WEBVTT - SEC's War on Crypto & Campus Antisemitism 0:00:03.200 --> 0:00:08.000 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:09.160 --> 0:00:12.760 The crypto industry is like the wild wild West. To 0:00:13.039 --> 0:00:15.480 SEC chair Gary Gensler. 0:00:15.280 --> 0:00:18.880 The wild West of the crypto markets rife with non compliance, 0:00:18.880 --> 0:00:22.239 where investors have put hard earned assets at risk, and 0:00:22.320 --> 0:00:26.560 highly speculative asset class such growth and rapid change also 0:00:26.600 --> 0:00:29.520 means more possibility for wrongdoing. Is the cop on the beat? 0:00:29.560 --> 0:00:32.599 We must be able to meet the match of bad actors. 0:00:33.080 --> 0:00:37.120 Gensler told lawmakers five months ago that the agency had 0:00:37.120 --> 0:00:41.920 to expand to protect investors against a crypto industry rife 0:00:41.960 --> 0:00:46.600 with non compliance. So what has the sec accomplished in 0:00:46.640 --> 0:00:50.680 its six years of trying to regulate crypto? Joining me 0:00:50.720 --> 0:00:54.400 to answer that question is securities law expert James Park, 0:00:54.760 --> 0:00:58.600 a professor at UCI Law School. What has the sec 0:00:58.720 --> 0:01:02.160 accomplished so far? And it's battle over crypto. 0:01:03.040 --> 0:01:06.520 It's been a long process, and I think the SEC 0:01:06.640 --> 0:01:09.959 has learned a lot over this period and it has 0:01:09.959 --> 0:01:15.600 developed its positions gradually over time. One criticism I think 0:01:15.640 --> 0:01:17.959 of the SEC is that its positions may not have 0:01:18.040 --> 0:01:21.479 been entirely consistent. But I think it's clear now that 0:01:22.160 --> 0:01:27.360 the SEC views many crypto assets as being securities and 0:01:27.480 --> 0:01:31.959 believes that it can regulate a substantial number of not 0:01:32.080 --> 0:01:36.440 only crypto assets, but also exchanges exchanges where these crypto 0:01:36.480 --> 0:01:40.160 assets have been trading, and has disagreed with some of 0:01:40.200 --> 0:01:44.679 the determinations by these exchanges that the crypto assets trading 0:01:44.959 --> 0:01:50.000 on their marketplaces are not securities. So we have an 0:01:50.160 --> 0:01:55.080 SEC that believes that a significant number of crypto assets 0:01:55.120 --> 0:02:00.240 are securities. We have some industry members who believe the 0:02:00.320 --> 0:02:03.440 SEC's position may be too broad, and there's also a 0:02:03.720 --> 0:02:07.280 criticism that the SEC has not done enough to provide 0:02:07.320 --> 0:02:11.040 clarity to the industry. I think that's another major theme 0:02:11.120 --> 0:02:14.160 that we've seen over the last four or five years. 0:02:14.160 --> 0:02:19.040 What federal agencies are sort of jocking to play a 0:02:19.160 --> 0:02:22.800 role in policing crypto In addition. 0:02:22.480 --> 0:02:26.560 To the SEC, the other major candidate is the CFTC. 0:02:27.240 --> 0:02:31.880 If crypto assets are primarily commodities, and that's typically under 0:02:31.880 --> 0:02:36.920 the jurisdiction of the CFTC. We also have broader issues 0:02:37.000 --> 0:02:42.040 relating to financial regulation, such as money laundering, which would 0:02:42.080 --> 0:02:46.399 be the province of various federal banking regulators. So there 0:02:46.400 --> 0:02:50.000 are a number of different federal agencies that could regulate 0:02:50.080 --> 0:02:53.079 crypto But I think the SDC has been in the 0:02:53.160 --> 0:02:57.520 lead in certain respects and is asserting that many of 0:02:57.560 --> 0:03:02.239 these crypto acsets are securities and that these exchanges are 0:03:02.320 --> 0:03:03.519 under its jurisdiction. 0:03:04.320 --> 0:03:08.800 The SEC has filed about fifty five enforcement lawsuits over 0:03:08.880 --> 0:03:13.680 cryptocurrencies since Gary Gensler took over. That's according to data 0:03:13.680 --> 0:03:17.200 from Cornerstone Research. How has it fared in those cases? 0:03:17.360 --> 0:03:22.000 Generally generally fared fairly well. It's one of the vast 0:03:22.040 --> 0:03:25.400 majority of the cases. But that may also reflect that 0:03:25.480 --> 0:03:29.919 the SEC is picking cases that are favorable to its position. 0:03:30.080 --> 0:03:34.440 It may be picking cases involving egregious facts where there 0:03:34.520 --> 0:03:37.840 is a clear fraud and in cases like that, judges 0:03:37.880 --> 0:03:41.840 tend to be sympathetic to the SEC's position. As it 0:03:41.880 --> 0:03:46.840 gets to bringing cases against entities that are not frauds, 0:03:46.920 --> 0:03:50.120 I think that its task is a little bit more difficult, 0:03:50.200 --> 0:03:52.760 and I think it's getting to that point in a 0:03:52.840 --> 0:03:57.080 number of cases where you don't have clear evidence of fraud, 0:03:57.120 --> 0:04:00.200 and so there's going to be questions about whether its 0:04:00.200 --> 0:04:01.440 position is valid or not. 0:04:02.120 --> 0:04:05.840 Is the SEC embarking on a specific strategy when we 0:04:05.920 --> 0:04:09.800 see that it is suing coinbase and two other platforms. 0:04:09.920 --> 0:04:13.520 Is there a strategy involved here, Yes, I. 0:04:13.440 --> 0:04:17.160 Think the SEC is trying to bring big impact cases 0:04:17.520 --> 0:04:22.000 and exchanges are key centers of activity. They're critical to 0:04:22.080 --> 0:04:26.880 the development of crypto assets because you need a marketplace 0:04:26.960 --> 0:04:31.200 where these assets are traded frequently in order to have 0:04:31.360 --> 0:04:35.560 confidence in the integrity of their prices. So exchanges are 0:04:35.600 --> 0:04:39.480 a very important part of the infrastructure. If you want 0:04:39.560 --> 0:04:44.200 crypto assets to become established as a valid asset class, 0:04:44.480 --> 0:04:47.720 that would bring more investors in. And so the SEC 0:04:48.160 --> 0:04:52.719 is trying to assert its domain over these exchanges, and 0:04:52.800 --> 0:04:55.200 for good reasons. You know. In the background, of course, 0:04:55.279 --> 0:05:00.240 are the scandals at FTX and buyinand those scandals have 0:05:00.440 --> 0:05:03.720 given reason for the SEC to come in and regulate 0:05:03.880 --> 0:05:07.600 exchanges and has taught the SEC a number of lessons 0:05:07.680 --> 0:05:10.080 with respect of the problems that can come up in 0:05:10.480 --> 0:05:12.720 various crypto asset exchanges. 0:05:13.240 --> 0:05:16.560 Do you think that the collapse of FTX and the 0:05:16.760 --> 0:05:23.360 criminal charges and finance do they sort of support Genstler's 0:05:23.400 --> 0:05:25.520 statement that it's the wild wild West. 0:05:26.800 --> 0:05:30.680 They support I think the case for regulation. They support 0:05:30.720 --> 0:05:34.479 the need for regulation. Not all of these changes are 0:05:35.560 --> 0:05:38.920 the same, and so you know, I could see coinbase 0:05:39.360 --> 0:05:41.960 making the arguments that we're not the same as FTX 0:05:42.040 --> 0:05:45.240 and binus. We are making good faith efforts to comply. 0:05:46.040 --> 0:05:49.839 We're a public corporation, you know, we sold securities pursuing 0:05:49.880 --> 0:05:54.400 to a registration statement approved by the SEC that described 0:05:55.040 --> 0:05:58.679 very frankly what our business is, and so we're different. 0:05:58.839 --> 0:06:02.760 We're different, and we are making substantial efforts to comply 0:06:03.240 --> 0:06:08.040 and to prevent market manipulation. The SEC, to my understanding, 0:06:08.080 --> 0:06:12.960 has not found evidence of market manipulation on Coinbase at 0:06:12.960 --> 0:06:16.320 this time, at least it's not alleged in their complaints, 0:06:17.080 --> 0:06:20.840 and so the key for defendants like Coinbase is to 0:06:21.200 --> 0:06:24.560 establish that they are different from FTX and buy it. 0:06:25.040 --> 0:06:27.560 On the other hand, I think the SEC can make 0:06:27.600 --> 0:06:31.320 the case that there are certain structural issues that we 0:06:32.000 --> 0:06:36.839 saw in FTX and binance that lead us to be 0:06:37.120 --> 0:06:41.359 more wary of exchanges, even those like Coinbase that we 0:06:41.839 --> 0:06:45.479 had approved a registration statement for. So I think that's 0:06:45.680 --> 0:06:48.840 one of the issues that will continue to see being 0:06:49.000 --> 0:06:51.360 litigated and developed over the next year. 0:06:51.839 --> 0:06:56.400 Everyone in crypto is watching that case against Coinbase in particular. 0:06:56.960 --> 0:06:58.920 What's the SEC's case there. 0:06:59.600 --> 0:07:05.800 They are arguing that Coinbase is a securities exchange Under 0:07:05.920 --> 0:07:09.560 the Securities Exchange Act of nineteen thirty four, the SEC 0:07:10.080 --> 0:07:14.280 has the power to regulate exchanges, and a securities exchange 0:07:14.360 --> 0:07:19.760 must register with the Securities and Exchange Commissions. That's the 0:07:19.840 --> 0:07:22.040 key issue here, and the question as to whether or 0:07:22.080 --> 0:07:25.560 not something that the securities exchange is going to mainly 0:07:25.600 --> 0:07:30.920 boil down to whether there are securities trading on coinbase wan. 0:07:31.000 --> 0:07:36.640 Coinbase's defense is that we did rigorous evaluation and assessment 0:07:36.680 --> 0:07:39.760 of the crypto assets that we allow to be traded 0:07:39.800 --> 0:07:42.600 on our exchange, and we concluded that none of those 0:07:42.680 --> 0:07:46.200 crypto assets are securities. Therefore, we do not have to 0:07:46.280 --> 0:07:50.720 register with the SEC as a securities exchange. The SEC 0:07:50.760 --> 0:07:53.960 has taken the position in its complaint that there are 0:07:53.960 --> 0:07:58.000 at least ten or so crypto assets trading on coinbase 0:07:58.400 --> 0:08:02.200 that are securities under the HOWI test. Therefore, this is 0:08:02.400 --> 0:08:05.480 an exchange that must register with US, and that you're 0:08:05.560 --> 0:08:10.000 violating the securities laws if you continue to operate without registration. 0:08:11.240 --> 0:08:15.040 Now, Coinbase is going to ask a federal judge this 0:08:15.280 --> 0:08:19.360 month to dismiss the SEC's lawsuit. Do you think that 0:08:19.480 --> 0:08:23.160 there's a chance that a judge would do that, or 0:08:23.760 --> 0:08:24.720 might a judge weight. 0:08:25.760 --> 0:08:28.720 There's always a chance, but I think it is unlikely 0:08:29.040 --> 0:08:32.400 that a judge will grant the motion to dismiss that 0:08:32.559 --> 0:08:37.640 this stage given the complexity of the issues involved. One 0:08:37.640 --> 0:08:41.120 of the questions is whether or not the crypto assets 0:08:41.160 --> 0:08:46.360 identified by the sec are actually securities, and that typically 0:08:46.400 --> 0:08:51.320 is going to require a case by case determination evaluating 0:08:51.360 --> 0:08:54.640 each of these crypto assets based upon the HOWI test, 0:08:55.440 --> 0:08:58.439 and some of that work may require discovery and may 0:08:58.480 --> 0:09:03.520 require looking close lead into these crypto assets and evaluating 0:09:03.559 --> 0:09:06.680 the evidence, which is typically not something that a district 0:09:06.679 --> 0:09:10.600 court will do on a motion to dismiss. Coinbase has 0:09:10.720 --> 0:09:15.319 advanced a very narrow interpretation of Howie. If they were 0:09:15.360 --> 0:09:18.480 to prevail on that very narrow definition of Howie, then 0:09:18.600 --> 0:09:22.440 perhaps the judge could say that I can conclude without 0:09:22.480 --> 0:09:27.240 further discovery that all of these crypto assets are actually securities, 0:09:27.440 --> 0:09:30.239 and that's a plausible outcome, but I think it's unlikely. 0:09:30.400 --> 0:09:34.080 That's just my opinion that may not necessarily turn out 0:09:34.120 --> 0:09:37.160 to be correct, but this is what courts are for. 0:09:37.360 --> 0:09:41.480 They decide whether or not interpretations of tests are appropriate 0:09:41.720 --> 0:09:45.000 or not. There's also another issue with respect to the 0:09:45.440 --> 0:09:50.400 major questions doctrine and whether or not this may involve 0:09:50.679 --> 0:09:54.920 such a large expansion of the SEC's jurisdiction to run 0:09:54.960 --> 0:09:58.480 a foul of a doctrine that the Supreme Court created 0:09:58.520 --> 0:10:02.920 over the last year or so that prohibits expansive interpretations 0:10:02.920 --> 0:10:06.480 of agency power with respect to that particular issue. I 0:10:06.520 --> 0:10:09.320 think that there is more fact finding that would be 0:10:09.440 --> 0:10:12.400 used on that issue, And there's also a good argument 0:10:12.480 --> 0:10:15.920 the SEC has that that doctrin has not really been 0:10:15.960 --> 0:10:20.080 applied to enforcement action. I think there's another argument that 0:10:20.480 --> 0:10:23.560 the crypto asset market that the SEC is seeking to 0:10:23.679 --> 0:10:27.679 regulate is not substantial enough a part of our economy 0:10:27.760 --> 0:10:31.160 to fall under that particular doctrine. You know, if you 0:10:31.240 --> 0:10:34.560 look at the value of all the crypto assets out there, 0:10:34.920 --> 0:10:37.560 you know, the total values maybe around a trillion dollars 0:10:37.679 --> 0:10:40.240 or so. But remember, the SEC is not asserting it 0:10:40.240 --> 0:10:43.800 can regulate all trillion dollars worth of crypto assets, because 0:10:43.840 --> 0:10:47.439 it's competed that bitcoin is not a security, and bitcoin 0:10:47.880 --> 0:10:52.959 represents the vast majority, the maybe supermajority, of the value 0:10:53.000 --> 0:10:55.400 of crypto that is out there, and so we're talking 0:10:55.880 --> 0:11:00.720 about a relatively small amount of value that the SEC 0:11:00.800 --> 0:11:03.160 is trying to start its jurisdiction over and so it 0:11:03.200 --> 0:11:05.960 may not fall under the major questions doctrine. 0:11:06.120 --> 0:11:09.640 Coming up next is the Coinbase case likely to reach 0:11:09.679 --> 0:11:12.680 the Supreme Court. I'm Drew and Grosso and you're listening 0:11:12.679 --> 0:11:15.960 to Bloomberg. I've been talking to Professor James Park of 0:11:16.080 --> 0:11:21.680 UCLA Law School about the SEC's fight to regulate crypto. Jim, 0:11:21.720 --> 0:11:25.680 the SEC's lawsuit against Coinbase has a long way to go. 0:11:26.160 --> 0:11:28.120 But do you think it's a case that you could 0:11:28.160 --> 0:11:30.839 see ending up at the Supreme Court. 0:11:31.240 --> 0:11:35.240 Yes, I think it could. You know, Coinbase has the resources, 0:11:35.280 --> 0:11:42.120 they have excellent legal representation, and these cases involved very 0:11:42.160 --> 0:11:45.160 important legal issues that have not gone up to the 0:11:45.200 --> 0:11:47.800 Supreme Court in some time. You know how he was 0:11:47.840 --> 0:11:51.920 decided more than fifty years ago, and there could be 0:11:52.320 --> 0:11:54.800 reason for the Supreme Court to weigh in on the 0:11:54.800 --> 0:11:58.120 definition of a security. I also don't see the SEC 0:11:58.240 --> 0:12:02.040 backing down from its position. It just filed a case 0:12:02.240 --> 0:12:07.400 in November against another exchange cracket on November twentieth, making 0:12:07.440 --> 0:12:10.520 pretty much the same arguments that is made against Coinbase 0:12:10.679 --> 0:12:14.240 and Binance. So it is committed to its position as well, 0:12:14.679 --> 0:12:17.200 and so we could see litigation proceed all the way 0:12:17.280 --> 0:12:19.000 up to the US Supreme Court. 0:12:19.400 --> 0:12:23.080 So you mentioned Finance's problems. It was criminally charged in 0:12:23.120 --> 0:12:27.319 November and admitted to violating laws that require financial companies 0:12:27.360 --> 0:12:31.640 to have anti money laundering controls, and its founder pleaded 0:12:31.679 --> 0:12:35.880 guilty and faces eighteen months in prison. Do those factors 0:12:35.960 --> 0:12:39.679 play into the SEC's case against Finance. 0:12:40.440 --> 0:12:45.360 The SEC did file motion in the District Court making 0:12:45.440 --> 0:12:49.600 note of that conviction and what it does. I think 0:12:49.679 --> 0:12:53.559 it highlights some of the dangers of exchanges and it 0:12:53.800 --> 0:12:57.480 puts Finance in an unfavorable life. I mean that could 0:12:57.640 --> 0:13:01.800 be a background consideration in the district court assessment of 0:13:01.840 --> 0:13:05.520 the case. However, these securities law issues are different. They 0:13:05.559 --> 0:13:08.880 are different than issues relating to money laundering. The issue 0:13:08.880 --> 0:13:13.280 of whether or not the crypto assets are securities are distinct. Also, 0:13:13.400 --> 0:13:17.600 the sec as allegations of market manipulation, which are still 0:13:17.640 --> 0:13:21.720 being litigated as well. I'm having said that it's a 0:13:21.720 --> 0:13:24.679 bit of an uphill battle for a defendant who has 0:13:24.920 --> 0:13:28.679 pleted guilty to criminal charges on one set of regulatory 0:13:28.720 --> 0:13:33.480 issues in terms of litigating another set of issues before 0:13:34.080 --> 0:13:38.480 the district court. And you know, Coinbase can't be extremely 0:13:38.520 --> 0:13:41.199 happy about the fact that Binance is making pretty much 0:13:41.200 --> 0:13:44.080 the same arguments as coinbase, and so that there's a 0:13:44.120 --> 0:13:47.319 possibility that the District Court in DC, which is deciding 0:13:47.360 --> 0:13:52.479 the finance case, could look unfavorably upon finance and securities 0:13:52.520 --> 0:13:55.080 law theories which are the same as coinbases, and so 0:13:55.200 --> 0:13:58.600 there could be a greater risk of a adverse decision 0:13:59.200 --> 0:14:02.160 in the decail court that could in turn have some 0:14:02.320 --> 0:14:06.320 influence on the way the coinbase litigation is happening, which 0:14:06.360 --> 0:14:08.679 is in the Southern District of Now. I do think 0:14:08.679 --> 0:14:12.439 the district court judges will look independently at these cases 0:14:12.679 --> 0:14:15.160 and assess them the arguments for what they are. But 0:14:15.559 --> 0:14:18.160 it is worth noting that Coinbase in Binance are pretty 0:14:18.200 --> 0:14:21.480 much making the same arguments against the SEC in terms 0:14:21.480 --> 0:14:22.560 of the legal arguments. 0:14:23.040 --> 0:14:27.240 How will the decisions in those three cases affect the 0:14:27.360 --> 0:14:30.200 SEC's push to regulate crypto. 0:14:30.760 --> 0:14:33.720 They will have a very significant impact, and I think 0:14:33.800 --> 0:14:37.160 the most immediate impact is that they will give three 0:14:37.200 --> 0:14:40.560 more district court judges the chance to tell us more 0:14:40.600 --> 0:14:44.479 about the howie, can we have a couple of dueling decisions, 0:14:44.480 --> 0:14:46.760 as you know, in the Southern District of New York 0:14:46.880 --> 0:14:51.160 and the Ripple and terraform cases coming to a different conclusions. 0:14:51.600 --> 0:14:53.960 And now we have three more judges who are going 0:14:53.960 --> 0:14:58.200 to have to decide whether or not particular cryptoascids are 0:14:58.280 --> 0:15:01.920 securities and apply to how we test in doing so, 0:15:02.160 --> 0:15:05.160 and so that, you know, gives us the opportunity to 0:15:05.200 --> 0:15:08.920 see which interpretation is more persuasive or looking more persuasive 0:15:09.000 --> 0:15:11.720 to the federal District Court judges. And you know, if 0:15:11.720 --> 0:15:15.480 you see the district court judges overwhelmingly tilting one way 0:15:15.600 --> 0:15:18.840 versus the other, then that can give momentum to one 0:15:18.880 --> 0:15:20.200 side over the other. 0:15:20.760 --> 0:15:25.480 And where does the effort to launch exchange traded funds 0:15:25.520 --> 0:15:28.320 that whole bitcoin, Where does that effort stand? 0:15:28.840 --> 0:15:32.200 Mind is staying. The sec is considering the petition, and 0:15:32.880 --> 0:15:35.440 my sense is that it's fairly likely that it will 0:15:35.480 --> 0:15:38.440 be granted. And if that's the case, then we're going 0:15:38.520 --> 0:15:41.720 to have a bitcoin exchange traded fund. As I was, 0:15:42.080 --> 0:15:44.760 you know, in the airport recently, I saw an advertisement 0:15:44.840 --> 0:15:48.480 for Great Scale and the Gray Scale ETF. So they 0:15:48.480 --> 0:15:51.880 seem fairly confident that this is happening, and they, you know, 0:15:51.920 --> 0:15:56.040 are obviously probably in touch with the SDC. I mean, 0:15:56.120 --> 0:15:59.120 that's why bitcoin has rallied and that's been a bright 0:15:59.200 --> 0:16:03.280 spot in the stew acid industries. We see bitcoin the 0:16:03.360 --> 0:16:06.480 price increased from around twenty five thousand dollars to around 0:16:06.520 --> 0:16:10.120 forty five thousand dollars and the last four months or so, 0:16:10.240 --> 0:16:14.880 with that additional value, that may attract more investors into 0:16:14.880 --> 0:16:19.520 crypto assets. More generally, the fact that there's an ETF 0:16:19.720 --> 0:16:25.360 may increase the legitimacy of cryptoacid as an asset class, 0:16:25.440 --> 0:16:30.000 and that is certainly something that is a positive development 0:16:30.040 --> 0:16:32.920 for the crypto acid industry. On the other hand, remember 0:16:32.960 --> 0:16:37.120 the sec though, has always distinguished Bitcoin from other crypto assets, 0:16:37.280 --> 0:16:40.280 and so the fact that we have a Bitcoin ETF 0:16:40.440 --> 0:16:43.800 does not mean that other crypto assets that are securities 0:16:44.120 --> 0:16:47.200 are going to escape a regulation. That does not mean 0:16:47.200 --> 0:16:50.400 that this crypto assets other than bitcoin have any real 0:16:50.480 --> 0:16:54.280 economic value. And so I think that it is something 0:16:54.320 --> 0:16:57.640 that is a very interesting dynamic that we'll see over 0:16:57.720 --> 0:17:01.440 twenty twenty four what the impact of that is and 0:17:01.480 --> 0:17:05.240 whether or not that's going to spark more interesting crypto assets. 0:17:05.800 --> 0:17:08.000 And by the end of twenty twenty four, do you 0:17:08.040 --> 0:17:12.800 think that there'll be more certainty about which agency regulates 0:17:12.840 --> 0:17:14.040 crypto It's. 0:17:13.880 --> 0:17:17.000 A good question. I don't know if we'll get more certainty. 0:17:17.119 --> 0:17:20.160 To be frank with you, I think the litigation process 0:17:20.240 --> 0:17:23.840 is going to move slowly. And we are coming up 0:17:23.880 --> 0:17:27.840 on an election. There's some time before we get into 0:17:27.880 --> 0:17:32.879 that election season, but administrative agencies may slow down what 0:17:32.960 --> 0:17:36.040 they're doing as we get into the summer and into 0:17:36.080 --> 0:17:37.960 the falls. You know, we don't know who's going to 0:17:38.000 --> 0:17:42.399 win the election. That could also result in changes in policies, 0:17:42.520 --> 0:17:46.560 changes in priorities. So there's a lot of uncertainty over 0:17:46.600 --> 0:17:49.879 the next year or so that makes it difficult to 0:17:49.960 --> 0:17:53.639 predict whether or not one agency is going to sort 0:17:53.640 --> 0:17:55.680 of rise further to the top. 0:17:55.840 --> 0:17:58.960 Jim, thanks so much for helping us understand all these 0:17:59.040 --> 0:18:02.879 crypto lawsuits it's going on. That's Professor James Park of 0:18:03.040 --> 0:18:06.760 UCLA Law School coming up next on the Bloomberg Law Show. 0:18:07.160 --> 0:18:11.240 Lawsuits in the fight against anti Semitism on college campuses. 0:18:11.800 --> 0:18:12.679 This is Bloomberg. 0:18:16.240 --> 0:18:21.360 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:18:22.840 --> 0:18:27.040 Instead of studying for finals like his classmates, University of 0:18:27.040 --> 0:18:31.960 Pennsylvania student Ayal Jacobe went to Congress on December fifth 0:18:32.160 --> 0:18:35.760 for a press conference on the anti Semitism at the campus. 0:18:36.400 --> 0:18:41.000 Penn's ambivalence fuels the crisis that has shattered my academic 0:18:41.080 --> 0:18:45.320 sanctuary policies meant to safeguard us have become hollow promises, 0:18:45.920 --> 0:18:48.800 and let us be clear, if they failed Jewish students 0:18:48.800 --> 0:18:51.400 today tomorrow, they will fail the rest of us. 0:18:51.840 --> 0:18:55.720 On the same day, Yakobe and another student also sued Penn, 0:18:56.040 --> 0:18:59.600 claiming the school fostered a hostile environment that left them 0:18:59.640 --> 0:19:04.200 feeling unsafe in class or crossing the campus. Their lawsuit 0:19:04.240 --> 0:19:07.760 is one of several filed in recent weeks against universities 0:19:08.040 --> 0:19:11.280 by students citing Title six of a Civil Rights Act 0:19:11.320 --> 0:19:15.000 of nineteen sixty four. Joining me is Bloomberg Legal reporter 0:19:15.160 --> 0:19:20.160 David Voriakis, David, is there any kind of measure of 0:19:20.680 --> 0:19:25.000 just how much anti Semitism Jewish students are facing on 0:19:25.160 --> 0:19:26.840 campuses these days? 0:19:27.320 --> 0:19:31.960 Several Jewish organizations stay that the anti semitism they have 0:19:32.200 --> 0:19:37.879 seen before October seventh and since the October seventh attack 0:19:38.000 --> 0:19:43.119 by HMAS on Israel is unprecedented, and the numbers have 0:19:43.320 --> 0:19:47.480 spiked dramatically in the last couple of months. So by 0:19:47.640 --> 0:19:51.000 various measures, there's different ways to look at it, but 0:19:51.400 --> 0:19:57.000 the number of anti Semitic incidents that Jewish students have 0:19:57.240 --> 0:20:02.040 seen has dramatically increased, and the Anti Defamation League has 0:20:02.119 --> 0:20:07.240 said something like more than half of American Jewish students 0:20:07.320 --> 0:20:11.159 have seen some type of anti Semitic behavior. 0:20:11.800 --> 0:20:17.560 And what about Muslim, Arab and Palestinian students? Is Islamophobia 0:20:18.160 --> 0:20:19.840 prevalent on campuses today? 0:20:20.520 --> 0:20:26.240 They also are facing a significant increase in Islamophobia. And 0:20:26.720 --> 0:20:33.000 there's an organization known as care caai R as the 0:20:33.080 --> 0:20:37.639 Council of American Islamic Relations, and they say that the 0:20:37.760 --> 0:20:42.440 number of Islamophobia incidents has also dramatically increased. 0:20:43.080 --> 0:20:47.600 So tell us about aal Yakobe University of Pennsylvania student 0:20:47.680 --> 0:20:49.320 to suit his university. 0:20:49.720 --> 0:20:54.200 Al Yakhobe is a senior at ten and he had 0:20:54.359 --> 0:21:01.399 started to complain to university administrators before October seventh about 0:21:01.400 --> 0:21:07.200 anti semitism on campus. In particular, in late September, there 0:21:07.400 --> 0:21:12.880 was a writer's conference of Palestinian writers that's been roundly 0:21:12.920 --> 0:21:19.960 criticized as sponsoring anti Semitic speakers, and he sent a 0:21:20.080 --> 0:21:25.520 number of emails and letters, He organized petition drives and 0:21:26.000 --> 0:21:30.000 had very little success with pen administrators, and he was 0:21:30.119 --> 0:21:35.440 quite frustrated after the Hamas attack. He continued to complain 0:21:35.560 --> 0:21:40.200 about a spike and antisemitism on campus, and he said 0:21:40.200 --> 0:21:44.359 that he felt quite unsafe on campus, that he was 0:21:44.560 --> 0:21:47.239 in the Hillel building on campus when there was a 0:21:47.280 --> 0:21:52.000 bomb threat that was not announced, and he felt that 0:21:52.320 --> 0:21:57.520 the university was not enforcing its policies that were already 0:21:57.600 --> 0:22:02.440 on the books to prevent this type of conduct and speech. 0:22:02.720 --> 0:22:08.160 And so that's what led him to go to Congress 0:22:08.280 --> 0:22:12.760 on December fifth for a press conference. And this was 0:22:12.800 --> 0:22:17.120 on the same day that the three university presidents testified 0:22:17.160 --> 0:22:21.439 to Congress, and that testimony went badly for a couple 0:22:21.480 --> 0:22:26.240 of them. But during that press conference on December fifth, 0:22:26.960 --> 0:22:30.600 he spoke about what he called the chilling landscape of 0:22:30.680 --> 0:22:34.280 hatred and hostility at Penn. He said, despite what my 0:22:34.400 --> 0:22:38.240 university says, I do not feel safe. Let me be clear, 0:22:38.400 --> 0:22:42.199 I do not feel safe. He then told me that 0:22:42.880 --> 0:22:46.040 about a week later, he had already gotten hundreds of 0:22:46.160 --> 0:22:50.840 threats because of his outspokenness at that press conference. 0:22:51.960 --> 0:22:55.560 So he filed a lawsuit against Penn, he and another student, 0:22:56.200 --> 0:23:00.399 and that's one of several lawsuits filed in recent weeks 0:23:00.440 --> 0:23:05.200 against universities, and they're citing Title six of the Civil 0:23:05.320 --> 0:23:09.560 Rights Act. Has Title six been used in this context before. 0:23:10.560 --> 0:23:15.040 Title six has been used in different contexts, often by 0:23:15.640 --> 0:23:20.480 African American students, But it's a new development that Jewish 0:23:20.560 --> 0:23:26.280 students have gotten so organized and have really concentrated on 0:23:26.600 --> 0:23:32.040 how they could use this law to abate the spike 0:23:32.240 --> 0:23:37.160 in anti Semitism on campus. Title six is enforced by 0:23:37.200 --> 0:23:41.280 the Office of Civil Rights at the Education Department, and 0:23:41.760 --> 0:23:46.160 so it can either be enforced by the government itself 0:23:46.280 --> 0:23:50.359 through the Education Department's Office of Civil Rights, or in 0:23:50.440 --> 0:23:53.240 what is sort of a novel twist that we wrote about, 0:23:53.680 --> 0:23:57.960 there are a series of private lawsuits that have been 0:23:58.040 --> 0:24:02.600 filed that seek a potentially the same goal, which is 0:24:02.680 --> 0:24:09.439 to force colleges and universities to use the policies that 0:24:09.520 --> 0:24:13.720 are on the books that prevent the sort of harassment 0:24:14.040 --> 0:24:16.640 that Jewish students are now complaining about. 0:24:16.920 --> 0:24:20.639 Well, for the University of Pennsylvania, what kind of policies 0:24:21.560 --> 0:24:26.159 does the university have that the two students are looking 0:24:26.200 --> 0:24:27.280 for them to enforce. 0:24:28.200 --> 0:24:32.240 Well, for instance, there's a code of conduct that seeks 0:24:32.280 --> 0:24:36.800 to prevent harassment and also to prevent a hostile environment 0:24:37.200 --> 0:24:42.560 based on someone's beliefs. So they want the university to 0:24:42.720 --> 0:24:47.320 enforce those codes of conduct, and the remedy that they're seeking, 0:24:47.400 --> 0:24:50.840 for instance, is to ask a judge to order PEN 0:24:51.040 --> 0:24:56.320 to fire faculty and administrators that are responsible for what 0:24:56.359 --> 0:24:59.920 they say is the anti Semitic abuse permeating the school. 0:25:00.560 --> 0:25:04.480 They also want a judge to order PEN to suspend 0:25:04.600 --> 0:25:09.240 or expel students engaged in such conduct. They're also looking 0:25:09.359 --> 0:25:11.240 forward financial damages. 0:25:11.800 --> 0:25:15.720 Are they asking the school to suspend or expel students 0:25:15.760 --> 0:25:20.040 who protest against Israel or in support of the Palestinians. 0:25:20.480 --> 0:25:23.840 No, this is a very interesting area of the law, 0:25:24.640 --> 0:25:30.679 and what they say they're interested in putting it end too, 0:25:31.119 --> 0:25:37.840 is harassment, either physical harassment, physical threats, or verbal statements 0:25:37.880 --> 0:25:44.240 that are perceived as threats. So mere protests themselves are 0:25:44.280 --> 0:25:49.280 not subject to this type of litigation. What they're trying 0:25:49.320 --> 0:25:54.719 to do is prevent the type of speech that is 0:25:54.880 --> 0:26:01.240 seen as harassing or intimidating speech and conduct. And so 0:26:01.359 --> 0:26:04.359 that's a bit of a gray area, obviously, and it's 0:26:04.440 --> 0:26:10.000 open to interpretation. But one of the aspects of this 0:26:10.160 --> 0:26:16.240 type of litigation is a question about just what is 0:26:16.720 --> 0:26:22.440 anti semitism and what constitutes anti Semitic speech, And there's 0:26:22.520 --> 0:26:29.080 an international interpretation of anti semitism that if you deny 0:26:30.119 --> 0:26:34.760 the ability of Israel to exist, or you say that 0:26:35.200 --> 0:26:41.199 Israel should not exist, then that's considered anti semitism. That's actionable. 0:26:41.600 --> 0:26:45.280 And the expression from the River to the Sea is 0:26:45.680 --> 0:26:49.960 very controversial. Some see it as antisemitic, others do not. 0:26:50.880 --> 0:26:52.639 How do the plaintiffs here view it. 0:26:53.119 --> 0:26:58.480 So the lawyers that are assuing believe that that is antisemitic. 0:26:59.040 --> 0:27:03.640 It is open to interpretation whether the Palestinian supporters who 0:27:03.800 --> 0:27:09.720 say that are in fact advocating the elimination of Israel 0:27:09.960 --> 0:27:14.639 or not. And so this is a very difficult area 0:27:14.760 --> 0:27:18.680 that's going to be resolved in the months ahead, as 0:27:18.800 --> 0:27:24.400 dis litigation moves forward, and as the Department of Education's 0:27:24.520 --> 0:27:30.679 Office of Civil Rights negotiates with schools to reach civil 0:27:30.800 --> 0:27:37.639