1 00:00:00,560 --> 00:00:05,360 Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio. 2 00:00:06,680 --> 00:00:11,119 Speaker 1: The Electoral College voted today, solidifying Joe Biden's victory in 3 00:00:11,160 --> 00:00:15,920 Speaker 1: the presidential election. Biden has three hundred six electoral votes 4 00:00:16,160 --> 00:00:19,680 Speaker 1: to President Trump's two hundred thirty two. So will this 5 00:00:19,840 --> 00:00:23,800 Speaker 1: end President Trump's lawsuits using baseless claims of voter fraud 6 00:00:23,840 --> 00:00:26,880 Speaker 1: to try to overturn the election, lawsuits which have been 7 00:00:26,920 --> 00:00:31,000 Speaker 1: rejected by the Supreme Court unanimously. The latest on Friday, 8 00:00:31,080 --> 00:00:34,840 Speaker 1: when the Court rejected calls by Trump, Texas and seventeen 9 00:00:34,920 --> 00:00:38,640 Speaker 1: other GOP controls states plus one d twenty six House 10 00:00:38,720 --> 00:00:43,080 Speaker 1: Republican lawmakers to reverse the election results. My guest is 11 00:00:43,080 --> 00:00:46,360 Speaker 1: elections law expert Derek Mueller, a professor at the University 12 00:00:46,360 --> 00:00:49,840 Speaker 1: of Iowa Law School. Dereck Texas was trying to invoke 13 00:00:49,920 --> 00:00:55,480 Speaker 1: the Supreme Court's original jurisdiction, explained the basis for the lawsuit. Yeah, so, 14 00:00:55,640 --> 00:00:59,920 Speaker 1: Texas suit Pennsylvania and a few other states aleging impropriet 15 00:01:00,000 --> 00:01:03,240 Speaker 1: these and those other states elections, and the Constitution sets 16 00:01:03,320 --> 00:01:06,080 Speaker 1: up that the federal courts and the Supreme Court in particular, 17 00:01:06,200 --> 00:01:11,120 Speaker 1: are open to controversies involving two or more states. And 18 00:01:11,120 --> 00:01:13,720 Speaker 1: so in states sue one another, they typically sue directly 19 00:01:13,720 --> 00:01:16,480 Speaker 1: in the United States Supreme Court, and it's usually about 20 00:01:16,520 --> 00:01:21,759 Speaker 1: things like water rights or land boundary disputes, things like that. 21 00:01:22,160 --> 00:01:26,080 Speaker 1: But occasionally they filed disputes about different kinds of controversies. 22 00:01:26,120 --> 00:01:29,280 Speaker 1: A few years ago, for instance, Nebraska suit Colorado over 23 00:01:29,319 --> 00:01:32,480 Speaker 1: its marijuana laws. But for the most part, the Supreme 24 00:01:32,520 --> 00:01:36,240 Speaker 1: Court has recognized that it has the discretion to decline 25 00:01:36,319 --> 00:01:39,479 Speaker 1: jurisdiction in these cases. So the heart of the controversy 26 00:01:39,480 --> 00:01:42,680 Speaker 1: that Texas had was alleging that the state legislatures were 27 00:01:42,760 --> 00:01:45,520 Speaker 1: not sort of in control of their election processes in 28 00:01:45,560 --> 00:01:48,760 Speaker 1: these states, that it violated equal protection of some of 29 00:01:48,800 --> 00:01:51,200 Speaker 1: the voters in these states, and so on. But the 30 00:01:51,200 --> 00:01:55,320 Speaker 1: Court pretty summarily just dismissed this claim, saying we're not 31 00:01:55,320 --> 00:01:56,880 Speaker 1: going to hear it, and we decline to hear it. 32 00:01:57,240 --> 00:01:59,680 Speaker 1: Texas is not shown that it's been injured in any 33 00:01:59,680 --> 00:02:04,640 Speaker 1: way what other states do in their elections. Justices Clarence 34 00:02:04,640 --> 00:02:08,040 Speaker 1: Thomas and Samuel Leto said that they would have let 35 00:02:08,120 --> 00:02:12,239 Speaker 1: Texas file the suit. Did they model the message with 36 00:02:12,520 --> 00:02:15,600 Speaker 1: what they said? So? I don't think so. I mean, 37 00:02:15,639 --> 00:02:18,040 Speaker 1: I think sometimes people might try to read into it. 38 00:02:18,080 --> 00:02:20,880 Speaker 1: But Justices Thomas and Alto have for a long time 39 00:02:21,000 --> 00:02:26,240 Speaker 1: had this view of its provision of law, which pertains 40 00:02:26,320 --> 00:02:31,880 Speaker 1: to the court's original jurisdictions. Jurisdiction here controversies involving multiple states, 41 00:02:32,040 --> 00:02:36,360 Speaker 1: and in a couple of previous cases, both Justices have said, look, 42 00:02:36,400 --> 00:02:40,200 Speaker 1: we don't think the Court has the discretion to decline 43 00:02:40,280 --> 00:02:43,720 Speaker 1: these cases. So consistent with that, they said, listen, I 44 00:02:43,720 --> 00:02:48,880 Speaker 1: don't think we can decline allowing Texas to file the complaint. 45 00:02:49,040 --> 00:02:50,720 Speaker 1: So this is really sort of a kind of a 46 00:02:50,760 --> 00:02:53,919 Speaker 1: walky dispute about whether or not the Court has the 47 00:02:53,960 --> 00:02:57,080 Speaker 1: power to decline to even hear this case in the 48 00:02:57,120 --> 00:03:00,000 Speaker 1: first place. But the Justice is went on to say, right, well, 49 00:03:00,000 --> 00:03:01,880 Speaker 1: I would not grant other relief. I would not grant 50 00:03:01,919 --> 00:03:05,200 Speaker 1: Texas request for a stay what's happening in the states. 51 00:03:05,200 --> 00:03:08,200 Speaker 1: I would not grant the request for a preliminary injunction 52 00:03:08,320 --> 00:03:12,240 Speaker 1: preventing the states from issuing orders pertaining to their electors, 53 00:03:12,280 --> 00:03:15,399 Speaker 1: having their electors meeting, all that kind of stuff. So 54 00:03:15,400 --> 00:03:18,480 Speaker 1: so they sort of agreed with the outcome of the court. 55 00:03:18,960 --> 00:03:21,600 Speaker 1: The only differences they would have been open to Texas, 56 00:03:21,600 --> 00:03:23,920 Speaker 1: at least filing the complaints and then who knows what 57 00:03:24,000 --> 00:03:27,799 Speaker 1: happens after that. Some people are reading a lot into 58 00:03:27,880 --> 00:03:31,200 Speaker 1: this decision by the Supreme Court. They're saying, you know, 59 00:03:31,560 --> 00:03:34,680 Speaker 1: this is sending a message that we're not engaging in 60 00:03:34,760 --> 00:03:38,640 Speaker 1: partisan politics. We just look at the law. Is that 61 00:03:38,760 --> 00:03:41,120 Speaker 1: carrying it too far? So? I mean, I think it's 62 00:03:41,200 --> 00:03:44,000 Speaker 1: right to say that the Court is not acting in 63 00:03:44,000 --> 00:03:46,520 Speaker 1: an overtly partisan fashion here. And I think it's very 64 00:03:46,560 --> 00:03:49,400 Speaker 1: easy to say that. You know, Texas didn't have standing 65 00:03:49,480 --> 00:03:51,760 Speaker 1: to to bring this challenge, and you can think, I mean, 66 00:03:51,800 --> 00:03:54,600 Speaker 1: think back to some other great presidential contest. I mean, 67 00:03:54,960 --> 00:03:57,600 Speaker 1: what would have been the reaction of New York sued 68 00:03:57,640 --> 00:04:02,600 Speaker 1: in the Supreme Court in floor against Florida in two thousand, saying, hey, 69 00:04:02,640 --> 00:04:05,560 Speaker 1: Florida's electors, you know they they've been engaged in some 70 00:04:05,600 --> 00:04:08,600 Speaker 1: shenanigans and how they're participating in this recount, right, I mean, 71 00:04:08,720 --> 00:04:10,640 Speaker 1: it would just it would make no sense to us. 72 00:04:10,640 --> 00:04:14,680 Speaker 1: And that's because the presidential election is designedly decentralized. Each 73 00:04:14,760 --> 00:04:17,800 Speaker 1: state does what it wants with its own electors. They 74 00:04:17,880 --> 00:04:20,240 Speaker 1: choose the mode of appointment, they choose the manner of 75 00:04:20,240 --> 00:04:22,359 Speaker 1: how they're going to conduct the election, and well, you 76 00:04:22,440 --> 00:04:25,120 Speaker 1: might have some sort of disputes within your state, there's 77 00:04:25,160 --> 00:04:29,360 Speaker 1: really no contest for other states or grounds for them 78 00:04:29,400 --> 00:04:33,040 Speaker 1: to challenge what you're doing in your state on this matter. 79 00:04:33,520 --> 00:04:35,839 Speaker 1: Um So, in that respect, I think it's something that 80 00:04:35,839 --> 00:04:39,160 Speaker 1: that justices across the political spectrum agree with. And this 81 00:04:39,279 --> 00:04:42,320 Speaker 1: was really, uh, you know, less illegal case and more 82 00:04:42,400 --> 00:04:45,000 Speaker 1: sort of a political statement that was you know, attempted 83 00:04:45,040 --> 00:04:46,839 Speaker 1: to be raised by Texas. So I think there's no 84 00:04:46,920 --> 00:04:50,520 Speaker 1: surprise that the court was was pretty pretty unanimous and 85 00:04:51,200 --> 00:04:54,200 Speaker 1: pretty terse, and it's in its take so they wor 86 00:04:54,480 --> 00:04:57,800 Speaker 1: ters should they have written a longer opinion and in 87 00:04:57,800 --> 00:05:01,000 Speaker 1: no uncertain terms, you know, upheld the livy the election 88 00:05:01,120 --> 00:05:05,000 Speaker 1: and SI did the president for his attempts to undermine 89 00:05:05,240 --> 00:05:08,680 Speaker 1: democracy or the rule of law. I don't know. I mean, 90 00:05:08,680 --> 00:05:10,520 Speaker 1: that's just if you wrestle with the pig, you're just 91 00:05:10,560 --> 00:05:13,520 Speaker 1: gonna get dirty, right, So I don't know, I don't 92 00:05:13,520 --> 00:05:15,120 Speaker 1: know if they really needed a weigh in much more. 93 00:05:15,200 --> 00:05:16,839 Speaker 1: I was a little surprised they actually waited in as 94 00:05:16,920 --> 00:05:18,760 Speaker 1: much as they did. I was a little surprised that 95 00:05:18,839 --> 00:05:21,240 Speaker 1: they didn't just say it's then. I was you know, 96 00:05:21,279 --> 00:05:24,080 Speaker 1: they explained that Texas last standing, So that was actually 97 00:05:24,120 --> 00:05:27,039 Speaker 1: more than I anticipated they might otherwise do. Right, the 98 00:05:27,080 --> 00:05:30,440 Speaker 1: Court often doesn't feel compelled to inject itself needs disputes. 99 00:05:30,680 --> 00:05:33,800 Speaker 1: Last week, um, there was a dispute arising out of 100 00:05:33,800 --> 00:05:36,839 Speaker 1: Pennsylvania that you know that was on certain or on 101 00:05:36,880 --> 00:05:40,279 Speaker 1: an injunction file before the court, an emergency injunction where 102 00:05:40,279 --> 00:05:43,000 Speaker 1: the Court just denied it with no explanation, which is 103 00:05:43,040 --> 00:05:46,320 Speaker 1: coming for these disputes. Understandably, it's a it's a big cage, right, 104 00:05:46,360 --> 00:05:49,719 Speaker 1: involves the president and involves several states suing each other, 105 00:05:49,760 --> 00:05:51,840 Speaker 1: and then a lot of Amika's briefs coming in from 106 00:05:51,880 --> 00:05:53,919 Speaker 1: a lot of different parties interested about if. At the 107 00:05:53,920 --> 00:05:56,320 Speaker 1: same time, the Court is by saying so little, you know, 108 00:05:56,360 --> 00:05:59,080 Speaker 1: emphasizing this is really something that is not our job. 109 00:05:59,200 --> 00:06:01,720 Speaker 1: It's not our job to sort out your controversies, either 110 00:06:01,760 --> 00:06:05,200 Speaker 1: in the political process or in how states typically run 111 00:06:05,240 --> 00:06:08,400 Speaker 1: their elections. So go back to the ordinary means of litigation, 112 00:06:08,560 --> 00:06:11,320 Speaker 1: the ordinary means of political struggle. We're not going to 113 00:06:11,400 --> 00:06:13,320 Speaker 1: get involved. And in that respect, I think it's in 114 00:06:13,360 --> 00:06:16,000 Speaker 1: some ways good the Court didn't feel the need to 115 00:06:16,120 --> 00:06:20,719 Speaker 1: expound more broadly. Electoral College members in all six battleground 116 00:06:20,800 --> 00:06:25,000 Speaker 1: states where President Trump most fiercely contested the results cast 117 00:06:25,040 --> 00:06:28,760 Speaker 1: their ballots for Democrat Joe Biden, effectively cutting off the 118 00:06:28,760 --> 00:06:33,520 Speaker 1: president's path to overturning the election. Now, the President, in 119 00:06:33,520 --> 00:06:37,200 Speaker 1: a series of tweets and on Fox yesterday, vowed to 120 00:06:37,279 --> 00:06:43,920 Speaker 1: continue the fight. It's not over, he said, Is it over? Well, 121 00:06:44,160 --> 00:06:46,520 Speaker 1: it depends on your definition of the word over. I mean, 122 00:06:46,640 --> 00:06:48,840 Speaker 1: in some senses it's been over for a long time, 123 00:06:48,920 --> 00:06:51,320 Speaker 1: and in other senses it won't be over for some time. 124 00:06:52,200 --> 00:06:54,560 Speaker 1: I think there's no question that as of at least 125 00:06:54,600 --> 00:06:57,280 Speaker 1: a couple of days after the after election day, UM, 126 00:06:57,320 --> 00:06:59,480 Speaker 1: it was pretty obvious that that Joe Biden had a 127 00:07:00,040 --> 00:07:03,040 Speaker 1: dancial majority of electoral votes and that there was no 128 00:07:03,200 --> 00:07:07,000 Speaker 1: sort of material legal reason why, UM, any of the 129 00:07:07,040 --> 00:07:09,840 Speaker 1: results in these states would change. And sure enough that, 130 00:07:09,960 --> 00:07:12,040 Speaker 1: I mean, maybe if you looked at the map on 131 00:07:12,520 --> 00:07:15,040 Speaker 1: November six and sort of the level of certainty we had, 132 00:07:15,080 --> 00:07:18,840 Speaker 1: it's been essentially unchanged today and should be essentially unchanged 133 00:07:18,960 --> 00:07:21,960 Speaker 1: through inauguration day. UM. At the same time we say 134 00:07:22,000 --> 00:07:23,760 Speaker 1: is it over, you know, the question is are there 135 00:07:23,760 --> 00:07:26,840 Speaker 1: more avenues to fight? Are there more lawsuits to be filed? 136 00:07:27,160 --> 00:07:30,440 Speaker 1: There's a case out of Wisconsin before the Seventh Circuit. 137 00:07:30,520 --> 00:07:34,239 Speaker 1: There are cases with story pending before the Supreme Court 138 00:07:34,360 --> 00:07:36,480 Speaker 1: right now, right but but all these things are going 139 00:07:36,520 --> 00:07:39,120 Speaker 1: to start to feel, you know, even sillier than they 140 00:07:39,160 --> 00:07:42,200 Speaker 1: do right now, as the Electoral College convenes, as it 141 00:07:42,320 --> 00:07:45,400 Speaker 1: sends those votes to Congress UM. And so, undoubtedly, I 142 00:07:45,400 --> 00:07:47,720 Speaker 1: think they'll be fighting. I think they'll be political struggle. 143 00:07:47,760 --> 00:07:51,560 Speaker 1: I think there'll be lots of fundraising emails, undoubtedly, But 144 00:07:51,640 --> 00:07:54,200 Speaker 1: in terms of it being over, in terms of the 145 00:07:54,560 --> 00:07:57,000 Speaker 1: certainty we have that Joe Biden is the next president 146 00:07:57,000 --> 00:07:59,400 Speaker 1: of the United States or I feel pretty pretty confident 147 00:07:59,440 --> 00:08:03,480 Speaker 1: that it's over in that sense. The Electoral College meets today, 148 00:08:03,480 --> 00:08:07,040 Speaker 1: and usually that's something that doesn't get much attention, if 149 00:08:07,080 --> 00:08:12,560 Speaker 1: any attention, what actually happens today. Sure, so yeah, and 150 00:08:12,960 --> 00:08:15,400 Speaker 1: so when we vote to the president on November three, 151 00:08:15,560 --> 00:08:18,200 Speaker 1: we're voting actually for slates of electors. In each state 152 00:08:18,200 --> 00:08:22,360 Speaker 1: has between three and fifty five electors that they uh 153 00:08:22,560 --> 00:08:25,920 Speaker 1: they have allocated to them based on their Senate and 154 00:08:26,040 --> 00:08:31,440 Speaker 1: House representation, and they typically are party loyalists, party faithful um. 155 00:08:31,440 --> 00:08:33,960 Speaker 1: In New York, Bill and Hillary Clinton are two of 156 00:08:34,000 --> 00:08:38,200 Speaker 1: the presidential elector Stacey Abrams is an elector in Georgia. UM. 157 00:08:38,320 --> 00:08:40,240 Speaker 1: And what they do is they just show up today, 158 00:08:40,720 --> 00:08:43,440 Speaker 1: typically in the state capital, UM, and they cast their 159 00:08:43,480 --> 00:08:46,160 Speaker 1: votes in a fairly formal ceremony. They cast a vote 160 00:08:46,160 --> 00:08:48,520 Speaker 1: for the president on a ballot they cast a vote 161 00:08:48,520 --> 00:08:51,280 Speaker 1: for a vice president on a separate ballot. UM. They 162 00:08:51,320 --> 00:08:55,000 Speaker 1: submit those, they list out their votes, they sign them, 163 00:08:55,280 --> 00:08:58,080 Speaker 1: and then they send the certificates on the Congress for 164 00:08:58,200 --> 00:09:01,040 Speaker 1: Congress to account. UM. So got that. You know, these 165 00:09:01,080 --> 00:09:03,160 Speaker 1: meetings got a little bit more attention four years ago 166 00:09:03,280 --> 00:09:05,679 Speaker 1: when there were a lot of electors who were attempting 167 00:09:05,760 --> 00:09:09,280 Speaker 1: to keep Donald Trump out of the White House. Now 168 00:09:09,520 --> 00:09:11,960 Speaker 1: they're sort of in a different direction. And now that 169 00:09:12,000 --> 00:09:13,760 Speaker 1: now it's the Trump campaign that shoes on the other 170 00:09:13,760 --> 00:09:16,520 Speaker 1: foot trying to figure out how to challenge these electors. UM. 171 00:09:16,520 --> 00:09:18,319 Speaker 1: But but for the most part, we should expect very 172 00:09:18,320 --> 00:09:22,000 Speaker 1: few surprises, you know, a little social distancing and masking, UM. 173 00:09:22,000 --> 00:09:25,600 Speaker 1: But otherwise that they'll engage in largely a formal task. Today, 174 00:09:25,800 --> 00:09:28,520 Speaker 1: there have been rumblings that there may be a challenge 175 00:09:28,640 --> 00:09:33,040 Speaker 1: by Trump allies when Congress meets to tally the electoral 176 00:09:33,160 --> 00:09:37,880 Speaker 1: votes from each state. How would that unfold? Their Congress 177 00:09:37,920 --> 00:09:41,640 Speaker 1: meets January six to count electoral votes. And that's typically 178 00:09:41,720 --> 00:09:44,760 Speaker 1: a pretty formalistic act. Again that when they read the 179 00:09:44,800 --> 00:09:47,200 Speaker 1: certificates one by one that comes from the states in 180 00:09:47,240 --> 00:09:50,080 Speaker 1: alphabetical order. The meeting that doesn't last more than an 181 00:09:50,080 --> 00:09:52,080 Speaker 1: hour where they run through the list, they have all 182 00:09:52,120 --> 00:09:54,760 Speaker 1: the electors and they have a total at the end 183 00:09:54,760 --> 00:09:56,920 Speaker 1: of the day and Comngress has counted the votes. Yeah, 184 00:09:56,920 --> 00:09:59,559 Speaker 1: but there has been some discussion about some individuals and 185 00:09:59,679 --> 00:10:03,360 Speaker 1: con risk objecting in this process. And the Electoral Account 186 00:10:03,360 --> 00:10:07,400 Speaker 1: Act of seven is the mechanism that Congress would use today. 187 00:10:07,400 --> 00:10:10,440 Speaker 1: It requires a Senator and a member of the House 188 00:10:10,720 --> 00:10:14,560 Speaker 1: to object in writing and they state their objection to 189 00:10:14,920 --> 00:10:18,160 Speaker 1: a given slate of electors or an electoral vote. And 190 00:10:18,200 --> 00:10:21,840 Speaker 1: if you file the objection, then there is an opportunity 191 00:10:21,880 --> 00:10:25,200 Speaker 1: for the houses to separate. They spend two hours in debate, 192 00:10:25,520 --> 00:10:28,360 Speaker 1: they vote on emotion, and they reconvene back together. This 193 00:10:28,400 --> 00:10:30,400 Speaker 1: is pretty rare that you have. These kind of debates 194 00:10:30,400 --> 00:10:33,720 Speaker 1: have happened twice, once in six nine with a faithless 195 00:10:33,720 --> 00:10:36,200 Speaker 1: elector from North Carolina and once in two thousand five 196 00:10:36,720 --> 00:10:40,520 Speaker 1: challenging Ohio's electoral votes. You know, there was a written objection. 197 00:10:40,640 --> 00:10:43,640 Speaker 1: The houses separated for two hours. They had debate, but 198 00:10:43,960 --> 00:10:47,400 Speaker 1: the objection was not upheld. They essentially wasted two hours 199 00:10:47,480 --> 00:10:50,040 Speaker 1: and came back and then they continued on with account. 200 00:10:50,160 --> 00:10:52,800 Speaker 1: So there is that formal process. But again I don't 201 00:10:52,840 --> 00:10:55,240 Speaker 1: anticipate that even if there is an objection in Congress 202 00:10:55,280 --> 00:10:57,720 Speaker 1: and some fights about how to count these electors, that 203 00:10:57,720 --> 00:11:00,240 Speaker 1: would really change the outcome. I think all the tooral 204 00:11:00,320 --> 00:11:03,920 Speaker 1: votes will be counted. There are still Republican senators who 205 00:11:04,000 --> 00:11:08,120 Speaker 1: haven't acknowledged that Joe Biden won the presidency. Is there 206 00:11:08,160 --> 00:11:12,760 Speaker 1: any way the Senate could stop the certification somehow? It 207 00:11:12,840 --> 00:11:16,800 Speaker 1: requires both houses to agree to an objection in order 208 00:11:16,920 --> 00:11:19,280 Speaker 1: to sustain it, So you start with that. So if 209 00:11:19,480 --> 00:11:22,360 Speaker 1: Arizona's electoral votes come out and someone objects to the 210 00:11:22,400 --> 00:11:25,200 Speaker 1: Democratic controlled House is gonna be narrow Democratic majority. But 211 00:11:25,280 --> 00:11:28,440 Speaker 1: still I think the Democratic controlled House will deny any 212 00:11:28,480 --> 00:11:31,280 Speaker 1: such objections. That's the first problems. But on top of that, 213 00:11:31,640 --> 00:11:34,320 Speaker 1: I think you have a core of Senators and Republicans. 214 00:11:34,400 --> 00:11:37,160 Speaker 1: It's essentially a split Senate at the moment, and you've 215 00:11:37,160 --> 00:11:41,040 Speaker 1: had a core of Republican senators like Senators Collins Murkowski 216 00:11:41,400 --> 00:11:45,440 Speaker 1: from the sass I think, who would not sort of 217 00:11:45,480 --> 00:11:48,240 Speaker 1: go along with such shenanigans, if you will, So I 218 00:11:48,280 --> 00:11:51,760 Speaker 1: would be surprised to see a majority of the Senate 219 00:11:51,840 --> 00:11:54,480 Speaker 1: sustain one of those objections. But even then you have 220 00:11:54,559 --> 00:11:56,520 Speaker 1: the fail safe that you need both houses to agree 221 00:11:56,520 --> 00:11:59,280 Speaker 1: to an objection. So at that point it is actually 222 00:11:59,800 --> 00:12:03,839 Speaker 1: in possible for Trump to overturn the election results. Right, 223 00:12:03,840 --> 00:12:06,840 Speaker 1: So once once those votes are counted, um, you know, 224 00:12:06,840 --> 00:12:10,760 Speaker 1: they're counted, and that is what we use to determine 225 00:12:10,760 --> 00:12:12,760 Speaker 1: the next president of the United States, who will be 226 00:12:13,240 --> 00:12:16,599 Speaker 1: sworn in on January twentieth, whom the Chief Justice of 227 00:12:16,679 --> 00:12:20,120 Speaker 1: Supreme Court comes, you know, to take that oath of 228 00:12:20,120 --> 00:12:23,120 Speaker 1: office on at noon on that day. So yeah, so 229 00:12:23,160 --> 00:12:25,720 Speaker 1: I think at that point there's really nothing left, you know. 230 00:12:25,840 --> 00:12:29,520 Speaker 1: That's uh, it is. That is about the last stop 231 00:12:29,520 --> 00:12:32,720 Speaker 1: on the train, the last formal struck, at least on 232 00:12:32,760 --> 00:12:34,960 Speaker 1: the train. As we think about this process playing out, 233 00:12:35,480 --> 00:12:39,240 Speaker 1: you had these thousands of people in Washington over the 234 00:12:39,280 --> 00:12:44,640 Speaker 1: weekend and speeches about stop the steal. Is it possible 235 00:12:44,760 --> 00:12:50,280 Speaker 1: to sort of quantify how much damage President Trump's continuation 236 00:12:50,480 --> 00:12:55,360 Speaker 1: of this assault on the election and declaration that it's rigged, 237 00:12:55,760 --> 00:13:00,000 Speaker 1: how much effect that has had on the whole process 238 00:13:00,040 --> 00:13:03,760 Speaker 1: as an Americans belief in the process. I want to 239 00:13:04,040 --> 00:13:06,440 Speaker 1: give a little history first, and it's not it's not 240 00:13:06,480 --> 00:13:08,880 Speaker 1: to make false equivalency, because I want to explain also 241 00:13:08,920 --> 00:13:11,080 Speaker 1: why it's different now, right. I mean, we have seen 242 00:13:11,120 --> 00:13:14,160 Speaker 1: a lot of frustration, especially over the last twenty years 243 00:13:14,160 --> 00:13:18,120 Speaker 1: of presidential elections. From um Florida was stolen by the 244 00:13:18,120 --> 00:13:21,680 Speaker 1: Supreme Court in two thousand two. It was divaled voting 245 00:13:21,679 --> 00:13:24,960 Speaker 1: machines in Ohio that hacked the election for Bush in 246 00:13:25,000 --> 00:13:28,840 Speaker 1: two thousand four, to Barack Obama was secretly born in 247 00:13:29,000 --> 00:13:32,160 Speaker 1: Kenya and is an illegitimate president in two thousand eight, 248 00:13:32,240 --> 00:13:36,360 Speaker 1: to Russia hacked voting machines in twos sixteen and installed 249 00:13:36,440 --> 00:13:41,480 Speaker 1: Donald Trump, fielding marches on Washington in November and January, 250 00:13:41,640 --> 00:13:44,480 Speaker 1: and um, you know, every four years or eight years, 251 00:13:44,559 --> 00:13:48,160 Speaker 1: it's been this sort of increasing rhetoric of undermine the 252 00:13:48,240 --> 00:13:51,040 Speaker 1: legitimacy of the outcome. Now Donald Trump, I think has 253 00:13:51,080 --> 00:13:53,600 Speaker 1: elevated it even a step further, and that he is 254 00:13:53,679 --> 00:13:56,360 Speaker 1: the President of the United States advocating for these things. 255 00:13:56,520 --> 00:13:58,920 Speaker 1: And the last last time it was sort of maybe 256 00:13:58,920 --> 00:14:01,960 Speaker 1: marginal groups or politicians that would advocate for it at 257 00:14:02,040 --> 00:14:05,600 Speaker 1: least that at least the losing candidate would concede defeat. Um, 258 00:14:05,640 --> 00:14:09,079 Speaker 1: it's much harder when the candidate has not conceded defeat. 259 00:14:09,160 --> 00:14:11,600 Speaker 1: So with that, we'll see what. You know, what will 260 00:14:11,600 --> 00:14:14,080 Speaker 1: the next four years yield. Will it be a lot 261 00:14:14,120 --> 00:14:17,640 Speaker 1: of sort of fundraising off this rage that just leads 262 00:14:17,679 --> 00:14:20,440 Speaker 1: to a different kind of political movement? Is that, uh, 263 00:14:20,560 --> 00:14:23,240 Speaker 1: something that's really going to result in a crisis and 264 00:14:23,280 --> 00:14:26,320 Speaker 1: the confidence of our democratic process? Or you know, maybe 265 00:14:26,360 --> 00:14:29,360 Speaker 1: if a Republican wins in four years, that suddenly the 266 00:14:29,400 --> 00:14:32,040 Speaker 1: shoes on the other foot and everyone feels confident on 267 00:14:32,080 --> 00:14:34,560 Speaker 1: the right and and you know there's a lack of 268 00:14:34,600 --> 00:14:37,840 Speaker 1: confidence on the left. I just don't know, you know, 269 00:14:37,880 --> 00:14:40,520 Speaker 1: it's not a good thing, but sort of measuring the 270 00:14:41,000 --> 00:14:43,200 Speaker 1: degree to which it's damaging is a harder thing to 271 00:14:43,280 --> 00:14:47,680 Speaker 1: its us. Finally, is there anything that can be done, 272 00:14:47,920 --> 00:14:52,200 Speaker 1: I mean anything concretely that can be done to restore 273 00:14:52,240 --> 00:14:56,880 Speaker 1: the public's trust in elections, excuse me, in the elections 274 00:14:56,880 --> 00:15:00,560 Speaker 1: an electors and process, you know, So I don't know, 275 00:15:00,640 --> 00:15:02,360 Speaker 1: you know, I think in the past there have been 276 00:15:02,360 --> 00:15:05,400 Speaker 1: attempts that sort of bipartisan commissions. Um, you know this 277 00:15:05,560 --> 00:15:08,120 Speaker 1: happened that there were some efforts, especially after the election 278 00:15:08,160 --> 00:15:11,840 Speaker 1: in two thousand, with the help America Vote Active two thousand, 279 00:15:11,920 --> 00:15:14,840 Speaker 1: to to update voting equipment in the States, to send 280 00:15:14,840 --> 00:15:18,280 Speaker 1: them more money to ensure and increase confidence in them 281 00:15:18,680 --> 00:15:22,120 Speaker 1: UM and more a formal level in the political sense. 282 00:15:22,840 --> 00:15:26,240 Speaker 1: After and there were there were some you know, foreign 283 00:15:26,240 --> 00:15:30,880 Speaker 1: interference concerns, uh, you know in voter registration databases, uh 284 00:15:31,320 --> 00:15:33,920 Speaker 1: that were breached and the like, you know, nothing that 285 00:15:34,080 --> 00:15:38,440 Speaker 1: affected the outcome of the elections. UM States increasingly began 286 00:15:38,480 --> 00:15:41,440 Speaker 1: to trust the Department of Homeland Security and federal agencies 287 00:15:41,480 --> 00:15:44,840 Speaker 1: and in collaborating with them and recognizing that they were 288 00:15:44,840 --> 00:15:47,240 Speaker 1: going to be helpful actors, and I think yielded very 289 00:15:47,320 --> 00:15:51,640 Speaker 1: strong and secure election in UM. So. I think as 290 00:15:51,640 --> 00:15:54,720 Speaker 1: we move forward, we're we're looking at concerns about you know, 291 00:15:54,760 --> 00:15:58,440 Speaker 1: whether it's it's ballot signatures or whether it's a dominion 292 00:15:58,560 --> 00:16:00,880 Speaker 1: voting machines or other kind of things, and some of 293 00:16:00,920 --> 00:16:03,360 Speaker 1: this I I don't know. I would hope that people 294 00:16:03,400 --> 00:16:06,640 Speaker 1: could realize that we have a lot of safeguards in place. 295 00:16:06,720 --> 00:16:08,920 Speaker 1: We have a lot of really competent election officials, We 296 00:16:08,960 --> 00:16:12,320 Speaker 1: have paper trails and just about every race in the country, 297 00:16:12,400 --> 00:16:16,080 Speaker 1: so there's no sort of a hidden electronic switching of stuff. Um. 298 00:16:16,120 --> 00:16:19,000 Speaker 1: But at the same time, it's a very hard thing, 299 00:16:19,040 --> 00:16:22,479 Speaker 1: the sort of path on mass right, It's it's undoubtedly 300 00:16:22,520 --> 00:16:26,280 Speaker 1: the case that a small myth can turn into a 301 00:16:26,400 --> 00:16:29,680 Speaker 1: very large myth very quickly, and restoring confidence after that 302 00:16:29,800 --> 00:16:32,920 Speaker 1: is a long, slow process. So, um, maybe there will 303 00:16:32,960 --> 00:16:35,360 Speaker 1: be some efforts at sort of a national level or 304 00:16:35,720 --> 00:16:39,760 Speaker 1: to stil some faith in the democratic process, But I 305 00:16:39,760 --> 00:16:41,840 Speaker 1: don't know. I think that's that's just a tough way 306 00:16:41,880 --> 00:16:44,520 Speaker 1: to look at how things will will come in the future. 307 00:16:45,080 --> 00:16:48,560 Speaker 1: Thanks Derek. That's Derek Muller, professor at the University of 308 00:16:48,600 --> 00:16:54,920 Speaker 1: Iowa Law School. Several executives at some pharmaceutical companies sold 309 00:16:54,920 --> 00:16:58,120 Speaker 1: their stock around the time their companies announced positive news 310 00:16:58,200 --> 00:17:03,680 Speaker 1: about COVID nineteen vaccine, resulting in staggering profits. In a study, 311 00:17:03,720 --> 00:17:07,520 Speaker 1: Columbia Law School professor Joshua Mets analyzed more than twelve 312 00:17:07,520 --> 00:17:11,680 Speaker 1: million transactions and found that such sales occur more frequently 313 00:17:11,720 --> 00:17:15,320 Speaker 1: in the healthcare industry than other sectors. And he joins, me, now, 314 00:17:15,640 --> 00:17:18,720 Speaker 1: why did you decide to do this study? I have 315 00:17:19,080 --> 00:17:22,439 Speaker 1: really over the last couple of years been working on 316 00:17:22,480 --> 00:17:29,080 Speaker 1: a series of projects on coincidentally chimes, trading, trading and 317 00:17:29,200 --> 00:17:35,439 Speaker 1: situations which raise questions. And when I read the story 318 00:17:35,800 --> 00:17:42,880 Speaker 1: of Fightser CEO boer Law cashing out so It's portfolio 319 00:17:43,440 --> 00:17:46,840 Speaker 1: on the day that Fiser had announced its Phase three 320 00:17:47,280 --> 00:17:50,960 Speaker 1: trial results, I thought, you know, this is really a 321 00:17:51,040 --> 00:17:56,480 Speaker 1: setting which hasn't been explored, and that is specifically the 322 00:17:56,720 --> 00:18:04,240 Speaker 1: coincidence between inside Eighter treating plans that are at least 323 00:18:04,359 --> 00:18:09,520 Speaker 1: claimed to be predetermined, and the release of good news. 324 00:18:10,040 --> 00:18:15,120 Speaker 1: It really was the question, how could a plan that 325 00:18:15,280 --> 00:18:22,440 Speaker 1: is supposedly predetermined lead to such strange coincidences like these 326 00:18:23,200 --> 00:18:27,560 Speaker 1: where you have a major announcement and not just the 327 00:18:27,640 --> 00:18:34,200 Speaker 1: liquidation of a few shares but the portfolio. And from 328 00:18:34,200 --> 00:18:37,560 Speaker 1: there I started digging into the data more generally to 329 00:18:37,680 --> 00:18:40,400 Speaker 1: see if this is a pattern, and lo and behold 330 00:18:40,920 --> 00:18:46,760 Speaker 1: it is. Is this true across all industries, all sectors, 331 00:18:46,920 --> 00:18:49,680 Speaker 1: or do you find it more in one sector. It 332 00:18:49,800 --> 00:18:55,119 Speaker 1: definitely happens across the board, but it's much more concentrated, 333 00:18:55,160 --> 00:18:57,280 Speaker 1: you could say, in the health care sectors. And the 334 00:18:57,320 --> 00:19:01,640 Speaker 1: paper in the project I do a comparison across industries 335 00:19:01,920 --> 00:19:06,600 Speaker 1: and we see this sort of coincidental we'll call it 336 00:19:06,680 --> 00:19:10,879 Speaker 1: coincidental timing. We see the sort of coincidental timing most 337 00:19:11,000 --> 00:19:14,720 Speaker 1: pronounced in the healthcare sector, and I think one reason 338 00:19:14,800 --> 00:19:17,520 Speaker 1: for that and some I'm somewhat speculating here, but I 339 00:19:17,560 --> 00:19:22,400 Speaker 1: think biotech and medical device companies and pharmacy of companies, 340 00:19:22,720 --> 00:19:26,840 Speaker 1: the value of these companies is so tightly linked to 341 00:19:27,200 --> 00:19:32,800 Speaker 1: positive news announcements like clinical trial results, that it makes 342 00:19:32,840 --> 00:19:39,760 Speaker 1: sense for executives to structure their compensation packages to cash 343 00:19:39,920 --> 00:19:46,320 Speaker 1: out upon these sorts of announcements. And that's less compelling 344 00:19:46,440 --> 00:19:50,879 Speaker 1: or less needed in other industries where your stock price 345 00:19:51,160 --> 00:19:53,840 Speaker 1: is not necessarily going to react as much as it 346 00:19:53,920 --> 00:19:58,639 Speaker 1: doesn't healthcare so Fiser not only did the CEO sell 347 00:19:58,840 --> 00:20:02,760 Speaker 1: the majority of his stuck in one day on the 348 00:20:02,800 --> 00:20:05,800 Speaker 1: same day the company announced the results of the COVID 349 00:20:05,880 --> 00:20:10,800 Speaker 1: nineteen vaccine trial, but another visor executive also sold shares 350 00:20:10,920 --> 00:20:14,680 Speaker 1: that same day. And what happened there seems dwarfed by 351 00:20:14,840 --> 00:20:18,840 Speaker 1: what happened at Maderna. Tell us about that. So in 352 00:20:18,920 --> 00:20:23,240 Speaker 1: the project, what I'm mainly doing is looking across the 353 00:20:23,359 --> 00:20:27,200 Speaker 1: data as a whole um. I do talk about these 354 00:20:27,240 --> 00:20:30,639 Speaker 1: examples really just to illustrate the broader phenomenon. In the 355 00:20:30,680 --> 00:20:33,680 Speaker 1: case of Maderna, there's really a bunch of different things 356 00:20:33,720 --> 00:20:37,080 Speaker 1: going on. So you have some executives who are catching 357 00:20:37,119 --> 00:20:39,639 Speaker 1: out on a regular basis, and I think that may 358 00:20:39,680 --> 00:20:43,680 Speaker 1: be less suspicious. But then you have others particularly want 359 00:20:43,680 --> 00:20:45,719 Speaker 1: to get the names. But you know, there's there's at 360 00:20:45,800 --> 00:20:49,480 Speaker 1: least one director who hadn't treated at all from May 361 00:20:49,560 --> 00:20:52,199 Speaker 1: to July, and then there was this big trade showing 362 00:20:52,280 --> 00:20:54,800 Speaker 1: up in July on the very same day that that 363 00:20:54,920 --> 00:20:59,760 Speaker 1: Maderna had made its its announcements. So this happens, you know, 364 00:21:00,119 --> 00:21:04,840 Speaker 1: happens across the board, it happens in differing intensities, and 365 00:21:05,560 --> 00:21:08,040 Speaker 1: I guess one way to think about it is, you know, 366 00:21:08,160 --> 00:21:12,680 Speaker 1: it's one thing if executives are being transparent about the 367 00:21:12,760 --> 00:21:15,920 Speaker 1: nature of their trading. So the problem that I've focused 368 00:21:15,960 --> 00:21:18,400 Speaker 1: on in the paper is not the fact that they're 369 00:21:18,440 --> 00:21:21,240 Speaker 1: cashing out. We generally think that's okay. And you know, 370 00:21:21,359 --> 00:21:25,240 Speaker 1: if they were making regular sales, as indeed a couple 371 00:21:25,320 --> 00:21:28,400 Speaker 1: of the Maderna executives can have been doing, I probably 372 00:21:28,400 --> 00:21:33,560 Speaker 1: would find that less troublesome. But what's particularly troublesome is 373 00:21:34,200 --> 00:21:37,639 Speaker 1: structuring your the nature of your disclosure and your plans 374 00:21:38,160 --> 00:21:41,120 Speaker 1: so that on the moment you make a positive announcement 375 00:21:41,200 --> 00:21:44,720 Speaker 1: like your clinical trial results, some members of your executive 376 00:21:44,720 --> 00:21:47,679 Speaker 1: team or your or your directors or other officers have 377 00:21:47,800 --> 00:21:51,600 Speaker 1: what are called triggers in place to cash out. And 378 00:21:51,640 --> 00:21:55,040 Speaker 1: this is what seems to be going on based on 379 00:21:55,080 --> 00:21:57,879 Speaker 1: the data. And I say seems to be because because 380 00:21:57,920 --> 00:22:00,320 Speaker 1: both of the Suffiser and in Maderna and we look 381 00:22:00,359 --> 00:22:03,160 Speaker 1: more broadly, we really have no idea and that's something 382 00:22:03,200 --> 00:22:05,920 Speaker 1: that the public, I think often doesn't understand. We're not 383 00:22:06,119 --> 00:22:11,160 Speaker 1: giving any details as to what triggers these these stocks hills. 384 00:22:11,200 --> 00:22:16,119 Speaker 1: We're basically putting it together in hindsight, observing these patterns 385 00:22:16,440 --> 00:22:18,840 Speaker 1: and scratching your heads, going it must be the case 386 00:22:19,280 --> 00:22:21,920 Speaker 1: that they've done something behind the scenes, but we don't 387 00:22:21,920 --> 00:22:24,520 Speaker 1: really know what that something is. And I think that's 388 00:22:24,560 --> 00:22:27,719 Speaker 1: one of the biggest problems is that we see these patterns, 389 00:22:28,080 --> 00:22:32,000 Speaker 1: these patterns that can be ultimately very harmful inks to 390 00:22:32,119 --> 00:22:35,760 Speaker 1: investors who purchase without realizing that executives are selling, and 391 00:22:35,880 --> 00:22:38,560 Speaker 1: we have no idea that these plans are in place 392 00:22:38,760 --> 00:22:43,480 Speaker 1: in leading to this sort of coincidental timing. The company's 393 00:22:43,560 --> 00:22:47,640 Speaker 1: response to these trades is often well, these were all 394 00:22:47,760 --> 00:22:51,280 Speaker 1: planned beforehand. They're done according to the ten D five 395 00:22:51,560 --> 00:22:56,399 Speaker 1: one plans. Explain what the F one plan is. So 396 00:22:56,560 --> 00:22:59,919 Speaker 1: the five one plan. There's a rule that the s 397 00:23:00,040 --> 00:23:02,880 Speaker 1: b C put out Its basically says, if you pre 398 00:23:03,080 --> 00:23:09,040 Speaker 1: commit to UH strategy to sell your stock, we will 399 00:23:09,520 --> 00:23:12,320 Speaker 1: be not have been trading on the basis of the 400 00:23:12,440 --> 00:23:17,800 Speaker 1: curial non public information, which is of a golden UH ticket, 401 00:23:17,880 --> 00:23:23,240 Speaker 1: so to speak to UH to immunity from insider trading liability. So, 402 00:23:23,480 --> 00:23:26,920 Speaker 1: if you're a corporate executive, you're very concerned that your 403 00:23:26,960 --> 00:23:32,240 Speaker 1: stock sales could be construed as occurring on the basis 404 00:23:32,280 --> 00:23:35,679 Speaker 1: of some non public information that you have, and you 405 00:23:35,840 --> 00:23:37,119 Speaker 1: you're you know, you don't want to be in a 406 00:23:37,160 --> 00:23:41,400 Speaker 1: situation where you're facing liability. So what what insiders will 407 00:23:41,440 --> 00:23:46,399 Speaker 1: do is they will they will often contract with specialized providers. 408 00:23:46,440 --> 00:23:49,480 Speaker 1: Sometimes this is wealth manities of wealth management firms. Who 409 00:23:49,520 --> 00:23:52,000 Speaker 1: will who will set up these plans? Now, and I 410 00:23:52,000 --> 00:23:55,600 Speaker 1: think folks don't really appreciate who who who kind of 411 00:23:55,640 --> 00:23:58,520 Speaker 1: talk about this casually here, I'm including, you know, the 412 00:23:58,560 --> 00:24:01,880 Speaker 1: public relations arms of some of these companies and also 413 00:24:01,960 --> 00:24:06,480 Speaker 1: been a lot of casual commentary is that the plans 414 00:24:06,600 --> 00:24:11,959 Speaker 1: can include very sophisticated what are what I call price triggers. 415 00:24:12,000 --> 00:24:14,800 Speaker 1: And what this means is that you can actually put 416 00:24:14,800 --> 00:24:17,159 Speaker 1: in your ten D five one plan that if the 417 00:24:17,200 --> 00:24:20,640 Speaker 1: stock price jumps by a particular amount, and if other 418 00:24:20,720 --> 00:24:24,080 Speaker 1: conditions are satisfied, go ahead and sell a lot of stock. 419 00:24:24,720 --> 00:24:28,199 Speaker 1: And why this is troublesome is that the more you 420 00:24:28,400 --> 00:24:31,400 Speaker 1: the more you customize, the more you you know, custom 421 00:24:31,560 --> 00:24:36,960 Speaker 1: tailor your uh your algorithm. And actually the rule uses 422 00:24:37,000 --> 00:24:39,320 Speaker 1: the word the phrase computer program. The more you set 423 00:24:39,359 --> 00:24:43,240 Speaker 1: up a computer program UH that that that sensitive to 424 00:24:43,400 --> 00:24:48,480 Speaker 1: something like a price increase, the more dangerous that sort 425 00:24:48,520 --> 00:24:52,800 Speaker 1: of treating is for the average investor. And that's because 426 00:24:53,400 --> 00:24:57,760 Speaker 1: a purchaser who's seeing the stock price go up and 427 00:24:57,880 --> 00:25:04,680 Speaker 1: buying stock is not told contemporaneously that the executives trigger 428 00:25:04,840 --> 00:25:08,880 Speaker 1: might have been activated, and so so the average buyer 429 00:25:09,640 --> 00:25:13,560 Speaker 1: has no idea that they might be buying while the 430 00:25:13,760 --> 00:25:18,840 Speaker 1: CEO is selling the portfolio. And that can be that 431 00:25:19,040 --> 00:25:26,040 Speaker 1: is totally consistent with one rule, but it may nonetheless 432 00:25:26,240 --> 00:25:29,680 Speaker 1: serve to defraud and to take advantage of and deceive 433 00:25:30,200 --> 00:25:33,480 Speaker 1: the average investor because they're less completely in the dark 434 00:25:33,840 --> 00:25:37,800 Speaker 1: that the plan is being used in this way. So 435 00:25:37,960 --> 00:25:42,080 Speaker 1: these plans are more than just saying sell my stock 436 00:25:42,640 --> 00:25:47,480 Speaker 1: when it reaches this level. One are the UH I 437 00:25:47,560 --> 00:25:52,159 Speaker 1: think misconceptions is that people think the plan kicks in 438 00:25:52,240 --> 00:25:55,480 Speaker 1: on certain days. I think most people would say that 439 00:25:55,480 --> 00:25:57,080 Speaker 1: if you would ask what it's gonna be five one one, 440 00:25:57,119 --> 00:25:59,480 Speaker 1: they would say, well, it means that an executive every 441 00:25:59,560 --> 00:26:04,000 Speaker 1: month sells a particular quantity of shares. Now, the fact 442 00:26:04,040 --> 00:26:07,080 Speaker 1: that some of those may be tied to the price 443 00:26:07,160 --> 00:26:12,720 Speaker 1: reaching a certain level is um is itself unknown, I think, 444 00:26:13,200 --> 00:26:16,360 Speaker 1: except to you know, a small group of folks who 445 00:26:16,560 --> 00:26:19,080 Speaker 1: who specialized in this area, It's not widely discussed in 446 00:26:19,080 --> 00:26:22,920 Speaker 1: those terms. What I think is even less uh visible 447 00:26:23,200 --> 00:26:26,560 Speaker 1: is the fact that these plans can be structured with 448 00:26:26,680 --> 00:26:30,439 Speaker 1: even more sophistication, such that it could not just be 449 00:26:30,520 --> 00:26:32,480 Speaker 1: when the price necessarily reaches a level, but when the 450 00:26:32,520 --> 00:26:36,159 Speaker 1: price increases by a certain amount, or when there's a 451 00:26:36,200 --> 00:26:40,040 Speaker 1: certain uh level of trading volume. And so. Now, the 452 00:26:40,080 --> 00:26:44,199 Speaker 1: reason why those details really matter is because what I 453 00:26:44,280 --> 00:26:48,280 Speaker 1: document in my paper is that on these days where 454 00:26:48,280 --> 00:26:51,879 Speaker 1: the price jumps and the sales take in, the stock 455 00:26:52,000 --> 00:26:58,720 Speaker 1: price is just at a temporary, transitory ephemeral level. And 456 00:26:58,760 --> 00:27:00,480 Speaker 1: so when you say, well the stock, you know, they're 457 00:27:00,480 --> 00:27:02,840 Speaker 1: just selling stock when it reaches a certain level. You 458 00:27:02,920 --> 00:27:05,840 Speaker 1: might think, well, that's just a reward for hitting that level. 459 00:27:05,880 --> 00:27:08,560 Speaker 1: But what I show in the data is that that's 460 00:27:08,600 --> 00:27:12,679 Speaker 1: a very short lived price. And so what's happening is 461 00:27:12,720 --> 00:27:15,760 Speaker 1: the price on average in the data we see this 462 00:27:16,280 --> 00:27:21,400 Speaker 1: falls often you know, ten twenty more percent, sometimes even 463 00:27:21,400 --> 00:27:26,680 Speaker 1: as much uh depending on which which cases you're looking at. 464 00:27:26,800 --> 00:27:31,800 Speaker 1: And and that price decline is in fact the very 465 00:27:31,960 --> 00:27:36,199 Speaker 1: harmful to the average investor, because the average investor buys 466 00:27:36,600 --> 00:27:39,879 Speaker 1: not aware that the executive trigger has picked in, not 467 00:27:40,000 --> 00:27:43,159 Speaker 1: aware the executive has engineered the plan in such a 468 00:27:43,160 --> 00:27:45,720 Speaker 1: way as to dump shares at this moment, and not 469 00:27:45,920 --> 00:27:48,359 Speaker 1: aware that they just bought a stock that's about to 470 00:27:48,400 --> 00:27:54,880 Speaker 1: go down value. Now you say transparency, is any transparency 471 00:27:55,040 --> 00:28:01,159 Speaker 1: required by the SEC? The SEC yeah, is often notified 472 00:28:01,280 --> 00:28:05,120 Speaker 1: or can be notified upon requests, So the SEC has 473 00:28:05,160 --> 00:28:08,720 Speaker 1: the capacity to request in a non public manner, the 474 00:28:08,840 --> 00:28:12,520 Speaker 1: details of these plans, but the SEC does not require 475 00:28:12,960 --> 00:28:17,679 Speaker 1: any public disclosure of the plan. Companies will will often 476 00:28:17,880 --> 00:28:23,399 Speaker 1: voluntarily uh tag their their trading disclosures, so instiders have 477 00:28:23,520 --> 00:28:26,240 Speaker 1: to make trading discosers, but those don't come around for 478 00:28:26,320 --> 00:28:30,720 Speaker 1: about forty eight hours after the trades taking place. Companies 479 00:28:30,760 --> 00:28:34,800 Speaker 1: will sometimes add a footnote to those training schoolers are saying, Okay, 480 00:28:34,880 --> 00:28:38,720 Speaker 1: this was made pursuance to a one plan. Sometimes they'll 481 00:28:38,760 --> 00:28:41,800 Speaker 1: say when that plan was adopted, But that's as far 482 00:28:41,920 --> 00:28:44,600 Speaker 1: as it gets. You're not going to get any information 483 00:28:44,760 --> 00:28:47,720 Speaker 1: about the nature of the plan, what triggers might be 484 00:28:47,760 --> 00:28:51,160 Speaker 1: in place, how many more shares might be sold, when 485 00:28:51,200 --> 00:28:55,280 Speaker 1: those shares might be sold. All of that is very material, 486 00:28:55,600 --> 00:28:59,560 Speaker 1: very important to the average investor who's trying to make 487 00:28:59,560 --> 00:29:02,840 Speaker 1: a decis a shame do I buy this stock? And 488 00:29:02,840 --> 00:29:06,520 Speaker 1: and you know, the lack of transparency beyond the mere 489 00:29:06,680 --> 00:29:10,760 Speaker 1: fact that there was an executive sale UH is really 490 00:29:10,840 --> 00:29:13,840 Speaker 1: quite harmful to the integrity of our market, and I 491 00:29:13,880 --> 00:29:17,600 Speaker 1: think contributes in large parts to this sense among investors 492 00:29:17,640 --> 00:29:20,320 Speaker 1: that the markets are are the deck is kind of 493 00:29:20,320 --> 00:29:24,520 Speaker 1: stacked against them, that the markets are are an unequal, 494 00:29:24,840 --> 00:29:30,280 Speaker 1: unfair playing field and tilted in favor of these insiders. 495 00:29:30,520 --> 00:29:34,400 Speaker 1: So these ten be five one plans are designed to 496 00:29:34,960 --> 00:29:39,720 Speaker 1: avoid allegations of insider trading, But the way the plans 497 00:29:39,720 --> 00:29:43,640 Speaker 1: are being used, do they fit a definition of insider trading. 498 00:29:44,520 --> 00:29:48,040 Speaker 1: That's such great question, and it's a level assication because 499 00:29:48,080 --> 00:29:50,840 Speaker 1: actually the answer is no. And that this is another 500 00:29:50,920 --> 00:29:53,520 Speaker 1: point that I think could slipped. There's a little bit 501 00:29:53,560 --> 00:29:55,680 Speaker 1: of a sleight of hand going on here, a little 502 00:29:55,680 --> 00:29:56,920 Speaker 1: bit of a shell game, a little bit of a 503 00:29:56,960 --> 00:29:59,800 Speaker 1: smoke screen, um, and that is that in all of 504 00:29:59,840 --> 00:30:03,680 Speaker 1: the these cases, what we're talking about our sales that 505 00:30:03,720 --> 00:30:08,240 Speaker 1: are by definition made after the disclosure of the information 506 00:30:08,280 --> 00:30:10,960 Speaker 1: to the market. And this is a critical point. And 507 00:30:11,040 --> 00:30:14,880 Speaker 1: I thought the financial press for not not wholly taking 508 00:30:14,880 --> 00:30:17,640 Speaker 1: these executives, I think to quite an accountable for this, 509 00:30:17,800 --> 00:30:20,720 Speaker 1: because the first question I would ask a corporate executive 510 00:30:20,760 --> 00:30:23,520 Speaker 1: who's claiming can be five one plane as a defense 511 00:30:23,560 --> 00:30:25,520 Speaker 1: to this is why do you even need will tend 512 00:30:25,560 --> 00:30:29,440 Speaker 1: be five one at all? Um? After all, the information 513 00:30:29,560 --> 00:30:33,480 Speaker 1: is public prior to your trade. If it weren't, you 514 00:30:33,480 --> 00:30:36,920 Speaker 1: wouldn't be profiting as much as you are. And in fact, 515 00:30:37,160 --> 00:30:40,800 Speaker 1: the whole idea here is that the information is already out, 516 00:30:40,920 --> 00:30:44,040 Speaker 1: the price has already risen, and that's what makes the 517 00:30:44,120 --> 00:30:48,040 Speaker 1: sales so profitable. So in a sense, uh, we're the 518 00:30:48,280 --> 00:30:52,520 Speaker 1: whole discussion of pend five one uh and and insider 519 00:30:52,560 --> 00:30:56,240 Speaker 1: trading is really just a distraction, it's just a In fact, 520 00:30:56,240 --> 00:30:58,640 Speaker 1: I go even further, I think that there is a 521 00:30:58,880 --> 00:31:03,960 Speaker 1: tactic here of uh, distracting the SEC from what's really 522 00:31:03,960 --> 00:31:05,520 Speaker 1: going on. I think there's a lot of people at 523 00:31:05,560 --> 00:31:09,080 Speaker 1: the SEC who when they hear a TEND five one 524 00:31:09,120 --> 00:31:12,000 Speaker 1: plan that you know that is a rule which provides 525 00:31:12,040 --> 00:31:15,240 Speaker 1: immunity from insider trading liability, and so they just lift 526 00:31:15,240 --> 00:31:17,320 Speaker 1: their hands up that that's it, We're done. You know. 527 00:31:17,400 --> 00:31:19,000 Speaker 1: This is I think, and let's thing. I know this 528 00:31:19,480 --> 00:31:22,320 Speaker 1: as a fact, but from talking to people in the industry, 529 00:31:22,360 --> 00:31:24,760 Speaker 1: this is often how it works. There's an article like this, 530 00:31:25,480 --> 00:31:28,280 Speaker 1: like there was about about Fiser and the company. The 531 00:31:28,320 --> 00:31:32,360 Speaker 1: company says TEND five one, and the SEC staff when 532 00:31:32,440 --> 00:31:36,880 Speaker 1: they see TEND five one, they go, okay, next but 533 00:31:37,360 --> 00:31:39,520 Speaker 1: one to the next case. And I think, I think, 534 00:31:39,520 --> 00:31:43,440 Speaker 1: to your question, Uh, your question is exactly right. This 535 00:31:43,480 --> 00:31:46,920 Speaker 1: is a complete sleight of hand. There's no material non 536 00:31:46,960 --> 00:31:50,800 Speaker 1: public information in in in this story. By by by definition, 537 00:31:51,160 --> 00:31:53,840 Speaker 1: the announcement has already been made. We shouldn't be talking 538 00:31:53,840 --> 00:31:55,640 Speaker 1: about SNB five one at all. We should be talking 539 00:31:55,680 --> 00:31:58,600 Speaker 1: about fraud. To be talking about security strong we should 540 00:31:58,600 --> 00:32:02,560 Speaker 1: be talking about whether the company is fulfilling its duty 541 00:32:02,680 --> 00:32:07,240 Speaker 1: of loyalty, it's duty of transparency, that it has its 542 00:32:07,320 --> 00:32:11,160 Speaker 1: duty of honesty to to speak truthfully to the market. 543 00:32:11,680 --> 00:32:14,560 Speaker 1: Uh and and and there's the problem, right. The problem 544 00:32:14,680 --> 00:32:17,320 Speaker 1: is you've gone out and told the market is good news. 545 00:32:17,600 --> 00:32:19,400 Speaker 1: You know people are going to buy your stock as 546 00:32:19,400 --> 00:32:23,920 Speaker 1: a result, but you haven't told them the secret trades 547 00:32:24,440 --> 00:32:27,840 Speaker 1: that your executives are executing. That has nothing to do 548 00:32:27,920 --> 00:32:31,840 Speaker 1: with insider trading. It's just straight up deception. What do 549 00:32:31,880 --> 00:32:34,960 Speaker 1: you think should be done to the SEC B prosecuting 550 00:32:35,000 --> 00:32:39,760 Speaker 1: these cases? I think a couple a couple recommendations here. 551 00:32:39,760 --> 00:32:43,000 Speaker 1: Another one is and part of what my project is 552 00:32:43,040 --> 00:32:45,920 Speaker 1: SPRDER is to reorient the conversation the only lines of 553 00:32:46,000 --> 00:32:49,000 Speaker 1: your your last question, which is, let's stop thinking talking 554 00:32:49,040 --> 00:32:51,520 Speaker 1: about insider trading and thinking and start thinking about these 555 00:32:51,520 --> 00:32:55,600 Speaker 1: cases of straight up deception cases. And and that's something 556 00:32:55,640 --> 00:32:59,320 Speaker 1: the SEC and the Justice departments can do today with 557 00:32:59,400 --> 00:33:03,080 Speaker 1: the tools that they have, is to ask whether companies 558 00:33:03,120 --> 00:33:07,240 Speaker 1: are being fully transparent when they disclose positive news about 559 00:33:07,280 --> 00:33:12,040 Speaker 1: the the the counter veiling trading patterns of their corporate objectives. 560 00:33:12,440 --> 00:33:16,200 Speaker 1: That's something that in my view, those sorts of questions 561 00:33:16,240 --> 00:33:19,120 Speaker 1: can be asked today. Now, whether or not a case 562 00:33:19,200 --> 00:33:21,880 Speaker 1: can be brought in any given circumstance is going to 563 00:33:21,920 --> 00:33:24,560 Speaker 1: depend on the nature of the disclosure. It's going to 564 00:33:24,600 --> 00:33:28,720 Speaker 1: depend on on what executives knew about their trading plans. 565 00:33:28,720 --> 00:33:31,520 Speaker 1: It's going to depend on what they what the folks 566 00:33:31,520 --> 00:33:34,600 Speaker 1: you are responsible for putting these good news announcements out 567 00:33:35,080 --> 00:33:38,040 Speaker 1: uh news. So there's a lot of questions, But what 568 00:33:38,200 --> 00:33:40,880 Speaker 1: investigations are the way you get the answers to those questions. 569 00:33:40,880 --> 00:33:44,640 Speaker 1: And I think the sec can immediately start looking into 570 00:33:44,680 --> 00:33:50,040 Speaker 1: these cases under the standard rubric of securities fraud using 571 00:33:50,040 --> 00:33:52,680 Speaker 1: the tools that they have today. That being said, there 572 00:33:52,680 --> 00:33:56,160 Speaker 1: may be situations where the evidence is not there as 573 00:33:56,240 --> 00:34:00,320 Speaker 1: to intent or or or we just want to ask selves, 574 00:34:00,360 --> 00:34:04,040 Speaker 1: what might we do about this? More generally, but beyond 575 00:34:04,200 --> 00:34:08,120 Speaker 1: bringing individual enforcement actions or prostitutions, and and in the 576 00:34:08,120 --> 00:34:09,920 Speaker 1: pager I proposed, I think what I think is a 577 00:34:10,000 --> 00:34:12,960 Speaker 1: simple remedy, which is a claw back run. And the 578 00:34:13,040 --> 00:34:16,520 Speaker 1: idea is, you know, if executives cash out on good 579 00:34:16,560 --> 00:34:21,880 Speaker 1: news while the stock prices increasing, they I'm perfectly happy 580 00:34:21,960 --> 00:34:25,880 Speaker 1: to let them keep their profits because they've created value 581 00:34:25,880 --> 00:34:29,319 Speaker 1: for shareholders, and they deserve to be compensated for that. 582 00:34:29,440 --> 00:34:32,440 Speaker 1: I mean, it's it's it's just a standard sort of 583 00:34:32,480 --> 00:34:36,080 Speaker 1: function of a corporation to create value for its shareholds, 584 00:34:36,200 --> 00:34:38,840 Speaker 1: uh if. And though on the other hand, they sold 585 00:34:38,880 --> 00:34:42,160 Speaker 1: at a short lived price peak where the price went 586 00:34:42,239 --> 00:34:45,840 Speaker 1: up and then went down, and you have potentially millions 587 00:34:45,840 --> 00:34:49,760 Speaker 1: and of dollars of investor losses where individuals, retail investors, 588 00:34:49,760 --> 00:34:53,440 Speaker 1: institutions bought stock not knowing that the executive was cashing 589 00:34:53,440 --> 00:34:58,400 Speaker 1: out at this transitorily high price, this short lived peak. 590 00:34:59,080 --> 00:35:03,200 Speaker 1: That's the time to give those profits back. And this 591 00:35:03,280 --> 00:35:07,560 Speaker 1: is not an unprecedented uh idea. We already have this 592 00:35:07,640 --> 00:35:10,520 Speaker 1: sort of claw back and place for other kinds of 593 00:35:10,680 --> 00:35:15,000 Speaker 1: concerning insider trading uh using that term, that is to say, 594 00:35:15,000 --> 00:35:18,319 Speaker 1: trading activity by corporate insiders that may be legal but 595 00:35:18,440 --> 00:35:21,680 Speaker 1: nonetheless concerning under the what's called a short swing profit rule. 596 00:35:21,920 --> 00:35:24,879 Speaker 1: So we already have this in the place for some 597 00:35:24,960 --> 00:35:27,560 Speaker 1: kinds of insider trading. And in the paper I proposed 598 00:35:28,040 --> 00:35:32,920 Speaker 1: uh just broadening back to include these situations where a, uh, 599 00:35:33,480 --> 00:35:39,280 Speaker 1: these insiders enjoy profits at the expense of public company 600 00:35:39,280 --> 00:35:42,200 Speaker 1: shareholders who had no idea that this was happening and 601 00:35:42,960 --> 00:35:45,480 Speaker 1: h end up losing because they're buying prior to the 602 00:35:45,520 --> 00:35:49,520 Speaker 1: price of declining. Thanks Joshua. That's Joshua Mits, professor at 603 00:35:49,560 --> 00:35:51,920 Speaker 1: Columbia Law School. And that's it for the edition of 604 00:35:51,920 --> 00:35:55,319 Speaker 1: the Bloomberg Law Show. I'm June Grossel. Thanks so much 605 00:35:55,360 --> 00:35:58,000 Speaker 1: for listening, and remember to tune into the show every 606 00:35:58,000 --> 00:36:00,920 Speaker 1: weeknight at ten pm Eastern, right here on Bloomberg Radio.