WEBVTT - Movie Armorer & SCOTUS Polarized

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<v Speaker 1>This is Bloomberg Law with June Brusso from Bloomberg Radio.

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<v Speaker 2>To find the defendant Anddutiers guilty of involuntary manslaughter as

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<v Speaker 2>Carshan count one. We find the dependent Andiboutiers not guilty.

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<v Speaker 2>Put Tambre evidence chart should come too. After just two

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<v Speaker 2>and a half hours of deliberations, a new Mexico jury

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<v Speaker 2>found Hanna Guccierrez read the armorer on the set of

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<v Speaker 2>the movie Rust, guilty of involuntary manslaughter for the death

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<v Speaker 2>of cinematographer Helena Hutchins. She was shot and killed when

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<v Speaker 2>a live round from a gun held by actor Alec

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<v Speaker 2>Baldwin fired during rehearsal. In twenty twenty one, Jura Alberto

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<v Speaker 2>Sanchez explained why they came to their decision pretty much.

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<v Speaker 3>Is just that all the never did the safety checks,

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<v Speaker 3>never checked the rounds, to pull him out, to look

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<v Speaker 3>at him, shake them. I mean, if you'd have done that,

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<v Speaker 3>this wouldn't happen.

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<v Speaker 2>The defense had argued that Guccierrez Reid was a fall

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<v Speaker 2>guy and the ultimate responsibility rested with producers, including Baldwin.

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<v Speaker 1>Hanas being made a skatego for are deliberate heerrors and

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<v Speaker 1>mistakes by production.

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<v Speaker 2>Now all eyes turned to Baldwin's own involuntary manslaughter trial,

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<v Speaker 2>which begins on July tenth. Joining me is former prosecutor

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<v Speaker 2>Joshua Castenberg, a professor at the University of New Mexico

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<v Speaker 2>Law School. A two week trial, very short jury deliberations,

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<v Speaker 2>what was the critical prosecution evidenced.

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<v Speaker 4>I think one is the prosecution did a very good

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<v Speaker 4>job of proving that Hanna Goudiers Read had a duty

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<v Speaker 4>and that she failed to perform the basic functions of

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<v Speaker 4>that duty, and that is to make sure the firearms

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<v Speaker 4>are safe. Now, the prosecution had not only the normal

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<v Speaker 4>hurdle of proof beyond a reasonable doubt, they also understood

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<v Speaker 4>that one of the defenses would be that, look, other

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<v Speaker 4>people had access to the guns and the armor isn't

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<v Speaker 4>the only one responsible for this. But they focused on

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<v Speaker 4>her specific responsibilities and they were able to get in

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<v Speaker 4>some evidence of drug use, and I think those were

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<v Speaker 4>the two strengths of the case. And frankly, the defense

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<v Speaker 4>didn't put up a compelling defense, even though it's not

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<v Speaker 4>their burden to do so. They didn't.

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<v Speaker 2>So one of the jurors said that they'd easily reached

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<v Speaker 2>their decision by determining that Gucciera's Read had failed to

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<v Speaker 2>properly carry out gun safety checks. The big question has

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<v Speaker 2>been why was their live ammunition on the movie set,

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<v Speaker 2>which is strictly forbidden. The prosecution said that Gucciera's Read

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<v Speaker 2>brought the live rounds to the set and showed some

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<v Speaker 2>photos to prove that.

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<v Speaker 4>Yeah, so, you know, I think there is evidence, you know,

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<v Speaker 4>where the live rounds came from. I don't think it's

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<v Speaker 4>you know, it's conclusive beyond a reasonable doubt, but there

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<v Speaker 4>is evidence that it came from her. I think what

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<v Speaker 4>that evidence really proved if she knew of the possibility

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<v Speaker 4>that live rounds would be in the vicinity of the

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<v Speaker 4>weapon and fail to do anything to stop it from

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<v Speaker 4>entering the weapon or keeping it in the weapon.

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<v Speaker 2>I mean, let's talk about how this affects Baldwin's trial.

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<v Speaker 2>If she's responsible for the live ammunition on the set,

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<v Speaker 2>that helps him, doesn't it.

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<v Speaker 4>Well, his attorneys have looked at this case, I have

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<v Speaker 4>no doubt, very carefully, and not only very carefully, but

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<v Speaker 4>with an eye towards presenting evidence in their own case.

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<v Speaker 4>And I think, ironically, the stronger the prosecution's case is

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<v Speaker 4>against Hanne Goodyear's read the weaker it is against Baldwin,

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<v Speaker 4>even though those are two separate trials with two different

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<v Speaker 4>theories of guilt.

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<v Speaker 2>Does this verdict in any way absolve Baldwin of negligence, Well.

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<v Speaker 4>It doesn't absolve him of negligence, because you can have

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<v Speaker 4>a criminal negligence series of crimes where there are multiple

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<v Speaker 4>people who had duties to perform or avoid performing certain things,

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<v Speaker 4>and yet they're all guilty, even though those duties are desparate.

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<v Speaker 4>But then there's the human logic, and the human logic

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<v Speaker 4>will go some thing like this, the more guilty she is,

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<v Speaker 4>the less he is, because really, what was his role? Now,

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<v Speaker 4>the prosecution did a great job in this first trial.

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<v Speaker 4>Their next focus has to be getting to the point

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<v Speaker 4>where the individual who last had their hand on the

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<v Speaker 4>gun had an independent responsibility to make sure the gun

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<v Speaker 4>was safeguarded. That's a true statement, but whether it rises

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<v Speaker 4>to the level of a crime, the failure to do

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<v Speaker 4>that or not, that's a tough mountain to climb.

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<v Speaker 2>The prosecutors used videos from the set to portray a

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<v Speaker 2>breakdown of movie industry firearms safety standards. The defense tried

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<v Speaker 2>to show that the producers were trying to cut costs,

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<v Speaker 2>They rushed the crew, They gave her too many things

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<v Speaker 2>to do because she was both a part time armorer

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<v Speaker 2>and a prop assistant. That's the producer's fault. But Baldwin

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<v Speaker 2>is one of the producers.

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<v Speaker 4>And you know, if the prosecution pursues that line, they

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<v Speaker 4>go up against Baldwin. He's not just an actor. He

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<v Speaker 4>had a greater role in the movie, on the Russ

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<v Speaker 4>movie that than a normal actor would have, and they'll

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<v Speaker 4>try to tie him in as being complicit in those failures,

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<v Speaker 4>and there's a possibility they'll be able to do so.

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<v Speaker 2>What I found interesting is that there was testimony that

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<v Speaker 2>he exerted a disproportionate amount of power because he was

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<v Speaker 2>serving as producer, writer, and lead actor. He was described

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<v Speaker 2>by one witness as the boss and no one says

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<v Speaker 2>no to him.

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<v Speaker 4>That's important, it's very important. Yeah, I mean, he's not

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<v Speaker 4>just the lead act. You know that Hollywood is not

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<v Speaker 4>the military, but there are defined leadership roles in the

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<v Speaker 4>movie industry, and it's clear that he took one of them,

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<v Speaker 4>and so there's responsibility that comes with taking one of them.

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<v Speaker 2>A firearms expert said that Balwin was basically instructing the

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<v Speaker 2>armorer how to do their job.

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<v Speaker 4>Yeah, you know, the armorer would have an independent duty

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<v Speaker 4>to push back. But I think the prosecution tried to

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<v Speaker 4>tailor this case against Hannah Goodear as reeds preserving enough

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<v Speaker 4>strong evidence against Baldwin to go after him in that trial,

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<v Speaker 4>and I think they did a pretty good job of

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<v Speaker 4>doing it. It's just that the prosecution of Alec Baldwin

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<v Speaker 4>is going to be considerably harder than it was against

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<v Speaker 4>the armorer.

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<v Speaker 2>I sort of wonder why they're going after Baldwin since

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<v Speaker 2>they found out that the armorer, or they believe the

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<v Speaker 2>armorer brought the ammunition to the set, she didn't do

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<v Speaker 2>proper safety checks before the incident.

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<v Speaker 4>You're going to hear competing theories about why they're going

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<v Speaker 4>after Baldwin. For example, one theory is they want publicity.

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<v Speaker 4>I don't believe that's true, but that is going to

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<v Speaker 4>be something that's advocating that he's a big person to

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<v Speaker 4>take down in the like. You're going to hear another

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<v Speaker 4>competing theory, which is we only have one system of

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<v Speaker 4>justice in this country, and there's been this unfortunate narrative

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<v Speaker 4>that there's two systems of us as one for the

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<v Speaker 4>top one percent and one for the rest of us.

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<v Speaker 4>But I also think that there's a fundamental issue here,

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<v Speaker 4>and that is the person who had their finger on

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<v Speaker 4>the trigger, it should have the justice system focused on

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<v Speaker 4>them as well at a fairness, because they're the one

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<v Speaker 4>who pulled the trigger without looking at the gun, without

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<v Speaker 4>doing the final safety check and the like. And I

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<v Speaker 4>actually think that's the most basic and real reason why

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<v Speaker 4>the prosecution is going forward on it. Having said that,

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<v Speaker 4>Baldwin is very gifted defense Council and you know, they're

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<v Speaker 4>going to make an equation to for example, you rent

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<v Speaker 4>a car when you land at the airport from a

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<v Speaker 4>reputable cart rental company. Your assumption when you turn the

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<v Speaker 4>ignition in on the car is the car is up

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<v Speaker 4>to safety standards, you know, And so that's what they're

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<v Speaker 4>going to equate it to.

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<v Speaker 2>Baldwin maintains and has maintained since day one, that he

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<v Speaker 2>didn't pull the trigger, and there's going to be test

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<v Speaker 2>stamoni from gun experts that it couldn't have fired without

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<v Speaker 2>pulling the trigger. How important is that?

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<v Speaker 4>Well, that cuts both ways, because if you have an FBI,

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<v Speaker 4>or you have a firearms expert or real expert saying, look,

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<v Speaker 4>this gun was fired because the trigger was depressed, and

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<v Speaker 4>it makes it appear that Baldwin wasn't telling the truth.

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<v Speaker 4>That can hurt him. On the other hand, what I'd

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<v Speaker 4>say about it is maybe he absolutely believes that he

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<v Speaker 4>didn't pull the trigger. Because the human mind is fallible,

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<v Speaker 4>and that's why, for example, when a railroad accident occurs,

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<v Speaker 4>or a plane crash accident occurs, the National Transportation Safety Board,

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<v Speaker 4>when they do mass interviews with people, they don't give

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<v Speaker 4>the interviews individualized credibility because everybody has a different story

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<v Speaker 4>as to what they saw in Our minds are conditioned,

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<v Speaker 4>particularly during a stressful moment, to capture and retain data

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<v Speaker 4>and then show the data in a manner that makes

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<v Speaker 4>sense to us, even though it may not be an

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<v Speaker 4>accurate reflection of what occurred. And so, if you remember,

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<v Speaker 4>there was a plane after nine to eleven that crashed

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<v Speaker 4>in Long Island. There were witnesses. They said there was

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<v Speaker 4>a giant fireball. There were witnesses they said the wings

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<v Speaker 4>fell off the airplane. All kinds of stories as to

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<v Speaker 4>what happened. It turned out there was no fireball, there

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<v Speaker 4>was no explosion. There was a plane crash because the

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<v Speaker 4>plane broke apart. But if you're the person with your

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<v Speaker 4>finger on the trigger, your brain may actually synthesize the

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<v Speaker 4>data that occurred, you know, the recall to say you

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<v Speaker 4>had nothing to do with it. It just went off,

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<v Speaker 4>even though your finger did it, you know. So I

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<v Speaker 4>don't think that the prosecution is going to spend a

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<v Speaker 4>lot of time trying to paint Baldwin as a liar.

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<v Speaker 4>They're going to try to paint them as irresponsible.

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<v Speaker 2>And in this case, Hannah Gucciras Reid did not take

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<v Speaker 2>the witness stand. But do we expect that Alec Ballwin

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<v Speaker 2>will take the witness stand?

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<v Speaker 4>Well, you know, taking the witness stand is ultimately a

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<v Speaker 4>defendant's choice, and it's not the defense council's choice. I mean,

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<v Speaker 4>they can just advise. And it's a risk for him

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<v Speaker 4>to take the stand. It's also a risk for him

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<v Speaker 4>not to. The judge instructs the jury that they're to

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<v Speaker 4>infer no guilt whatsoever from any defendant who does not

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<v Speaker 4>testify in their own defense. That's true, But he's an actor,

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<v Speaker 4>and him taking the witness stand, the risk is he

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<v Speaker 4>has to be genuine as to who he is. If

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<v Speaker 4>he takes the stand and tells the truth as he

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<v Speaker 4>sees it, but if the jury thinks he's acting through it,

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<v Speaker 4>they're going to hold it a tense him. But he's

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<v Speaker 4>in the most unique category of defendant that I could

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<v Speaker 4>think of.

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<v Speaker 2>Looking at the evidence that came in and how it

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<v Speaker 2>was received by the jury, which side do you think

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<v Speaker 2>has the advantage, the prosecution or Baldwin Well.

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<v Speaker 4>I think that the prosecution tried to put deserve as

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<v Speaker 4>much of the strength as they could in the evidence

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<v Speaker 4>to be used against Baldwin. Having said that, I could

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<v Speaker 4>see that Baldwin's attorneys might call the new Mexico OSHA

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<v Speaker 4>person to testify. They may call witnesses who brought in

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<v Speaker 4>evidence about Hanne Goudiera's read drug use to say that, look,

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<v Speaker 4>my client wasn't aware that he was under the influence

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<v Speaker 4>of marijuana or cocaine during this time on the movie set.

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<v Speaker 4>So I think that it felt slightly in favor of Baldwin.

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<v Speaker 4>I mean, you could still get a conviction out of

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<v Speaker 4>this evidence, but it's much harder to do so we'll find.

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<v Speaker 2>Out in July. Thanks so much, josh Deft. Professor Joshua

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<v Speaker 2>Castenberg at the University of New Mexico Law School coming

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<v Speaker 2>up next. What the liberal justices were worried about in

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<v Speaker 2>the Supreme Court's decision keeping Trump on the ballot. I'm

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<v Speaker 2>June Grosso and you're listening to Bloomberg. On the surface,

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<v Speaker 2>the Supreme Court was unanimous on Monday in ruling that

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<v Speaker 2>Donald Trump can appear on presidential ballots, but just below

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<v Speaker 2>the surface, there was plenty of conflict. In a procureum opinion,

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<v Speaker 2>all nine justices concluded that states can't enforce the insurrection

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<v Speaker 2>clause to bar federal candidates from the ballot, But the

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<v Speaker 2>three liberal justices wrote a caustic concurrence which read like

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<v Speaker 2>a dissent, saying the five conservatives had gone too far,

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<v Speaker 2>and Conservative Justice Amy Cony Barrett wrote her own, more

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<v Speaker 2>restrained concurrence joining me. Is Jessica Levinson, a professor at

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<v Speaker 2>Loyola Law School and host of the Passing Judgment podcast.

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<v Speaker 2>Jessica explained the reasoning of the procureum opinion, which all

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<v Speaker 2>nine justices agreed to. Why they decided that Donald Trump

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<v Speaker 2>should remain on the ballot.

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<v Speaker 5>So I wouldn't frame this so much as should Donald

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<v Speaker 5>Trump for me in on the ballot? Does any single

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<v Speaker 5>state have the power under section three of the fourteenth

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<v Speaker 5>Amendment to say that a presidential candidate is ineligible for office.

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<v Speaker 5>And the top line here is that nine of the

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<v Speaker 5>justices agreed that when it comes to a state, they

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<v Speaker 5>do not have the power for federal officials, particularly for

0:13:23.840 --> 0:13:28.000
<v Speaker 5>the president, to say that they're disqualified for office having

0:13:28.520 --> 0:13:33.120
<v Speaker 5>been previously serving in government, engaging in insurrection, and then

0:13:33.200 --> 0:13:35.040
<v Speaker 5>trying to once again serve in government.

0:13:35.640 --> 0:13:38.960
<v Speaker 2>You have two concurrences, one by all three of the

0:13:39.000 --> 0:13:43.120
<v Speaker 2>liberal justices and one by Amy Cony Barrett in the

0:13:43.160 --> 0:13:46.440
<v Speaker 2>Liberal justice is concurrence that read more like a dissent.

0:13:47.240 --> 0:13:51.280
<v Speaker 2>They said that the five conservatives went too far further

0:13:51.360 --> 0:13:56.000
<v Speaker 2>than they needed to go. Explain they decide novel constitutional

0:13:56.080 --> 0:14:01.359
<v Speaker 2>questions to insulate this court and petitioner that's trump future controversy.

0:14:01.720 --> 0:14:04.120
<v Speaker 2>Explain what they were concerned about there.

0:14:04.920 --> 0:14:07.520
<v Speaker 5>So I think what the concurrence, which really does read

0:14:07.559 --> 0:14:11.000
<v Speaker 5>more like a descent, is concerned about is one that

0:14:11.080 --> 0:14:15.400
<v Speaker 5>the Court answered a question that wasn't asked. That they said,

0:14:15.559 --> 0:14:20.760
<v Speaker 5>not only can a stake not by itself say that

0:14:21.080 --> 0:14:25.280
<v Speaker 5>there's a federal candidate whose ineligible profice under section three

0:14:25.280 --> 0:14:29.120
<v Speaker 5>of the fourteenth amendments. But here's who can It's just Congress,

0:14:29.160 --> 0:14:32.480
<v Speaker 5>and it's just through a certain type of legislation. And

0:14:32.560 --> 0:14:36.240
<v Speaker 5>so the first problem the concurrence has, it's this idea

0:14:36.440 --> 0:14:39.760
<v Speaker 5>that in fact, the procureum and as they phrased it,

0:14:39.840 --> 0:14:44.160
<v Speaker 5>the majority is just going too far and they're answering

0:14:44.160 --> 0:14:46.560
<v Speaker 5>a question that they didn't need to, and that that

0:14:47.200 --> 0:14:51.520
<v Speaker 5>violates the principle of judicial restraint. And then the second

0:14:51.560 --> 0:14:55.360
<v Speaker 5>thing they're saying about insulating, and I think this wasn't clear,

0:14:55.400 --> 0:14:58.120
<v Speaker 5>and I wish they had just said what they mean.

0:14:58.480 --> 0:15:01.080
<v Speaker 5>But I suspect what they mean is that by the

0:15:01.080 --> 0:15:06.320
<v Speaker 5>majority saying here's the way that you enforced Section three,

0:15:06.520 --> 0:15:12.520
<v Speaker 5>it's congressional legislation that is specifically aimed at and narrowly

0:15:12.560 --> 0:15:16.520
<v Speaker 5>tailored aimed at the issue the Constitution lays out. What

0:15:16.560 --> 0:15:20.240
<v Speaker 5>they're saying is does that mean then if Donald Trump,

0:15:20.320 --> 0:15:23.920
<v Speaker 5>for instance, was to win the election and then Congress

0:15:24.040 --> 0:15:28.000
<v Speaker 5>was to try not to certify under a different statute

0:15:28.160 --> 0:15:31.400
<v Speaker 5>under the Electoral Count Act, would Congress then laugh the

0:15:31.480 --> 0:15:33.800
<v Speaker 5>power to do that under this majority opinion?

0:15:34.440 --> 0:15:38.760
<v Speaker 2>And during the oral arguments, the lawyer for the Colorado

0:15:38.880 --> 0:15:43.000
<v Speaker 2>voters had said that a rule requiring Congressional action to

0:15:43.080 --> 0:15:46.960
<v Speaker 2>implement Section three could leave the door open to a

0:15:47.000 --> 0:15:51.120
<v Speaker 2>renewed fight over trying to use the provision to disqualify

0:15:51.200 --> 0:15:54.080
<v Speaker 2>Trump in the event that he wins the election. So

0:15:54.440 --> 0:15:57.400
<v Speaker 2>those five conservatives knew what they were doing.

0:15:57.800 --> 0:16:00.400
<v Speaker 5>I think this conservatives did know what they were doing.

0:16:00.440 --> 0:16:04.320
<v Speaker 5>This was discussed in oral arguments. I think that there's

0:16:04.600 --> 0:16:07.800
<v Speaker 5>a question as to whether or not it's appropriate or

0:16:07.880 --> 0:16:11.680
<v Speaker 5>not for the picureum to have gone further than just

0:16:11.880 --> 0:16:16.160
<v Speaker 5>Colorado lacks this power. But it certainly is the case

0:16:16.360 --> 0:16:19.800
<v Speaker 5>that there was a conversation about whether or not a

0:16:19.920 --> 0:16:22.880
<v Speaker 5>specific type of judicial decision would just kick the can

0:16:23.000 --> 0:16:27.040
<v Speaker 5>down the road. And I think that's what the concurrence

0:16:27.080 --> 0:16:29.760
<v Speaker 5>is really arguing her. The concurrence by the liberals, which is,

0:16:30.400 --> 0:16:35.240
<v Speaker 5>you're just pushing off some big and complicated questions until later,

0:16:36.160 --> 0:16:41.080
<v Speaker 5>and specifically those big questions, you're actually tilting the scale

0:16:41.240 --> 0:16:44.840
<v Speaker 5>in favor of saying that Congress would lack the power

0:16:44.960 --> 0:16:48.760
<v Speaker 5>to take any action outside of a new piece of legislation,

0:16:49.080 --> 0:16:52.440
<v Speaker 5>and that that's helpful not just for Trump but for

0:16:52.560 --> 0:16:56.160
<v Speaker 5>the Court itself in avoiding future controversy.

0:16:56.800 --> 0:17:00.600
<v Speaker 2>Well, do you think that there was a push, you know,

0:17:00.640 --> 0:17:04.800
<v Speaker 2>to speak with one voice, and so the three liberals

0:17:05.160 --> 0:17:09.360
<v Speaker 2>went along with that. Was this really a unanimous decision.

0:17:09.840 --> 0:17:14.360
<v Speaker 5>It really was a unanimous decision that was deeply fractured

0:17:14.520 --> 0:17:19.440
<v Speaker 5>on everything else other than the one line of the outcome.

0:17:19.720 --> 0:17:21.920
<v Speaker 5>So on the one hand, you can see that there's

0:17:21.920 --> 0:17:25.879
<v Speaker 5>this enormous pressure because of the case with huge political

0:17:25.920 --> 0:17:31.040
<v Speaker 5>consequences and huge consequences on an issue that really divides

0:17:31.080 --> 0:17:35.639
<v Speaker 5>our country, that the court not look like they're policymakers.

0:17:35.720 --> 0:17:38.160
<v Speaker 5>So the court look like they are judges, They are

0:17:38.200 --> 0:17:41.119
<v Speaker 5>resolving disputes, they are not putting their thumb on the

0:17:41.160 --> 0:17:44.320
<v Speaker 5>scale of an election. And so I think that's how

0:17:44.359 --> 0:17:48.560
<v Speaker 5>we do get to that one line saying based on federalism,

0:17:48.680 --> 0:17:52.320
<v Speaker 5>based on all of these concerns about patchworks and chaos,

0:17:52.520 --> 0:17:55.159
<v Speaker 5>we're going to say Colorado went outside of its power.

0:17:55.720 --> 0:18:00.600
<v Speaker 5>But then the agreement dissipates, and that's where we lose

0:18:00.760 --> 0:18:06.000
<v Speaker 5>all consensus, and that's where you have the majority, I

0:18:06.000 --> 0:18:09.200
<v Speaker 5>think taking a very different stance thing, and here's exactly

0:18:09.240 --> 0:18:12.920
<v Speaker 5>how you apply Section three. And the concurrent thing, why

0:18:12.960 --> 0:18:16.040
<v Speaker 5>are you going so far? And you're doing this in

0:18:16.080 --> 0:18:19.320
<v Speaker 5>a way that not just avoids judicial restraints, but you're

0:18:19.400 --> 0:18:23.240
<v Speaker 5>kind of tipping the scales in favor of somebody like

0:18:23.480 --> 0:18:24.520
<v Speaker 5>the former president.

0:18:25.480 --> 0:18:30.080
<v Speaker 2>Justice amy Cony Barrett, in her separate, more temperate Concurrence, wrote,

0:18:30.480 --> 0:18:33.040
<v Speaker 2>the Court has settled a politically charged issue in the

0:18:33.119 --> 0:18:37.800
<v Speaker 2>volatile season of a presidential election, particularly in this circumstances,

0:18:37.880 --> 0:18:41.040
<v Speaker 2>writings on the Court should turn the national temperature down,

0:18:41.440 --> 0:18:43.480
<v Speaker 2>not up, but then goes on to say, well, the

0:18:43.520 --> 0:18:44.600
<v Speaker 2>main messages.

0:18:44.200 --> 0:18:47.400
<v Speaker 5>We all agreed, right, And I think this is an

0:18:47.520 --> 0:18:52.720
<v Speaker 5>understandable message by Justice Barrett, because she's very cognism of

0:18:52.720 --> 0:18:55.080
<v Speaker 5>the past that she doesn't want this to be a

0:18:55.080 --> 0:18:59.040
<v Speaker 5>bush by Gore reduct where it looks like by a

0:18:59.400 --> 0:19:04.240
<v Speaker 5>thinly de court divided along ideological lines of who appointed

0:19:04.280 --> 0:19:08.720
<v Speaker 5>the justices, that they make a decision that has huge

0:19:08.720 --> 0:19:12.560
<v Speaker 5>effects on the presidential election. So what she's saying is

0:19:13.040 --> 0:19:16.840
<v Speaker 5>he understands the concern that the majority went too far,

0:19:17.359 --> 0:19:20.560
<v Speaker 5>but she wishes that. I think the dissent gives me

0:19:20.760 --> 0:19:26.359
<v Speaker 5>the Freudian slips with the concurrence hadn't used such strident language.

0:19:26.560 --> 0:19:29.560
<v Speaker 5>And I wonder if there was some world in which

0:19:30.000 --> 0:19:32.840
<v Speaker 5>the liberals actually could have gotten Justice Barrett to sign

0:19:32.920 --> 0:19:37.720
<v Speaker 5>on if the tenor of the Concurrence had maybe been

0:19:38.200 --> 0:19:39.000
<v Speaker 5>slightly different.

0:19:40.080 --> 0:19:43.200
<v Speaker 2>Well, she hasn't been sitting in those liberal seats for

0:19:43.240 --> 0:19:47.359
<v Speaker 2>so long, particularly so to Mayor, and the emotion, shall

0:19:47.400 --> 0:19:50.879
<v Speaker 2>we say or anger building up. Is Barrett on a

0:19:50.960 --> 0:19:54.560
<v Speaker 2>sort of a mission because she appeared with Sonya so

0:19:54.680 --> 0:19:57.679
<v Speaker 2>to Mayor at the National Conference of Governors to say,

0:19:58.040 --> 0:20:01.400
<v Speaker 2>there are not Republican judges or democratic judges. We all

0:20:01.400 --> 0:20:04.840
<v Speaker 2>wear black robes, not red, not blue. But she on

0:20:04.840 --> 0:20:07.000
<v Speaker 2>a mission that you usually see the Chief Justice on.

0:20:07.720 --> 0:20:11.200
<v Speaker 5>I think that it's Justice Barrett, it's Justice Sonia Sodamayor,

0:20:11.280 --> 0:20:15.040
<v Speaker 5>who's also spoken warmly about Justice Clarence Thomas. It's the

0:20:15.160 --> 0:20:19.440
<v Speaker 5>Chief Justice, it's Elena Kagan, all of whom have said

0:20:19.520 --> 0:20:23.560
<v Speaker 5>some version of please know that we're judges, not politicians

0:20:23.600 --> 0:20:26.760
<v Speaker 5>and robes. And of course they need that right. The

0:20:26.800 --> 0:20:31.040
<v Speaker 5>Supreme Court depends on our respect and it depends on

0:20:31.600 --> 0:20:35.520
<v Speaker 5>us viewing them as something different from just political actors,

0:20:35.720 --> 0:20:39.239
<v Speaker 5>because ultimately they get their power from us. Saying that

0:20:39.560 --> 0:20:41.679
<v Speaker 5>they have that power, I mean, they don't have an

0:20:41.800 --> 0:20:44.480
<v Speaker 5>army to send in, they don't have a group of

0:20:44.520 --> 0:20:48.119
<v Speaker 5>police officers to send in to enforce their opinions. In

0:20:48.200 --> 0:20:50.680
<v Speaker 5>the sense that they have the power of the pen,

0:20:50.840 --> 0:20:52.880
<v Speaker 5>and if we ignore that, then we have a real

0:20:52.960 --> 0:20:54.720
<v Speaker 5>problem with our third branch.

0:20:54.880 --> 0:20:58.080
<v Speaker 2>So they don't want to appear as political actors. They

0:20:58.080 --> 0:21:00.919
<v Speaker 2>want to appear as judges. Yet, over the space of

0:21:01.040 --> 0:21:05.840
<v Speaker 2>six days, they gave Trump this outright victory in Colorado

0:21:06.080 --> 0:21:10.280
<v Speaker 2>and a victory in putting off his criminal case after

0:21:10.560 --> 0:21:16.120
<v Speaker 2>waiting for two weeks to decide whether or not they

0:21:16.119 --> 0:21:20.520
<v Speaker 2>were going to take his claim of presidential immuni from prosecution,

0:21:21.240 --> 0:21:25.480
<v Speaker 2>which may mean, probably will mean that he won't be

0:21:25.640 --> 0:21:28.879
<v Speaker 2>tried in the election interference case because there won't be time.

0:21:29.640 --> 0:21:30.960
<v Speaker 2>How is that not political?

0:21:31.680 --> 0:21:34.960
<v Speaker 5>I think what the justices would say is like, we

0:21:35.080 --> 0:21:39.480
<v Speaker 5>decided to take this case because we decide big constitutional

0:21:39.560 --> 0:21:42.359
<v Speaker 5>questions that are matters of first impression, and this is

0:21:42.400 --> 0:21:46.719
<v Speaker 5>a big constitutional question that we've never confronted before. And

0:21:46.920 --> 0:21:50.040
<v Speaker 5>I think what they might also say is, Jasonuth came

0:21:50.040 --> 0:21:52.159
<v Speaker 5>to us in December and asked us to said this

0:21:52.320 --> 0:21:55.840
<v Speaker 5>for arguments in March. We instead said you don't get

0:21:55.880 --> 0:21:58.520
<v Speaker 5>to jump the line, and we set arguments for the

0:21:58.600 --> 0:22:02.479
<v Speaker 5>end of April. Now is the end of April quite different?

0:22:02.560 --> 0:22:05.520
<v Speaker 5>In fact, when it comes to the court calendar and

0:22:05.560 --> 0:22:08.280
<v Speaker 5>the electoral calendar than the beginning of March. Of course

0:22:08.320 --> 0:22:10.879
<v Speaker 5>it is, but they can also say, look, we had

0:22:10.920 --> 0:22:14.560
<v Speaker 5>a full calendar. We didn't push this off until next term.

0:22:15.400 --> 0:22:20.160
<v Speaker 5>And they might say it's not our responsibility to make

0:22:20.200 --> 0:22:24.520
<v Speaker 5>sure that this case can occur before the election. Now,

0:22:24.680 --> 0:22:27.440
<v Speaker 5>on the other hand, of course, one would say, well,

0:22:27.480 --> 0:22:33.720
<v Speaker 5>are they actually unnecessarily delaying things by setting this particular pace.

0:22:33.960 --> 0:22:37.040
<v Speaker 5>But I think the justices would say, actually, we're moving

0:22:37.119 --> 0:22:38.360
<v Speaker 5>for us quite quickly.

0:22:39.160 --> 0:22:41.800
<v Speaker 2>Well, they set it for the last possible day they

0:22:41.800 --> 0:22:45.359
<v Speaker 2>could for all arguments, and we saw how fast they

0:22:45.359 --> 0:22:49.520
<v Speaker 2>did the Colorado case and that Trump immunity case has

0:22:49.600 --> 0:22:52.760
<v Speaker 2>been briefed and rebriefed. I don't know what else there

0:22:52.800 --> 0:22:53.440
<v Speaker 2>is left.

0:22:53.240 --> 0:22:55.800
<v Speaker 5>To say, right, I mean, what's left is the Supreme

0:22:55.800 --> 0:22:58.639
<v Speaker 5>Court decision. And I think what we do need to

0:22:59.040 --> 0:23:01.760
<v Speaker 5>think about is that we could get a decision that

0:23:02.080 --> 0:23:04.360
<v Speaker 5>isn't just an up or down. It's not just there

0:23:04.440 --> 0:23:06.879
<v Speaker 5>is absolute immunity or there isn't. We could get a

0:23:06.880 --> 0:23:10.920
<v Speaker 5>decision that says, for instance, there is qualified immunity and

0:23:11.119 --> 0:23:14.200
<v Speaker 5>send the case back to Judge chuckin the trial court

0:23:14.280 --> 0:23:18.080
<v Speaker 5>judge in the DC case dealing with election interference and

0:23:18.160 --> 0:23:21.959
<v Speaker 5>tell her to apply that standard that could also present

0:23:22.119 --> 0:23:23.440
<v Speaker 5>a delay, and.

0:23:23.440 --> 0:23:28.080
<v Speaker 2>None of the justices dissented from that order delaying Trump's

0:23:28.080 --> 0:23:28.800
<v Speaker 2>trial either.

0:23:29.600 --> 0:23:32.000
<v Speaker 5>One thing I would offer is, I know we're all

0:23:32.080 --> 0:23:34.959
<v Speaker 5>very much focused on the question of whether or not

0:23:35.040 --> 0:23:39.600
<v Speaker 5>the DC case, that election interference case does move forward

0:23:39.680 --> 0:23:44.199
<v Speaker 5>before the election. But there's also another question looming in

0:23:44.240 --> 0:23:47.600
<v Speaker 5>that case, in an unrelated case before the Supreme Court,

0:23:47.680 --> 0:23:51.600
<v Speaker 5>dealing with whether or not the federal statute that Trump

0:23:51.680 --> 0:23:53.520
<v Speaker 5>is charged under, at least for I think half of

0:23:53.560 --> 0:23:56.480
<v Speaker 5>the charges, whether or not that's appropriate to use in

0:23:56.560 --> 0:24:00.000
<v Speaker 5>this type of case, and that similarly could have delayed.

0:23:59.640 --> 0:24:03.040
<v Speaker 2>This trick and not to be repetitive, but I will

0:24:03.080 --> 0:24:06.560
<v Speaker 2>be taking these cases that basically put them in the

0:24:06.560 --> 0:24:09.760
<v Speaker 2>middle of the presidential election is not going to help

0:24:09.840 --> 0:24:13.240
<v Speaker 2>to make people think that they're judges in black robes

0:24:13.280 --> 0:24:14.400
<v Speaker 2>and not politicians.

0:24:14.880 --> 0:24:19.080
<v Speaker 5>Well, I think when it came to the Section three case,

0:24:19.119 --> 0:24:21.200
<v Speaker 5>as a fourteenth Amendment, they just didn't have a choice.

0:24:21.240 --> 0:24:23.960
<v Speaker 5>That's the case that screams out for Supreme Court review

0:24:24.320 --> 0:24:28.600
<v Speaker 5>when it comes to the cases dealing with January sixth

0:24:28.600 --> 0:24:32.119
<v Speaker 5>and whether or not the obstruction statues that people are

0:24:32.200 --> 0:24:36.040
<v Speaker 5>charged under is appropriate. I similarly think that probably does

0:24:36.280 --> 0:24:39.320
<v Speaker 5>cry out for Supreme Court resolution. And then when it

0:24:39.359 --> 0:24:43.119
<v Speaker 5>comes to this question of presidential immunity, one could argue

0:24:43.280 --> 0:24:49.080
<v Speaker 5>same things constitutional question matter first impressions, that means Supreme Court.

0:24:49.119 --> 0:24:51.639
<v Speaker 2>Well, I'm not sure their approval rating can get any lower,

0:24:51.680 --> 0:24:55.440
<v Speaker 2>but we'll see. Thanks so much, Jessica. That's Professor Jessica

0:24:55.520 --> 0:25:00.320
<v Speaker 2>Levinson of Loyola Law School, host of the Passing Judgment podcast.

0:25:00.840 --> 0:25:05.399
<v Speaker 2>Coming up next is the SEC's multi billion dollar enforcement tool,

0:25:05.520 --> 0:25:08.520
<v Speaker 2>in Jeopardy. I'm June Grosso and this is Bloomberg.

0:25:12.040 --> 0:25:17.280
<v Speaker 1>This is Bloomberg Law with June Grosso from Bloomberg Radio.

0:25:18.000 --> 0:25:21.040
<v Speaker 2>Whether or not a defendant has to cough up profits

0:25:21.080 --> 0:25:25.119
<v Speaker 2>from illegal trading activity may come down to what court

0:25:25.320 --> 0:25:30.399
<v Speaker 2>securities regulators filed in. That's because US appeals courts disagree

0:25:30.480 --> 0:25:33.920
<v Speaker 2>about what the SEC needs to show to take back

0:25:34.000 --> 0:25:37.800
<v Speaker 2>profits from alleged wrongdoers. Is it about how much investors

0:25:37.920 --> 0:25:41.040
<v Speaker 2>lost or is it about how much the defendant made

0:25:41.119 --> 0:25:45.439
<v Speaker 2>from illegalas a lot is at stake for the SEC

0:25:45.920 --> 0:25:49.199
<v Speaker 2>because disgorgement is one of the most powerful tools it

0:25:49.280 --> 0:25:53.720
<v Speaker 2>has for taking back those illegal profits it brought in

0:25:53.760 --> 0:25:57.840
<v Speaker 2>some three point thirty seven billion dollars in twenty twenty three.

0:25:58.440 --> 0:26:02.000
<v Speaker 2>That's more than twice what the agency recovered in fines.

0:26:02.840 --> 0:26:05.760
<v Speaker 2>Joining me is Anthony Sabino, a professor in the Department

0:26:05.800 --> 0:26:08.840
<v Speaker 2>of Law at the Peter J. Tobin College of Business

0:26:08.880 --> 0:26:11.760
<v Speaker 2>at Saint John's University. Nice to have you back on

0:26:11.800 --> 0:26:12.600
<v Speaker 2>the show, Anthony.

0:26:13.040 --> 0:26:15.320
<v Speaker 3>Well, first of all, let me say I'm delighted to

0:26:15.400 --> 0:26:18.639
<v Speaker 3>be on the program with you again and especially today

0:26:18.680 --> 0:26:21.600
<v Speaker 3>to discuss what I think is going to be the

0:26:21.640 --> 0:26:24.760
<v Speaker 3>next landmark Supreme Court case in the realm of securities law.

0:26:24.840 --> 0:26:27.119
<v Speaker 3>It's probably a year away, but again, this is an

0:26:27.160 --> 0:26:30.359
<v Speaker 3>issue that certainly the Supreme Court should resolve and I

0:26:30.400 --> 0:26:31.880
<v Speaker 3>think very much needs to resolve.

0:26:32.760 --> 0:26:36.840
<v Speaker 2>So how much a defendant will pay to the sec

0:26:36.880 --> 0:26:41.800
<v Speaker 2>and disgorgement depends on where they are, what circuit they're in.

0:26:42.040 --> 0:26:43.560
<v Speaker 2>Just explain this.

0:26:43.920 --> 0:26:46.960
<v Speaker 3>Problem, junior. Correct, It is very much a problem, which

0:26:46.960 --> 0:26:49.240
<v Speaker 3>is why the Supreme Court is going to eventually have

0:26:49.280 --> 0:26:52.240
<v Speaker 3>to step in, and I hope sooner as opposed to later.

0:26:52.680 --> 0:26:55.120
<v Speaker 3>And the reason is there is very much a sharp divide,

0:26:55.160 --> 0:26:58.399
<v Speaker 3>a deep chest in between A decision from June to

0:26:58.400 --> 0:27:02.040
<v Speaker 3>twenty two called Hall the Fifth Circuit, a very prominent

0:27:02.080 --> 0:27:06.600
<v Speaker 3>circuit indeed, which basically said that disgorg is regulated by

0:27:06.600 --> 0:27:10.760
<v Speaker 3>a statutory addition that Congress made in very early twenty

0:27:10.840 --> 0:27:14.159
<v Speaker 3>twenty one with respect to recognizing disgorgements, and as the

0:27:14.160 --> 0:27:17.640
<v Speaker 3>Fifth Circuit classifier, is a legal version of the remedy

0:27:18.080 --> 0:27:21.560
<v Speaker 3>as opposed to the more recent decision called Goville from

0:27:21.560 --> 0:27:24.719
<v Speaker 3>October of last year. So it's very fresh from the

0:27:24.720 --> 0:27:27.560
<v Speaker 3>eminent Second Circuit. And as we've said many times on

0:27:27.640 --> 0:27:30.480
<v Speaker 3>the program before, the Second Circuit was long ago recognized

0:27:30.520 --> 0:27:33.280
<v Speaker 3>by the Supreme Court as the mother court of the

0:27:33.280 --> 0:27:36.280
<v Speaker 3>federal securities law, and the Justices pay a great deal

0:27:36.320 --> 0:27:39.359
<v Speaker 3>of attention, if not deference to it. The Second Circuit,

0:27:39.359 --> 0:27:43.000
<v Speaker 3>in a more recent opinion authored by Circuit Judgement Nashi said, well,

0:27:43.040 --> 0:27:46.480
<v Speaker 3>no disgordn even with this statutory revision, is still an

0:27:46.520 --> 0:27:50.960
<v Speaker 3>equitable remedy that is regulated by equitable principles and paramounts

0:27:50.960 --> 0:27:54.520
<v Speaker 3>among them is that in seeking discord and the amount

0:27:54.520 --> 0:27:59.160
<v Speaker 3>of money related there too, the sec must prove that

0:27:59.200 --> 0:28:03.359
<v Speaker 3>there are acts actually investors who were not only defrauded okay,

0:28:03.400 --> 0:28:06.600
<v Speaker 3>material misrepresentations or missions, et cetera, but they must prove

0:28:06.680 --> 0:28:10.600
<v Speaker 3>the extent, they must quantify the amount of monetary damage

0:28:10.600 --> 0:28:13.679
<v Speaker 3>to those investors. In other words, if the SEC can

0:28:13.840 --> 0:28:18.320
<v Speaker 3>show there are investors with actual pecuniary harm, there is

0:28:18.320 --> 0:28:21.840
<v Speaker 3>no basis for disgorgements, and therefore the SEC can recover.

0:28:22.080 --> 0:28:25.560
<v Speaker 3>And the SEC has basically been using disgorgement for decades

0:28:26.040 --> 0:28:31.399
<v Speaker 3>to extract illegal profits from malefactors. But the bottom line is,

0:28:31.440 --> 0:28:34.240
<v Speaker 3>and you now see this, this limitation placed upon it

0:28:34.280 --> 0:28:36.960
<v Speaker 3>by the second circuit, that makes the SEC's case oil

0:28:37.000 --> 0:28:41.280
<v Speaker 3>the much harder, especially in the contemporary environment where we have,

0:28:41.560 --> 0:28:46.560
<v Speaker 3>for example, cryptocurrency cases where it's difficult and maybe impossible

0:28:46.640 --> 0:28:51.120
<v Speaker 3>to basically show the quantitative damage the dollar value, the

0:28:51.120 --> 0:28:54.520
<v Speaker 3>pecuniary harm to investors. So you have this very sharp

0:28:54.600 --> 0:28:56.280
<v Speaker 3>chasm between these two circuits.

0:28:57.000 --> 0:28:59.040
<v Speaker 2>And how have the other circuits lined up.

0:28:59.360 --> 0:29:02.120
<v Speaker 3>There's appending case before the first circuit up in Boston

0:29:02.320 --> 0:29:04.680
<v Speaker 3>that we have yet to hear from an eleventh circuit

0:29:04.720 --> 0:29:08.320
<v Speaker 3>case pending down in Florida, and that there is prior

0:29:08.440 --> 0:29:11.880
<v Speaker 3>eleventh circuit case law that sort of takes a middle

0:29:11.920 --> 0:29:14.600
<v Speaker 3>of the road position. We're not too sure where they're at.

0:29:14.760 --> 0:29:17.520
<v Speaker 3>The tenth circuit apparently said something about this. So both

0:29:17.600 --> 0:29:22.680
<v Speaker 3>qualitatively and quantitatively, the circuits are deeply divided, and that

0:29:22.720 --> 0:29:25.320
<v Speaker 3>has to be reconciled by the Supreme Court. And finally,

0:29:25.560 --> 0:29:28.320
<v Speaker 3>the reason the Court has to step in, in my estimation,

0:29:28.840 --> 0:29:32.840
<v Speaker 3>is the fact that this situation was largely presaged by

0:29:32.840 --> 0:29:36.080
<v Speaker 3>the Supreme Court's decision in Juna twenty twenty in the

0:29:36.160 --> 0:29:40.080
<v Speaker 3>Liu versus SEC. Case, where the Court and the depinion

0:29:40.160 --> 0:29:43.840
<v Speaker 3>by Justice Soto Mayor basically defined some of the parameters

0:29:44.160 --> 0:29:47.480
<v Speaker 3>of disgorgement as an equiple revet remedy and set forth

0:29:47.560 --> 0:29:51.080
<v Speaker 3>certain conditions and requirements for the SEC to prove it

0:29:51.320 --> 0:29:54.120
<v Speaker 3>and conversely how one defends against such a charge. But

0:29:54.240 --> 0:29:57.520
<v Speaker 3>it left certain questions unanswered, and that in turn was

0:29:57.560 --> 0:30:02.640
<v Speaker 3>exacerbated by some statutory revisions made by Congress in June

0:30:02.680 --> 0:30:05.760
<v Speaker 3>of twenty twenty one. And in essence, that's why the

0:30:05.760 --> 0:30:08.520
<v Speaker 3>Goville case from the Second Circuit and the Halem case

0:30:08.720 --> 0:30:10.920
<v Speaker 3>from the Fifth Circuit or at odds, because they take

0:30:10.960 --> 0:30:14.680
<v Speaker 3>startling different views of what Liu said or did not

0:30:14.800 --> 0:30:18.200
<v Speaker 3>say and what the statutory revision by Congress did or

0:30:18.240 --> 0:30:20.920
<v Speaker 3>did not do. So, as the final arbitrar of our

0:30:21.000 --> 0:30:23.560
<v Speaker 3>nation's laws is Supreme Court needs to step in and

0:30:23.640 --> 0:30:28.480
<v Speaker 3>especially because again disgorgements both as a deterrent to wrongful

0:30:28.520 --> 0:30:31.400
<v Speaker 3>behavior and as a just punishment for those who do

0:30:31.520 --> 0:30:34.680
<v Speaker 3>wrong in the capital markets. We need resolution on this.

0:30:34.960 --> 0:30:37.280
<v Speaker 3>So I'm looking forward to this case being keed up

0:30:37.280 --> 0:30:39.680
<v Speaker 3>by one of these parties, one of these cases, hopefully

0:30:39.720 --> 0:30:42.760
<v Speaker 3>the Goville case, to get to the justices, not this

0:30:42.920 --> 0:30:43.840
<v Speaker 3>year but next year.

0:30:44.480 --> 0:30:48.920
<v Speaker 2>So can the SEC, in a lot of cases, file

0:30:49.000 --> 0:30:49.800
<v Speaker 2>anywhere but the.

0:30:49.760 --> 0:30:55.040
<v Speaker 3>Second Circuit absolutely, absolutely okay. The securities laws give exclusive

0:30:55.120 --> 0:30:58.240
<v Speaker 3>jurisdiction in most cases to the SEC, and it gives

0:30:58.280 --> 0:31:00.720
<v Speaker 3>it broad authority to file and whatever district court they

0:31:00.760 --> 0:31:03.040
<v Speaker 3>think appropriate, obviously the district court being the trial court.

0:31:03.080 --> 0:31:05.400
<v Speaker 3>Then it percolates up to the circuit court level. But

0:31:05.520 --> 0:31:08.320
<v Speaker 3>again they can get you where the SEC is doing business,

0:31:08.360 --> 0:31:11.320
<v Speaker 3>where you are doing business with our investors who you're harmed.

0:31:11.680 --> 0:31:15.960
<v Speaker 3>Giving the quintessential interstate nature of securities transactions, that basically

0:31:16.160 --> 0:31:19.239
<v Speaker 3>leaves open the old the fifty States. So again the

0:31:19.280 --> 0:31:22.600
<v Speaker 3>SEC has Treman's choices. So right now, no doubt the

0:31:22.840 --> 0:31:25.320
<v Speaker 3>folks doing good work at the Division of Enforcement. The

0:31:25.360 --> 0:31:28.000
<v Speaker 3>SEC in Washington, d C. Not to mention, the regional

0:31:28.040 --> 0:31:30.800
<v Speaker 3>offices are thinking very long and hard about Okay, where

0:31:30.800 --> 0:31:33.920
<v Speaker 3>do we bring these cases? If they're seeking disgorgements, they

0:31:33.920 --> 0:31:36.240
<v Speaker 3>may very well decide, you know what, the second circuit

0:31:36.360 --> 0:31:38.880
<v Speaker 3>is not exactly friendly to us at this point in time.

0:31:39.240 --> 0:31:41.560
<v Speaker 3>So let's try the fifth circuit, which is clearly said,

0:31:42.040 --> 0:31:45.280
<v Speaker 3>this is the legal remedy of disgorgement, and therefore you

0:31:45.280 --> 0:31:47.520
<v Speaker 3>can ask for it, and here are the rules. And

0:31:47.920 --> 0:31:50.240
<v Speaker 3>again they may decide to pick the fifth circuit over

0:31:50.240 --> 0:31:52.800
<v Speaker 3>the second. They may avoid some of the circuits that

0:31:52.840 --> 0:31:55.760
<v Speaker 3>are in transition, shall we say, such as the tenth

0:31:56.240 --> 0:31:59.520
<v Speaker 3>and especially the first and the eleft circuit. And you know, June,

0:31:59.520 --> 0:32:01.120
<v Speaker 3>one of the I is here we can't lose sight of.

0:32:01.200 --> 0:32:03.560
<v Speaker 3>Is this, as the Supreme Court pointed out of the

0:32:03.600 --> 0:32:05.760
<v Speaker 3>Leo decision a couple of years ago, and as both

0:32:05.840 --> 0:32:09.800
<v Speaker 3>the go Villain Allow decisions point out, is that disgorgements

0:32:10.040 --> 0:32:13.040
<v Speaker 3>is really a modern remedy. It's really a judicially crafted

0:32:13.080 --> 0:32:16.200
<v Speaker 3>remedy that goes back to, of all places, the second circuit.

0:32:16.400 --> 0:32:20.880
<v Speaker 3>The Second circuit really invented disforgements back around nineteen seventy

0:32:20.920 --> 0:32:24.960
<v Speaker 3>one in the landmark securities fraud case called Texas Gulf

0:32:25.000 --> 0:32:28.520
<v Speaker 3>sofur So. This is really the second circuit, having invented

0:32:28.560 --> 0:32:32.400
<v Speaker 3>disgorgements or modifying it or applying it to modern securities

0:32:32.400 --> 0:32:36.600
<v Speaker 3>transactions in the early seventies and sharpping it through its

0:32:36.680 --> 0:32:40.400
<v Speaker 3>various transitions. And now we see how they're interpreting guidance

0:32:40.400 --> 0:32:43.120
<v Speaker 3>from the Supreme Court two years ago in the LEO case.

0:32:43.720 --> 0:32:47.920
<v Speaker 2>How much does the pecuniary harm standard complicate how the

0:32:48.080 --> 0:32:51.000
<v Speaker 2>SEC brings cases? I mean, does it need a lot

0:32:51.040 --> 0:32:54.280
<v Speaker 2>more work up front? We just talked about how in

0:32:54.400 --> 0:32:57.840
<v Speaker 2>cases where it could it would bring the actions elsewhere exactly?

0:32:57.920 --> 0:33:00.840
<v Speaker 3>Okay, yes, you're completely correct. The SEC will have to

0:33:00.840 --> 0:33:03.000
<v Speaker 3>do a lot more front end work, if I may

0:33:03.080 --> 0:33:05.560
<v Speaker 3>characterize it as such, where not only are they going

0:33:05.640 --> 0:33:08.320
<v Speaker 3>to have to examine has fraud been committed as a

0:33:08.360 --> 0:33:10.880
<v Speaker 3>metal of the parameters for securities fraud? And once again

0:33:10.920 --> 0:33:13.680
<v Speaker 3>remember the test for securities fraud is rather arduous. The

0:33:13.720 --> 0:33:16.400
<v Speaker 3>government must prove and again we're talking civil cases or

0:33:16.520 --> 0:33:19.440
<v Speaker 3>just fifty one percent, okay, not beyond reasonable doubt that

0:33:19.480 --> 0:33:22.440
<v Speaker 3>there was a material misreperomission. There was cyenta in other words,

0:33:22.440 --> 0:33:27.480
<v Speaker 3>evil intense. There was reliance, There was economic loss, causation,

0:33:27.560 --> 0:33:30.160
<v Speaker 3>a chain of causation with respect to all those events

0:33:30.600 --> 0:33:32.360
<v Speaker 3>and in connection with the purchase of sale of the

0:33:32.440 --> 0:33:35.440
<v Speaker 3>securities on the American markets. But the bottom line is

0:33:35.560 --> 0:33:37.320
<v Speaker 3>the Commission is now not only going to have to

0:33:37.320 --> 0:33:39.520
<v Speaker 3>prove the elements of fraud, they're going to have to

0:33:39.720 --> 0:33:43.080
<v Speaker 3>get down into the weeds and assure themselves that there

0:33:43.200 --> 0:33:48.080
<v Speaker 3>is a cognizable body of investors who have again been

0:33:48.520 --> 0:33:52.120
<v Speaker 3>defrauded and not only flim flam, not only deceived, but

0:33:52.160 --> 0:33:54.760
<v Speaker 3>they suffered pecuniary harm. And that has to be measurable,

0:33:54.800 --> 0:33:58.200
<v Speaker 3>that has to be quantifiable, certainly in the Second Circuit's

0:33:58.200 --> 0:34:01.760
<v Speaker 3>opinion with respect to the gulfilled decision. And again, what

0:34:02.080 --> 0:34:04.520
<v Speaker 3>this highlights you in is one of the conflicts for

0:34:04.560 --> 0:34:08.120
<v Speaker 3>the tension between the existing law prior to the Supreme

0:34:08.160 --> 0:34:11.680
<v Speaker 3>Court's decision in LIEU and the amends that Congress made

0:34:11.719 --> 0:34:16.160
<v Speaker 3>basically six months later. LEU was predicated upon one subsection

0:34:16.719 --> 0:34:20.520
<v Speaker 3>of Section seventy eight U. Okay, again, the complexity of

0:34:20.520 --> 0:34:23.959
<v Speaker 3>the Federal Security's laws is astounding, but basically the existing.

0:34:23.680 --> 0:34:26.960
<v Speaker 2>Substounding, right, that's one thing that no one disagrees with.

0:34:27.160 --> 0:34:29.440
<v Speaker 3>That's for sure. We all know it's astounding, but it

0:34:29.440 --> 0:34:31.719
<v Speaker 3>gives us something to talk about. Does it not so.

0:34:31.960 --> 0:34:35.319
<v Speaker 3>The existing law talked about how the SEC can seek

0:34:35.520 --> 0:34:39.320
<v Speaker 3>any equitable remedy as long as it's for the benefit

0:34:39.440 --> 0:34:42.279
<v Speaker 3>of investors. And by the way, that's crucial to the

0:34:42.280 --> 0:34:46.000
<v Speaker 3>Goville decision because it said, okay, benefit to investors means

0:34:46.480 --> 0:34:49.839
<v Speaker 3>that to benefit them, you have to find someone who

0:34:49.920 --> 0:34:53.399
<v Speaker 3>was harmed, and the purpose of the equitable remedy, whatever

0:34:53.440 --> 0:34:55.560
<v Speaker 3>it might be, is to restore them to where they

0:34:55.560 --> 0:34:58.160
<v Speaker 3>should have been had they not been defrauded. Okay, And

0:34:58.200 --> 0:35:01.440
<v Speaker 3>as judgment ashly points out well so well. He states,

0:35:01.560 --> 0:35:04.279
<v Speaker 3>if there's no pecuniary harm, that means that if you

0:35:04.280 --> 0:35:07.600
<v Speaker 3>give these folks money via disgorgement of some other remedy,

0:35:07.840 --> 0:35:09.399
<v Speaker 3>you're not putting them back where they should have been.

0:35:09.520 --> 0:35:12.480
<v Speaker 3>You're improving their position. It's a winfull, okay, And that's

0:35:12.520 --> 0:35:15.000
<v Speaker 3>not what justice is all about. On the other hand,

0:35:15.040 --> 0:35:16.719
<v Speaker 3>and this is where again we see the chas in

0:35:16.760 --> 0:35:20.479
<v Speaker 3>between the circuits. The fifth Circuit in Halam focused upon

0:35:20.520 --> 0:35:24.680
<v Speaker 3>the amendment from January twenty twenty one that says disgorgement

0:35:24.760 --> 0:35:27.520
<v Speaker 3>and again, the SEC may seek disgorgement if I just report,

0:35:27.760 --> 0:35:31.800
<v Speaker 3>it doesn't define what disgorgement is. It does not say

0:35:31.880 --> 0:35:34.520
<v Speaker 3>that the disgorgment has to be for the benefit of investors.

0:35:34.760 --> 0:35:38.000
<v Speaker 3>And that's why Hallum basically says, you don't have to

0:35:38.080 --> 0:35:41.879
<v Speaker 3>find investors suffering the pecuniary harms. That's where they basically

0:35:41.920 --> 0:35:45.160
<v Speaker 3>parted ways with the Second Circuit. And indeed, the bottom

0:35:45.160 --> 0:35:48.320
<v Speaker 3>line is Goville was presaged by a prior Second Circuit

0:35:48.360 --> 0:35:52.239
<v Speaker 3>case called Ahmed, and so the chronology limited chronology is

0:35:52.480 --> 0:35:55.239
<v Speaker 3>second Circuit says such and such in Ahmed, the Fifth

0:35:55.280 --> 0:35:59.000
<v Speaker 3>Circuit July twenty twenty two disagrees in Halam. And now

0:35:59.400 --> 0:36:02.600
<v Speaker 3>the Second Circuit in October of twenty twenty three says no, no, no,

0:36:02.640 --> 0:36:05.920
<v Speaker 3>we're right, you're wrong. And again you see this division.

0:36:06.120 --> 0:36:08.400
<v Speaker 3>But again that's the whole point because now, and this

0:36:08.520 --> 0:36:10.840
<v Speaker 3>is why the Supreme Court very much needs to step in,

0:36:10.880 --> 0:36:12.480
<v Speaker 3>because they have to say, Okay, wait a minute. When

0:36:12.520 --> 0:36:16.919
<v Speaker 3>Congress enacted the newer provision that talks about disgorgements, did

0:36:16.920 --> 0:36:21.040
<v Speaker 3>it adopt any of the Court's principles regarding equitable remedies

0:36:21.239 --> 0:36:25.000
<v Speaker 3>from the Liu case. The irony is, if Congress had

0:36:25.080 --> 0:36:28.920
<v Speaker 3>been more direct in defining its newer version of disgorgements,

0:36:29.120 --> 0:36:31.480
<v Speaker 3>we wouldn't have this issue to start with, it is

0:36:31.520 --> 0:36:32.440
<v Speaker 3>so complicated.

0:36:32.480 --> 0:36:36.280
<v Speaker 2>Thanks so much for your explanations, Anthony. That's Anthony Sabino,

0:36:36.360 --> 0:36:38.759
<v Speaker 2>a professor in the Department of Law at the Peter J.

0:36:38.880 --> 0:36:43.000
<v Speaker 2>Tobin College of Business at Saint John's University. And that's

0:36:43.000 --> 0:36:46.000
<v Speaker 2>it for this edition of the Bloomberg Law Podcast. Remember

0:36:46.000 --> 0:36:48.719
<v Speaker 2>you've can always get the latest legal news by subscribing

0:36:48.760 --> 0:36:52.200
<v Speaker 2>and listening to the show on Apple Podcasts, Spotify, and

0:36:52.320 --> 0:36:56.319
<v Speaker 2>at Bloomberg dot com, slash podcast, Slash Law. I'm June

0:36:56.320 --> 0:36:58.480
<v Speaker 2>Grosso and this is Bloomberg