WEBVTT - Charges in Spectacular Archegos Debacle 0:00:03.160 --> 0:00:07.920 This is Bloombird Law with June Brussel from Bloombird Radio. 0:00:09.320 --> 0:00:13.640 The sudden collapse of Arkaegos Capital Management last year sent 0:00:13.800 --> 0:00:18.360 shockwaves through global finance, exposed gaping holes and how major 0:00:18.440 --> 0:00:22.320 banks managed their risks, and how regulators oversea Wall Street, 0:00:22.560 --> 0:00:26.480 Manhattan US attorney Damien Williams says it was a massive 0:00:26.560 --> 0:00:30.920 fraud of vast criminal scheme to mislead banks and manipulate 0:00:31.000 --> 0:00:35.800 the markets that nearly jeopardized our financial system. The lies 0:00:36.280 --> 0:00:42.400 fed the inflation, and the inflation fed more lies. Round 0:00:42.440 --> 0:00:46.440 and round it went. The last year, the music stopped, 0:00:47.000 --> 0:00:50.960 the bubble burst, the prices dropped, and when they did, 0:00:51.520 --> 0:00:57.120 billions of dollars nearly evaporated overnight. Arkaegos founder James Wong 0:00:57.240 --> 0:01:00.920 and its chief financial officer, Patrick Halligan were arrested on 0:01:01.000 --> 0:01:06.320 Wednesday on securities fraud, racketeering and market manipulation charges. Joining 0:01:06.360 --> 0:01:08.640 me is James Park, a professor at u c l 0:01:08.680 --> 0:01:11.240 A Law School. This is being called one of the 0:01:11.360 --> 0:01:16.479 highest profile white color prosecutions in recent memory. Do you agree? 0:01:16.720 --> 0:01:21.640 I agree, simply because of the size of the alleged 0:01:21.880 --> 0:01:26.080 market manipulation, something that I think the extent of which, 0:01:26.280 --> 0:01:30.920 in my mind, seemed unimaginable until it actually happened. And 0:01:31.160 --> 0:01:35.280 it's also a very ambitious case. In my view, market 0:01:35.319 --> 0:01:40.959 manipulation is very difficult to identify and define, and so 0:01:41.360 --> 0:01:45.440 the case in my view, is forging ahead in new 0:01:45.480 --> 0:01:50.120 areas and could not only affect the individual defendants in 0:01:50.160 --> 0:01:53.800 the case, but it could also create lawed expectations for 0:01:53.920 --> 0:01:57.360 the way that creating happens on Wall Street. The U 0:01:57.440 --> 0:02:00.960 S attorney said the scheme was his oric in scope. 0:02:01.040 --> 0:02:04.720 Can you explain what the scheme was? The theory was 0:02:04.840 --> 0:02:08.880 that he was manipulating the prices of stock that he 0:02:09.000 --> 0:02:13.640 was invested in very simply by buying huge amounts of 0:02:13.800 --> 0:02:18.240 stock using his own funds and also critically borrowed money, 0:02:18.320 --> 0:02:22.359 money that was borrowed from various investment banks, and simply 0:02:22.360 --> 0:02:25.680 by buying and buying. He was trying to drive the 0:02:25.800 --> 0:02:29.000 price up. He was buying at certain times the end 0:02:29.000 --> 0:02:31.799 of the trading day, when those trades would have a 0:02:31.880 --> 0:02:37.080 larger impact. They were engaging in transactions before the market opened, 0:02:37.160 --> 0:02:40.560 when there's not a high volume of transactions, and so 0:02:41.000 --> 0:02:43.840 in some ways, the basic scheme is actually fairly simple. 0:02:43.880 --> 0:02:47.000 It's simply supply and demand. You know, the more you 0:02:47.080 --> 0:02:50.720 demand of a particular thing, the higher the price goes, 0:02:50.960 --> 0:02:54.480 and the alleged intent was to increase the price of 0:02:54.560 --> 0:02:57.480 his holding. A second element of the team was that 0:02:57.520 --> 0:03:00.480 in order to get the funds from the investment banks, 0:03:00.560 --> 0:03:05.840 he lied about the condition of his firm. He didn't 0:03:05.960 --> 0:03:10.239 disclose the extent to which he had very large, concentrated 0:03:10.320 --> 0:03:13.840 risky positions in the stocks. I get what his lying 0:03:13.880 --> 0:03:17.200 to the bank was about, but why is it illegal 0:03:17.400 --> 0:03:20.079 to buy a lot of stock to buy it at 0:03:20.080 --> 0:03:23.079 different times of the day, when what's illegal about that? 0:03:23.480 --> 0:03:25.600 It's a very high standard to meet you, and I 0:03:25.680 --> 0:03:27.760 think you've really hit the nail on the head. The 0:03:27.840 --> 0:03:32.840 standard for market manipulation, which was discussed in the criminal 0:03:32.919 --> 0:03:35.520 context about thirty years ago in a case of the 0:03:35.560 --> 0:03:39.320 Second Circuit decided called the Moharan case, basically says the 0:03:39.360 --> 0:03:43.840 sole purpose of the stock purchases has to be manipulation, 0:03:44.040 --> 0:03:48.800 that you are buying the stock prices solely to artificially 0:03:48.800 --> 0:03:52.800 inflaged the stock price, and it's really a question of intent. 0:03:53.120 --> 0:03:56.320 Low is the intent of archegos Hung and the other 0:03:56.360 --> 0:04:00.640 participants in the scheme was the sole intent to artificially 0:04:00.640 --> 0:04:03.920 inflayed the stock price, and I think that's a very 0:04:04.120 --> 0:04:07.480 tough standard to meet, although I think it's very fact 0:04:07.560 --> 0:04:10.160 specific and for the key thing the government has going 0:04:10.200 --> 0:04:14.520 for it maybe the sheer size of the transaction and 0:04:14.920 --> 0:04:18.440 what may be a complete lack of any connection to 0:04:18.560 --> 0:04:23.720 any economic fundamentals or you know, analysis that the stock 0:04:24.000 --> 0:04:27.960 was under priced and so further investment was warranted. But 0:04:28.120 --> 0:04:31.520 it is going to be a challenging legal theory to 0:04:32.080 --> 0:04:35.480 win that trial, and also who knows what the Second 0:04:35.480 --> 0:04:38.000 Circuit will do if the case goes up on appeal. 0:04:38.360 --> 0:04:40.520 On the other hand, this is an area of law 0:04:40.680 --> 0:04:44.960 that has not been developed all that much, and sometimes 0:04:45.200 --> 0:04:49.200 court will adjust the law to some extent based upon 0:04:49.200 --> 0:04:52.679 a particularly egregious set of fact, and so I would 0:04:52.680 --> 0:04:56.800 not rule out the viability of this legal theory. Tell 0:04:56.880 --> 0:04:59.640 us how the law on the Second Circuit might be 0:04:59.760 --> 0:05:02.280 hell helpful to the defense here, I think. I think 0:05:02.320 --> 0:05:06.120 the Moharon case me is the case that the defense 0:05:06.120 --> 0:05:10.640 will most likely site, and in that case, the Second 0:05:10.640 --> 0:05:13.560 Circuit implied that the standard for the manipulation was that 0:05:13.640 --> 0:05:16.799 it has to be the sole purpose of the stock crisis, 0:05:17.000 --> 0:05:19.920 that the manipulation has to be the only reason you're 0:05:19.960 --> 0:05:25.239 making these purchases. And I imagine the defense will argue that, 0:05:25.480 --> 0:05:27.880 you know, they bought the stock because they believed there 0:05:27.920 --> 0:05:31.520 was undervalue, they believed that the stock was worth more, 0:05:31.920 --> 0:05:35.760 and that they were aggressively entering into this position because 0:05:35.760 --> 0:05:38.839 they thought that this would be a good investment, and 0:05:38.880 --> 0:05:42.040 that they weren't artificially, you know, just trying to increase 0:05:42.080 --> 0:05:46.640 the price for some arbitrary reason. Another piece of language 0:05:46.640 --> 0:05:48.599 in that decision that I think will be helpful to 0:05:48.640 --> 0:05:51.400 the defense is that if you lose money on a 0:05:51.440 --> 0:05:55.479 manipulative game, that that can be a fact that weighs 0:05:55.560 --> 0:05:59.480 against the finding of manipulation, and that could be something 0:05:59.560 --> 0:06:02.520 that of defendants would argue would cut against the idea 0:06:02.600 --> 0:06:07.039 that this was a successful manipulation. You said earlier that 0:06:07.160 --> 0:06:11.120 this was almost unimaginable to you. Explain why. I just 0:06:11.200 --> 0:06:14.480 want to highlight this is a really remarkable Hey, Typically 0:06:14.480 --> 0:06:17.200 when we think of security fraud, we think about a 0:06:17.279 --> 0:06:22.080 corporation issuing false statement to inflate the stock price. You know, 0:06:22.160 --> 0:06:26.720 think about Enron twenty years ago issuing false financial statements. 0:06:26.839 --> 0:06:31.479 But now you have investors with family offices that are 0:06:31.560 --> 0:06:35.359 so large and are able to get so much of 0:06:35.440 --> 0:06:39.000 financing through these derivatives, these total return slops where they're 0:06:39.080 --> 0:06:42.800 essentially not even buying the stock, but they're entering into 0:06:42.800 --> 0:06:45.880 a contract with the bank where the bank pays the 0:06:45.920 --> 0:06:48.800 investor if the stock price goes up, the investor pays 0:06:48.839 --> 0:06:51.800 the bank if the stock price goes down. And you know, 0:06:51.880 --> 0:06:56.080 to see a public company stock price manipulated by a 0:06:56.160 --> 0:06:59.920 large investor like this is really really remarkable in the 0:07:00.120 --> 0:07:04.440 history of securities fraud and securities fraud regulation. Also very 0:07:04.520 --> 0:07:08.599 interesting comparison with the game Stop situation about a year ago, 0:07:08.720 --> 0:07:11.400 where you have a whole bunch of small retail investors 0:07:11.440 --> 0:07:15.160 banding together inflating the stock price of game Stop, and 0:07:15.400 --> 0:07:19.240 a MC coordinating through chat boards, and this is a 0:07:19.280 --> 0:07:22.120 little bit more of an elite form of that sort 0:07:22.400 --> 0:07:26.440 of market activity. And I think that it's very interesting 0:07:26.560 --> 0:07:30.520 to be that even public company stocks can be manipulated 0:07:30.600 --> 0:07:34.440 in this way. The conventional understanding before was that, you know, 0:07:34.480 --> 0:07:36.800 with a big public company stock, there's just too many 0:07:36.840 --> 0:07:41.000 shares out there for anyone to effectively manipulate the stock 0:07:41.080 --> 0:07:44.080 prices of those companies. But this shows that that's no 0:07:44.160 --> 0:07:47.120 longer the case, and I think that the SDC will 0:07:47.160 --> 0:07:49.880 have to do some thinking about how we can sat 0:07:49.960 --> 0:07:52.920 prevent these sorts of shots to the system from happening 0:07:52.920 --> 0:07:55.080 in the future. Now, on the other hand, there is 0:07:55.120 --> 0:07:57.920 the language Mohar that may be somewhat useful to the 0:07:57.960 --> 0:08:02.360 government's case. And you know, the full purpose standard was 0:08:02.600 --> 0:08:05.240 used in deciding that case, but there is some language 0:08:05.280 --> 0:08:09.880 in the second circuit indicating that it's not clear that 0:08:09.880 --> 0:08:13.600 that is the standard for determining whether there's manipulation um, 0:08:13.640 --> 0:08:16.720 and so we'll have to see how that law is 0:08:16.760 --> 0:08:20.760 interpreted by the judges in this case. The collapse put 0:08:20.760 --> 0:08:25.400 a spotlight on large family offices. What do you think 0:08:25.440 --> 0:08:28.280 should be done about large family offices? Should they be 0:08:28.360 --> 0:08:31.040 held to different standards than they are now. I think 0:08:31.120 --> 0:08:35.840 some level of disclosure would be prudent for family offices 0:08:35.920 --> 0:08:40.160 over a certain size. And I think the assumption behind 0:08:40.200 --> 0:08:45.360 the current framework which exempts family offices from a disclosure 0:08:45.640 --> 0:08:48.400 to the SEC is the assumption that they're not going 0:08:48.440 --> 0:08:52.040 to be able to impact market stability. They're not a 0:08:52.080 --> 0:08:55.559 systemic risk to the market. But this shows that they 0:08:55.559 --> 0:08:57.800 can be large enough so that they can have such 0:08:57.840 --> 0:09:00.320 an impact and the SEC has been moved being in 0:09:00.320 --> 0:09:06.800 the direction of requiring disclosure of investment companies investment advisors 0:09:07.000 --> 0:09:11.480 in order to monitor better their potential impact on markets, 0:09:11.480 --> 0:09:14.640 and to the extent that hedge funds and private equity 0:09:14.679 --> 0:09:18.559 funds are going to be required to disclose information about 0:09:18.600 --> 0:09:22.480 their losses to the SEC so that the SEC can 0:09:22.520 --> 0:09:26.880 evaluate market risk. I don't see any reason why family 0:09:26.960 --> 0:09:31.840 offices of a certain size should be exempt from those requirements. 0:09:32.320 --> 0:09:36.320 The U. S. Attorney's Office is now gathering evidence around 0:09:36.320 --> 0:09:40.800 whether or not thanks engaged in illegal activities here, particularly 0:09:40.840 --> 0:09:44.120 whether some market participants were getting tipped off ahead of time. 0:09:44.480 --> 0:09:47.200 Would that also be a really difficult case to prove. 0:09:47.679 --> 0:09:51.200 I think if they find the evidence, and you know, 0:09:51.320 --> 0:09:53.600 I think the question to some extent is to what 0:09:53.720 --> 0:09:57.560 extent will some of these defendants agree to cooperate. That 0:09:57.760 --> 0:10:01.240 is something that could come into the a Asian And 0:10:01.480 --> 0:10:04.000 you know, I think they'll have access to their records, 0:10:04.000 --> 0:10:07.439 their documents, so they'll be able to look at various communications. 0:10:07.440 --> 0:10:10.400 But I would suspect to the accept their worth such agreement. 0:10:11.080 --> 0:10:13.960 They may not be memorialized. I think that some of 0:10:14.040 --> 0:10:17.280 these participants are becoming more savvy about the potential for 0:10:17.440 --> 0:10:20.280 government regulations, So I think it will be difficult. But 0:10:20.320 --> 0:10:23.319 if they find the evidence, you think that very clearly 0:10:23.360 --> 0:10:28.000 would be illegal, and certainly this could result in more cases. 0:10:28.720 --> 0:10:32.400 You said earlier that this was almost unimaginable to you. 0:10:32.640 --> 0:10:35.240 Explain why. I just want to highlight this is a 0:10:35.280 --> 0:10:39.079 really remarkable Hey. Typically when we think of security fraud, 0:10:39.160 --> 0:10:43.960 we think about a corporation issuing false statements to inflate 0:10:44.040 --> 0:10:47.319 the stock price. You know, think about Enron twenty years 0:10:47.320 --> 0:10:52.359 ago issuing false financial statements. But now you have investors 0:10:52.559 --> 0:10:56.640 with family offices that are so large and are able 0:10:56.720 --> 0:11:00.120 to get so much of financing through these drive is 0:11:00.240 --> 0:11:03.840 these total return slops where they're essentially not even buying 0:11:03.840 --> 0:11:06.840 the stock, but they're entering into a contract with the 0:11:06.880 --> 0:11:09.959 bank where the bank pays the investor if the stock 0:11:10.000 --> 0:11:12.439 price goes up, the investor pays the bank if the 0:11:12.480 --> 0:11:15.720 stock price goes down. And you know, to see a 0:11:15.880 --> 0:11:20.560 public company stock price manipulated by a large investor like 0:11:20.800 --> 0:11:24.199 this is really really remarkable in the history of securities 0:11:24.240 --> 0:11:29.160 fraud and securities fraud regulation. Also very interesting comparison with 0:11:29.240 --> 0:11:32.080 the game Stop situation about a year ago, where you 0:11:32.080 --> 0:11:35.319 have a whole bunch of small retail investors banning together 0:11:35.640 --> 0:11:38.920 inflating the stock price of game Stop, and a MC 0:11:39.600 --> 0:11:42.960 coordinating through chatboards. And this is a little bit more 0:11:42.960 --> 0:11:46.920 of an elite form of that sort of market activity. 0:11:47.120 --> 0:11:50.680 And I think that it's very interesting to see that 0:11:50.880 --> 0:11:54.280 even public company stocks can be manipulated in this way. 0:11:54.360 --> 0:11:57.520 The conventional like understanding before was that you know, with 0:11:57.640 --> 0:12:00.360 a big public company stock, there's just too many airs 0:12:00.440 --> 0:12:04.480 out there for anyone to effectively manipulate the stock prices 0:12:04.520 --> 0:12:07.520 of those companies. But this shows that that's no longer 0:12:07.600 --> 0:12:10.280 the case, and I think that the SBC will have 0:12:10.400 --> 0:12:13.320 to do some thinking about how we can best prevent 0:12:13.440 --> 0:12:16.000 the sources of shocks to the system from happening in 0:12:16.040 --> 0:12:19.840 the future. Thanks James. That's Professor James Park of u 0:12:19.840 --> 0:12:24.560 c l A Law School. A divided Supreme Court allowed 0:12:24.559 --> 0:12:28.280 a selective Northern Virginia public high school to keep using 0:12:28.320 --> 0:12:32.600 an admissions policy adopted to add more racial and socioeconomic 0:12:32.679 --> 0:12:36.320 diversity to its student body. The Justice is refused to 0:12:36.320 --> 0:12:40.800 block Thomas Jefferson High School's euro policy, which a community 0:12:40.800 --> 0:12:45.040 group challenged as discriminating against Asian American applicants, but the 0:12:45.080 --> 0:12:49.000 Fairfax County school Board said it's using race neutral methods 0:12:49.040 --> 0:12:53.280 to foster diversity, something the Supreme Court had previously indicated 0:12:53.360 --> 0:12:57.280 was constitutional. A federal judge had blocked the policy for 0:12:57.320 --> 0:13:00.560 the current admissions cycle, but a federal appeals court put 0:13:00.600 --> 0:13:02.960 that ruling on hold by a two to one vote. 0:13:03.400 --> 0:13:06.960 The case tests what steps schools and universities can take 0:13:07.080 --> 0:13:10.920 to ensure racial diversity in their classrooms. Joining me is 0:13:10.920 --> 0:13:15.680 Audrey Anderson, who heads the higher education practice at Bassbarian Sims. 0:13:16.200 --> 0:13:19.640 The school board says it's using race neutral methods to 0:13:19.800 --> 0:13:23.920 foster diversity. Can you describe those methods, Audrey. So the 0:13:24.000 --> 0:13:28.000 way they are choosing students for this school is completely 0:13:28.120 --> 0:13:31.679 race neutral. When the applicants are being considered, there is 0:13:31.720 --> 0:13:36.040 no indication of their name, their gender, or their race 0:13:36.080 --> 0:13:41.120 on the applications. Everybody is given an application number and 0:13:41.160 --> 0:13:46.400 that's how they are considered. So then they also take 0:13:46.600 --> 0:13:52.160 a certain percentage from every middle school that is within 0:13:52.200 --> 0:13:56.200 the area that this high school covers, but that's all 0:13:56.360 --> 0:14:00.360 race neutral as well. So the way they're choosing students 0:14:00.440 --> 0:14:04.880 is completely race neutral. The reason why um the lower court, 0:14:04.880 --> 0:14:08.760 the district court here found that that on its face 0:14:09.040 --> 0:14:13.680 race neutral admissions program violated the Constitution. Was because the 0:14:13.720 --> 0:14:18.040 court found that, compared to the admissions program they had before, 0:14:18.760 --> 0:14:23.000 their new admissions program had a disparate impact on Asian 0:14:23.160 --> 0:14:27.520 American students. And the court also found that the school 0:14:27.520 --> 0:14:31.960 boards whole process was the word he used, was infected 0:14:32.440 --> 0:14:38.000 with racial balancing, which the district court found is unconstitutional. 0:14:38.440 --> 0:14:40.320 So we said, even though it is the race neutral 0:14:40.320 --> 0:14:44.480 on its face, the school board had an unlawful intent 0:14:45.040 --> 0:14:48.960 to harm a particular racial group and their plan indeed 0:14:49.200 --> 0:14:53.320 has a disparate impact on Asian Americans if it's race 0:14:53.400 --> 0:14:58.200 neutral on its face. Due courts usually dig into the 0:14:58.320 --> 0:15:02.560 intent or this is expected intent, Well, they they do 0:15:02.640 --> 0:15:06.040 the on its face, the law the district court applied 0:15:06.800 --> 0:15:10.280 is the appropriate law, and the school board doesn't argue 0:15:10.280 --> 0:15:13.200 with the legal tests. What the school board argues with 0:15:13.360 --> 0:15:16.920 is that the district court got the facts wrong, um, 0:15:17.080 --> 0:15:20.640 And they said that when you look at the facts, uh, 0:15:20.640 --> 0:15:26.080 there was no intent to harm any particular racial group. 0:15:26.640 --> 0:15:30.360 What the school board says they were trying to do, 0:15:30.480 --> 0:15:32.800 and they say, all the findings that you can make 0:15:33.360 --> 0:15:36.080 is that the school board was trying to gain a 0:15:36.160 --> 0:15:42.960 more diverse student body in the school, measured by geography, 0:15:43.120 --> 0:15:48.200 measured by English language learner status, measured by socio economic background, 0:15:48.480 --> 0:15:52.200 and measured by race. And so there there are um 0:15:52.360 --> 0:15:56.040 statements in the record that show that the school board 0:15:56.160 --> 0:15:59.520 was paying attention to race and how they could get 0:15:59.560 --> 0:16:03.480 greater racial diversity. But they say that's not the same 0:16:03.520 --> 0:16:05.840 thing as saying that the school board had an intent 0:16:06.120 --> 0:16:09.120 to harm any particular racial group or to have an 0:16:09.160 --> 0:16:13.840 adverse impact on any particular racial group. The group challenging this, 0:16:14.640 --> 0:16:16.880 what is it they want? Do they want the school 0:16:17.040 --> 0:16:21.800 just to admit students based on their tests, on their 0:16:21.880 --> 0:16:24.120 g p A. How do they want the school to 0:16:24.200 --> 0:16:28.320 admit students? Well, they don't want the They don't want 0:16:28.360 --> 0:16:32.880 the admissions program that the school board enacted. How exactly 0:16:32.880 --> 0:16:36.640 they want it changed is not clear from the court 0:16:36.720 --> 0:16:39.480 record that I have seen. I don't know if they 0:16:39.480 --> 0:16:43.080 are asking to go back to the process exactly how 0:16:43.120 --> 0:16:46.080 it was before. I think that from the papers, what 0:16:46.120 --> 0:16:48.040 they're saying is they want the school board to come 0:16:48.120 --> 0:16:52.040 up with some other process that is constitutional, and to 0:16:52.160 --> 0:16:55.640 do that in the matter of weeks and make the 0:16:55.680 --> 0:16:58.960 new choices in a way that does not harm um 0:16:59.040 --> 0:17:02.040 Asian Americans to the same extent, or that actually does 0:17:02.080 --> 0:17:05.600 not harm them at all. The Supreme Court turned this away. 0:17:05.920 --> 0:17:09.840 It was on what's called the shadow docket, an emergency request. 0:17:10.680 --> 0:17:13.440 Did it say anything about the issue itself or could 0:17:13.440 --> 0:17:16.040 it just have turned it away because they'd argued that 0:17:16.080 --> 0:17:19.960 it was you know, it was too late to make changes, right. 0:17:20.040 --> 0:17:23.159 So what happened after the district court found that the 0:17:23.240 --> 0:17:28.080 plan was unconstitutional and the district court actually enjoined the 0:17:28.119 --> 0:17:31.240 school board from using that admissions plan, then the school 0:17:31.240 --> 0:17:33.040 board went to the Court of Appeals and the Court 0:17:33.040 --> 0:17:35.359 of Appeals said, you know, hey, it's going to be 0:17:35.400 --> 0:17:37.119 way too hard for the school board to put a 0:17:37.119 --> 0:17:39.760 new plan in place in this amount of time. But 0:17:39.960 --> 0:17:42.480 the judges on the Court of Appeals for the Fourth 0:17:42.480 --> 0:17:45.159 Circuit also said, you know, we think that the district 0:17:45.160 --> 0:17:48.879 court might have gotten this wrong. Disrecourt shouldn't have given 0:17:49.000 --> 0:17:53.760 summary judgment. There are there are disputed facts here, um, 0:17:53.800 --> 0:17:55.320 and they may have cut The distrec Court might have 0:17:55.359 --> 0:17:58.680 come to the wrong factual conclusions as to disparate impact 0:17:58.800 --> 0:18:02.560 and the school board it's intent. So we're going to 0:18:03.400 --> 0:18:06.359 um put a stay on the injunction. So then it 0:18:06.400 --> 0:18:10.639 went to the Supreme Court and the student group is 0:18:10.680 --> 0:18:14.840 now saying, please vacate the stay, so we have an 0:18:14.840 --> 0:18:17.400 injunction again so the old so that the new plan 0:18:17.480 --> 0:18:20.359 won't go into effect. So on the one hand, it 0:18:20.400 --> 0:18:22.840 doesn't say anything at all, because there is a very 0:18:22.960 --> 0:18:27.000 high standard, at least on paper, for the Supreme Court 0:18:27.119 --> 0:18:31.720 to reach down and and say, you know, we are 0:18:31.800 --> 0:18:36.240 going to um with no real briefing, with no real argument, 0:18:36.520 --> 0:18:39.600 We're going to undo what the Court of Appeals has done. 0:18:40.200 --> 0:18:42.760 It's a very high standard. One of the things that 0:18:42.840 --> 0:18:46.359 some lawyers are complaining about or raising some concerns about, 0:18:46.440 --> 0:18:49.000 is that over the last you know, two or three 0:18:49.119 --> 0:18:52.119 years or maybe five years, the court seems to have 0:18:52.640 --> 0:18:55.920 in practice loosen that standard, even though on paper it's 0:18:55.960 --> 0:18:59.040 the same. So on the one hand, you say, there's 0:18:59.080 --> 0:19:01.320 nothing to be learned about here. They didn't meet the 0:19:01.400 --> 0:19:04.399 very high standard. But the thing that is a little 0:19:04.400 --> 0:19:08.040 more concerning is that there were three justices who dissented 0:19:08.560 --> 0:19:12.719 from that decision. There's nothing written, so there's no opinion written, 0:19:13.720 --> 0:19:18.320 but Justice Thomas, Justice Alito, and Justice Corsus would have 0:19:18.359 --> 0:19:22.240 granted the application to vacate the stay, which means that 0:19:22.400 --> 0:19:26.840 from their perspective, they think that the Court would take 0:19:26.960 --> 0:19:31.080 this case to review it, that there is irreparable harm 0:19:31.280 --> 0:19:36.200 being visited on these Asian American students by the new plan, 0:19:37.280 --> 0:19:42.080 and that there's a likelihood success for the Asian American students. 0:19:42.080 --> 0:19:45.639 So they've already got three votes um at the Supreme Court. 0:19:45.840 --> 0:19:48.760 If they can get the case there or likely do, 0:19:49.240 --> 0:19:51.359 the Supreme Court would say, well, this is you know, 0:19:51.440 --> 0:19:54.840 a preliminary vote on something like this doesn't tell you 0:19:54.920 --> 0:19:57.320 exactly how will vote at the end of the day, 0:19:57.359 --> 0:20:00.479 but it usually does, so that's the most eesting thing. 0:20:00.520 --> 0:20:02.800 They've got three votes now if they were to make 0:20:02.840 --> 0:20:05.439 it to the Supreme Court. But isn't it surprising that 0:20:05.520 --> 0:20:08.760 they don't have the Chief Justice? No, I don't think 0:20:08.760 --> 0:20:10.960 it's surprising at all, June that they don't have the 0:20:11.040 --> 0:20:15.040 Chief Justice on this, because the Chief has been more 0:20:15.680 --> 0:20:19.359 likely to stick to the court real test of we 0:20:19.440 --> 0:20:23.960 are not going to give emergency relief on a case 0:20:24.200 --> 0:20:27.600 unless they meet this very high standard. And having to 0:20:27.640 --> 0:20:31.400 make the school district change their admissions policy in such 0:20:31.400 --> 0:20:34.520 a very short period of time, I think is something 0:20:34.560 --> 0:20:37.600 that would usually, you know, weigh against doing that. In 0:20:37.640 --> 0:20:40.639 a situation like this, So that's not a huge surprise. 0:20:41.000 --> 0:20:44.320 We've talked before about the what's coming next term at 0:20:44.359 --> 0:20:48.600 the Supreme Court, this showdown over affirmative action, if you will, 0:20:48.920 --> 0:20:52.959 in cases involving Harvard College and the University of North Carolina. 0:20:53.480 --> 0:20:57.080 Is this different because those programs explicitly take account of 0:20:57.200 --> 0:21:01.160 race as one factor among many, where as this high 0:21:01.200 --> 0:21:06.879 school program uses race neutral criteria. So is it different, Yes, Junior, right, 0:21:06.960 --> 0:21:09.200 it's different because of that. And the Supreme Court, though, 0:21:09.240 --> 0:21:13.080 has already dated out that things are different at K 0:21:13.280 --> 0:21:18.600 twelve schools rather than at schools of higher education. So 0:21:19.080 --> 0:21:22.600 whereas the Court has clearly held in the precedent that's 0:21:22.640 --> 0:21:27.439 being challenged this coming term that colleges and universities do 0:21:27.560 --> 0:21:32.840 have a compelling interest in a diverse student enrollments and 0:21:33.200 --> 0:21:37.720 that they may use race conscious measures to forward those 0:21:37.800 --> 0:21:41.320 means as long as they're narrowly tailored, there's not really 0:21:41.359 --> 0:21:45.000 a holding from the Supreme Court for K twelve institutions 0:21:45.040 --> 0:21:49.160 the same way. And that's from a case from two 0:21:49.200 --> 0:21:53.879 thousand and six called Parents Involved in Community Schools versus Seattle, 0:21:54.640 --> 0:21:57.840 And that's that's the case that the lawyers who are 0:21:57.880 --> 0:22:02.160 representing the plainists in this Thomas Jefferson High School case. 0:22:02.200 --> 0:22:06.960 Specific Legal Foundation, the Pacific Legal Foundation is very interested 0:22:07.160 --> 0:22:12.159 in efforts to create more racially diverse student enrollments in 0:22:12.320 --> 0:22:16.359 K twelve schools, so they are on the lookout for 0:22:16.480 --> 0:22:23.000 cases that they can support to further their efforts in 0:22:23.520 --> 0:22:27.720 what they believe are improper uses of race. Even when 0:22:27.760 --> 0:22:30.960 the school boards say this is race neutral, we're not 0:22:31.119 --> 0:22:33.880 using race at all, as in this case, the Specific 0:22:34.000 --> 0:22:37.400 Legal Foundation will sometimes say, oh, but these other things 0:22:37.400 --> 0:22:40.720 you're doing our our pretext for using race. And in fact, 0:22:41.200 --> 0:22:43.800 when the parents involved in the Community Schools case was 0:22:44.119 --> 0:22:48.040 argued on the Pacific Legal Foundation and other amiki, we're 0:22:48.119 --> 0:22:52.359 trying to push the court to not only say that 0:22:52.520 --> 0:22:55.040 school boards can't use race conscious measures, they were also 0:22:55.080 --> 0:22:56.840 trying to get the court to go so far as 0:22:56.920 --> 0:23:00.439 to say that any time that a school to strict 0:23:00.880 --> 0:23:05.320 talks about the racial components of their school, talks about 0:23:05.440 --> 0:23:09.720 trying to take any race neutral steps to create a 0:23:09.760 --> 0:23:14.960 greater diversity in a school, that that was unconstitutional because 0:23:15.000 --> 0:23:17.959 the Constitution is supposed to be color blind, and so 0:23:18.080 --> 0:23:21.000 governmental actors should not be talking about race at all. 0:23:21.400 --> 0:23:23.480 So I see that this is kind of a step 0:23:23.560 --> 0:23:27.960 towards them maybe trying to cement that idea as law. 0:23:28.600 --> 0:23:31.960 Thanks for your insights, Audrey. That's Audrey Anderson, who heads 0:23:31.960 --> 0:23:36.080 the higher education practice at Basparian SIMS. I'm June Grosso 0:23:36.200 --> 0:23:37.639 and you're listening to Bloomberg.