WEBVTT - Thin Gruel: Tetrahedron, Target, Firing 0:00:03.120 --> 0:00:08.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.280 --> 0:00:13.880 This is the day at All Crashes and Barns. Yeah, hello, 0:00:13.920 --> 0:00:16.800 and welcome to the Money Stuff Podcast. You're a weekly 0:00:16.840 --> 0:00:21.200 podcast where we talk about stuff related to money. I'm 0:00:21.200 --> 0:00:23.720 Matt Levigne and I write the Money Stuff column for 0:00:23.800 --> 0:00:24.680 Bloomberg Opinion. 0:00:25.160 --> 0:00:27.840 I'm Katie Greifeld, a reporter for Bloomberg News and an 0:00:27.840 --> 0:00:31.360 anchor for Bloomberg Television. I also write a newsletter called BTFIQ. 0:00:32.040 --> 0:00:34.199 Katie, you're like gracing us with a little bit of 0:00:34.240 --> 0:00:36.640 your presence between sessions at the big ETF conference. 0:00:36.720 --> 0:00:39.400 Huh, Yeah, you know, we were well. I was joking 0:00:39.840 --> 0:00:42.360 as I walked in ten minutes late. Matt had been 0:00:42.360 --> 0:00:46.120 sitting here miked up. There's an ETF conference at Bloomberg. 0:00:46.240 --> 0:00:49.640 It's Thursday when we're recording this. Matt's a celebrity in 0:00:49.720 --> 0:00:53.560 a lot of context. I'm a celebrity in an ETF context, 0:00:53.680 --> 0:00:55.760 and you know, walking through an ETF event, it's hard 0:00:55.760 --> 0:00:56.880 to get anywhere on time. 0:00:57.520 --> 0:00:59.080 I feel like this is a challenge and I'm gonna 0:00:59.080 --> 0:01:00.000 have to come back to the ETF. 0:01:00.480 --> 0:01:03.400 Yeah. I mean, now you're gonna walk upstairs and everyone's 0:01:03.480 --> 0:01:05.679 gonna just stop in their tracks. 0:01:05.959 --> 0:01:08.520 Plimberg once side a crypto conference in which I interviewed 0:01:08.600 --> 0:01:12.319 Sam Bankman Freed on stage. A real a real highlight. 0:01:12.360 --> 0:01:14.399 But at a Boomberg crypto conference, I'm like a little 0:01:14.400 --> 0:01:16.720 bit of a celebrity, and like before this interview, people 0:01:16.720 --> 0:01:18.440 were coming up to me and being like, I'm a fan. 0:01:18.760 --> 0:01:20.440 And then after this interview I walked back to the 0:01:20.480 --> 0:01:24.400 green room with Sam Bankman Freed and like he yeah, 0:01:24.640 --> 0:01:27.320 is a celebrity. Yeah, people were pushing each other as 0:01:27.360 --> 0:01:28.800 loud to get to Sam Bankman Freed. 0:01:28.920 --> 0:01:31.959 There's this is better times for him certainly. Levels Yeah, 0:01:32.000 --> 0:01:34.520 that's a real uh like a time capse happened. 0:01:34.720 --> 0:01:37.800 Yeah, that was like it was like summer twenty twenty one. 0:01:38.000 --> 0:01:41.959 I introduced him on stage, said something like Sam Bankman 0:01:42.000 --> 0:01:44.840 Fried probably needs no introduction. He's probably bought most of 0:01:44.880 --> 0:01:48.160 your companies. Like this is back between like when everything 0:01:48.160 --> 0:01:49.160 else scratched and when. 0:01:49.520 --> 0:01:51.080 Yeah, like the Terror Luna stuff. 0:01:51.200 --> 0:01:51.800 Yeah. 0:01:51.840 --> 0:01:56.240 Man. Anyway, well, anyway, what are. 0:01:56.120 --> 0:01:57.320 You talking about today, Katie. 0:01:57.480 --> 0:02:01.000 We're gonna talk about the onions and info wars. We're 0:02:01.040 --> 0:02:08.200 willing to talk about some proof that everything is securities fraud. 0:02:08.639 --> 0:02:11.120 I've described that correctly, right, yeah, okay, and then we're 0:02:11.160 --> 0:02:16.440 going to talk about Ken Peterman who was fired and 0:02:16.480 --> 0:02:25.480 then right, but did he sit so the Onion, this 0:02:25.600 --> 0:02:27.400 was interesting. I haven't checked in on this story in 0:02:27.440 --> 0:02:29.360 a while, and then you published on it, and I 0:02:29.400 --> 0:02:32.240 thought that the Onion was for sure buying info Wars. 0:02:32.440 --> 0:02:36.000 That's the service level headline reading that I had done. 0:02:36.120 --> 0:02:39.440 But turns out not exactly right. 0:02:39.520 --> 0:02:43.240 So info Wars Alex Chrenz's company that he used to 0:02:45.160 --> 0:02:47.639 spread various writing conspiracy theories, one of which is that 0:02:47.720 --> 0:02:50.520 the Sandy Hook massacre was a hoax. The parents of 0:02:50.560 --> 0:02:54.200 the Sandy Hook children who are killed suit him and 0:02:54.919 --> 0:02:58.600 won like a billion dollars of damages, which is considerably 0:02:58.600 --> 0:03:01.200 more money than Alex Chans and info Wars have, and 0:03:01.240 --> 0:03:05.800 so they filed for bankruptcy, and you know, like kind 0:03:05.800 --> 0:03:08.679 of that means that the Sandihug parents kind of own 0:03:08.880 --> 0:03:11.720 his assets kind of, but like what it literally means 0:03:11.800 --> 0:03:16.400 is that the bankruptcy trustee has an auction of the assets, 0:03:16.400 --> 0:03:19.320 which is basically like the info Wars like company and 0:03:19.360 --> 0:03:21.720 brand and website and stuff, and the highest bidder at 0:03:21.760 --> 0:03:24.200 the auction wins the assets, and like the money from 0:03:24.200 --> 0:03:28.200 the bid goes to Alex Jones's creditors, which means mainly 0:03:28.240 --> 0:03:30.280 the Sandiak families, but there are also some other people 0:03:30.280 --> 0:03:32.040 who he owes money to, either because he borrowed money 0:03:32.040 --> 0:03:34.839 from them or because they also sued him. And so 0:03:35.000 --> 0:03:37.400 they had an auction and there were two bidders, and 0:03:37.480 --> 0:03:41.120 one of them was this thing called First United American 0:03:41.120 --> 0:03:46.200 Companies FUAK, which is like kind of Alex Jones. It's 0:03:46.240 --> 0:03:48.520 like someone's putting up money for Alex Jones to buy 0:03:48.600 --> 0:03:50.720 back Info Wars so you can continue running it his 0:03:50.760 --> 0:03:53.160 Info Wars. And then the other bidder was the Onion 0:03:53.320 --> 0:03:56.400 or it's corporate parrot, which has the great name Global 0:03:56.440 --> 0:03:59.800 Tetrahedron llcfully great name, like really like the Onion. You know, 0:04:00.120 --> 0:04:01.680 although at the corporate structure they're. 0:04:01.480 --> 0:04:03.760 Committed to comedy, they committed to the bid. 0:04:03.960 --> 0:04:07.640 Yeah, and so they were they bid for the assets, 0:04:07.920 --> 0:04:12.560 and they had less cash than FUAK, but what they 0:04:12.600 --> 0:04:15.280 had was the support of the Sandy Hook parents because 0:04:16.200 --> 0:04:18.200 if you think about the parents, like one thing they 0:04:18.240 --> 0:04:20.920 want is money. Another thing they want is for Alex 0:04:21.000 --> 0:04:24.919 Jones to stop running Info Wars and stop broadcasting conspiracy theories. 0:04:26.279 --> 0:04:27.640 And then the third thing they want is that I 0:04:27.680 --> 0:04:31.080 think they liked what the onions plans for info Wars were, 0:04:31.080 --> 0:04:32.839 which is sort of like running as a satire of 0:04:32.839 --> 0:04:35.280 the conspiracy side. And also I think you know, there 0:04:35.320 --> 0:04:37.360 was like a teaming up with every Town for Gun Safety, 0:04:37.400 --> 0:04:41.559 the Eco Bloomberg fact initiative. They would use info Wars 0:04:41.560 --> 0:04:44.040 in part to sort of work against gun violence. And 0:04:44.080 --> 0:04:47.680 so the parents liked that plan and they supported it. 0:04:47.839 --> 0:04:49.440 And so you had this auction in which on the 0:04:49.440 --> 0:04:53.919 one side was a higher cash bid from FUAC and 0:04:54.000 --> 0:04:55.640 on the other side was like the bid that was 0:04:55.680 --> 0:04:58.960 supported by the Lion's share of the creditors. And so 0:04:59.279 --> 0:05:01.720 the bankruptcy t you said that the Onion won, and 0:05:01.760 --> 0:05:04.560 then FUEK went to court to stop it, and the 0:05:04.640 --> 0:05:07.200 judge said, actually, this was not a fair auction. You 0:05:07.240 --> 0:05:09.000 have to run the auction again and kind of give 0:05:09.040 --> 0:05:10.040 it the highest bidter. 0:05:10.480 --> 0:05:12.960 So is that what happens now that we have another auction. 0:05:13.240 --> 0:05:14.919 I think what happens now is we have another auction. 0:05:15.120 --> 0:05:20.000 And it seems like the decision was that the bankruptcy 0:05:20.080 --> 0:05:23.120 trustees procedures weren't good enough, and like you can have 0:05:23.160 --> 0:05:25.960 another auction where the Onion could win. The way it 0:05:26.000 --> 0:05:28.240 worked is that FUEX bid was cash. It's three point 0:05:28.240 --> 0:05:30.320 five million dollars. The Onion's bid was one point seventy 0:05:30.360 --> 0:05:34.000 five million dollars in cash. And also the parents, the 0:05:34.000 --> 0:05:40.320 Sandy Hook parents, signed a waiver basically saying whatever money 0:05:40.640 --> 0:05:43.880 other creditors, other people who ALEX, JANDZ have money to 0:05:44.160 --> 0:05:47.679 whatever money the other creditors would get from any other bid, 0:05:48.520 --> 0:05:51.359 they will get one hundred thousand dollars more from this 0:05:51.400 --> 0:05:54.520 Onion bid. So basically, like you know, if the Onion 0:05:54.520 --> 0:05:56.920 puts in one point seven five million dollars, as much 0:05:56.920 --> 0:05:58.679 as all of that can go to the other creditors, 0:05:58.680 --> 0:06:01.760 whereas a FUEC puts in three five million dollars, you 0:06:01.800 --> 0:06:03.960 know three quarters of that or something is going to 0:06:04.040 --> 0:06:06.120 go to the Santiagog parents because they have most of 0:06:06.160 --> 0:06:09.080 the claims and pankruptcy. And so because of that waiver, 0:06:09.760 --> 0:06:11.359 they could go to the court and say, look, we 0:06:11.360 --> 0:06:13.840 can guarantee that the other creditors will get more money 0:06:13.880 --> 0:06:15.760 from our bid than from any other bid, and like, 0:06:15.839 --> 0:06:18.440 these creditors support it. So it's the highest bid even 0:06:18.440 --> 0:06:19.359 though it has less money. 0:06:19.800 --> 0:06:24.040 Interesting, so what needs to happen in round two of 0:06:24.040 --> 0:06:27.000 this auction for the Onion to be successful, do they 0:06:27.080 --> 0:06:28.839 just simply need more money. 0:06:29.279 --> 0:06:30.880 Well, so there's a couple of things. One is that 0:06:31.000 --> 0:06:33.200 like the procedure at the auction got sort of wonky 0:06:33.240 --> 0:06:35.000 at the end, where like it was supposed to be 0:06:35.040 --> 0:06:36.680 an open auction and it sort of turned to a 0:06:36.680 --> 0:06:38.960 sealed bid auction. And part of that is because the 0:06:38.960 --> 0:06:41.840 Onion bid was we will pay one hundred thousand dollars 0:06:41.920 --> 0:06:44.880 more than anyone else. So there's not really a point 0:06:44.880 --> 0:06:48.159 of having multiple rounds of bids. But you could imagine 0:06:48.160 --> 0:06:50.400 just structuring the bid again so that they can do 0:06:50.440 --> 0:06:52.320 a more open auction and then sort of coming too 0:06:52.320 --> 0:06:55.599 the same result. The other possibility is that, you know, 0:06:55.760 --> 0:06:58.520 a reader suggested this to me, like if FUEX says, 0:06:58.920 --> 0:07:01.320 this waiver from the parents isn't real, like it doesn't 0:07:01.320 --> 0:07:04.080 count as real value. And I think the trustee argued, 0:07:04.080 --> 0:07:05.919 and the Onion argues, and I think it's clearly true 0:07:06.160 --> 0:07:08.480 that this is like a normal way to provide value 0:07:08.480 --> 0:07:11.040 in bankruptcy. You know, I wrote about credit bids where 0:07:11.440 --> 0:07:13.760 the creditor who has a mortgage on a house could 0:07:13.760 --> 0:07:15.720 get that house without paying more cash for it. Because 0:07:15.760 --> 0:07:18.320 they can bid the amount of their lean Here. You know, 0:07:18.400 --> 0:07:20.880 these parents have a huge claim in the bankruptcy, and 0:07:20.920 --> 0:07:23.760 if they're wave a portion of their claim, then that 0:07:24.200 --> 0:07:26.360 provides value to the other creditors. But if you don't 0:07:26.440 --> 0:07:30.160 like that, then the answer is finance it. The answer 0:07:30.240 --> 0:07:32.400 is the onion could go out and borrow like two 0:07:32.440 --> 0:07:35.600 million dollars from a bank and pay it back. That 0:07:35.640 --> 0:07:37.760 two million dollars would then go to the Santiego parents 0:07:37.800 --> 0:07:39.800 when they win the auction, and then they could rout 0:07:39.840 --> 0:07:41.560 it back to the Onion and then to the bank. Right, 0:07:41.840 --> 0:07:46.040 if the parents want a non financial benefit from this 0:07:46.680 --> 0:07:49.160 and like are bidding a portion of their claims, you 0:07:49.160 --> 0:07:51.800 could probably find a way to like get the bank 0:07:51.840 --> 0:07:53.760 to put up the money and then have a circle 0:07:53.800 --> 0:07:56.160 back to the bank. So that might be another thing 0:07:56.200 --> 0:07:56.840 that happens here. 0:07:57.320 --> 0:07:59.600 Do you think that something that that actually would? I mean, 0:07:59.720 --> 0:08:02.120 how do the bids change? But also like how the 0:08:02.160 --> 0:08:04.440 auction change is when it's run again. 0:08:04.920 --> 0:08:07.080 I think that if the auction is run again it 0:08:07.120 --> 0:08:09.559 might be more transparent or whatever. But the trustee thinks 0:08:09.760 --> 0:08:11.760 that the waiver of claims provides a lot of value, 0:08:12.280 --> 0:08:15.160 and I think he's right. And it's sort of hard 0:08:15.200 --> 0:08:18.400 to imagine the trustee changing his mind on that, And 0:08:18.480 --> 0:08:20.320 I don't think the court ruled that he was wrong. 0:08:20.920 --> 0:08:25.400 But you could imagine something where the Onion puts up 0:08:25.400 --> 0:08:28.000 more cash and then gets the cash back so that 0:08:28.200 --> 0:08:32.040 they have a higher optical cash bid, but like ultimately 0:08:32.240 --> 0:08:33.120 come to the same place. 0:08:33.520 --> 0:08:35.400 Well, this will be interesting to follow, but I kind 0:08:35.400 --> 0:08:38.160 of wish that I just stayed in my ignorant little 0:08:38.160 --> 0:08:40.480 bubble and only had read the first headline, because it 0:08:40.480 --> 0:08:44.480 seems like really good poetic justice that the Onion, with 0:08:44.559 --> 0:08:47.400 the backing of the parents would buy info wars. 0:08:48.280 --> 0:08:51.560 I still would guess that that's what's going to happen. Yeah, 0:08:51.559 --> 0:08:52.439 but I'm not sure. 0:09:07.120 --> 0:09:10.880 Let's talk about Target. Do you remember the twenty twenty 0:09:10.920 --> 0:09:14.240 three Pride marketing event from Target? 0:09:14.760 --> 0:09:16.920 No? I remember solely the controversy about it. 0:09:17.000 --> 0:09:19.560 I don't remember it either. I also remember the controversy, 0:09:19.600 --> 0:09:20.679 but only very vaguely. 0:09:21.000 --> 0:09:24.640 I mean, they had like LGBT Pride themed merchandise at 0:09:24.640 --> 0:09:26.240 like the end of the aisle or something people got 0:09:26.280 --> 0:09:26.880 really mad about. 0:09:26.880 --> 0:09:29.240 It was this before or after the bud Light thing. 0:09:29.640 --> 0:09:31.240 I want to say it was after the buddlet I think, 0:09:31.240 --> 0:09:33.120 but I'm not sure. Man, is it around the same 0:09:33.160 --> 0:09:34.040 time it was after. 0:09:33.880 --> 0:09:35.800 The bud was after man, why do the companies keep 0:09:35.880 --> 0:09:39.600 doing this? It led to a boycott, the stock went down. Yeah, 0:09:39.720 --> 0:09:43.080 Target has a lot of problems that aren't related to this, 0:09:43.200 --> 0:09:45.360 whereas it feels like the bud Light thing like really 0:09:45.840 --> 0:09:48.000 jeopardized bud Light's position, as. 0:09:48.280 --> 0:09:50.480 The bud Light thing was like a sort of switch 0:09:50.520 --> 0:09:50.920 flipped on. 0:09:51.280 --> 0:09:54.040 Yeah, but in any case, security is fraud. 0:09:55.040 --> 0:09:56.800 So you do something in the stock goes down, someone's 0:09:56.800 --> 0:10:00.120 going to see you for securities for And here what 0:10:00.200 --> 0:10:04.600 happened is that America First legal group, like a Stephen 0:10:04.679 --> 0:10:09.439 Miller backed like sort of Trump official backed, anti Woke, 0:10:09.559 --> 0:10:15.880 anti DEI sort of legal entity. 0:10:13.960 --> 0:10:15.480 Very in vogue right now, it. 0:10:15.520 --> 0:10:19.920 Feels right now. They sued Target for securities fraud. And 0:10:19.960 --> 0:10:23.960 what they said was that you did this thing, you like, 0:10:24.040 --> 0:10:29.280 did this marketing event, you didn't disclose that it would 0:10:30.000 --> 0:10:33.400 cause a customer boycott and your stock went down, and 0:10:33.440 --> 0:10:35.880 so therefore we were defrauded because we bought the stock 0:10:36.520 --> 0:10:38.320 not knowing that you were doing this thing that would 0:10:38.360 --> 0:10:40.679 cause a customer boycott, and then when the stock went down, 0:10:40.720 --> 0:10:43.640 we lost because of that front, which struck me at 0:10:43.640 --> 0:10:45.079 the time. This is they sued in like August the 0:10:45.160 --> 0:10:46.960 last year. It struck me as sort of a crazy 0:10:47.000 --> 0:10:50.760 theory because it's not like Target was concealing that they 0:10:50.800 --> 0:10:54.080 were doing a Pride marketing event. It was marketing. It 0:10:54.120 --> 0:10:57.680 was quite public and you might say, well, okay, but 0:10:57.720 --> 0:11:01.240 they didn't warn investors that the event might lead to 0:11:01.280 --> 0:11:04.120 a boycott. But they actually did do that, Like there's 0:11:04.160 --> 0:11:07.840 actually a risk factor in their annual report saying that 0:11:08.320 --> 0:11:11.920 our position or perceived lack of position on environmental, social 0:11:11.920 --> 0:11:16.520 and governance ESG matters such as sustainability, responsible sourcing, and diversity, 0:11:16.559 --> 0:11:20.080 equity and inclusion de and I could harm a reputation 0:11:20.679 --> 0:11:24.520 and could result in consumer boycotts. 0:11:24.800 --> 0:11:27.600 That's pretty clear, Well not enough, Matt. 0:11:27.600 --> 0:11:30.320 That you know, you're saying our DEI initiatives could like 0:11:30.360 --> 0:11:33.000 harm a reputation and lead to consumer boycotts. And so 0:11:33.679 --> 0:11:35.959 what the people suing said is, well, okay, you said that, 0:11:36.160 --> 0:11:39.600 but you didn't say specifically this twenty twenty three marketing 0:11:39.640 --> 0:11:43.000 initiative could lead to a consumer boycott. You didn't specifically 0:11:43.000 --> 0:11:46.160 call out this thing as a problem. And last week 0:11:46.160 --> 0:11:48.760 a judge agreed with them and said, yes, this is 0:11:48.800 --> 0:11:52.800 not sufficient disclosure, and the case can go forward because 0:11:53.000 --> 0:11:55.800 Target really might have defrauded shaholders by not telling them 0:11:56.000 --> 0:11:58.520 about the possibility that there would be a boycott for 0:11:58.559 --> 0:11:59.920 this marketing initiative. 0:12:00.120 --> 0:12:00.960 So that's wild. 0:12:01.160 --> 0:12:02.000 It's pretty wild. 0:12:02.240 --> 0:12:04.920 Yeah, and you talk about this in the column. But 0:12:05.040 --> 0:12:08.240 it's kind of fun to imagine, like what does this 0:12:08.400 --> 0:12:10.800 mean going forward? Like when you see a Target ad 0:12:11.120 --> 0:12:13.440 on TV. I like to imagine, like you know, at 0:12:13.440 --> 0:12:16.960 the end of medicine and like pharmaceutical ads, they have 0:12:17.040 --> 0:12:19.079 that sped up voice talk about the side effects, like 0:12:19.120 --> 0:12:20.920 they should have that at the end of every commercial 0:12:20.960 --> 0:12:21.760 that's sped up voice. 0:12:21.800 --> 0:12:22.960 You No, it's not in the ad, that's in the 0:12:22.960 --> 0:12:25.079 ten K that the securities fields have to be much 0:12:25.120 --> 0:12:27.120 much longer and say every possible risk. 0:12:27.320 --> 0:12:29.000 But I don't think that's what they should They should 0:12:29.040 --> 0:12:29.680 go overboard. 0:12:29.760 --> 0:12:31.040 I don't think it's really what it means. I think 0:12:31.080 --> 0:12:33.480 what it means is like, technically this is about disclosure, 0:12:33.520 --> 0:12:36.959 but it's not really because you can't possibly disclose everything 0:12:36.960 --> 0:12:38.720 that could go wrong, right, Like you have a risk 0:12:38.720 --> 0:12:42.160 factor and that's like what we do about DEI could 0:12:42.160 --> 0:12:44.240 cause a customer boycott. That's pretty good. That's like a 0:12:44.240 --> 0:12:47.640 pretty specific disclosure, but it's not specific enough. I think 0:12:47.679 --> 0:12:50.640 that what it means on its face is that everything 0:12:50.679 --> 0:12:52.720 is security is ruight. What it means on its face 0:12:53.000 --> 0:12:54.920 is that if you do something then the stock price 0:12:54.960 --> 0:12:58.080 goes down, doesn't matter what your disclosure said, there's some 0:12:58.200 --> 0:13:00.800 problem with the disclosure. No matter what, there's always something 0:13:00.920 --> 0:13:03.040 that you could have said that you didn't say, and 0:13:03.440 --> 0:13:06.559 you can always get sued. And so it's a true 0:13:06.600 --> 0:13:08.880 case of everything is security is for rud It's a 0:13:08.920 --> 0:13:11.160 true case of like any bad thing that a company 0:13:11.200 --> 0:13:13.360 does that causes it stock price to go down, it 0:13:13.360 --> 0:13:16.880 can be security as fraud without worrying about what its disclosure. 0:13:16.960 --> 0:13:19.679 So that's like one possible reading, and I think that's 0:13:19.720 --> 0:13:22.000 the right reading. I think the right reading is that 0:13:22.559 --> 0:13:27.400 this is a conservative legal group picking a place to 0:13:27.440 --> 0:13:30.120 file this case with like a very republican judge. And 0:13:30.720 --> 0:13:35.040 this sort of like anti dei, anti woke advocacy is 0:13:35.080 --> 0:13:37.920 like on the rise politically. And I've been writing about 0:13:37.960 --> 0:13:39.480 like the idea that everything is security is rude for 0:13:39.520 --> 0:13:41.760 a long time, right, the idea that like anything you 0:13:41.800 --> 0:13:45.040 don't like that a public company does you can say, well, 0:13:45.280 --> 0:13:47.280 what they really did is they felt to disclose it, 0:13:47.559 --> 0:13:50.120 and so it's security is fraud. And when I started 0:13:50.120 --> 0:13:53.040 writing about this like a decade ago, it was because 0:13:53.600 --> 0:13:56.680 the New York Attorney General was suing i think Exxon 0:13:56.800 --> 0:14:03.640 Mobile for not disclosing enough about climate change and basically saying, well, 0:14:03.679 --> 0:14:06.240 climate change is this like fraud political topic. But we 0:14:06.280 --> 0:14:09.360 can point to your securities disclosure and say, oh, you 0:14:09.400 --> 0:14:12.440 didn't like warn investors enough that like climate change was 0:14:12.440 --> 0:14:14.480 coming and it would be bad for oil companies, and 0:14:14.520 --> 0:14:17.440 therefore you're committing securities run. Ultimately, the New York ag 0:14:17.600 --> 0:14:21.000 lost that case, but that was like where this idea started. 0:14:21.240 --> 0:14:24.480 It was this idea that like, we can use securities 0:14:24.560 --> 0:14:31.320 laws to pursue the substance of political purposes. And what's 0:14:31.320 --> 0:14:34.080 happening now is like the same thing, but like from 0:14:34.080 --> 0:14:36.520 the other side politically, right, Like what's happening now is 0:14:36.560 --> 0:14:40.320 like if you don't like DEI initiatives, you can sue 0:14:40.360 --> 0:14:42.360 and call them securities fraud and like now you can 0:14:42.400 --> 0:14:44.160 win or you can like you know, your case doesn't 0:14:44.160 --> 0:14:47.520 get dismissed. You've seen in the current sec like there's 0:14:47.560 --> 0:14:51.440 been a lot of securities cases about climate disclosure. There's 0:14:51.480 --> 0:14:53.680 a case that I talk about a lot. This is 0:14:53.880 --> 0:14:56.920 a long time ago that the SEC sued Sea World 0:14:57.320 --> 0:15:01.440 for mistreating its orcas with Securities Red, and it's like 0:15:01.480 --> 0:15:03.520 all these like things that you can wrap up into 0:15:03.520 --> 0:15:06.120 securities for Red. In the next four years with like 0:15:06.880 --> 0:15:10.840 a very Republican judiciary and like a Trump sec it's 0:15:10.880 --> 0:15:13.280 going to be the reverse. It's going to be everything 0:15:13.480 --> 0:15:16.040 that conservatives don't like is going to be Security's rud. 0:15:16.640 --> 0:15:19.840 How does that make you feel because that feels like 0:15:19.880 --> 0:15:22.000 a lot of fodder for the money stuff column and 0:15:22.040 --> 0:15:25.160 potentially the podcast. Does that excite you or do you 0:15:25.160 --> 0:15:25.760 feel tired? 0:15:25.920 --> 0:15:29.440 I feel tired. This decision seems wrong and not like 0:15:29.640 --> 0:15:33.600 traditional securities fraud reasoning. So I think there's going to 0:15:33.600 --> 0:15:35.000 be a lot of stuff where it's like, yeah, this 0:15:35.080 --> 0:15:38.400 doesn't really make sense. Yeah, you know, fodder for the column. 0:15:38.720 --> 0:15:42.680 Totally different from esg Ordi. But in just talking about 0:15:42.680 --> 0:15:44.880 the disclosures and like thinking about, you know, how does 0:15:44.920 --> 0:15:48.720 this change things about you know, how companies disclose possible risks. 0:15:48.960 --> 0:15:51.080 It kind of reminded me of that short seller I 0:15:51.080 --> 0:15:54.240 think it was Carstille Capital with that very tongue in 0:15:54.320 --> 0:15:57.840 cheek letter, which was basically just like, assume we don't 0:15:57.880 --> 0:16:00.800 hold the stock anymore. I don't know, I could see 0:16:00.800 --> 0:16:01.600 some parallels there. 0:16:01.800 --> 0:16:05.320 Yeah, I think it's harder to do in like the 0:16:05.360 --> 0:16:09.480 corporate risk factor. Yeah, context, you can't be a sarcastic. 0:16:09.920 --> 0:16:12.680 No, that's too bad. I do wonder at what point 0:16:12.840 --> 0:16:15.600 you know it turns in on itself if it does 0:16:15.640 --> 0:16:18.960 it all, Like if you're disclosing every possible risk factor, 0:16:19.120 --> 0:16:21.480 if the stock does go down because of that risk factor, 0:16:21.560 --> 0:16:24.400 I mean, could they then get sued because hello, you 0:16:24.480 --> 0:16:27.800 knew this was going to you know, potentially hurt the 0:16:27.920 --> 0:16:30.280 stock price and you did it anyway? Or is that silly? 0:16:30.520 --> 0:16:33.240 Technically that's not a securities FROD clan, I'd say, like 0:16:33.560 --> 0:16:37.440 state law fiduciary duty clan, Yeah, which people are less 0:16:37.440 --> 0:16:40.080 excited to bring for various reasons. But now sure, I mean, 0:16:40.120 --> 0:16:42.720 like even when it's in a risk factor, like often 0:16:42.760 --> 0:16:44.880 what happens is like a company says, if we got hacked, 0:16:44.920 --> 0:16:46.880 that would be really bad for us, and then like 0:16:47.160 --> 0:16:49.400 once they get hacked, it's like you have this risk 0:16:49.440 --> 0:16:51.760 factor saying if we get hacked, but you already got hacked, 0:16:51.880 --> 0:16:54.640 you haven't updated that risk factor, Like you're deceiving us 0:16:54.760 --> 0:16:57.240 by saying if we get hacked, when you did get hacked. 0:16:57.440 --> 0:16:59.560 So like there's a lot of that where like even 0:16:59.560 --> 0:17:01.800 the exist thin so that the risk factor like creates 0:17:01.840 --> 0:17:04.480 a potential for more liability because like you have to 0:17:04.520 --> 0:17:06.720 update the risk factor to to sort of cover what's 0:17:06.760 --> 0:17:07.639 actually happened already. 0:17:08.080 --> 0:17:09.119 How should be on this section? 0:17:09.640 --> 0:17:12.040 My summing up would be, like I've said for ten 0:17:12.119 --> 0:17:14.360 years that every bad thing that a public company does 0:17:14.480 --> 0:17:17.800 is security is for raud. And like what's happening now 0:17:17.880 --> 0:17:20.280 is that what counts as a bad thing is shifting, right, 0:17:20.320 --> 0:17:23.879 Like you might think that, like polluting is bad, but 0:17:24.520 --> 0:17:28.680 the new vibe is that having ESG policies is bad. 0:17:28.960 --> 0:17:30.679 And so a lot of stuff is going to be 0:17:30.680 --> 0:17:32.480 treated as bad and is then going to be treated 0:17:32.480 --> 0:17:35.600 as securities fraud because everything is security is for I don't. 0:17:35.440 --> 0:17:54.159 Know everything subjective. What is bad? I don't know. You 0:17:54.200 --> 0:17:58.800 know what's bad? No being fired? But you know what 0:17:58.840 --> 0:18:01.760 else I don't want that super bad is insider trading. 0:18:01.960 --> 0:18:05.399 Wow, I don't want to be fired. I like insider trading. 0:18:05.600 --> 0:18:09.440 Oh I mean no, I mean I enjoyed writing about 0:18:09.440 --> 0:18:12.560 insider trading. I have a soft spot for insider traders, 0:18:13.080 --> 0:18:16.080 so incredibly a sec case this week. Ken Peterman was 0:18:16.320 --> 0:18:19.880 the sea of a pretty small company called ComTech Telecommunications, 0:18:20.680 --> 0:18:24.199 and the following sequence of events allegedly occurred. One he 0:18:24.320 --> 0:18:27.680 got like their earnings results like a few weeks before 0:18:27.680 --> 0:18:30.600 they were announced that they were terrible. Two he got 0:18:30.600 --> 0:18:32.679 called into a meeting with like a lawyer doing an 0:18:32.720 --> 0:18:39.560 investigation of his alleged sexual relationship with a subordinate. In 0:18:39.600 --> 0:18:42.760 this meeting, he won confessed to that relationship, and two 0:18:43.480 --> 0:18:46.480 confessed that he had had someone else watched the like 0:18:46.600 --> 0:18:49.440 mandatory sexual harassment training video for him because he was 0:18:49.480 --> 0:18:50.200 too busy. 0:18:49.960 --> 0:18:50.520 To do it. 0:18:50.680 --> 0:18:55.919 Just like right, right, Probably not, But I write a 0:18:55.920 --> 0:18:59.560 lot about like accounting firm partners or whatever, who you 0:18:59.600 --> 0:19:03.960 know don't take their regulatory continuing education or civement seriously. 0:19:03.960 --> 0:19:05.879 But if you're like doing sexual arrassment, you should really 0:19:05.880 --> 0:19:08.040 watch the sexual arrassment video. You'll learn something. 0:19:08.160 --> 0:19:10.080 Well, maybe he thought it wasn't, which is also why 0:19:10.119 --> 0:19:13.600 he should have watched the video, but I maybe realized 0:19:13.640 --> 0:19:14.720 the error of his ways. 0:19:14.720 --> 0:19:18.879 Anyway, anyway, so that happened at this meeting and shortly 0:19:18.920 --> 0:19:20.680 after the meeting, the board called him and said we're 0:19:20.680 --> 0:19:25.840 going to fire you for cause, and then he called 0:19:25.880 --> 0:19:28.359 his breaker and tried to sell all of his stock 0:19:28.800 --> 0:19:32.760 in the company, sell it all. Then the next day 0:19:33.080 --> 0:19:35.359 the company announced that he was fired. In the stock 0:19:35.359 --> 0:19:37.199 felt like twenty seven percent, and then like a few 0:19:37.240 --> 0:19:39.520 days later they announced their earnings of the stockfell even more. 0:19:39.680 --> 0:19:42.920 So by selling the stock, he avoided something like twelve 0:19:43.000 --> 0:19:45.439 thousand dollars of losses, which is like, this is a 0:19:45.480 --> 0:19:49.359 small company, right, right, the SEC says is inside of trading. 0:19:49.480 --> 0:19:52.600 You read the description of what he was doing, he 0:19:52.680 --> 0:19:54.399 was in a blackout period, right, So the company had 0:19:54.400 --> 0:19:58.439