Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
Speaker 2: Securities and Exchange Commissioned Chairman Paul Atkins promised changes at
Speaker 2: the agency when he took over in April.
Speaker 3: So at the helm of the SEC, I can confidently
Speaker 3: say it is a new days signed for the SEC
Speaker 3: to end its waywardness and return to its core mission
Speaker 3: that Congress set for it, investor protection, fair, orderly and
Speaker 3: efficient markets, and capital formation. I will work to protect
Speaker 3: investors from fraud, keep politics out of how our securities
Speaker 3: laws and regulations are applied, and advance clear rules of
Speaker 3: the road that encourage investment in our economy to the
Speaker 3: benefit of Americans.
Speaker 2: And the SEC has paired back enforcement. Indeed, new enforcement
Speaker 2: actions have dropped by about twenty eight percent through September,
Speaker 2: and the focus has changed to more traditionals to securities
Speaker 2: law violations and intentional misconduct. The agency has retreated from
Speaker 2: crypto related litigation and is focusing more on individual offenders
Speaker 2: than household name companies. Nearly thirty percent of enforcement actions
Speaker 2: brought under this administration so far focus on offering fraud
Speaker 2: or insider trading. My guest is securities law expert James Park,
Speaker 2: a professor at UCLA Law School, Can you start by
Speaker 2: sort of broadly describing what Gary Gensler's era at the
Speaker 2: SEC looked like as far as enforcement actions, It was.
Speaker 4: Very vigorous, I think in terms of enforcement, I think
Speaker 4: they brought significant cases that made an impact. I think
Speaker 4: there was a willingness to be entrepreneurial, to bring innovative
Speaker 4: theories in a number of areas, particularly with respec to
Speaker 4: ESG to issues, environmental, social and governance issues. We had
Speaker 4: some very significant cases against companies like Volkswagen, for example,
Speaker 4: which had that emission scandal, and you know Boeing, you
Speaker 4: know cases arising out of misrepresentations relating to the accidents
Speaker 4: that they had before. You had some theories like shadow trading,
Speaker 4: where you're using inside information not to trade in your
Speaker 4: own company, but in another company that you don't owe
Speaker 4: for douciary duties to but you may have a duty
Speaker 4: of confidentiality with respect to that information. And we saw
Speaker 4: record penalties and that's something that the prior enforcement director
Speaker 4: said is he believed that higher penalties are important to deterrence.
Speaker 4: Was a major theme during the Genstler enforcement era. I
Speaker 4: think that's the best way to describe it and.
Speaker 2: How as Chairman Paul Atkins distinguished or tried to distinguish
Speaker 2: his tenure from gancellers, what are his focuses.
Speaker 4: I think he's more focused on the straightforward cases, cases
Speaker 4: where you have clear evidence of intentional wrongdoing, whether that
Speaker 4: be theft by a broker, insider trading, really intentional misconduct.
Speaker 4: I think that's one area of emphasis. Another is that
Speaker 4: I think the SEC may be looking more at individuals
Speaker 4: as opposed to bringing cases against corporations. In that I
Speaker 4: think is a development that we've seen before. Actually, during
Speaker 4: the nineteen seventies, we had a very aggressive enforcement division
Speaker 4: under Stanley Sporken that was bringing innovative cases against corporations
Speaker 4: for accounting fraud, paying bribes to foreign companies. I mean,
Speaker 4: there are questions about whether the SEC was exceeding its authority.
Speaker 4: With Chairman Shad coming in, one of these things he
Speaker 4: emphasized is that we're going to focus more on individuals
Speaker 4: and insider trading. And that's kind of an interesting similarity
Speaker 4: with this era where we're moving from focusing on corporations
Speaker 4: as wrongdoers to individuals. And I think that, you know,
Speaker 4: may be based on sort of the idea that you know,
Speaker 4: most wrongdoing is done by rogue actors, people who are
Speaker 4: just acting on their own. I think that's the approach
Speaker 4: I think that we see Atkins taking versus maybe the
Speaker 4: Gensler position that goes after corporations is more concerned about
Speaker 4: sort of bad corporate cultures, that it's not individuals who
Speaker 4: just decide to do bad things, but because they're in
Speaker 4: bad corporate cultures that they commit fraud.
Speaker 2: According to a Bloomberg Law review, the SEC has brought
Speaker 2: about ninety one new enforcement suits since inauguration Day through
Speaker 2: the end of September. That's down from one hundred and
Speaker 2: twenty six actions filed during the same period in twenty
Speaker 2: twenty four. Is it because it's a new administration. Is
Speaker 2: it because they're focusing on different things? I mean, why
Speaker 2: do you think there's that drop.
Speaker 4: I think it could be a combination of different things.
Speaker 4: It's very hard to pinpoint the cause, and I think
Speaker 4: certainly the fact that you're in a transition period may
Speaker 4: mean that there are fewer cases that are actually filed.
Speaker 4: You know, we only got a new enforcement director last month,
Speaker 4: Judge Ryan in September, and enforcement moves more slowly without
Speaker 4: clear guidance from the top, and you know, just having
Speaker 4: a leadership transition maybe a reason that you have a
Speaker 4: decline in the number of cases. And you know, I
Speaker 4: took a look at a few numbers, and you know,
Speaker 4: even before this year, if you look at twenty twenty four,
Speaker 4: which was during the Gensler era, that'sa our decline compared
Speaker 4: to twenty twenty three. Five hundred and eighty three actions
Speaker 4: are filed in twenty twenty four. Seven hundred eighty four
Speaker 4: were in twenty twenty three. That's a twenty six percent
Speaker 4: decline within the same administration. Now, the penalties did increase
Speaker 4: in twenty twenty four relative to twenty twenty three, and
Speaker 4: so I think in a few weeks or a few
Speaker 4: months will learn, you know, what the penalties collected are
Speaker 4: and that may tell something additional. And it is finally
Speaker 4: possible that you know, the new administration's less aggressive. You know,
Speaker 4: we have some cases that were dropped that might have settled,
Speaker 4: and probably investigations that were started that could have resulted
Speaker 4: in actions may either be you know, just sort of
Speaker 4: delayed or languishing or maybe even formally closed. So I
Speaker 4: think I think it's a combination of a lot of
Speaker 4: different things.
Speaker 2: And did they drop all the crypto related actions, even
Speaker 2: the ones that were ongoing. Basically they dropped.
Speaker 4: Them, the major ones against exchanges in particular. I have
Speaker 4: seen a few crypto related cases involving outright thefts, and
Speaker 4: so they have not dropped all crypto cases, but the
Speaker 4: cases against you know, exchanges for example, or major developers
Speaker 4: where the argument is that you should have registered, you
Speaker 4: should have registered this as a security. I believe all
Speaker 4: or almost all of those have been withdrawn.
Speaker 2: So there's not a big discussion anymore. I mean, the
Speaker 2: last couple of years, you and I we're discussing what
Speaker 2: is a security? Is this a security? And the judges
Speaker 2: in New York we are having conflicting decisions. So that's
Speaker 2: not happening anymore. They don't have to worry about that, well.
Speaker 4: Not through the sec But there are cases that are
Speaker 4: private litigation that are percolating up, and I expect that
Speaker 4: the issue of whether or not certain digital assets our
Speaker 4: securities will be decided by courts in that context. And
Speaker 4: I've seen a few cases here and there that have
Speaker 4: gone both ways, so I think there still will be
Speaker 4: some litigation about that. For the time being, but it'll
Speaker 4: happen in the context of private litigation rather than SEC
Speaker 4: government enforcement.
Speaker 2: The SEC is making it easier for companies going public
Speaker 2: to force securities fraud claims into arbitration. Why and what
Speaker 2: would be the result of that?
Speaker 4: Well, I think the idea behind this is that shareholders
Speaker 4: should have a choice. Shareholders should be able to decide
Speaker 4: how the company is governed. And there's an argument that
Speaker 4: the way you resolve certain types of shareholder litigation should
Speaker 4: be up to the shareholders and if they accept it.
Speaker 4: You know, while they may not actually have a say
Speaker 4: in deciding whether or not such provisions are put into
Speaker 4: the charter of a company going public, they do have
Speaker 4: a say in that if they're unhappy with the provision,
Speaker 4: they can choose not to buy the stock. They can
Speaker 4: choose to pay less for the stock. This is a
Speaker 4: well established academic idea now, is that that shareholders have
Speaker 4: a choice with respect to corporate governance, and this policy
Speaker 4: decision effectively is signaling a willingness to allow companies to
Speaker 4: try this out if they would like to. I think
Speaker 4: there are some questions about the legality of some of
Speaker 4: these mandatory arbitration provisions. If they are adopted. So I
Speaker 4: think there is some risk that if somebody adopts them,
Speaker 4: this will be litigated. And for now, at least in Delaware,
Speaker 4: Delaware companies would not be able to put these visions
Speaker 4: in their charter because of a Delaware state law. But
Speaker 4: it's you know, it's something that academics have talked about
Speaker 4: for some time, and you know it's consistent with a
Speaker 4: Republican SEC chair to try this out. Now, whether or
Speaker 4: not companies will will do this, how this will work,
Speaker 4: you know, that's still very much up in the air,
Speaker 4: and so I think it'll take a few years before
Speaker 4: it starts having an impact.
Speaker 2: If it does, I'm going to go through just a
Speaker 2: couple of changes. The Division Director no longer has authority
Speaker 2: to issue formal orders of investigation, which allowed Division staff
Speaker 2: to issue to poenas, and so they're going back to
Speaker 2: something that they did prior to two thousand and nine,
Speaker 2: I think, where the commissioners have to approve the orders
Speaker 2: by majority vote.
Speaker 4: It's a significant change. It's a significant change, a procedural
Speaker 4: change that very well will likely affect the pace of
Speaker 4: SEC enforcement. I think it'll be slower, and you know,
Speaker 4: to give a little little background. For a long time,
Speaker 4: this was the policy of the SEC where the five commissioners,
Speaker 4: these five pointees had to sign off on every enforcement subpoena,
Speaker 4: any decision to issue orders that open investigations, those five
Speaker 4: commissioners had to decide this. And you know, I think
Speaker 4: the issue is that these five commissioners are very busy
Speaker 4: right there deciding all sorts of things, looking at new rules,
Speaker 4: and you know, all sorts of other matters, and so
Speaker 4: it will take a while for the subpoena to get
Speaker 4: on the agenda. And you know, I think that's what
Speaker 4: resulted in delays with the SEC and enforcement and even
Speaker 4: opening up an investigation. I mean, so after the Madeoff
Speaker 4: scandal two thousand and nine, one of the reforms is
Speaker 4: we're going to delegate some of this to the staff
Speaker 4: and so investigations could open more quickly, move more quickly,
Speaker 4: and in my view, it's a good change. But I
Speaker 4: think the argument on the other side is that, you know,
Speaker 4: if you want to control enforcement, you want the commissioners
Speaker 4: to get involved from the very beginning, because they're ultimately
Speaker 4: the ones you have to approve and enforcement action being
Speaker 4: brought being settled. And if they're involved at the very beginning,
Speaker 4: they can maybe cut off some investigations that may be
Speaker 4: inappropriate in their mind.
Speaker 2: Jim, you mentioned the dollar amounts of fines. Does it
Speaker 2: matter how much money the SEC brings in through enforcement actions?
Speaker 2: I mean, is that considered a gauge of how well
Speaker 2: the commissioner is doing?
Speaker 4: It's cited and it's something that I think the SEC
Speaker 4: chair in the past, both Republican and Democrat, have highlighted
Speaker 4: when they have a record amount of penalties. It's a
Speaker 4: way to show Congress, Hey, we're doing our job. We're
Speaker 4: vigorous on enforcement.
Speaker 1: Now.
Speaker 4: Is it a great measure? I think that there's some
Speaker 4: questions as to whether or not this might lead to
Speaker 4: artificial inflation of penalties, or even an incentive to settle
Speaker 4: cases more quickly for too little, just to get the
Speaker 4: penalty in your numbers. There's a Wall Street Journal article
Speaker 4: about a year ago that reported that a lot of
Speaker 4: these penalties are actually not collect that they're from bankrupt companies,
Speaker 4: and so that the SEC doesn't actually end up cofflecting
Speaker 4: all the penalties that it imposes. They only announce the
Speaker 4: ones that they've imposed, not necessarily ones that they've collected,
Speaker 4: and so and so. It's an imperfect measure, but it's
Speaker 4: a significant one. And I suspect that if we see
Speaker 4: a consistent decline, then that may be used against this SEC.
Speaker 4: You know, if there's a big crash, that that would
Speaker 4: be oh, you know, look at the penalties they declined
Speaker 4: by you know, fifty percent under Atkins. That's why we
Speaker 4: have a lots of confidence. So the SEC needs to
Speaker 4: be careful because if it's not vigorous and there's a
Speaker 4: market correction and a lot of scandals, everyone asks, you know,
Speaker 4: why was the SEC asleep at the switch?
Speaker 2: Chairman Atkins has also expressed a commitment to notifying businesses
Speaker 2: of technical violations before jumping to enforcement.
Speaker 4: I think that's fine in some cases. If it truly
Speaker 4: is a minor technical infraction that is a mistake, then
Speaker 4: may be faster. It may be faster to simply inform
Speaker 4: the company you know, you need to fix this now.
Speaker 4: The problem is if this becomes an excuse to you know,
Speaker 4: avoid enforcement of more serious matters, more serious matters where
Speaker 4: there is repeated violations, where there's harmed investors and customers,
Speaker 4: whether you know, sometimes technical rule violations signal a more
Speaker 4: corrupt corporate culture, and that's something that I'd be worried if,
Speaker 4: you know, if the SEC is not looking into this
Speaker 4: and following up on some of these minor rule violations.
Speaker 4: Now on the other side is maybe it's a better
Speaker 4: use of SEC enforcements which have become more limited. You know,
Speaker 4: there's a lot of staff decline. You know, SEC's always
Speaker 4: have limited enforcement resources. This may be a way of
Speaker 4: quickly resolving matters without fully investigating. But I would be
Speaker 4: concerned about over using this particular method. But I do
Speaker 4: think used properly, it could be a good thing.
Speaker 2: You mentioned to focus sort of more on individuals. The
Speaker 2: powerhouse public companies then breathe a sigh of relief and
Speaker 2: maybe relax their compliance programs or not.
Speaker 4: I hope not. I hope they don't see that as
Speaker 4: the message. A lot of the large companies have already
Speaker 4: invested in substantial amounts of compliance and so they have
Speaker 4: the infrastructure in place. I would be surprised if they
Speaker 4: abandoned that, because we could have a different SEC in
Speaker 4: the next you know, if there's a transition in a
Speaker 4: few years. And also it's good business to have strong compliance.
Speaker 4: In my view that it's a way of controlling misconduct
Speaker 4: within your organization that you know, you would not want,
Speaker 4: the shareholders would not want as well, but it would
Speaker 4: you know, probably send a signal that on some issues
Speaker 4: we can maybe be a little bit less worried. And
Speaker 4: so the danger there is that you know, corporate manager
Speaker 4: has become a little bit too complacent, and so they
Speaker 4: may get the signal where we can take more risk
Speaker 4: with respect to misconduct, and they may not listen to
Speaker 4: the lawyers who are telling them. If you do this,
Speaker 4: the sec could come knocking and they may see that
Speaker 4: as less credible if you have less vigorous enforcement on
Speaker 4: the on the corporate side, and you know, cases against individuals,
Speaker 4: I think the reality is they're very expensive, they're very
Speaker 4: hard to develop. You have to be very very thorough
Speaker 4: and sometimes the evidence to really establish liability against individuals
Speaker 4: may take years and years to develop, and so it
Speaker 4: will provide some deterrence, I think. But I think that
Speaker 4: you know, sometimes if you have a substantial wrongdoing by
Speaker 4: a big corporation that gets a lot of publicity, that
Speaker 4: generates a lot of deterrence in the corporate world.
Speaker 2: Finally, a noticeable decrease in the use of press releases
Speaker 2: in September, only one press release this is a Gorina routers.
Speaker 2: Only one press release announce an enforcement action compared to
Speaker 2: forty three in September of twenty twenty four.
Speaker 4: What's a big decline actually, And you know, I watch
Speaker 4: those press releases very carefully. The blogs do as well.
Speaker 4: That's how we learn about the big cases. And I
Speaker 4: hope they will issue more press releases with notable cases
Speaker 4: because that's how we law professors and attorneys get a
Speaker 4: sense of what the SEC thinks is important. It keeps
Speaker 4: the SEC visible. But I think it's understandable. With the transition,
Speaker 4: I expect they will ramp up their press releases over the.
Speaker 2: Next year, so I'm sure they'll put out at least
Speaker 2: more than one a month. Do you have any concerns
Speaker 2: about enforcement that we haven't addressed?
Speaker 3: You know.
Speaker 4: The other point I would make is that, you know,
Speaker 4: with AI technology becoming so important, I hope the SEC
Speaker 4: really keeps a close eye on fundraising by AI companies
Speaker 4: because it's a very opaque technology. I think there are
Speaker 4: a lot of opportunities for fraud in this space. It's
Speaker 4: an important part of our economic boom, and I think
Speaker 4: that if we lose some confidence in those valuations, investors
Speaker 4: will lose a lot of money. So I hope the
Speaker 4: SEC is continuing those initial efforts to look at AI companies.
Speaker 2: That will certainly keep them busy. Thanks Jim. That's Professor
Speaker 2: James Park of UCLA Law School. The Supreme Court has
Speaker 2: agreed to rule on the constitutionality of the federal law
Speaker 2: that bans firearm possession by drug users and addicts. It
Speaker 2: will be the second test this term of the Second
Speaker 2: Amendment's gun rights protections. Earlier this month, the Supreme Court
Speaker 2: agreed to hear a gun case testing the right to carry.
Speaker 2: My guest is Andrew Willinger, executive director of the Duke
Speaker 2: Center for Firearms Law. Andrew tell us about the federal
Speaker 2: law at issue here in the Hamani case.
Speaker 1: This section of federal law might sort of sound familiar
Speaker 1: to people who have been following the Court's Second Amendment
Speaker 1: jureisprudence over the past couple of years. This is eighteen
Speaker 1: US Code nine twenty two, and specifically nine twenty two G,
Speaker 1: which lists a number of prohibited statuses groups of people who,
Speaker 1: because of their status, are prohibited under federal law from
Speaker 1: possessing firearms or ammunition and one of those groups. One
Speaker 1: of those subsections under nine twenty two G was an
Speaker 1: issue in the Rahimi case. That's individuals who are subject
Speaker 1: to a domestic violence restraining order that meets certain criteria.
Speaker 1: But there are other groups as well, felons for example,
Speaker 1: and then, as relevant to the Harmani case, individuals who
Speaker 1: are considered unlawful users of or addicted to a controlled substance.
Speaker 1: So that's the specific revision of criminal law that's at
Speaker 1: issue in this case is a ban on unlawful drug
Speaker 1: users possessing firearms.
Speaker 2: The Fifth Circuit said that the blanket ban is unconstitutional,
Speaker 2: but the ban could be used against people accused of
Speaker 2: being high and armed at the same time. Explain the
Speaker 2: logic of that.
Speaker 1: That's basically right. It is a little bit confusing because
Speaker 1: there are a number of different cases in the Fifth Circuit,
Speaker 1: and so if you look back at the Harmoni case,
Speaker 1: there really isn't a lengthy decision because the Circuit had
Speaker 1: decided in an earlier case called Connolly, and all the
Speaker 1: judges said in this specific case is that you know,
Speaker 1: we're applying our ruling in Connolly and therefore find that
Speaker 1: as applied to this individual HARMIONI the provision is also unconstitutional.
Speaker 1: But basically the approach that the Fifth Circuit has taken
Speaker 1: in these drug cases is to say that, as a
Speaker 1: historical matter, that judges believe that their support for applying
Speaker 1: this provision when somebody is under the influence of drugs
Speaker 1: and at the same time in possession of guns or ammunition,
Speaker 1: but when there's no proof that those two things were contemporaneous,
Speaker 1: that they occurred at the same time, then the judges
Speaker 1: have said that the provision cannot be applied. And that's
Speaker 1: what they decided in the Harmonic case.
Speaker 2: And this is the same provision that a jury convicted
Speaker 2: Hunter Biden on.
Speaker 1: That's correct, that is correct.
Speaker 2: That's where its fame. So the Justice Department is arguing
Speaker 2: that the law is valid. So they're arguing then, for
Speaker 2: a law that restricts Second Amendment rights, that's right.
Speaker 1: Yeah, it's a little bit of an interesting posture, as
Speaker 1: you know. But again, I think what this comes back
Speaker 1: to is the distinction between a facial challenge and it
Speaker 1: has applied challenge. So the Hamani case deals with an
Speaker 1: has applied challenge, and the government is saying, you know,
Speaker 1: we think the Fifth Circuit got it wrong, but on
Speaker 1: these specific facts. So I think it's going to be
Speaker 1: a little bit of a delicate dance throughout this case
Speaker 1: as it works its way through the briefing and the
Speaker 1: oral argument before the Supreme Court, where I actually don't
Speaker 1: think that the current administration believes that nine twenty two
Speaker 1: G Three has the language has been interpreted, is constitutional
Speaker 1: in all of its applications, right. I don't know that
Speaker 1: they would say that this is constitutional as applied to
Speaker 1: somebody who's just, you know, using marijuana on a regular basis.
Speaker 1: But they want to say in this case because there
Speaker 1: are maybe exacerbating factors not just marijuana. There's potentially other
Speaker 1: legal drugs at issue, and there's a connection to allegedly
Speaker 1: to foreign terrorism that's not really relevant to the Second Amendment.
Speaker 1: But they're going to, I think, focus a lot on
Speaker 1: the as applied nature and on the specific facts of
Speaker 1: this case.
Speaker 2: The Supreme Court in twenty twenty two, in the Bruin case,
Speaker 2: rule that any restrictions on firearms have to be consistent
Speaker 2: with the nation's historical tradition of firearms regulation. What is
Speaker 2: the history and tradition that the government is saying supports
Speaker 2: their position here?
Speaker 1: The government at least below in these cases in the
Speaker 1: Fifth Circuit has basically rested on three categories of historical
Speaker 1: statutes or restrictions. So the first is the historical treatment
Speaker 1: of the mentally ill, and that's sort of an argument
Speaker 1: that maybe drug users are analogous in some way to
Speaker 1: those who are mentally ill, that this is this is
Speaker 1: some form of a temporary incapacitation. The second is more
Speaker 1: generally just laws that we're based on a legislative determination
Speaker 1: that some group of people is dangerous. So that could
Speaker 1: be you know, political dissonance for example, it could be
Speaker 1: any group where the determination is that you know, this
Speaker 1: group is dangerous and we're not going to allow them
Speaker 1: to have guns. And then the third is and this
Speaker 1: kind of you know, goes in sequential order. You know,
Speaker 1: the mental illness and the dangerousness laws are earlier, and
Speaker 1: then eventually you start you start to see laws that
Speaker 1: talk about alcohol and being intoxicated with alcohol, and those
Speaker 1: are also a category that the government has come forward
Speaker 1: with in these cases. And again, I think for each one,
Speaker 1: you know, it's going to depend on this level of
Speaker 1: generality issue that that courts have really been wrestling with
Speaker 1: under Bruin, which is how close do the historical statutes
Speaker 1: really need to be in order to uphold the modern law?
Speaker 2: And the historic statutes go back to the seventeenth and
Speaker 2: eighteenth century, do they go back to the nineteenth century?
Speaker 2: What does the court consider acceptable history?
Speaker 1: Yeah, Well, that's one of the really interesting aspects of
Speaker 1: sort of both of these cases that the Court has
Speaker 1: granted now, which is that in some sense there are
Speaker 1: narrow questions, but I think they're in the background. You
Speaker 1: have this doctrinal uncertainty, and we're going to start to
Speaker 1: get some clues about questions like the one you raise,
Speaker 1: which is what's even the time period?
Speaker 2: Right?
Speaker 1: How far back do you go? You know, if something's
Speaker 1: enacted in the nineteenth century, is that too new? Like
Speaker 1: does that not really inform the original meaning of the
Speaker 1: Second Amendment? In the Bruin case, the Court seems to
Speaker 1: at least leave the door open to considering historical laws
Speaker 1: anywhere from around the time of the founding all the
Speaker 1: way up through about nineteen hundred. But there's really been
Speaker 1: a divergence in the courts of appeal in terms of
Speaker 1: what courts have done with this later in time history
Speaker 1: and how much emphasis they're putting on Reconstruction era history,
Speaker 1: and that's going to come up. I think in both
Speaker 1: of these cases actually.
Speaker 2: Tell us about the argument of the plaintiffs.
Speaker 1: It's really an argument for this contemporaneousness requirement as to
Speaker 1: nine twenty two G. Three. So the argument is that
Speaker 1: the historically correct way to think about this type of
Speaker 1: prohibition is that legislatures had the power to say if
Speaker 1: you are if you're actively under the influence of some
Speaker 1: intoxicating substance and you're you know, you're not acting in
Speaker 1: your right mind at that point in time, you can
Speaker 1: be prohibited from having guns. But otherwise just sort of
Speaker 1: evidence that you may have used drugs in the past
Speaker 1: isn't enough, And I think that's what they're going to
Speaker 1: say here. There probably also will be a lot of
Speaker 1: back and forth about how much work these other facts
Speaker 1: are doing. You know, the connection to the terrorist organization,
Speaker 1: you know, that shouldn't really be relevant. But I think
Speaker 1: what's happened. You mentioned the Hunter Biden case. You know,
Speaker 1: the federal government doesn't charge this provision a lot, so
Speaker 1: they tend to charge it in sort of egregious cases.
Speaker 1: Do you know Hunter Biden, he's not just somebody who's
Speaker 1: using marijuana and happens to have a gun, he's going
Speaker 1: out and writing a memoir where he admits it to
Speaker 1: this type of product. So I think, you know, there
Speaker 1: will be some discussion of the sort of how the
Speaker 1: provisions actually used, with the government maybe saying, look, we're
Speaker 1: not intending to really bring this type of charge, you know,
Speaker 1: if somebody's just without any aggravating circumstance occasionally using marijuana.
Speaker 2: The court did uphold a federal law that bars guns
Speaker 2: for domestic abusers, even though there was no such domestic
Speaker 2: abuse law on the books at the nation's founding. Do
Speaker 2: you think that that's where they're going with this, That
Speaker 2: they took this case to reverse the Fifth Circuit and
Speaker 2: find the ban constitutional.
Speaker 1: Yeah, so my best guess is that they did that.
Speaker 1: They took it tending to reverse the Fifth Circuit. I
Speaker 1: think actually the calculus might have been influenced by the
Speaker 1: earlier grand in Wolford, which we can maybe talk about.
Speaker 1: But yeah, I expect them to reverse and I think
Speaker 1: it could be close to unanimous decision again resting on
Speaker 1: this facial versus as applied issue, which was a similar
Speaker 1: issue in the Rahemi case. Right where they're sort of
Speaker 1: getting these cases with bad facts and saying, look has
Speaker 1: applied here, this provision's okay. But we're not necessarily going
Speaker 1: to say that the unlawful user ban is okay if
Speaker 1: somebody is just a medical marijuana user and has a gun.
Speaker 1: So that would be my guest that Dell reverse here.
Speaker 2: The joys of originalism, which is for another day, but anyway,
Speaker 2: coming up next on the Bloomberg Law Show, I'll continue
Speaker 2: this conversation with Andrew Willinger of the Duke Center for
Speaker 2: Firearms Law. The Supreme Court will also consider a Hawaii
Speaker 2: law over the right to carry. I'm June Grosso and
Speaker 2: you're listening to Bloomberg. The Supreme Court's conservative super majority
Speaker 2: has expanded the right to bear arms starting in twenty
Speaker 2: twenty two, with the landmark Ruined case holding the Second
Speaker 2: Amendment protects the right to carry a handgun in public.
Speaker 2: The test the Court established was that any restrictions of
Speaker 2: firearms must be consistent with the national history and tradition.
Speaker 2: The lower courts have been struggling with that test, and
Speaker 2: the Supreme Court is taking up two gun cases this
Speaker 2: term that may help to clarify the test. I've been
Speaker 2: talking to Andrew Willinger, the executive director of the Duke
Speaker 2: Center for Firearms Law. The court earlier this month also
Speaker 2: agreed to hear a challenge to Hawaii law that prohibits
Speaker 2: people from carrying guns onto another person's private property without
Speaker 2: that person's consent, And in this case, the Trump administration
Speaker 2: is backing the challengers to the law.
Speaker 1: Yeah, so this law is part of a group of states,
Speaker 1: you know, the the year or two after that Bruined
Speaker 1: decision that we talked about in twenty twenty two, which
Speaker 1: set out this new test and also ruled that discretionary
Speaker 1: concealed carry permitting was unconstitutional. So, in other words, basically
Speaker 1: said that states that had these stricter laws for determining
Speaker 1: whether somebody can have a concealed carry permit had to
Speaker 1: relax them. And so the group of you know, six
Speaker 1: or eight states that had those laws, I think most
Speaker 1: of those states reacted ultimately by enacting new statutes. They
Speaker 1: got rid of the discretionary language, but they also instituted
Speaker 1: new application requirements and they restricted as relevant here, they
Speaker 1: restricted where permit holders can carry their guns. So it's
Speaker 1: kind of this idea of recognizing, you know, we're going
Speaker 1: to have more people who get these permits, but you know,
Speaker 1: as a result, we want to limit where those permit
Speaker 1: holders can can carry. And so typically what these laws
Speaker 1: look like and what they look like in New York,
Speaker 1: California and then Hawaii was that they would have a
Speaker 1: long list of what's called sensitive places, so locations where
Speaker 1: guns are absolutely prohibited. You can't carry your firearm in
Speaker 1: a school, a government building, and a courthouse and so on.
Speaker 1: And then a few states also did as a y
Speaker 1: did what you can think of it as switching the
Speaker 1: default rule for private property. So the default has always
Speaker 1: been and I think every state that you are allowed
Speaker 1: to carry a firearm onto private property unless you are
Speaker 1: told otherwise. And that's when you think about businesses posting
Speaker 1: a sign that says no guns allowed, right, That's why
Speaker 1: they do that, because they have to specify if they
Speaker 1: don't want people to carry. But what these states have
Speaker 1: done is to say, we're going to flip that and
Speaker 1: we're going to make the default that no carry is allowed.
Speaker 1: And if a business, for example, would like to allow
Speaker 1: a permit holder to carry their gun, they need to
Speaker 1: post a sign or otherwise say yes, you're allowed to
Speaker 1: do that, but as a default that they do nothing,
Speaker 1: a permit holder is not allowed to carry there.
Speaker 2: So the Administration in its papers told the High Court
Speaker 2: that people could bring bicycles, roller skates, protest banners, muddy shoes,
Speaker 2: dripping umbrellas, melting ice cream cones into private stores without permission.
Speaker 2: Only if someone wants to carry a gun must he
Speaker 2: obtain express authorization under the arbitrary presumption that all property
Speaker 2: owners would view guns differently. It seems absurd to me
Speaker 2: to compare bicycles, melting ice cream cones, and muddy shoes
Speaker 2: with a gun.
Speaker 1: Right, And there is at least some pulling on this
Speaker 1: that suggests that people do prefer more than fifty percent
Speaker 1: prefer the no carry default that depends. I mean, that's
Speaker 1: different as you might imagine for these laws to reach
Speaker 1: private property generally. So people are very strongly in favor,
Speaker 1: as you can imagine a rule that says, as a
Speaker 1: default is someone can't carry a firearm into my home.
Speaker 1: They're less in favor when it comes to private property
Speaker 1: that's open to the public, and they still are, but
Speaker 1: it's closer. And that's what this case deals with, is
Speaker 1: private property that's open to the public, as you mentioned.
Speaker 1: So yeah, I mean, I think it's certainly true that
Speaker 1: the articles that you mentioned are very different. But under
Speaker 1: the Second Amendment cases and Ruin, the question is really
Speaker 1: simply whether this type of innovation, this specifically, is a
Speaker 1: new legislative intervention.
Speaker 4: Right.
Speaker 1: We don't have laws exactly like this anywhere in American history, because,
Speaker 1: as I've said, the default was always as a general matter,
Speaker 1: to allow guns to be carried. The question is whether
Speaker 1: there's nevertheless a tradition of some kinds of restrictions that
Speaker 1: could support this innovation.
Speaker 2: The Ninth Circuit had ruled that nothing in the text
Speaker 2: to the Second Amendment or otherwise suggests that a private
Speaker 2: property owner, even owners who open their private property to
Speaker 2: the public, must allow persons who bear arms to enter.
Speaker 2: There was a contrary opinion from the Second Circuit, was.
Speaker 1: It, Yeah, that's right on this specific question of flipping
Speaker 1: the default approach. There is a direct circuit split between
Speaker 1: the Second Circuit and the Ninth Circuit, and the Second
Speaker 1: con Circuit found that New York could not do this
Speaker 1: under the Second Amendment. The Ninth Circuit says Hawaii can't.
Speaker 1: And it really comes down to a handful of historical
Speaker 1: laws that are being parsed in these cases. There's some
Speaker 1: suggestion that there may be sort of anti poaching laws's
Speaker 1: laws that governed, you know, farms or plantations that you
Speaker 1: can't bring guns onto somebody else's land. But they may
Speaker 1: have gone broader than that in some instances. And so
Speaker 1: that's going to be the debate is exactly what types
Speaker 1: of private property those historical laws covered.
Speaker 2: And Andrew, are they just going to look at the
Speaker 2: history and tradition of the states on the mainland, or
Speaker 2: are they going to consider the history and tradition specifically
Speaker 2: of Hawaii. Wear It's attorney said, Hawai has a long
Speaker 2: history of reasonable gun regulation dating back to the eighteen fifties,
Speaker 2: well before it was even a state. Is it why
Speaker 2: going to get credit for that or not?
Speaker 1: Yeah, what you raised a very interesting issue, which is that,
Speaker 1: you know, Hawaii I think has been at the forefront
Speaker 1: of pushing back against this history and tradition approach and
Speaker 1: by the Supreme Court, so that the Hawaii Supreme Court
Speaker 1: had a decision in a case called Wilson I think
Speaker 1: maybe a couple of years ago where they really took
Speaker 1: some shots at the Supreme Court and said you know, look,
Speaker 1: this is not how we do things in Hawaii. We're
Speaker 1: rejecting this history and tradition approach. You know, this is
Speaker 1: not consistent with the spirit of aloha. And so I
Speaker 1: think that's that's kind of in the background here, a
Speaker 1: little bit of Hawaii, you know, really feeling like like
Speaker 1: they shouldn't be constrained by what the Supreme Court is
Speaker 1: saying and doing in the Second Amendment context. But as
Speaker 1: the Bruin test has been applied, I think the inquiry
Speaker 1: is is it's not Hawaii specific, right, and the courts
Speaker 1: that have dealt with these challenges haven't treated it that way.
Speaker 1: They're looking generally at the national historical tradition and seeing
Speaker 1: if they can find any type of analogous restriction in this.
Speaker 2: They're not challenging the parts of the law that banned
Speaker 2: firearms and so called sensitive locations like government buildings, public
Speaker 2: parks and beaches, etc. Why not challenge at all.
Speaker 1: What we saw in this case below is that the
Speaker 1: court kind of split the difference with some of these
Speaker 1: sensitive place bands. They upheld some of them, they reversed
Speaker 1: some of them. I think this is a strategic choice
Speaker 1: by the plaintiffs that they think that this private property
Speaker 1: rule is their best shot. It's one where we've seen
Speaker 1: some more liberal judges at the circuit level have some
Speaker 1: suspicion about it, and so I think that's why they've
Speaker 1: chosen to focus on it. But I do believe that
Speaker 1: the sensitive place question, it will be really important to
Speaker 1: sort of watch how it's influencing the justices thinking in
Speaker 1: this case, because you could imagine I think even some
Speaker 1: of the liberal wing of the Court being maybe okay
Speaker 1: with reversing the Ninth Circuit here if the sort of
Speaker 1: payoff of that, or the trade off is that you
Speaker 1: get a statement from the Supreme Court saying it's okay
Speaker 1: under the Sensitive Places doctrine to ban guns in a
Speaker 1: lot of different locations, right, but you just can't do
Speaker 1: the private property switch. So there's kind of some hydraulics
Speaker 1: there where I wonder whether that's going to be going
Speaker 1: on behind the scenes. Frankly, you know, it may be
Speaker 1: that we get something, you know, in the opinion that says,
Speaker 1: you know, look, this is not casting doubt on sensitive
Speaker 1: place laws even outside of the limited categories the Court
Speaker 1: has already recognized.
Speaker 2: I do think that the oral arguments in these cases
Speaker 2: are going to be interesting. Thanks for joining me, Andrew.
Speaker 2: That's Andrew Willinger, executive director of the Duke Center for
Speaker 2: Firearms Law. And that's it for this edition of The
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