WEBVTT - Judge Shopping and the Abortion Pill Case 0:00:03.120 --> 0:00:07.960 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:09.160 --> 0:00:12.440 A case in the Western District of Texas is one 0:00:12.440 --> 0:00:15.760 of the biggest fights over abortion since the Supreme Court 0:00:15.880 --> 0:00:19.720 overturned Roe v. Wade and the constitutional right to abortion. 0:00:20.160 --> 0:00:24.520 As we've seen, what starts in Texas doesn't stay in Texas. 0:00:25.120 --> 0:00:30.319 It often has grave national implications. That's Wendy Davis of 0:00:30.480 --> 0:00:34.520 Planned Parenthood Texas Votes talking about the case where anti 0:00:34.600 --> 0:00:37.479 abortion groups are trying to block the sales of a 0:00:37.640 --> 0:00:41.839 key abortion pill nationwide, a pill which was approved by 0:00:41.840 --> 0:00:47.280 the FDA decades ago, and they've brought their case in Amarillo, Texas, 0:00:47.680 --> 0:00:51.960 where they're one certain of getting Judge Matthew kesmeric a 0:00:52.080 --> 0:00:56.240 Trump appointee who's been criticized for his views opposing abortion 0:00:56.320 --> 0:01:00.440 and LGBTQ rights. It's an illustration of the problem with 0:01:00.520 --> 0:01:04.759 single judge divisions and judge shopping something, just as Alena 0:01:04.840 --> 0:01:09.120 Kagan complained about in a case this term in Texas, 0:01:09.640 --> 0:01:12.600 there are divisions within districts. You can pick your trial 0:01:12.640 --> 0:01:17.560 court judge. You know, you play by the rules, that's fine, 0:01:18.000 --> 0:01:21.360 but you pick your trial court judge. One judge stops 0:01:21.480 --> 0:01:24.840 a federal immigration policy in its tracks. Joining me is 0:01:24.840 --> 0:01:28.360 Professor Stephen Vlanik of the University of Texas Law School, 0:01:28.640 --> 0:01:31.919 who's been studying this issue and written about it. Steve, 0:01:31.959 --> 0:01:34.880 we've all heard about forum shopping. How is what's happening 0:01:34.880 --> 0:01:38.479 in Texas any different? And I think it's worth distinguishing 0:01:38.520 --> 0:01:42.320 between two different factories. So, in any legal system that 0:01:42.400 --> 0:01:46.360 has relatively permissive rules about where you can file a lawsuit, 0:01:46.600 --> 0:01:48.800 you know that doesn't just narrow it down to one 0:01:49.080 --> 0:01:52.320 jurisdiction for every single lawsuit, You're gonna have forum shopping. 0:01:52.360 --> 0:01:54.920 That is that you're going to have efforts by whoever 0:01:55.000 --> 0:01:58.560 controls where the case is filed to file in a 0:01:58.600 --> 0:02:03.480 place that is strategically advantageous, either because the general composition 0:02:03.520 --> 0:02:06.520 of the bench is favorable, or because the jury pool 0:02:06.640 --> 0:02:10.960 is favorable, or because maybe it's more geographically convenient to 0:02:11.080 --> 0:02:13.160 one side of the case and not the other. June. 0:02:13.240 --> 0:02:15.880 That is, to a degree inevitable and unavoidable in our 0:02:15.960 --> 0:02:18.200 legal system. What we're seeing a lot more of these 0:02:18.280 --> 0:02:20.960 days is what I think because a far more nefarious 0:02:21.200 --> 0:02:24.840 version of that, which is judge shopping, filing in tiny, 0:02:25.240 --> 0:02:30.280 usually single judge subdivisions of federal district courts where by 0:02:30.400 --> 0:02:33.680 filing in that particular place you have a one hundred 0:02:33.680 --> 0:02:37.720 percent chance of drawing a specific judge, where basically the 0:02:37.800 --> 0:02:40.400 plantiff can choose not just where to file, but by 0:02:40.440 --> 0:02:42.800 choosing where to file, the plantiffs can say, I want 0:02:42.919 --> 0:02:45.880 my case to be heard by Judge Smith. And I 0:02:45.919 --> 0:02:49.680 think that's not a brand new phenomenon, but we're seeing, 0:02:49.680 --> 0:02:53.360 and I think being exploited a lot more systemically and 0:02:53.440 --> 0:02:58.200 a lot more visibly in cases with partisan valances than 0:02:58.360 --> 0:03:01.120 was the case really at any recent point in the 0:03:01.160 --> 0:03:03.760 history of our legal system, and a lot more in Texas. 0:03:04.040 --> 0:03:06.320 So yeah, I mean, so Texas is not unique. You know, 0:03:06.400 --> 0:03:08.160 the headlines are all out of Texas, and there are 0:03:08.160 --> 0:03:10.480 some reasons for that, but it's worth stressing there are 0:03:10.680 --> 0:03:15.200 single judge divisions in a decent minority, probably around thirty 0:03:15.200 --> 0:03:18.359 five percent of the federal district courts in the country 0:03:18.639 --> 0:03:20.720 have at least somewhere where if you file, maybe you 0:03:20.800 --> 0:03:22.840 get it assigned to a single judge. What I think 0:03:22.919 --> 0:03:25.200 mixed Texas union because we've got a lot of So 0:03:25.639 --> 0:03:29.080 of the twenty seven total divisions in Texas across our 0:03:29.080 --> 0:03:32.000 four district courts, there are eight that are single judge divisions, 0:03:32.080 --> 0:03:33.400 and you know, June, I think we should say a 0:03:33.440 --> 0:03:36.320 single judge divisions staffed by judges who I think are 0:03:36.400 --> 0:03:40.480 relatively outliers when it comes to the ideological spectrum, and 0:03:40.560 --> 0:03:42.600 in the fifth Circuit right where you have a fairly 0:03:42.640 --> 0:03:45.280 sympathetic appellate bench as well. And so I think there's 0:03:45.280 --> 0:03:48.280 a reason why we've seen the state of Texas steer 0:03:48.680 --> 0:03:52.080 lawsuit after lawsuit against the Biden administration to the single 0:03:52.160 --> 0:03:55.800 judge divisions. Why we've seen this mythopristone case filed of 0:03:55.840 --> 0:03:58.960 all places in the country in Amarillo, Texas, so that 0:03:59.000 --> 0:04:01.200 it could be assigned to Dge Matthew kaz Marit. I 0:04:01.200 --> 0:04:04.200 think it's the pattern that's the problem, not just individual 0:04:04.200 --> 0:04:08.560 instances there. Ope, has Texas denied that it's filing in 0:04:08.600 --> 0:04:12.280 these districts to get conservative judges? No, I mean the 0:04:12.320 --> 0:04:14.720 irony is, though, you know, in three of the cases 0:04:14.800 --> 0:04:17.279 Texas has filed against the federal government, the federal government 0:04:17.279 --> 0:04:20.880 has now moved the transfer either to a different venue, 0:04:20.960 --> 0:04:22.640 like to a different district court, or at least to 0:04:22.680 --> 0:04:25.400 a different division within the same district court. And the 0:04:25.440 --> 0:04:29.000 first of those a case unhelpfully called Texas versus Department 0:04:29.000 --> 0:04:33.120 of Homeland Security. There was a hearing where Texas represented 0:04:33.240 --> 0:04:35.719 on the record in open court that they filed that 0:04:35.800 --> 0:04:39.880 particular lawsuit in the Victoria Division of the Southern Districtive 0:04:39.880 --> 0:04:43.159 of Texas because they wanted Judge Tipton. And you know 0:04:43.160 --> 0:04:47.200 what's remarkable of that is that, notwithstanding that concession, Judge 0:04:47.200 --> 0:04:52.640 Tipton still denied DJ's motion to transfer, basically because DJ 0:04:52.839 --> 0:04:56.080 wouldn't publicly accuse him of being biased. And you know, June, 0:04:56.120 --> 0:04:57.880 to me that miss is the point. The question is 0:04:57.920 --> 0:05:02.040 not whether Judge Tipton is or whether Judge Kasmarica is biased. 0:05:02.160 --> 0:05:05.039 The question is whether the reasonable person looking at this 0:05:05.160 --> 0:05:08.240 behavior by playing dist you know, by Texas buy on 0:05:08.320 --> 0:05:10.680 all these lawsuits in these district cords, would say that 0:05:10.720 --> 0:05:13.320 this looks like the system is being manipulated. And if 0:05:13.360 --> 0:05:15.560 the answer is yes, then that ought to be a 0:05:15.600 --> 0:05:18.680 pretty compelling reason for judges to say, you know, we 0:05:18.680 --> 0:05:20.919 don't want to abide that, we don't want to enable that, 0:05:21.000 --> 0:05:23.160 we don't want to support that, and yet here we are. 0:05:23.560 --> 0:05:28.480 Is the real problem, or a secondary problem, the issuance 0:05:28.520 --> 0:05:32.800 of nationwide injunctions. So you have a judge in Amarillo, 0:05:33.000 --> 0:05:37.760 Texas issuing an injunction that applies to the whole country. 0:05:38.000 --> 0:05:42.359 I think nationwide injunctions compound the problem June, because you know, 0:05:42.400 --> 0:05:45.880 among other things, they ratchet up the stakes of each 0:05:45.880 --> 0:05:48.480 of these individual cases. But you know, I think an 0:05:48.520 --> 0:05:52.240 individual district judge, even without a nationwide injunction, could still 0:05:52.240 --> 0:05:54.560 cause a stair amount of mischief by him or herself. 0:05:54.600 --> 0:05:57.599 So the nationwide injunctions I think have made this worse 0:05:57.800 --> 0:06:00.520 and more visible. But actually I think the sort of 0:06:00.520 --> 0:06:03.800 the judge shopping phenomenon is a problem no matter what 0:06:03.920 --> 0:06:07.039 kind of relief the parties receive, king especially where you 0:06:07.080 --> 0:06:10.120 have a defendant like the federal government that, even if 0:06:10.200 --> 0:06:12.839 not such a to a nationwide injunction right would probably 0:06:12.880 --> 0:06:15.960 still do its best to comply with a more geographically 0:06:15.960 --> 0:06:18.720 limited court order. So nation wide injunctions I think are 0:06:18.760 --> 0:06:22.080 part of why we're now paying more attention to this phenomenon. 0:06:22.440 --> 0:06:25.240 But I don't think there's a problem here. As far 0:06:25.240 --> 0:06:28.760 as the case before, Judge Kasmeric trying to block sales 0:06:28.839 --> 0:06:33.440 of the abortion pill nationwide. So he told the lawyer's 0:06:33.520 --> 0:06:36.560 last Wednesday that he would delay putting the hearing on 0:06:36.680 --> 0:06:41.200 the docket until late Tuesday to try to minimize disruptions 0:06:41.360 --> 0:06:46.039 and possible protests. Were his actions unconstitutional, I wouldn't go 0:06:46.080 --> 0:06:47.919 that far. I mean, I think the reality is that 0:06:48.000 --> 0:06:51.280 Judge Kasmaric didn't close the hearing to the public, and 0:06:51.320 --> 0:06:53.320 so from the first memo perspective, I don't think there's 0:06:53.320 --> 0:06:56.120 any issues. But the broader point here is that I 0:06:56.200 --> 0:06:59.440 think folks would have reacted to that new a lot 0:06:59.520 --> 0:07:03.280 differently if there hadn't been Judge shopping here. That is 0:07:03.320 --> 0:07:06.479 to say, if you know the plaintiffs seeking to revoke 0:07:06.560 --> 0:07:09.960 the FDA has approval of missa pristone had randomly drawn 0:07:10.280 --> 0:07:13.720 a randomly assigned district judge, I don't think there'd be 0:07:13.800 --> 0:07:17.040 nearly the sort of fear that the sticks is in 0:07:17.560 --> 0:07:20.520 anytime you see an unusual procedural order like this. So 0:07:20.800 --> 0:07:23.840 in that respect, I actually think Judge Kasmaris probably is 0:07:23.840 --> 0:07:27.560 a victim of nothing other than the playstiff's manipulation of 0:07:27.600 --> 0:07:29.960 his docket, where what he really thought was in the 0:07:30.000 --> 0:07:34.320 best interest of he and his family's personal safety. The courthouse, yeah, 0:07:34.680 --> 0:07:39.360 looks that much more sinister because of the transparent Judge 0:07:39.360 --> 0:07:41.400 shopping with the plays engaged in to get the case 0:07:41.400 --> 0:07:43.480 to him in the first place, it has the federal 0:07:43.520 --> 0:07:48.400 government moved to change venue in that case. It hasn't, 0:07:48.520 --> 0:07:51.160 because what the plaintiffs did in that case was they 0:07:51.240 --> 0:07:55.600 created a corporate form in Amarillo as a way of 0:07:55.640 --> 0:07:59.640 basically trying to manufacture venue there. So there's actually a 0:07:59.640 --> 0:08:03.600 stronger arguments somehow that Amarilla is an appropriate venue totally 0:08:03.640 --> 0:08:06.560 because of the paper steps the planets took to create 0:08:06.560 --> 0:08:10.320 an Amarilla based planiff. That's why the Texas cases are different, 0:08:10.320 --> 0:08:12.680 because Texas the states can't just sort of change where 0:08:12.680 --> 0:08:14.640 it's located. And so that's why I think that's where 0:08:14.680 --> 0:08:17.120 we've seen DJ fight on the transfer question, at least 0:08:17.120 --> 0:08:20.480 thus far unsuccessfully. Could they ask the judge to recuse 0:08:20.600 --> 0:08:25.200 himself because of his long held positions prior legal work 0:08:25.600 --> 0:08:28.200 and decision since becoming a judge, I mean that since 0:08:28.240 --> 0:08:29.760 they could, I think if they were going through they 0:08:29.760 --> 0:08:31.960 would have already. And you know, I think that sort 0:08:31.960 --> 0:08:34.719 of again misses what to me is the real problem here. 0:08:34.880 --> 0:08:38.080 One can believe that all of these judges are active 0:08:38.120 --> 0:08:40.080 in good state, you know, perhaps coming from just a 0:08:40.080 --> 0:08:42.120 different set of priors than some of us might have, 0:08:42.440 --> 0:08:44.840 and still think that it ought to be incumbent upon 0:08:45.120 --> 0:08:49.320 them to appreciate what it looks like to outsiders that 0:08:49.440 --> 0:08:53.360 cases are being deliberately steered to them that have a 0:08:53.440 --> 0:08:57.360 remarkable alignment with views they've previously taken publicly. To put 0:08:57.360 --> 0:09:00.440 a different way, I would have thought that spederal judges 0:09:00.480 --> 0:09:03.960 who are worried about the appearance of impropriety would be 0:09:04.040 --> 0:09:08.079 the first to push back if plaintiffs were so obviously 0:09:08.120 --> 0:09:11.840 in transparently trying to manipulate their dockets. At least thus 0:09:11.840 --> 0:09:14.000 bar June, they've been the last. And I think that's 0:09:14.040 --> 0:09:17.600 part of the story here. Well, if Judge Kazmeric doesn't 0:09:17.600 --> 0:09:20.959 know by now that people have focused on this issue, 0:09:20.960 --> 0:09:24.880 there have been so many articles about it and discussions 0:09:24.920 --> 0:09:28.480 about the fact that he has this particular case and 0:09:28.520 --> 0:09:30.480 the way it got to him, it seems like he 0:09:30.520 --> 0:09:32.280 doesn't care. I think that's right, and I think the 0:09:32.320 --> 0:09:35.079 question then is why not. This is not about Judge Kasmaric. 0:09:35.160 --> 0:09:37.520 I think this is about any of the judges who 0:09:37.600 --> 0:09:40.280 are seeing these cases being scared to them. I mean, 0:09:40.280 --> 0:09:42.280 it's pretty remarkable June that you know, over the twenty 0:09:42.320 --> 0:09:45.280 nine lawsuit Texas is file that comes to Biden administration 0:09:45.520 --> 0:09:48.520 in Texas dish records in the last two plus years. 0:09:48.679 --> 0:09:50.640 None of them have been filed in Austin, which is 0:09:50.679 --> 0:09:54.040 where the Texas government is. None in Houston, none in Dallas, 0:09:54.080 --> 0:09:56.560 none in San Antonio, non Inel Pasto. And so I 0:09:56.559 --> 0:09:59.599 guess the question is why isn't it more trouble and 0:09:59.679 --> 0:10:02.800 too judges who are having all of these cases steered 0:10:02.800 --> 0:10:06.439 to them that the plainists in these cases are behavior 0:10:06.559 --> 0:10:09.040 this way, and I think the irony is June that's 0:10:09.080 --> 0:10:11.960 what's reinforced and charges that this is the MANI playing 0:10:11.960 --> 0:10:14.360 on the system. That the judges themselves are refusing to 0:10:14.440 --> 0:10:17.520 see this as manipulation. Those on the other side of 0:10:17.520 --> 0:10:20.800 this will say, well, the Democrats did it when Trump 0:10:20.920 --> 0:10:23.559 was in office. Yes, there's a lot of what abouts 0:10:23.600 --> 0:10:26.320 them in response here. So two responses, I think. One 0:10:26.400 --> 0:10:28.679 is that President Trump was subject to a lot of 0:10:28.760 --> 0:10:32.280 lawsuits by Democratic attorneys general, and one is that there 0:10:32.320 --> 0:10:35.439 have always been single judge division. Factually, both of those 0:10:35.480 --> 0:10:38.560 things are true, but those are pretty different circumstances. Let's 0:10:38.600 --> 0:10:41.599 say California, right, So, California is sued the Trump administration 0:10:41.880 --> 0:10:44.560 on a number of occasions, and most of those losses 0:10:44.559 --> 0:10:46.600 I think almost all of them were brought in Oakland, 0:10:46.760 --> 0:10:50.360 in the Northern District of California. Well, one, there is 0:10:50.400 --> 0:10:55.120 a pretty large office of the California Attorney General in Oakland, 0:10:55.440 --> 0:10:58.280 and so it's not like Texas going to Amarillo, where 0:10:58.280 --> 0:11:00.880 there's no Attorney General's office, and so in that respect 0:11:00.920 --> 0:11:02.880 you don't see the same kind of manipulating where you 0:11:02.920 --> 0:11:05.360 can file. And to June, the Northern District is not 0:11:05.440 --> 0:11:08.240 divided the way that Texas is courted bar there's no 0:11:08.320 --> 0:11:11.280 place in California where you can file a lawsuit you 0:11:11.320 --> 0:11:13.960 can have a one percent chance of drawing a particular 0:11:14.040 --> 0:11:17.240 federal district judge. Right, The real compoint of those who 0:11:17.280 --> 0:11:19.839 would defend the Trump administration in this context is that 0:11:19.960 --> 0:11:23.360 the overall district court bench in the northern districts of 0:11:23.400 --> 0:11:27.720 California is heavily staffed with Democratic appointees. And that just 0:11:27.760 --> 0:11:30.520 goes back to the difference between forum shopping and judge shopping. Right, 0:11:30.520 --> 0:11:32.840 there's a degree to which forum shopping is always going 0:11:32.880 --> 0:11:36.480 to be unavoidable. But unless you think that every single 0:11:36.559 --> 0:11:39.760 judge appointed by a president of the same party is 0:11:39.760 --> 0:11:41.920 going to rule the same way in every case, there 0:11:42.000 --> 0:11:44.200 ought to be a pretty big difference between having a 0:11:44.240 --> 0:11:48.960 case randomly assigned to one of say, ten Democratic appointed 0:11:48.960 --> 0:11:51.760 district judges, and having a case that was brought in 0:11:51.840 --> 0:11:55.280 Amarillo for the specific purpose of being assigned not just 0:11:55.320 --> 0:11:58.720 to a Republican appointed district judge, but to a particular 0:11:59.080 --> 0:12:01.600 Republican appointed judge. That's the difference that I think it's 0:12:01.640 --> 0:12:04.600 good been lost in these responses. As you mentioned in 0:12:04.640 --> 0:12:09.600 your article, Justice Elena Kagan call the Texas Solicitor General 0:12:09.679 --> 0:12:12.520 on this. Is there anything the Supreme Court can do? 0:12:13.080 --> 0:12:15.040 I mean I think there is so. First, of course, 0:12:15.080 --> 0:12:18.280 the venue statutes, our statue said the Supreme Court could interpret. 0:12:18.360 --> 0:12:20.080 But second, in the Supreme Court I think has a 0:12:20.120 --> 0:12:22.719 bully pulpit. I mean Chief Justice Robert in his year 0:12:22.840 --> 0:12:25.400 end report in twenty twenty one, when out of his 0:12:25.480 --> 0:12:27.800 way to single out how there was a judge in 0:12:27.920 --> 0:12:31.920 Waco who was basically trying to hijack the nationwide docket 0:12:31.960 --> 0:12:34.400 of patent cases, and how one of the ways who 0:12:34.480 --> 0:12:36.360 was doing that was by saying, if you file your 0:12:36.400 --> 0:12:39.040 patent losses in Waco, there's a one hundred percent chance 0:12:39.040 --> 0:12:41.160 it will be assigned to meet Robert said that was 0:12:41.200 --> 0:12:44.720 a problem and last year, the Dishre Court changed its 0:12:44.760 --> 0:12:46.679 rule so that it could no longer have a one 0:12:47.600 --> 0:12:49.960 assignment policy. So I think the Supreme Court can do 0:12:50.000 --> 0:12:52.000 things formally. June, I think the Supreme Court can do 0:12:52.080 --> 0:12:55.040 things vocally to sort of push back against this practice. 0:12:55.160 --> 0:12:57.720 But I also think the dishre courts can fix it themselves. 0:12:57.760 --> 0:12:59.680 I mean, the dishre courts have the power to change 0:12:59.679 --> 0:13:02.439 their vision of business rules. That's what happened with cases 0:13:02.480 --> 0:13:04.360 in Waco, and so I think the real question is 0:13:04.360 --> 0:13:07.880 why don't disrecords realize that it's in their interest to 0:13:07.920 --> 0:13:11.240 avoid these kinds of appearances and change their own rules 0:13:11.240 --> 0:13:15.760 proactively going forward. Can one federal judge in Texas change 0:13:15.840 --> 0:13:18.800 that or does it require more well, So, Congress has 0:13:18.840 --> 0:13:22.199 delegated the power to divide business within disrecords to the 0:13:22.280 --> 0:13:25.600 chief judges of each disrecord. Now, of course, the chief judges, 0:13:25.679 --> 0:13:27.880 you know, they have colleagues. They're not trying to offend 0:13:27.920 --> 0:13:30.440 their colleagues. So the chief judges are going to change 0:13:30.440 --> 0:13:34.680 those rules, usually in concert with their colleagues. But it 0:13:34.760 --> 0:13:37.040 is ultimately up to the chief judges. And if the 0:13:37.080 --> 0:13:39.240 chief churches aren't going to do it themselves, then Congress 0:13:39.240 --> 0:13:41.720 ought to be consider whether we want that power to 0:13:41.760 --> 0:13:43.959 be held by disrecords in the first place. It's such 0:13:44.000 --> 0:13:47.360 an important point, Steve, thanks so much. That's Professor Stephen 0:13:47.480 --> 0:13:52.560 Vladdock of the University of Texas Law School. After the 0:13:52.600 --> 0:13:56.040 failure of the second and third largest banks in US history, 0:13:56.360 --> 0:14:01.040 President Joe Biden sought to reassure jittery consumers and markets 0:14:01.160 --> 0:14:04.520 that the US financial system is on solid footing. He 0:14:04.640 --> 0:14:08.880 also promised to hold those responsible accountable. There are important 0:14:08.920 --> 0:14:11.400 questions of how these banks got into the circumstance in 0:14:11.400 --> 0:14:14.760 the first place. We must get the full accounting of 0:14:14.800 --> 0:14:18.920 what happened and why those responsible can be held accountable. 0:14:19.760 --> 0:14:22.680 And my administration no one in mindment. No one is 0:14:22.680 --> 0:14:25.920 above the law. The Justice Department and the Securities and 0:14:26.000 --> 0:14:30.200 Exchange Commission have launched investigations into the Silicon Valley bank 0:14:30.240 --> 0:14:34.480 collapse and possible misconduct by bank officers, and according to 0:14:34.520 --> 0:14:40.080 Bloomberg's sources, both agencies were already investigating Signature Bank and 0:14:40.240 --> 0:14:44.520 potential money laundering by its crypto clients. Both banks have 0:14:44.720 --> 0:14:48.680 also been hit with class action investor lawsuits. Joining me 0:14:48.760 --> 0:14:52.960 is security litigator Anthony Sabino of Sabino and Sabino. He's 0:14:53.040 --> 0:14:56.480 also a professor of law at Saint John's University. Is 0:14:56.520 --> 0:14:59.720 it much of a surprise that the Justice Department and 0:14:59.800 --> 0:15:04.200 the sec are investigating after these banks failures? No, not 0:15:04.320 --> 0:15:07.400 at all, for the simple reason that banks are a 0:15:07.440 --> 0:15:10.280 matter of public trusts. And again, while they are private 0:15:10.320 --> 0:15:13.200 institutions and they're owned by the shareholders, the point is 0:15:13.280 --> 0:15:15.800 that it's a matter of maintaining the integrity of the 0:15:15.840 --> 0:15:18.840 banks and the overall banking system and assuring the public 0:15:19.080 --> 0:15:23.880 that these institutions are trustworthy. Also, especially in these troubled times, 0:15:24.360 --> 0:15:27.560 we have the many new challenges that are affective us 0:15:27.600 --> 0:15:31.000 in all industries and including the banking sector. So, for example, 0:15:31.400 --> 0:15:34.520 one of the things that's become recently known is that 0:15:34.600 --> 0:15:38.880 apparently the Justice Department was looking into, and emphasized looking into, 0:15:38.920 --> 0:15:43.280 no actual action taken yet signature banks dealings with respect 0:15:43.280 --> 0:15:46.720 to cryptocurrency holdings. And since that is such a nascent 0:15:46.840 --> 0:15:50.280 field and we're not too sure about that. Obviously, law 0:15:50.360 --> 0:15:55.280 enforcement has concerns about cryptocurrency being manipulated by persons for 0:15:55.400 --> 0:15:57.520 purposes of money laundering, so on and so forth, and 0:15:57.600 --> 0:16:00.400 again there's really nothing new about that. June for the 0:16:00.440 --> 0:16:04.360 reason that the anti money Laundering laws otherwise known as 0:16:04.440 --> 0:16:08.400 AML have been around for decades, and it's a routine 0:16:08.480 --> 0:16:11.480 matter for the Justice Department, the Treasure Department, so on, 0:16:11.520 --> 0:16:13.560 and so forth to look into this to make sure 0:16:13.640 --> 0:16:16.040 no one is engaging in money laundering, whether it is 0:16:16.080 --> 0:16:18.240 in cold, hard cash as you might have had in 0:16:18.240 --> 0:16:21.200 the cocaine wars of the nineteen eighties or nowadays in 0:16:21.240 --> 0:16:25.520 the twenty twenties. With respect to cryptocurrency, SEC chair Gary 0:16:25.560 --> 0:16:29.360 Gensler said, we at the SEC are particularly focused on 0:16:29.520 --> 0:16:33.520 monitoring for market stability and identifying and prosecuting any form 0:16:33.520 --> 0:16:38.040 of misconduct that might threaten investors. So they and the 0:16:38.120 --> 0:16:42.400 Justice Department are looking for misconduct by bank executives. What 0:16:42.520 --> 0:16:45.440 kind of misconduct might they be looking at? Well, first 0:16:45.440 --> 0:16:48.120 of all, we have to distinguish these two distinct threads here, 0:16:48.160 --> 0:16:53.040 as follows Chairman Gensler. Okay, while he's looking for purposes 0:16:53.080 --> 0:16:55.440 to maintain the integrity in the market, what his job 0:16:55.560 --> 0:16:58.200 is and what he's doing to his credit is his 0:16:58.320 --> 0:17:01.800 concern is the integrity of the securities market. Because again, 0:17:01.800 --> 0:17:04.880 as we've seen both signature as a VB and any 0:17:04.880 --> 0:17:09.680 other number of institutions. They're owned by shareholders, therefore separate 0:17:09.720 --> 0:17:13.119 and apart from the stability or in some cases the 0:17:13.160 --> 0:17:15.920 seizure and or collapse of the banks as a bank. 0:17:16.000 --> 0:17:20.719 Per se Gensler in the sec their paramount concern is 0:17:20.760 --> 0:17:24.400 whether there's been truthful disclosure to shareholders, because that impacts 0:17:24.400 --> 0:17:27.119 those individual shareholders, the integrity of the market, so on 0:17:27.160 --> 0:17:30.120 and so forth. So all Chairman Gensler is doing the same. Look, 0:17:30.359 --> 0:17:32.919 we have the anti fraud provisions of the securities laws. 0:17:33.119 --> 0:17:35.400 That's what we're here to enforce. So that's his bailiwick, 0:17:35.640 --> 0:17:39.400 that's his jurisdiction, and rightly so, the Justice Department has 0:17:39.440 --> 0:17:43.000 a wider portfolio, if you will, And what that involves 0:17:43.080 --> 0:17:47.760 is again looking into banking transactions as banking transactions, to 0:17:47.800 --> 0:17:51.399 assure that the anti money laundering laws are followed, that 0:17:51.440 --> 0:17:54.280 there's no manipulation of bank assets, so on and so forth, 0:17:54.440 --> 0:17:56.960 and also in a broader sense, to see if there 0:17:57.000 --> 0:18:00.359 was any fraud of manipulation, not necessarily just a security 0:18:00.400 --> 0:18:03.040 So that comes within the jurisdiction as well to some degree, 0:18:03.359 --> 0:18:06.280 but more so was their fraud with respect to defrauding 0:18:06.440 --> 0:18:09.000 the depositors. And here June we have to draw the 0:18:09.040 --> 0:18:12.080 important distinction. Let's take as a VB bank, for example, 0:18:12.119 --> 0:18:14.640 there's two distinct groups of parties who've been injured. Here. 0:18:14.880 --> 0:18:17.680 On the one hand, there are the folks who are stockholders, 0:18:18.000 --> 0:18:21.000 and so that agains the the sec and also on 0:18:21.040 --> 0:18:23.960 the criminal side of that, the Justice Department saying, okay, 0:18:24.200 --> 0:18:27.119 did you lie to your shareholders and injured them in 0:18:27.240 --> 0:18:29.760 terms of the stock market aspect of this. On the 0:18:29.800 --> 0:18:33.840 other hand, okay, the other group are the depositors who, thankfully, 0:18:34.080 --> 0:18:36.480 because of the government's action, it looks like they're going 0:18:36.520 --> 0:18:38.960 to be made whole or if I may use a 0:18:39.000 --> 0:18:41.639 crew term bailed out. But the bottom line is the 0:18:41.680 --> 0:18:44.960 concern of the Justice Department in that regard is to 0:18:45.080 --> 0:18:48.560 make sure that if there was any deception of depositors, 0:18:48.800 --> 0:18:52.119 in essence, nothing more complicated than people put money in 0:18:52.359 --> 0:18:55.200 any of these institutions, they thought it was safe, and 0:18:55.320 --> 0:18:58.520 as it turned out, they were deceived. So that's something 0:18:58.560 --> 0:19:01.600 that obviously the Justice departments crack down upon. You use 0:19:01.640 --> 0:19:06.840 the term bailout, and the Biden administration doesn't like that word, Well, 0:19:06.840 --> 0:19:10.280 that's politics, okay. And again it's been called everything from 0:19:10.320 --> 0:19:14.520 rescue to bailout etc. Etc. Okay, and there were genuine 0:19:14.560 --> 0:19:16.520 issues here that have been brought to the fore and 0:19:16.640 --> 0:19:19.160 need to be discussed. Certainly, we're all aware that since 0:19:19.240 --> 0:19:23.560 the nineteen thirties under FDR there is banking insurance. But 0:19:23.640 --> 0:19:26.200 again that has limits here, and a question has been raised. 0:19:26.240 --> 0:19:28.359 It's a legitimate one that needs to be examined in 0:19:28.400 --> 0:19:31.520 an objective and dispassionate way. Is well, wait a minute, 0:19:31.480 --> 0:19:34.680 all right, are you fulfilling what the law requires as 0:19:34.680 --> 0:19:37.320 far as the insurance. That's clearly happened, But have you 0:19:37.400 --> 0:19:42.400 gone overboard? And are you also providing funding rescuing folks 0:19:42.400 --> 0:19:47.040 with deposits that exceed the statutory limit or depositors for 0:19:47.400 --> 0:19:49.479 various endeavors. I think it would be certain businesses, so 0:19:49.520 --> 0:19:51.959 on and so forth. So again that's a matter more 0:19:52.000 --> 0:19:54.760 for the political arena, but it's still worthy of discussion 0:19:54.840 --> 0:19:57.120 because one of the things that and let me be frank, 0:19:57.160 --> 0:19:59.879 that troubles me most of all is the danger of 0:20:00.040 --> 0:20:04.280 as we call it, the moral hazard. Because my personal interpretation, 0:20:04.400 --> 0:20:08.119 free enterprise has always been free to succeed but also 0:20:08.200 --> 0:20:11.240 free to fail, so to the extent that the government 0:20:11.240 --> 0:20:13.959 comes in and says, okay, well, here's SVB. All right, 0:20:13.960 --> 0:20:16.920 we'll make everybody whole. That's nice. All right, if they 0:20:16.960 --> 0:20:19.640 do the same thing with signature, that's nice. But where 0:20:19.680 --> 0:20:22.000 does it end? Where does it end? Where fifteen years 0:20:22.000 --> 0:20:26.560 remove from governments? I'll use a less pejorative term assistance too, 0:20:26.880 --> 0:20:29.480 the major order makers, the financial sectors, so on and 0:20:29.520 --> 0:20:31.600 so forth. But we're still paying the price for that, 0:20:31.680 --> 0:20:35.119 all right. Where does government interventions stop? Where do we 0:20:35.119 --> 0:20:38.200 allow free enterprise to be truly free again to succeed 0:20:38.359 --> 0:20:42.000 or conversely to fail? And certainly there's always the danger 0:20:42.320 --> 0:20:44.640 that our free enterprise system is going to be damaged 0:20:44.680 --> 0:20:50.560 by government assistance. Government rescues turns into government intervention and 0:20:50.880 --> 0:20:54.240 maybe government control. Those are very scary words, and I 0:20:54.400 --> 0:20:56.800 say them with great trepidation, but they should be out 0:20:56.840 --> 0:20:58.879 there to be discussed in any event. It's something we 0:20:58.960 --> 0:21:02.200 have to watch out for. So one thing that apparently 0:21:02.720 --> 0:21:06.879 is being investigated is whether stock sales by executives violated 0:21:06.960 --> 0:21:11.080 trading rules. According to Bloomberg sources, security filing showed that 0:21:11.119 --> 0:21:15.960 the CEO Gregory Becker and the CFO Daniel Beck both 0:21:16.000 --> 0:21:19.879 so shares the week before the bank collapsed. Both sales 0:21:19.880 --> 0:21:24.160 were done under the ten B five one plans file 0:21:24.280 --> 0:21:27.080 thirty days earlier. So if they were done within that, 0:21:27.400 --> 0:21:31.440 is there any problem. Well, again, this matter requires examination, 0:21:31.520 --> 0:21:34.280 but on its face, everything appears to be above board 0:21:34.320 --> 0:21:37.640 because what you've commented upon, and what you're able colleagues 0:21:37.640 --> 0:21:40.480 have already reported on within the last twenty four hours 0:21:40.640 --> 0:21:44.760 is the fact that federal law explicitly provides that high 0:21:44.840 --> 0:21:50.200 level corporate executives may, according to a stipulated plan basically 0:21:50.240 --> 0:21:53.560 a plan made in advance, may sell shares in their 0:21:53.560 --> 0:21:56.720 own companies. And that does not violate the law. It 0:21:56.800 --> 0:21:59.920 does not qualify as inside of trading. And the reason 0:22:00.000 --> 0:22:03.359 if that is simply this. Okay. Even the highest corporate 0:22:03.359 --> 0:22:07.240 executives june their people just like us. So they need 0:22:07.320 --> 0:22:11.040