WEBVTT - Trump Targets Transgender Rights & Changes at SEC 0:00:02.759 --> 0:00:07.520 This is Bloomberg Law with June Grossel from Bloomberg Radio. 0:00:09.920 --> 0:00:11.000 With a stroke of my pen. 0:00:11.119 --> 0:00:15.640 On day one, We're going to stop the transgender lunacy, 0:00:20.040 --> 0:00:24.919 and I will sign executive orders to end child sexual mutilation, 0:00:25.760 --> 0:00:28.960 get transgender out of the military and out of our 0:00:29.480 --> 0:00:32.479 elementary schools and middle schools and high school. 0:00:33.120 --> 0:00:36.960 President Donald Trump had campaigned on ending what he called 0:00:37.000 --> 0:00:41.440 the transgender lunacy, and on day one, he began by 0:00:41.520 --> 0:00:45.800 targeting transgender people in a series of executive orders. 0:00:46.240 --> 0:00:49.479 It will henceforth be the official policy of the United 0:00:49.479 --> 0:00:54.680 States government that there are only two genders, male and female. 0:00:54.920 --> 0:00:59.360 Trump's followed that with executive orders barring transgender people from 0:00:59.400 --> 0:01:03.840 serving in the US military and revoking federal funding from 0:01:04.040 --> 0:01:08.720 entities that provide gender affirming care to minors and educational 0:01:08.760 --> 0:01:14.280 institutions that allow transgender female athletes to compete in school sports. 0:01:14.840 --> 0:01:18.479 All of these executive actions have been challenged in court. 0:01:18.959 --> 0:01:22.080 Joining me is David Cole, a professor at Georgetown Law 0:01:22.319 --> 0:01:26.360 and the former National Legal Director of the ACLU. On 0:01:26.400 --> 0:01:29.680 the first day of his presidency, he signed an order 0:01:29.800 --> 0:01:34.839 declaring that only two genders exist. Does that order itself 0:01:35.160 --> 0:01:38.319 have any effect on transgender people. 0:01:38.680 --> 0:01:43.760 Well, it's deeply demigrating of their very humanity. But I 0:01:43.760 --> 0:01:47.480 don't think the order itself has legal effect. The president 0:01:47.560 --> 0:01:50.200 can declare whatever he wants, but it doesn't make it. 0:01:50.280 --> 0:01:54.520 So let's discuss some of the executive orders he's issued. 0:01:54.960 --> 0:01:58.840 On January twenty seventh, Trump issued an executive order intended 0:01:58.840 --> 0:02:02.640 to bar transgender people from serving in the US military, 0:02:03.040 --> 0:02:07.480 and under new rules released by the Defense Secretary, transgender 0:02:07.600 --> 0:02:12.600 individuals are blocked from enlistment, and transgender troops already serving 0:02:12.639 --> 0:02:17.120 are blocked from receiving some gender related medical care. Is 0:02:17.160 --> 0:02:19.240 a complete ban likely next? 0:02:19.800 --> 0:02:22.359 Well, I'm not sure what's next, but what he put 0:02:22.400 --> 0:02:27.639 in place already is deeply disturbing and very likely unconstitutional. 0:02:27.840 --> 0:02:32.680 The executive order effectively says, or not effectively, literally says, 0:02:33.360 --> 0:02:37.480 transgender people cannot serve in the military because we need 0:02:37.720 --> 0:02:41.880 honest people serving in the military, and if you're transgender, 0:02:42.080 --> 0:02:49.600 you're not honest. That is simply pure ignorant prejudice. It's 0:02:49.720 --> 0:02:52.400 nothing more than that there are one point five million 0:02:52.480 --> 0:02:55.680 people in this country who are transgender. The fact that 0:02:55.680 --> 0:02:59.120 they are transgender has nothing whatsoever to do with whether 0:02:59.120 --> 0:03:01.800 they are honest. Some of them are honest, some of 0:03:01.840 --> 0:03:04.480 them are probably not, just like some presidents are honest 0:03:04.520 --> 0:03:06.919 and some are not. But that kind of an order, 0:03:06.960 --> 0:03:10.880 which is based on nothing more than bear animus against 0:03:10.880 --> 0:03:15.119 a minority group, is clearly unconstitutional. The fact that it 0:03:15.200 --> 0:03:18.760 arises in the context of the military might make it 0:03:18.800 --> 0:03:21.640 a closer case, because the president, as commander in chief, 0:03:21.680 --> 0:03:26.400 has special authority. But imagine if the president said black 0:03:26.440 --> 0:03:29.400 people are not honest and so they can't serve in 0:03:29.440 --> 0:03:33.520 the military. I don't think that order would stand, nor 0:03:33.560 --> 0:03:35.280 should the transgender order stand. 0:03:35.840 --> 0:03:39.960 There are several lawsuits over that ban. There are suits 0:03:40.000 --> 0:03:43.040 by six service members. Less Thursday, Land Illegal in the 0:03:43.120 --> 0:03:47.800 Human Rights Campaign filed a lawsuit, but in twenty nineteen, 0:03:47.920 --> 0:03:52.680 the Supreme Court allowed Trump's restrictions on transgender people in 0:03:52.720 --> 0:03:53.400 the military. 0:03:53.720 --> 0:03:56.160 The case never reached the Supreme Court in the sense 0:03:56.160 --> 0:03:59.040 the Supreme Court never agreed to hear the case. The 0:03:59.120 --> 0:04:02.800 last time around, it was a more limited restriction, and 0:04:02.920 --> 0:04:06.480 it was not as this one is, on its face, 0:04:06.960 --> 0:04:12.920 based on pure, unadulterated prejudice and animus. The Court has 0:04:13.040 --> 0:04:16.800 long ruled that when the government targets a group out 0:04:16.800 --> 0:04:20.560 of pure animus out of animus against the group, not 0:04:20.839 --> 0:04:26.160 based on any rational justification. Its actions are unconstitutional, and 0:04:26.240 --> 0:04:30.719 so I am quite optimistic that the courts will declare 0:04:30.920 --> 0:04:34.880 this ban unconstitutional and the Supreme Court will then take 0:04:34.960 --> 0:04:37.840 it up, because the Supreme Court generally does take up 0:04:38.000 --> 0:04:41.359 decisions that declare actions of the president unconstitutional. But this 0:04:41.520 --> 0:04:45.120 is deeply, deeply offensive. It is really no different than 0:04:45.200 --> 0:04:48.279 writing an order saying black people are not honest and 0:04:48.320 --> 0:04:50.200 therefore they can't serve in the military. 0:04:50.600 --> 0:04:53.920 So the next day, on January twenty eight, he issued 0:04:53.960 --> 0:04:58.919 in executive order ending federal funding research and education grants 0:04:58.960 --> 0:05:03.520 to medical institution, including hospitals and medical schools, that provide 0:05:03.600 --> 0:05:07.600 gender affirming care to patients under nineteen. And you call 0:05:07.680 --> 0:05:12.719 this protecting children from chemical and surgical mutilation. What about 0:05:12.760 --> 0:05:15.440 the legality of withholding federal funds here? 0:05:15.880 --> 0:05:21.200 Again deeply troubling and illegal. It's been challenged. I know 0:05:21.400 --> 0:05:26.000 the ACLU has challenged that action. It's illegal both because 0:05:26.120 --> 0:05:30.479 he is cut off funding that Congress specifically appropriated to 0:05:30.640 --> 0:05:33.800 be spent for these purposes, and for the same reason 0:05:33.880 --> 0:05:37.080 that courts have enjoined his efforts to cut off other 0:05:37.640 --> 0:05:41.240 Congressional funding and other contexts. The president doesn't have the 0:05:41.320 --> 0:05:45.760 power to simply cut off funding because he disagrees with 0:05:45.920 --> 0:05:49.599 Congress's judgment. His job is to execute the laws that 0:05:49.760 --> 0:05:53.279 Congress passes, and so he can't override that because he 0:05:53.400 --> 0:05:57.080 happens to be prejudiced against transgender people this lass. It 0:05:57.160 --> 0:06:00.800 also will be challenged as a form of second discrimination 0:06:01.120 --> 0:06:05.960 in the provision of healthcare, which violate a federal statute, 0:06:06.000 --> 0:06:08.719 and the United States Court of Appeals for the Fourth 0:06:08.720 --> 0:06:13.120 Circuit has held that denying care to transgender people is 0:06:13.200 --> 0:06:16.760 a form of sex discrimination that violates that federal statute. 0:06:16.839 --> 0:06:20.200 So I am quite optimistic that this order will also 0:06:20.760 --> 0:06:23.080 be struck down once the courts take it up. 0:06:23.720 --> 0:06:28.359 Three states, Washington, Oregon, and Minnesota, have also filed a 0:06:28.480 --> 0:06:33.920 lawsuit over that executive order on medical treatment for transgender minors, 0:06:34.480 --> 0:06:39.080 saying it violates the Fifth Amendment's equal protection guarantees, the 0:06:39.120 --> 0:06:43.920 constitutional separation of powers, and the Tenth Amendment. And the 0:06:43.960 --> 0:06:48.240 tenth Amendment has been invoked in other lawsuits by the 0:06:48.279 --> 0:06:50.040 states against Trump. 0:06:50.960 --> 0:06:54.040 So the tenth Amendment is because it's interfering with the 0:06:54.080 --> 0:06:56.560 authorities of the states, and so if he's seeking to 0:06:56.680 --> 0:07:01.400 use federal funding to coerce states in the taking action 0:07:01.560 --> 0:07:04.000 that they don't want to take. That's a violation of 0:07:04.400 --> 0:07:07.960 the principles of federalism. And with respect to the Fifth Amendment, 0:07:08.279 --> 0:07:13.440 singling out a particular group for unequal treatment violates the 0:07:13.440 --> 0:07:18.120 Fifth Amendments protection of due process, which in turn requires 0:07:18.480 --> 0:07:20.560 the federal government to treat all people equally. 0:07:21.040 --> 0:07:27.320 You represent transgender families challenging Tennessee's ban on gender firming 0:07:27.440 --> 0:07:31.600 care from minors. At the Supreme Court. The Trump administration 0:07:32.280 --> 0:07:35.880 flipped the federal government's position in that case, which came 0:07:35.920 --> 0:07:39.720 as no surprise, and now is in support of Tennessee's ban. 0:07:40.480 --> 0:07:43.120 Do you think that flip will have any effect on 0:07:43.200 --> 0:07:45.360 the Supreme Court's decision in the case. 0:07:45.960 --> 0:07:49.080 Well, we'll see when they issue their decision. I don't 0:07:49.120 --> 0:07:51.960 think it's likely to have an effect. The case was 0:07:52.240 --> 0:07:55.080 presented to the court, the court heard argument. I was 0:07:55.120 --> 0:07:59.400 actually co counsel for the transgender families with the ACLU 0:07:59.480 --> 0:08:03.360 in that case, and at the Supreme Court, initially and 0:08:03.400 --> 0:08:06.880 at our argument, the United States was on our side. 0:08:07.520 --> 0:08:10.760 Now that President Trump has taken office, he has switched 0:08:10.840 --> 0:08:13.760 sides and he's against us. But all he did was 0:08:13.760 --> 0:08:18.000 submit a letter saying we no longer support the plaintiffs 0:08:18.040 --> 0:08:20.800 in this case, and we think the law is constitutional. 0:08:20.920 --> 0:08:23.880 We think you should decide the case. So I suspect 0:08:23.880 --> 0:08:25.920 that the court will decide the case. I very much 0:08:25.960 --> 0:08:30.120 doubt that the Trump administration shifting its position will affect 0:08:30.200 --> 0:08:33.319 how the court decides the case. There's still a dispute 0:08:33.360 --> 0:08:38.360 between our clients and Tennessee, which is depriving the parents 0:08:38.360 --> 0:08:40.880 and their kids of the medical care that they and 0:08:40.920 --> 0:08:43.559 their doctors have determined as medically necessary. 0:08:44.360 --> 0:08:48.400 Let's say the Supreme Court upholds Tennessee's ban. Does that 0:08:48.480 --> 0:08:53.679 have any implications for Trump's executive order withholding funding from 0:08:53.800 --> 0:08:58.080 institutions that provide gender firming care for minors. 0:08:58.920 --> 0:09:01.880 Yeah, so if the court rules for Tennessee. Depending on 0:09:01.960 --> 0:09:06.000 how it rules for Tennessee, it would weaken the equal 0:09:06.080 --> 0:09:09.920 protection challenge to the extent there's an equal protection challenge 0:09:10.000 --> 0:09:12.120 to the Trump executive order, but it would have no 0:09:12.200 --> 0:09:15.160 effect on the claims that he can't cut off funding 0:09:15.240 --> 0:09:19.720 that Congress appropriated, that he can't discriminate on the basis 0:09:19.720 --> 0:09:23.760 of sex in the provision of healthcare under a federal statute, 0:09:24.000 --> 0:09:26.959 and that he can't commandeer the states to carry out 0:09:27.360 --> 0:09:30.800 programs that they disagree with, so all of those claims 0:09:31.040 --> 0:09:35.360 would remain. The Fifth Amendment due process slash equal protection 0:09:35.559 --> 0:09:38.840 claim that is also in the case could be weakened 0:09:38.920 --> 0:09:42.120 if the court rules against Tennessee, and would obviously be 0:09:42.400 --> 0:09:44.880 very much strengthened if the court rules in favor of 0:09:44.960 --> 0:09:46.440 the transgender family. 0:09:46.640 --> 0:09:49.720 Last Wednesday, in a ceremony at the White House, Trump 0:09:49.800 --> 0:09:54.520 signed an executive order denying federal funds to any educational 0:09:54.559 --> 0:10:00.520 institution that allows transgender female athletes to compete in female 0:10:00.559 --> 0:10:02.760 categories in school sports. 0:10:03.679 --> 0:10:07.280 We're putting every school receiving taxpayer dollars on notice that 0:10:07.320 --> 0:10:10.800 if you let men take over women's sports teams or 0:10:11.880 --> 0:10:15.920 invade your locker rooms, you will be investigated for violations 0:10:15.920 --> 0:10:18.520 of Title NINN and risk your federal funding. There will 0:10:18.520 --> 0:10:19.760 be no federal fundement. 0:10:21.200 --> 0:10:23.439 Well, I think again, this is, you know, consistent with 0:10:24.080 --> 0:10:27.000 everything else he has done with respect to transgender people, 0:10:27.000 --> 0:10:30.160 which is that he has targeted a very small minority 0:10:30.320 --> 0:10:35.640 in this country for disparate treatment that no one else 0:10:35.840 --> 0:10:39.080 has to suffer. And so he's basically saying we're going 0:10:39.120 --> 0:10:45.320 to take away funding from schools that allow allow transgender 0:10:45.360 --> 0:10:50.120 women to play on women's teams. There are many transgender 0:10:50.160 --> 0:10:53.040 women who are playing on women's teams. Some of them are, 0:10:53.720 --> 0:10:56.360 you know, very good, others are not. They're in the 0:10:56.600 --> 0:10:59.880 NC DOUBLEA, they're governed by NC DOUBLEA rules. If they're 0:11:00.360 --> 0:11:03.920 club sports, they're governed by whatever the school's rules are. 0:11:04.280 --> 0:11:07.240 But at the end of the day, sports are about 0:11:07.240 --> 0:11:12.559 two things, competition and participation. And to say to a 0:11:12.600 --> 0:11:16.760 trans woman, the only way you can participate or compete 0:11:16.880 --> 0:11:21.920 is if you deny your gender identity and you act 0:11:22.120 --> 0:11:25.079 as if you are a man when you are a woman. 0:11:25.760 --> 0:11:28.200 No one else has to deny who they are to 0:11:28.240 --> 0:11:31.679 play a sport. So it's a deeply again, a deeply 0:11:31.880 --> 0:11:35.839 cruel effort to use the power of the federal purse 0:11:35.960 --> 0:11:41.040 to coerce universities and schools to harm people who they're 0:11:41.080 --> 0:11:46.600 simply allowing to participate in extracurricular activities. And there are 0:11:46.679 --> 0:11:50.240 concerns in the sports context about the fairness of competition 0:11:50.360 --> 0:11:54.160 and the like, but most of the sport governing bodies 0:11:54.200 --> 0:11:57.880 have dealt with that through gender neutral rules. To say, 0:11:57.960 --> 0:11:59.880 you know, if you're going to play on the women's team, 0:12:00.080 --> 0:12:02.720 have been identified as a woman for a certain period 0:12:02.720 --> 0:12:05.920 of time, you have to have low testosterone level so 0:12:05.960 --> 0:12:08.520 that you're playing essentially on an equal playing field with 0:12:08.640 --> 0:12:11.400 the other women on the team. But that's a totally 0:12:11.400 --> 0:12:14.280 permissible set of rules to apply to come in and say, 0:12:15.000 --> 0:12:19.680 where a transgender woman is harming nobody, she cannot participate 0:12:19.720 --> 0:12:23.520 simply because I have an ideological view that rejects the 0:12:23.600 --> 0:12:26.880 reality of one point five million people in this country. 0:12:27.520 --> 0:12:33.240 Is again nothing more than pure animus and prejudice, and 0:12:33.280 --> 0:12:34.240 should be invalid. 0:12:34.600 --> 0:12:37.840 And two transgender girls in New Hampshire brought the first 0:12:38.080 --> 0:12:42.000 legal action against that executive order, and it's actually an 0:12:42.000 --> 0:12:46.080 expansion of a lawsuit filed last August against a state 0:12:46.200 --> 0:12:51.720 law prohibiting transgender girls from participating in female sports. So 0:12:51.800 --> 0:12:56.080 we'll see where that goes. Trump also issued an order 0:12:56.200 --> 0:13:00.960 requiring officials to ensure that transgender women detained in federal 0:13:01.040 --> 0:13:06.400 facilities be housed in men's facilities, and prohibiting the Bureau 0:13:06.440 --> 0:13:10.719 of Prisons from providing gender affirming care to inmates. 0:13:11.440 --> 0:13:16.000 And that has already been challenged by two transgender women 0:13:16.160 --> 0:13:18.920 and has been and joined by the courts because the 0:13:19.040 --> 0:13:21.600 law is and President Trump doesn't seem to care what 0:13:21.640 --> 0:13:24.000 the law is, but the law is, the constitutional law 0:13:24.120 --> 0:13:29.080 is that prison officials have to keep their detainees safe. 0:13:29.600 --> 0:13:32.240 They have a lot of discretion in how they make 0:13:32.360 --> 0:13:35.000 those decisions, but they have to make those decisions on 0:13:35.040 --> 0:13:38.800 an individualized basis. And so if a prison official determines 0:13:38.840 --> 0:13:43.880 that a particular trans inmate cannot be kept safe if 0:13:44.440 --> 0:13:47.320 she is held in the men's prison where she will 0:13:47.360 --> 0:13:52.560 be abused, raped, and the like, that's fully within the 0:13:52.600 --> 0:13:56.240 discretion of the Bureau of Prisons to decide. They have 0:13:56.320 --> 0:14:00.120 to decide it based on medical and safety concerns, not 0:14:00.280 --> 0:14:04.040 based on ideology. What President Trump's executive or says is 0:14:04.559 --> 0:14:07.920 even where Bureau of Prison officials have determined that the 0:14:07.920 --> 0:14:10.760 only way to keep a trans woman safe is to 0:14:10.800 --> 0:14:13.520 hold her in a woman's prison, she must be put 0:14:13.559 --> 0:14:18.040 into a male prison where she faces abuse, rape, and 0:14:18.080 --> 0:14:20.960 the like. So it's not surprising that both courts that 0:14:21.040 --> 0:14:25.360 have faced that have and enjoined the President Trump's executive order. Again, 0:14:25.840 --> 0:14:31.200 it's cruelty driven by animus, prejudice, and ideology, and that's 0:14:31.240 --> 0:14:33.239 not permissible under our constitution. 0:14:33.880 --> 0:14:36.880 He campaigned on this, and I assume he knew that 0:14:37.000 --> 0:14:42.680 there were the fierce opposition and lawsuits challenging these orders. 0:14:43.040 --> 0:14:46.160 It's not surprising that he has targeted transgender people. He 0:14:46.200 --> 0:14:51.880 targeted transgender people during his campaign. He targeted immigrants during 0:14:51.880 --> 0:14:54.960 his campaign. He knows you know who to target. He 0:14:55.080 --> 0:14:58.960 targets the vulnerable. He targets those without a voice in 0:14:59.000 --> 0:15:03.200 the political process. He makes them scapegoats. You know, that's 0:15:03.240 --> 0:15:08.960 a tried and true political tactic. Unfortunately, but the Constitution 0:15:09.120 --> 0:15:12.560 protects the vulnerable, and the Constitution requires you treat everybody 0:15:12.600 --> 0:15:16.880 equally and you not impose burdens on people simply for 0:15:17.000 --> 0:15:22.160 political gain or because you entertain prejudice against them. And 0:15:22.160 --> 0:15:25.120 that's exactly what President Trump has done with his executive 0:15:25.200 --> 0:15:26.760 orders on the trans community. 0:15:27.000 --> 0:15:29.560 And we'll see how the courts react. As you mentioned, 0:15:29.600 --> 0:15:32.760 a few courts have already blocked some of these orders 0:15:32.800 --> 0:15:37.120 from taking effect, at least temporarily. Tomorrow is Seattle federal 0:15:37.200 --> 0:15:39.720 judge is going to hold a hearing on a request 0:15:39.760 --> 0:15:44.080 for a temporary restraining order on the executive order that 0:15:44.320 --> 0:15:48.800 haults funding for institutions that provide gender affirming care for minors. 0:15:49.080 --> 0:15:52.440 That's in the case brought by the three States, and 0:15:52.520 --> 0:15:55.560 on February eighteenth, the judge is going to hear arguments 0:15:55.800 --> 0:15:59.800 for a preliminary injunction that would block the Trump administration 0:16:00.320 --> 0:16:04.960 and the US military from enacting the executive order barring 0:16:05.080 --> 0:16:09.160 transgender Americans from the Arms services. And I'm sure there'll 0:16:09.200 --> 0:16:12.040 be a lot more hearing scheduled in these cases. Thanks 0:16:12.080 --> 0:16:14.960 so much for joining me today, David. That's Professor David 0:16:15.000 --> 0:16:18.960 Cole of Georgetown Law. During his campaign, Donald Trump said 0:16:18.960 --> 0:16:21.880 he would make the United States the crypto capital of 0:16:21.920 --> 0:16:25.840 the planet and the bitcoin superpower of the world. 0:16:25.960 --> 0:16:28.960 We will have regulations, but from now on, the rules 0:16:29.000 --> 0:16:32.000 will be written by people who love your industry, not 0:16:32.240 --> 0:16:35.360 hate your industry. People that want to make it clear 0:16:35.480 --> 0:16:39.440 and simple, straightforward and fair. People that want to see 0:16:39.480 --> 0:16:40.760 your industry thrive. 0:16:41.000 --> 0:16:44.520 Trump also vowed to end the so called weaponization of 0:16:44.560 --> 0:16:49.600 the federal government, including the Securities and Exchange Commission. Trump's 0:16:49.720 --> 0:16:55.080 choice for SEC chair, former SEC Commissioner Paul Atkins, hasn't 0:16:55.120 --> 0:16:58.400 been confirmed yet, but there are changes underway at the 0:16:58.440 --> 0:17:02.640 agency already, with more to come. My guest is securities 0:17:02.720 --> 0:17:06.520 law attorney Robert him a partner at Tartar, Krinsky and Drogan, 0:17:06.800 --> 0:17:11.320 and a former SEC Assistant Regional Director, Gary Gensler had 0:17:11.480 --> 0:17:16.000 an aggressive enforcement agenda and he ended up levying over 0:17:16.080 --> 0:17:20.679 twenty billion dollars in penalties and other charges. Former SEC 0:17:20.680 --> 0:17:25.080 Commissioner Paul Atkins. Trump has tapped him to be the 0:17:25.119 --> 0:17:30.119 SEC chair if confirmed. How different do you think his 0:17:30.680 --> 0:17:31.600 strategy will be? 0:17:32.320 --> 0:17:35.000 Well, I think if mister Atkins is confirmed, there is 0:17:35.040 --> 0:17:37.960 definitely going to be a sea change at the SEC 0:17:38.200 --> 0:17:42.160 in terms of their approach and their strategy to crypto. 0:17:42.560 --> 0:17:45.600 Probably the biggest complaint that the crypto industry had is 0:17:45.640 --> 0:17:50.560 that the SEC was engaging in regulation by enforcement activities. 0:17:50.640 --> 0:17:55.360 So instead of promulgating rules and setting guidelines and rules 0:17:55.400 --> 0:17:58.480 for the road for the industry to follow, the SEC 0:17:58.520 --> 0:18:01.720 didn't do any of that. Instead just started bringing enforcement 0:18:01.760 --> 0:18:05.399 actions against various players in the industry, which was a 0:18:05.520 --> 0:18:08.960 huge concern to the industry participants because you know these 0:18:09.119 --> 0:18:13.440 actions can lead to find there's reputational damage and other 0:18:13.680 --> 0:18:17.480 problems with that approach. So I think mister Atkins is 0:18:17.520 --> 0:18:21.359 going to really take a different attack. He's most likely 0:18:21.520 --> 0:18:25.160 going to start more of a rulemaking process for the industry, 0:18:25.720 --> 0:18:27.760 so there's going to be clarity on all the different 0:18:27.880 --> 0:18:30.760 parts of the regulatory system that touch on crypto in 0:18:30.840 --> 0:18:33.760 terms of whether their securities or whether their commodities. 0:18:34.160 --> 0:18:39.080 He previously recommended that the SEC act more predictably and 0:18:39.200 --> 0:18:43.919 proposed that the agency adopt an open jacket policy to 0:18:44.000 --> 0:18:47.920 discourage it from bringing cases where evidence was deficient. What 0:18:48.200 --> 0:18:50.720 does that mean, an open jacket policy. 0:18:50.760 --> 0:18:52.960 Well, that could mean a couple of different things. You know. 0:18:53.040 --> 0:18:56.000 One is it certainly indicates that there was likely going 0:18:56.040 --> 0:19:00.119 to be much more transparency at the SEC regarding its 0:19:00.200 --> 0:19:04.399 rulemaking process and its decisions about who it sues and 0:19:04.640 --> 0:19:08.320 enforcement proceedings or not. One of the complaints that the 0:19:08.320 --> 0:19:11.080 crypto industry has had is that there has been a 0:19:11.160 --> 0:19:15.600 lack of transparency at the SEC in terms of, you know, 0:19:15.680 --> 0:19:19.760 exactly how the SEC is looking to regulate these products. So, 0:19:19.880 --> 0:19:23.960 for instance, there are several crypto organizations like Coinbase that 0:19:24.400 --> 0:19:27.199 had repeatedly tried to come in and meet with the 0:19:27.280 --> 0:19:30.359 SEC to find out, you know, the SEC's blots on 0:19:30.920 --> 0:19:34.440 how to register, you know, how to have proper regulatory oversight, 0:19:34.880 --> 0:19:38.960 what the SEC was expecting from these different organizations and 0:19:39.440 --> 0:19:42.640 the SEC while they took the meetings, they never provided 0:19:42.680 --> 0:19:45.040 any sort of guidance or even opened up a path 0:19:45.200 --> 0:19:48.320 for crypto firms to register with them, and that's been 0:19:48.359 --> 0:19:52.040 a huge point of contention because the crypto firms say, 0:19:52.359 --> 0:19:54.879 you know, we do want to comply and we do 0:19:54.960 --> 0:19:58.359 want to follow the rules, but you, the SEC, have 0:19:58.480 --> 0:20:00.359 to let us know what they are. You have to 0:20:00.359 --> 0:20:03.880 give us transparency into what you're thinking in terms of 0:20:03.920 --> 0:20:06.520 what the proper steps are that we need to take 0:20:07.000 --> 0:20:09.520 and not just you know, sue us and see millions 0:20:09.560 --> 0:20:10.680 of dollars in fines. 0:20:11.200 --> 0:20:14.200 The SEC has already created a task force to work 0:20:14.280 --> 0:20:19.080 with the crypto industry. It's led by Republican Commissioner Hester Pierce, 0:20:19.560 --> 0:20:22.720 known as Crypto Mom due to her favorable stance toward 0:20:22.760 --> 0:20:24.920 the sector. I mean, do you think there'll be any 0:20:25.560 --> 0:20:26.760 regulation of crypto? 0:20:27.400 --> 0:20:29.640 Yes, I do think that there's going to be regulation 0:20:29.760 --> 0:20:33.560 of crypto. And the industry also is not arguing that 0:20:33.600 --> 0:20:37.640 there shouldn't be any regulation. What the industry is arguing 0:20:37.720 --> 0:20:41.719 is more for common sense regulation, but also transparency and 0:20:41.760 --> 0:20:45.800 clarity on what those regulations are. And yes, the new 0:20:45.840 --> 0:20:49.480 Crypto task Force I believe is going to be very 0:20:49.480 --> 0:20:53.080 helpful and playing a big role in that process because 0:20:53.200 --> 0:20:55.720 what the task Force is doing right now is studying 0:20:56.320 --> 0:20:59.800 various aspects of the crypto industry and also doing a 0:21:00.040 --> 0:21:04.439 wholesale review of the SEC's actions in the crypto space, 0:21:04.520 --> 0:21:08.280 particularly it's enforcement cases. And we saw the other day 0:21:08.720 --> 0:21:11.320 probably the first concrete step to come out of the 0:21:11.359 --> 0:21:14.680 Crypto Task Force is that there was a sixty day 0:21:14.760 --> 0:21:19.560 pause that was entered in the SEC's enforcement proceedings against Finance, 0:21:19.800 --> 0:21:22.320 which was a major case the SEC brought against the 0:21:22.359 --> 0:21:27.119 Crypto Exchange. So that certainly signals the SEC is taking 0:21:27.160 --> 0:21:29.439 a deep dive and doing a serious review of the 0:21:29.480 --> 0:21:32.800 case and may either wind up dropping the case or 0:21:33.080 --> 0:21:36.359 may wind up proposing terms for a settlement that are 0:21:36.440 --> 0:21:39.800 much more reasonable than what the Commission was seeking under 0:21:39.840 --> 0:21:40.960 the prior administration. 0:21:41.880 --> 0:21:47.959 So Atkins has said that corporate finds unfairly penalized shareholders. 0:21:48.600 --> 0:21:50.600 Does that mean that, you know, we're going to see 0:21:50.640 --> 0:21:55.760 less corporate finds and more concentration on individuals. 0:21:55.800 --> 0:22:00.879 Perhaps, Yeah, I do think that is the implication of approach. So, 0:22:01.040 --> 0:22:05.160 for instance, with with Coinbase, which registered with the SEC 0:22:05.200 --> 0:22:07.960 and when public you know, had an IPO, one of 0:22:07.960 --> 0:22:11.320 their chief complaints is that you know, hey, look we 0:22:11.680 --> 0:22:15.600 put together a registration statement, the SEC reviewed it, were approved. 0:22:15.720 --> 0:22:20.200 We're trading our business model has been transparent for years, 0:22:20.840 --> 0:22:23.199 and all of a sudden, the SEC comes in and 0:22:23.320 --> 0:22:26.240 sues us for violating the securities laws and not registering 0:22:26.280 --> 0:22:30.000 as a broken dealer, not following all these other requirements 0:22:30.080 --> 0:22:33.439 that we feel don't apply. And you know, if the 0:22:33.480 --> 0:22:35.840 SEC was to succeed on that sort of case and 0:22:35.920 --> 0:22:38.840 a large fine was levied against the company, yeah, that 0:22:38.880 --> 0:22:42.520 comes out of the pockets of shareholders, you know, innocent investors, 0:22:42.760 --> 0:22:45.040 you know who didn't have anything to do with the violations. 0:22:45.200 --> 0:22:48.520 You know that being said once, the SEC maybe reduces 0:22:48.560 --> 0:22:52.720 their focus on finding corporativities. Yes, the focus con then 0:22:52.800 --> 0:22:57.200 shift to finding individual bad actors when that's a problem, 0:22:57.760 --> 0:23:01.760 or potentially having injunctive relief, where a court can order 0:23:02.280 --> 0:23:07.400 certain changes in a company's business practices so that violations 0:23:07.480 --> 0:23:11.000 or other problematic conduct can occur in the future. So 0:23:11.560 --> 0:23:15.800 just because the corporations themselves may be getting smaller fines 0:23:15.920 --> 0:23:19.199 doesn't mean that there's not other tools in the toolbox 0:23:19.320 --> 0:23:22.120 to ensure that companies and the people that work there 0:23:22.160 --> 0:23:25.639 as senior managers are complying with the relevant laws. 0:23:26.119 --> 0:23:28.280 Lawyers at the SEC have been told they need to 0:23:28.320 --> 0:23:34.040 seek permission from the politically appointed leadership the commissioners before 0:23:34.240 --> 0:23:40.000 formally launching investigations. That's according to Reuters. So tell us 0:23:40.000 --> 0:23:43.879 what the old procedure was like and the implications of 0:23:44.000 --> 0:23:44.920 these changes. 0:23:45.359 --> 0:23:47.719 Yeah, that is somewhat of a change. Typically in the 0:23:47.760 --> 0:23:50.560 past the SEC, where I used to work for about 0:23:50.600 --> 0:23:55.600 six years, typically the commissioners themselves would delegate the responsibility 0:23:55.720 --> 0:24:00.440 to determine which enforcement actions to pursue, especially in the 0:24:00.480 --> 0:24:03.440 early stages, to the Director of Enforcement. There was a 0:24:03.480 --> 0:24:06.439 lot of discretion in terms of looking at what areas 0:24:06.480 --> 0:24:10.440 to focus on, what investigations to launch. You know, ultimately, 0:24:10.480 --> 0:24:14.159 any enforcement actions even under past administrations, did have to 0:24:14.640 --> 0:24:17.680 be approved by the commissioners, but they placed a lot 0:24:17.680 --> 0:24:20.600 of reliance on the judgment and the recommendations of the 0:24:20.640 --> 0:24:24.320 Director of Enforcement. Now that's going to change. The commissioners 0:24:24.480 --> 0:24:27.280 are going to have a much more active role in 0:24:27.359 --> 0:24:30.919 setting the priorities for not only the Enforcement Division, but 0:24:31.000 --> 0:24:34.040 other divisions at the SEC, and I think taking a 0:24:34.119 --> 0:24:37.880 much harder look at what sort of cases are being 0:24:37.960 --> 0:24:41.119 filed so that they can make sure that the cases 0:24:41.160 --> 0:24:44.360 are in alignment with the philosophy of the new administration 0:24:44.600 --> 0:24:48.879 in terms of crypto and other agency priorities and endeavors. 0:24:49.240 --> 0:24:53.480 So the Supreme Court delta near fatal blow to the 0:24:53.600 --> 0:24:59.000 SEC's administrative law judge program. Do you think that under 0:25:00.000 --> 0:25:05.800 weakens the SEC will weaken the ALJ program even more? 0:25:06.359 --> 0:25:09.639 Well, yeah, I think that under Atkins, there really isn't 0:25:09.640 --> 0:25:13.040 that much of a choice given the Supreme Court's decision 0:25:13.480 --> 0:25:16.159 in the area. And you know, this gets into people's 0:25:16.280 --> 0:25:20.720 rights to have a jury trial and whether an administrative 0:25:20.760 --> 0:25:25.480 forum is appropriate for administrative law judges to be imposing 0:25:25.520 --> 0:25:29.520 these substantial civil penalties. But yes, I do think that 0:25:29.720 --> 0:25:32.800 we're going to see a pretty dramatic shift in SEC 0:25:32.960 --> 0:25:37.679 enforcement proceedings over to federal courts, where defendants will have 0:25:37.760 --> 0:25:41.720