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Speaker 1: just assumed that mister Musk was right and ignored the

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Speaker 1: fact that he had a very very difficult to break

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Speaker 1: acquisition agreement that he had willingly signed up, and the

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Speaker 1: legal record on these things was incredibly clear, and I

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Speaker 1: think ultimately that's one of the reasons why he just

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Speaker 1: decided to drop that challenge and close the deal on

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Speaker 1: the very same terms that he signed it up.

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Speaker 2: At one point, Musk acknowledged under questioning from lawyer for

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Speaker 2: Investors that the temporarily on hold post was a mistake.

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Speaker 2: Quote it may not be my wisest tweet. I don't

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Speaker 2: know if I would call it my stupidest, but if

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Speaker 2: it led to this trial, it probably qualifies as such.

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Speaker 1: It certainly looks like it could prove to be an

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Speaker 1: expensive set of tweets, right that even for someone with

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Speaker 1: wealth and the magnitude of the lawn Musk's stratosphere, a

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Speaker 1: two billion dollar award.

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Speaker 4: Is real money.

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Speaker 1: And so, you know, the one thing that's important to

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Speaker 1: note June is that the jury did not deliver any

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Speaker 1: judgment on the damages, and so the various members of

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Speaker 1: the plaintiff's class might have to come forward and say,

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Speaker 1: you know, listen, I was you know, I was one

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Speaker 1: of the people that I got fooled or got swindled

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Speaker 1: by this, and I lost.

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Speaker 4: Money because of it.

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Speaker 1: So that tabulation process is going to be ongoing, and

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Speaker 1: the plaintiffs attorneys have said this could be in the

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Speaker 1: mid two billions. I suspect some of those damages theories

439
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Speaker 1: are not going to pan out.

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Speaker 4: But you know, anything that.

441
00:24:00,400 --> 00:24:03,600
Speaker 1: Starts with a bee is something that anyone, including Kelon Musk,

442
00:24:03,600 --> 00:24:05,320
Speaker 1: probably is going to want to pay a little attention to.

443
00:24:05,680 --> 00:24:08,240
Speaker 2: Will it be the trial judge who decides how much

444
00:24:08,320 --> 00:24:10,920
Speaker 2: money each investor will get or someone else?

445
00:24:11,320 --> 00:24:12,520
Speaker 4: It will not be the jury.

446
00:24:12,520 --> 00:24:14,959
Speaker 1: It'll probably be the trial judge who is working in

447
00:24:15,000 --> 00:24:19,000
Speaker 1: collaboration with There's a whole private series of claims administrators

448
00:24:19,000 --> 00:24:21,440
Speaker 1: out there that try to tabulate up the various types

449
00:24:21,440 --> 00:24:22,359
Speaker 1: of claims.

450
00:24:21,960 --> 00:24:25,040
Speaker 4: But it will have to be superintended by the judge.

451
00:24:25,320 --> 00:24:27,639
Speaker 4: And this has not been a settlement right.

452
00:24:27,680 --> 00:24:29,760
Speaker 1: A lot of times when there's a securities front case,

453
00:24:29,760 --> 00:24:31,720
Speaker 1: most of them settle and then there's a pot of

454
00:24:31,760 --> 00:24:34,760
Speaker 1: money that's put in and then the claims administrator pretty

455
00:24:34,800 --> 00:24:37,200
Speaker 1: much works out outside of the supervision of the judge.

456
00:24:37,200 --> 00:24:38,480
Speaker 4: But now the judge is.

457
00:24:38,440 --> 00:24:39,800
Speaker 1: Going to have to be a little bit more involved

458
00:24:39,840 --> 00:24:41,960
Speaker 1: try to figure out, okay, who's getting what, And there

459
00:24:42,040 --> 00:24:43,720
Speaker 1: probably is going to be a little bit more legal

460
00:24:43,760 --> 00:24:47,560
Speaker 1: wrangling with various types of members of the class saying, hey,

461
00:24:47,600 --> 00:24:49,520
Speaker 1: I'm you know, I'm claiming that i'd lost, you know,

462
00:24:49,520 --> 00:24:51,080
Speaker 1: a couple hundred thousand dollars in this.

463
00:24:51,520 --> 00:24:52,400
Speaker 4: Does it add up?

464
00:24:52,480 --> 00:24:56,600
Speaker 1: Did your loss sort of somehow bookend these important statements

465
00:24:56,720 --> 00:24:56,959
Speaker 1: or not?

466
00:24:57,480 --> 00:24:59,680
Speaker 4: And so that's going to take some time to fare

467
00:24:59,760 --> 00:25:00,159
Speaker 4: it out.

468
00:25:00,200 --> 00:25:03,240
Speaker 1: But I can't imagine given the fact that people were

469
00:25:03,240 --> 00:25:06,239
Speaker 1: trading heavily in Twitter during this period of time, there

470
00:25:06,320 --> 00:25:08,159
Speaker 1: was a lot of interest in this transaction.

471
00:25:08,280 --> 00:25:10,760
Speaker 4: So there was a lot of volume of trading going on.

472
00:25:10,960 --> 00:25:12,720
Speaker 1: And when there's a lot of volume of trading going on,

473
00:25:12,800 --> 00:25:15,240
Speaker 1: that means there are a lot of potential securities fraud

474
00:25:15,560 --> 00:25:18,240
Speaker 1: claimants out there. So I would not be surprised for

475
00:25:18,440 --> 00:25:22,400
Speaker 1: the final bar tap on this set of tweets to

476
00:25:22,440 --> 00:25:25,120
Speaker 1: exceed a billion dollars, and it could well run north

477
00:25:25,119 --> 00:25:25,480
Speaker 1: of two.

478
00:25:26,040 --> 00:25:29,560
Speaker 2: So Musk's lawyers say they're going to appeal. We view

479
00:25:29,600 --> 00:25:32,920
Speaker 2: today's verdict where the jury found both for and against

480
00:25:32,960 --> 00:25:36,840
Speaker 2: the plaintiffs and found no fraud scheme as a bump

481
00:25:36,880 --> 00:25:39,359
Speaker 2: in the road. Now you were talking before about the

482
00:25:39,400 --> 00:25:41,000
Speaker 2: difficulties on appeal.

483
00:25:41,320 --> 00:25:43,119
Speaker 1: Yeah, So the one thing that's kind of interesting is

484
00:25:43,160 --> 00:25:46,960
Speaker 1: that while scheme liability, which the jury rejected, that this

485
00:25:47,080 --> 00:25:49,240
Speaker 1: was part of a long standing scheme and these are

486
00:25:49,280 --> 00:25:52,000
Speaker 1: just two two dots on the radar screen, but it

487
00:25:52,000 --> 00:25:54,439
Speaker 1: was a much bigger thing that was rejected by the jury,

488
00:25:54,800 --> 00:25:58,040
Speaker 1: and in principle that could have delivered a much higher

489
00:25:58,200 --> 00:26:02,919
Speaker 1: monetary damages award. So on some level, mister Musk dodged

490
00:26:02,920 --> 00:26:05,960
Speaker 1: a bullet because if everyone who traded at any time

491
00:26:06,080 --> 00:26:09,280
Speaker 1: during this scheme could bring a lawsuit or could make

492
00:26:09,320 --> 00:26:11,919
Speaker 1: a claim for damages, you could have something that may

493
00:26:11,960 --> 00:26:13,280
Speaker 1: be over ten billion dollars.

494
00:26:13,400 --> 00:26:14,359
Speaker 4: So now it's just going to be.

495
00:26:14,359 --> 00:26:17,159
Speaker 1: Those people that traded in and around these tweets and

496
00:26:17,200 --> 00:26:20,280
Speaker 1: can kind of trace it to market changes that took

497
00:26:20,280 --> 00:26:23,000
Speaker 1: place because of the tweet, and so that's going to

498
00:26:23,280 --> 00:26:26,600
Speaker 1: cabin the potential losses. But by the same token, it

499
00:26:26,800 --> 00:26:31,880
Speaker 1: makes a challenge on appeal somewhat more difficult to bring forward.

500
00:26:32,200 --> 00:26:35,520
Speaker 1: A lot of times, scheme liability has to involve up

501
00:26:35,840 --> 00:26:39,040
Speaker 1: some pronouncements by the judge and often pronouncements about what

502
00:26:39,080 --> 00:26:42,359
Speaker 1: the law says. The law is often pretty unclear in

503
00:26:42,359 --> 00:26:45,080
Speaker 1: this area because so many cases settled rather than litigate,

504
00:26:45,880 --> 00:26:48,439
Speaker 1: and so you can stand a chance about getting the

505
00:26:48,480 --> 00:26:52,840
Speaker 1: trial court judges ruling overturned on appeal when you're appealing

506
00:26:52,920 --> 00:26:54,880
Speaker 1: one of these scheme liability.

507
00:26:54,320 --> 00:26:57,679
Speaker 4: Cases for a misstatement case, and that's what this one is.

508
00:26:57,720 --> 00:27:01,520
Speaker 1: It's another type of security scrum case that is trickier

509
00:27:01,600 --> 00:27:05,760
Speaker 1: because so much more of the determination is basically given

510
00:27:05,840 --> 00:27:08,600
Speaker 1: to a deputized jury to find out. They just have

511
00:27:08,680 --> 00:27:11,720
Speaker 1: to figure out whether the facts around this were misleading

512
00:27:11,800 --> 00:27:14,720
Speaker 1: and reckless and so forth, and they found that they

513
00:27:14,720 --> 00:27:16,960
Speaker 1: were in these instances, and that is going to be

514
00:27:17,000 --> 00:27:20,359
Speaker 1: a much harder thing for an appellate level court that's

515
00:27:20,440 --> 00:27:24,320
Speaker 1: not seeing any witnesses, that's not looking at any you know,

516
00:27:24,560 --> 00:27:27,480
Speaker 1: documents at lengthen the evidentiary record other than you know,

517
00:27:27,520 --> 00:27:29,840
Speaker 1: some of the major ones to say, yeah, we just

518
00:27:29,840 --> 00:27:31,800
Speaker 1: think the jury got it wrong on this, that no

519
00:27:31,960 --> 00:27:35,639
Speaker 1: reasonable jury could have made that conclusion, when there are

520
00:27:35,680 --> 00:27:38,760
Speaker 1: so many people out there, including myself quite frankly, who

521
00:27:38,760 --> 00:27:41,919
Speaker 1: were kind of mystified at the time, and we're you know,

522
00:27:42,000 --> 00:27:44,480
Speaker 1: sort of saying that publicly about you know, why is

523
00:27:44,480 --> 00:27:47,080
Speaker 1: it the case that mister Musk was you know, thinking

524
00:27:47,080 --> 00:27:48,240
Speaker 1: that he could get out of the steal.

525
00:27:48,280 --> 00:27:49,560
Speaker 4: It just didn't seem like he could.

526
00:27:49,840 --> 00:27:54,119
Speaker 2: Does this jury verdict stand for anything beyond this case?

527
00:27:54,960 --> 00:27:56,440
Speaker 4: Well, I think in some ways it may.

528
00:27:56,560 --> 00:27:59,560
Speaker 1: I think the thing that you know has been maybe

529
00:27:59,640 --> 00:28:02,040
Speaker 1: lost in the shuffle in the last couple of years June,

530
00:28:02,160 --> 00:28:05,159
Speaker 1: as we've gotten you know, so excited about you know,

531
00:28:05,359 --> 00:28:09,040
Speaker 1: NFTs and crypto and very you know, meme stocks and

532
00:28:09,080 --> 00:28:12,760
Speaker 1: so forth, is that securities markets, when they're well regulated

533
00:28:12,800 --> 00:28:15,280
Speaker 1: and when they are not sort of pumped full of

534
00:28:15,680 --> 00:28:20,800
Speaker 1: exaggerations or careless statements, are a very very good mechanism

535
00:28:20,960 --> 00:28:24,679
Speaker 1: both to transmit information and to distribute risk across the

536
00:28:24,840 --> 00:28:27,600
Speaker 1: entire economy. And so there's a really, you know, kind

537
00:28:27,600 --> 00:28:31,199
Speaker 1: of major goal, policy goal that we all have in

538
00:28:31,320 --> 00:28:33,760
Speaker 1: trying to make sure that the way that security markets

539
00:28:33,800 --> 00:28:38,200
Speaker 1: are regulated and litigated, I guess is to make sure

540
00:28:38,200 --> 00:28:41,240
Speaker 1: that people, you know, feel like they are operating with integrity,

541
00:28:41,280 --> 00:28:43,960
Speaker 1: that when someone says something and that person is in

542
00:28:44,040 --> 00:28:46,600
Speaker 1: a position of authority in a company, that they're not

543
00:28:46,680 --> 00:28:49,840
Speaker 1: basically just making stuff up. And so there there is

544
00:28:49,920 --> 00:28:52,400
Speaker 1: on some level, you know, a sense that maybe this

545
00:28:52,520 --> 00:28:56,040
Speaker 1: does vindicate the idea that you know, people are who

546
00:28:56,040 --> 00:28:58,240
Speaker 1: are in possession of information, who are trying to make

547
00:28:58,280 --> 00:29:00,400
Speaker 1: statements that they know we're going to have an effect

548
00:29:00,400 --> 00:29:01,800
Speaker 1: on the price, they need to be.

549
00:29:01,840 --> 00:29:03,040
Speaker 4: Careful when they do it.

550
00:29:03,360 --> 00:29:07,160
Speaker 1: And ultimately, while that may be inconvenient for them at

551
00:29:07,200 --> 00:29:10,000
Speaker 1: the time, it will redound to all of our long

552
00:29:10,080 --> 00:29:13,440
Speaker 1: term benefit simply because that means that, you know, when

553
00:29:13,480 --> 00:29:16,120
Speaker 1: they really do have news, we can trust that they're

554
00:29:16,160 --> 00:29:19,360
Speaker 1: delivering that news in a bona fide fashion. And so,

555
00:29:19,560 --> 00:29:21,920
Speaker 1: you know, my sense is that this probably is on

556
00:29:22,000 --> 00:29:25,880
Speaker 1: some level of victory for you know, continued faith in

557
00:29:25,920 --> 00:29:30,400
Speaker 1: the help of securities markets. I'm not necessarily too worried

558
00:29:30,440 --> 00:29:33,640
Speaker 1: about the fact that there wasn't a scheme liability verdict

559
00:29:33,640 --> 00:29:35,680
Speaker 1: in this case, because I don't really think there was

560
00:29:35,760 --> 00:29:36,440
Speaker 1: much of a scheme.

561
00:29:36,520 --> 00:29:36,680
Speaker 4: You know.

562
00:29:36,720 --> 00:29:39,080
Speaker 1: My sense is that, you know, mister Musk, this wasn't

563
00:29:39,320 --> 00:29:41,800
Speaker 1: part of some you know, four dimensional chess type of

564
00:29:41,840 --> 00:29:43,840
Speaker 1: thing that he was trying to play. You know, he

565
00:29:43,840 --> 00:29:45,280
Speaker 1: thought he might want to buy Twitter, and then he

566
00:29:45,320 --> 00:29:46,760
Speaker 1: changed his mind. He was trying to come up with

567
00:29:46,800 --> 00:29:48,840
Speaker 1: reasons why he could walk away, and he was trying

568
00:29:48,880 --> 00:29:51,840
Speaker 1: it out by crowdsourcing it, but that also turned out

569
00:29:51,840 --> 00:29:52,600
Speaker 1: to be securities.

570
00:29:52,600 --> 00:29:52,880
Speaker 4: Fra up.

571
00:29:53,200 --> 00:29:56,400
Speaker 2: Eric, It's always a pleasure, Thanks so much. That's Professor

572
00:29:56,480 --> 00:29:59,840
Speaker 2: Eric Tally of Columbia Law School. And that's it. It's

573
00:29:59,840 --> 00:30:02,680
Speaker 2: a of the Bloomberg Law Show. Remember you can always

574
00:30:02,720 --> 00:30:05,680
Speaker 2: get the latest legal news on our Bloomberg Law podcasts.

575
00:30:05,920 --> 00:30:08,960
Speaker 2: You can find them on Apple Podcasts, Spotify, and at

576
00:30:09,120 --> 00:30:14,120
Speaker 2: www dot Bloomberg dot com, Slash podcast Slash Law, and

577
00:30:14,200 --> 00:30:17,280
Speaker 2: remember to tune into The Bloomberg Law Show every weeknight

578
00:30:17,360 --> 00:30:20,800
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579
00:30:20,880 --> 00:30:22,360
Speaker 2: you're listening to Bloomberg