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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 2: Donald Trump was on and off the witness stand in

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Speaker 2: less than four minutes today at the defamation trial by e.

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Speaker 2: Gene Carroll, the writer who won a related sexual abuse

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Speaker 2: case against him last year. Federal Judge Lewis Kaplan, who's

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Speaker 2: overseeing the trial, has already held Trump libel for defaming Carroll,

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Speaker 2: and now the jury in this second trial will decide

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Speaker 2: the damages shall be awarded. Joining me from the courthouse

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Speaker 2: is Bloomberg Legal reporter Patricia Hurtado, who was in the

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Speaker 2: courtroom for Trump's testimony. So Patty tell us about this

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Speaker 2: brief appearance on the stand by Trump.

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Speaker 3: Donald Trump is on the stand unbelievably brief, four minutes

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Speaker 3: at most, unlike the four hours he spent railing at

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Speaker 3: the system in the New York State Civil FRAU trial

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Speaker 3: in November when he testified. The judge took great pains

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Speaker 3: to strictly limit what Trump was allowed to say, and

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Speaker 3: he made Trump's lawyer, Elena Hobbock, answer specifically what was

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Speaker 3: the question she was going to ask him and what

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Speaker 3: was the answer Trump was going to get. So the

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Speaker 3: judge wanted to put the guardrails out there, and no

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Speaker 3: strain off of reservation on this one. Don't go off

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Speaker 3: on the off land, you're not allowed. So you could

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Speaker 3: hear some grumbling going on because Trump was muttering to

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Speaker 3: himself and to his lawyers and Sean Crowley, she's another

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Speaker 3: Carol lawyer. She said, mister Trump is making statements such as,

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Speaker 3: I don't know who this woman is. I never met her,

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Speaker 3: I don't know who this woman is before this trial.

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Speaker 3: And so the judge basically shot a grant at Trump, like,

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Speaker 3: you know, cool it, and then that the judge continued

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Speaker 3: to ask Trump's lawyer these questions. He said, very pointedly,

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Speaker 3: will mister Trump comply basically to his lawyer? Of course,

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Speaker 3: Trump is not supposed to speak, and Trump started mouthing

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Speaker 3: off and saying something, and the judge shot him down

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Speaker 3: and said, quote, I'm sorry, mister Trump, you're talking as

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Speaker 3: your lawyer is talking. But he really stern with him,

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Speaker 3: and then Trump looked grumpy and annoyed and stopped talking.

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Speaker 3: So basically the judge put these rules on and the

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Speaker 3: judge ruled before trial in September that the statements that

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Speaker 3: Trump has made about miss Carroll are as infanatory. So

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Speaker 3: now this story is just determining damages, right, So it's

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Speaker 3: sort of game over. So Trump was not allowed to

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Speaker 3: get on the stand and claim I never said this,

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Speaker 3: she's a liar. He couldn't say any extra stuff. He

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Speaker 3: had to limit it very carefully to you know, like

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Speaker 3: why did you make these statements? And Olena Habba tried

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Speaker 3: to get in the judge to allow Trump to testify

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Speaker 3: what was his state of mom when he made the

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Speaker 3: statements originally back in twenty nineteen that our defanatory and

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Speaker 3: the judge shut that down. So I think it was

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Speaker 3: a grand total of four minutes Trump was on the stand.

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Speaker 2: Judge Kaplin does run a tight courtroom. So what exactly

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Speaker 2: did Trump testify to in those four minutes?

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Speaker 3: For example, do you stand by your testimony and your

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Speaker 3: deposition answer one hundred percent? Yet did you make these statements? Yes,

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Speaker 3: she said some things I took as falsely accusatory, and

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Speaker 3: then the judge said sustained because it's not false anymore.

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Speaker 3: The judges found them not to be false. Did you ever?

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Speaker 3: And ten? And basically Carol alleges that she was just

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Speaker 3: saying because Trump's comments from the White House triggered a

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Speaker 3: barrage of hate speech at her from Trump's followers, and

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Speaker 3: that she got death threats, and so Alena Haba, Trump

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Speaker 3: flayer was able to ask did you ever intend for

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Speaker 3: anyone to harm her? And he said no, I just

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Speaker 3: wanted to defend myself, my family, and in fact the presidency.

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Speaker 3: The judge shot back part of this, answered is stricken.

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Speaker 3: I just wanted to defend myself. It was the only

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Speaker 3: part he was allowed, and the judge told the jury ignore,

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Speaker 3: I wanted to defend my family, and then back the presidency.

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Speaker 4: That was it.

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Speaker 3: That was it for direct and then cross Ervererta Catlan.

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Speaker 3: Carol's lawyer said, you gave a deposition in October twenty

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Speaker 3: twenty two, didn't you, And he goes, I believe so, yes.

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Speaker 3: And after that, months after that, there was a trial

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Speaker 3: that took place in this very courtroom, and then from

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Speaker 3: Claire objected and the judge sustained it, so that jury

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Speaker 3: to ignore them. She literally got four questions off, two

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Speaker 3: of which were sustained, and the jury was told to

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Speaker 3: ignore them. Are you aware that was another trial? And

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Speaker 3: then Trump answered yes, But then Lena Haba objected, and

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Speaker 3: then the judge said, yes, sustained, and and Lena always

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Speaker 3: wants to have the last word, and she said, thank you, judge.

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Speaker 3: And then Carol lawyer, the final question is is this

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Speaker 3: the first time you've been at a trial that's involving

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Speaker 3: Miss Carol that you've actually attended And he said yes,

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Speaker 3: and that was it. So it was very very limited.

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Speaker 2: This is about the damages. How effective was it when

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Speaker 2: the jury was shown a video of Trump bragging about

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Speaker 2: his wealth in a deposition.

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Speaker 3: Very powerful, and you have to remember, this jury is

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Speaker 3: sort of like a clean slate. They don't know what

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Speaker 3: the earlier jury and the first Carol trial saw, but

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Speaker 3: the jury saw a videotape deposition that Trump gave in

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Speaker 3: the State simple broadcase in which he's asked how much

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Speaker 3: money or you were, and Trump brags that he has

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Speaker 3: at least four hundred million dollars in cash, and he

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Speaker 3: also claimed that he's worth quote unquote billions of dollars,

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Speaker 3: and he said that his brand is almost like Coca cola.

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Speaker 3: It's worth billions of dollars. So that money isn't even

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Speaker 3: counting the billions of dollars the Trump name is worth.

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Speaker 3: So now the jury has bat to rollover that Trump's

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Speaker 3: worth quite a chunk of change in his own estimation,

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Speaker 3: he's like a billionaire.

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Speaker 4: And then the.

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Speaker 3: Jury saw the deposition he gave in the Eging Carol case,

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Speaker 3: where you know, it's quite powerful, where he says, this

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Speaker 3: woman's not my type. I've never met her. So then ROBERTA. Kaplan,

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Speaker 3: Carol's lawyer, shows Trump a black and white photo from

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Speaker 3: the nineteen eighties or early nineties of Egen Carrol as

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Speaker 3: a young woman, her then husband, and there's Evanna Trump,

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Speaker 3: Trump's first wife, and Donald Trump in some kind of

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Speaker 3: black tie event and everyone's wearing foremost and he goes, oh,

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Speaker 3: in fact, that's my second wife. That's Marlon Marla Maple.

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Speaker 3: And then his own lawyer has to correct Trump and go,

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Speaker 3: that's Eging Carroll Trump and mistook eg and Carroll for

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Speaker 3: Marlon Mabeles, his second wife.

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Speaker 2: Why did the judge let that in that seems like

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Speaker 2: that's already been determined. Why did he let this jury

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Speaker 2: hear that?

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Speaker 3: Because this jury gets to see it again to show

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Speaker 3: that there is the lie to Trump saying that none

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Speaker 3: of this is true. Because they have to determine damages

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Speaker 3: and if there's any doubt in their mind. There is

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Speaker 3: that very limited portion of the deposition that wasn't long.

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Speaker 3: It's limited to very brief statements that Trump made while

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Speaker 3: president of the United States. I've never met this woman.

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Speaker 3: She's not my type. And there's the lie to those two. Right,

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Speaker 3: he had met her before and she looked, according to him,

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Speaker 3: like his second wife. So that's why it was allowed

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Speaker 3: in to basically in case the jury needed any kind

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Speaker 3: of comfort that yes, he had met her before, and

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Speaker 3: here's exhibit A that they had met.

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Speaker 2: In an attempt to limit damages, the defense brought out

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Speaker 2: testimony that Carol enjoyed the fame that came with coming forward.

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Speaker 2: How did that go over?

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Speaker 3: It's kind of a very hard argument to believe, because

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Speaker 3: you know, she says she basically lost jobs after she

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Speaker 3: accuses Trump. She loses her job, as they asked Egene Carroll,

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Speaker 3: columns in El magazine and all of her TV appearances

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Speaker 3: and writing assignments all dry up only for the limited

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Speaker 3: purposes of what do you have to say about Donald Trump?

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Speaker 3: And that's the only time she's ever been on TV

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Speaker 3: or been asked to write an article. Is please tell

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Speaker 3: us again about what happened? To you with Donald Trump.

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Speaker 3: So the harm that her expert was testifying about is,

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Speaker 3: you know, how do you repair your reputation when the

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Speaker 3: President of the United States on the lawn of the

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Speaker 3: White House has is getting into the President's helicopter to

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Speaker 3: go to Camp David and calls her a liar. How

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Speaker 3: do you repair the reputation from the statement that is

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Speaker 3: made by one of the most powerful men in the

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Speaker 3: world who calls you a liar? And how do you

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Speaker 3: repair it? So that's what she's alleged. And so the

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Speaker 3: argument you could say is your name gets out there,

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Speaker 3: but you're not popular. Your name gets out there because

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Speaker 3: people are talking trash about you. So you're mentioned seventy

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Speaker 3: five thousand times, but it's not in a good way.

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Speaker 3: And that's what she was saying. You know, you can't

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Speaker 3: make money off Twitter, and she has no job anymore.

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Speaker 3: She can't really make money off substat columns she's writing,

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Speaker 3: but she's everything is basically dried up for her. What

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Speaker 3: was her testimony like, it's a much more muted eging Carol.

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Speaker 3: You know, she tells the story of I didn't want it,

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Speaker 3: saying I wanted to be the truth teller about what women.

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Speaker 3: You know that she writes this book describing different time

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Speaker 3: she's been assaulted by men and do women really need men?

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Speaker 1: What are meant for?

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Speaker 3: As the book is titled. So, I mean, she comes

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Speaker 3: off as kind of like a freewheeling, total New York

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Speaker 3: woman who was for a brief period Saturday night live

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Speaker 3: television show writer, and then she worked at, you know,

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Speaker 3: a bunch of different magazines and whittled out a career

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Speaker 3: for herself of being this advice columnist for Elle magazine.

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Speaker 3: They just had the editor. Her former boss, Robbie Myers,

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Speaker 3: testified about how she thought Eging Carroll was very, very

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Speaker 3: popular with their readers, and she left EL in twenty seventeen,

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Speaker 3: and she said that she had given Eging Carroll a

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Speaker 3: raise because she thought she was so popular that people

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Speaker 3: went to the magazine to read.

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Speaker 2: Trump couldn't hold any press conferences in the halls of

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Speaker 2: this federal courthouse. But I understand he had a mess

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Speaker 2: for the media.

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Speaker 3: As he was leaving the courtroom, he sauntered out of

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Speaker 3: the courtroom. He knew their spectators in the audience, that

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Speaker 3: there were reporters, and he turns to us and he muttered,

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Speaker 3: this is not America. Not America. This is not America.

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Speaker 3: And then he sauntered out. So he really wanted to

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Speaker 3: have his stay to tell everybody in the courtroom, that included,

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Speaker 3: you know, the likes of famous journalists that have covered

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Speaker 3: him at the White House, that he didn't think that

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Speaker 3: this trial is there.

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Speaker 2: They'll be closing arguments tomorrow morning, and then the case

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Speaker 2: will go to the jury, possibly as early as tomorrow afternoon.

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Speaker 2: Egene Carol is asking for ten million dollars in damages

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Speaker 2: plus punitive damages. So we'll see how the jury comes out.

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Speaker 2: I know you'll be there, Patty. Thanks so much. That's

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Speaker 2: Bloomberg Legal reporter Patricia Hurtado. Coming up next on the

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Speaker 2: Bloomberg Law Show, a challenge to the SEC's controversial policy

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Speaker 2: of silencing defendants who agree to settlements with the agency.

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Speaker 2: I'm June Grosso and you're listening to Bloomberg. Billionaire Mark

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Speaker 2: Cuban famously refused to settle the SEC's case against him

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Speaker 2: for insider trading, instead going to trial, where a Texas

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Speaker 2: jury cleared him in twenty thirteen, a rebuke to the SEC.

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Speaker 2: Cuban described the trauma of that legal fight in an

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Speaker 2: interview at CNBC.

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Speaker 5: When you get accused of this, it isn't just about

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Speaker 5: the money. It isn't just a fight. It's about your family,

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Speaker 5: trying to explain to your kids during those eight years

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Speaker 5: when I was fighting there, waking up in the middle

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Speaker 5: of the night, sending emails, doing searches, looking for things,

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Speaker 5: trying to find more information. It just consumes you when

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Speaker 5: the government is fighting you on justly.

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Speaker 2: And now a controversial SEC policy of silencing defendants who

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Speaker 2: settle that's been challenged before by Cuban and Elon Musk

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Speaker 2: is under fire again, and this time before a federal

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Speaker 2: appeals court that's shown a willingness to strike down law

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Speaker 2: longstanding practices of the agency. Christopher Novinger, a financial planner

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Speaker 2: and radio host from Texas who settled with the SEC

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Speaker 2: after he was accused in twenty fifteen of fraudulently selling securities,

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Speaker 2: is making a constitutional challenge to the agency's policy of

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Speaker 2: requiring defendants who settle to promise not to publicly deny

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Speaker 2: the SEC's allegations. Joining me, a securities law expert, Anthony Sabino,

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Speaker 2: a professor in the Department of Law at the Peter J.

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Speaker 2: Tobin College of Business at Saint John's University tell us

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Speaker 2: about the SEC's policy on settlements and this no deny policy,

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Speaker 2: which is sometimes referred to as the gag rule.

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Speaker 1: This is a policy that the Securities and Exchange Commission

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Speaker 1: has had in place for many decades June. And basically

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Speaker 1: what it says is here, we are the SEC. We

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Speaker 1: have charged you, we have investigated you, we have brought

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Speaker 1: an enforcement action, in other words, charging you with various

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Speaker 1: wrongdoing under the federal securities laws. Now we've reached a

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Speaker 1: settlement whereby you're going to pay money. Because once again,

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Speaker 1: the SEC's jurisdiction is to bring civil actions seeking monetary

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Speaker 1: relief and sometimes injunctive relief enjoined people from being in

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Speaker 1: the industry and so forth, whereas the Department of Justice

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Speaker 1: will bring criminal cases that involve prison time. And the

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Speaker 1: SEC says, okay, fine, we've reached the settlement with you

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Speaker 1: without going to trial. You're going to pay money, all right.

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Speaker 1: And the benefit of this to the accused is that

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Speaker 1: they get to say that we settle this case neither

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Speaker 1: admitting nor denying. We don't admit anything, we don't deny

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Speaker 1: anything with respect to our liability. However, says the SEC.

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Speaker 1: Here's one more condition, and that is once this is done,

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Speaker 1: you cannot comment on this publicly. You cannot issue press releases,

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Speaker 1: you can't say anything. And the counterpointing might say, well, gee,

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Speaker 1: for how long, and the sec says until the end

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Speaker 1: of time okay, in other words, forever and ever and

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Speaker 1: really June. What this comes down to with this present

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Speaker 1: case here that we're talking about today with novndury is

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Speaker 1: the fact that from my perspective, that it's a matter

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Speaker 1: of expediency on the government side and the Constitution with

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Speaker 1: respect to the first memory and speech on the other,

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Speaker 1: and in the vast majority of cases, the Constitution wins

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Speaker 1: as well it should, which is what makes this case

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Speaker 1: so interesting and sure to make for a rollicking opinion

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Speaker 1: from the Fifth Circuit which is hearing it, and in

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Speaker 1: all likelihood, because of the dissonance and the circuits, I

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Speaker 1: think the Supreme Court not only will hear this case,

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Speaker 1: I think they should and finally resolve it.

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Speaker 2: Well, it seems like the parties being sued are giving

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Speaker 2: up something, but they're getting something as well. They don't

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Speaker 2: have to fight the case in court, and they don't

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Speaker 2: have to say they were wrong, but they can't say

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Speaker 2: they were right.

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Speaker 1: That is correct, okay, And essentially to the SEC's point

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Speaker 1: of view, which is saying, look, of all sides are

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Speaker 1: giving up the right to go to trial where the

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Speaker 1: SEC could win big, or to the converse, you could

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Speaker 1: win big accused party and therefore walk away without paying

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Speaker 1: any money. All right, we've reached the settlements, which is

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Speaker 1: fairly common in SEC cases and frankly very common in

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Speaker 1: court rooms across the land on all sorts of cases.

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Speaker 1: So the quick pro quot the something for something is, look,

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Speaker 1: you don't have to admit anything, you don't have to

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Speaker 1: deny anything. You basically are silent.

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Speaker 4: You just pay money. But as a condition of that,

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Speaker 4: so not to undercut.

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Speaker 1: Our enforcement efforts, we don't want you at any time,

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Speaker 1: okay until the end of the world, to make any

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Speaker 1: sort of comment whatsoever. And the Commission's point of view,

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Speaker 1: and there's some grains of truth in this, I must admit,

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Speaker 1: is the fact that the Commission doesn't want any let's

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Speaker 1: call it contrary opinions, contrary information coming out after the fact,

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Speaker 1: whereby the party says, well, yeah, we settled and we

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Speaker 1: didn't admit or deny anything, We just paid money. But

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Speaker 1: isn't it true to some extent that if afterwards you

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Speaker 1: issue a press released saying, yes, we settled, but we

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Speaker 1: think the SEC was all wet and the accusations were meritless,

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Speaker 1: then aren't you in a way reciting a denial. So

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Speaker 1: one can see again the reasoning behind the SEC's position.

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Speaker 1: But on the other hand is the fact that when

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Speaker 1: the SEC issues its press release, and they always do

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Speaker 1: j okay, they always issue a long press release that

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Speaker 1: says okay, SEC had put investigation and file charges in

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Speaker 1: enforcement action against XYZ Corp. For failure to disclose material information,

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Speaker 1: whatever it may be under the filal securities laws. And

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Speaker 1: then the SEC goes on and it describes in detail,

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Speaker 1: and many times exquisite detail, the nature of the charges,

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Speaker 1: the who's, the what's, the whares, they name names, and

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Speaker 1: so forth, and then at the end is one little

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Speaker 1: paragraph whereby it states XYZ Corporation as it's agreed to

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Speaker 1: settle this case, admit nor deny guilt and its pain

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Speaker 1: and the amount of XYZ. So when you look at

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Speaker 1: that press release, both quantitatively and qualitatively, the vast bulk

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Speaker 1: of it is the SEC espousing its position, whereas the

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Speaker 1: accused the settling party is saying we neither admit nor

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Speaker 1: denied liability, but then they're foreclosed.

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Speaker 4: Till the end of time from saying anything.

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Speaker 1: And isn't that a little bit unfair? And that is

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Speaker 1: certainly the argument that's being made by mister Norbyn during

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Speaker 1: this case and by other folks who've been in similar

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Speaker 1: situations with various results, which is one of the reasons

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Speaker 1: why they should go to the Supreme Court eventually. And

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Speaker 1: also I think any America would say, well, isn't that

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Speaker 1: a little bit unfair? Because the government here has the

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Speaker 1: heavy hand. The government has the hammer, I few will.

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Speaker 1: They're saying we're going to drag you through court like

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Speaker 1: they did with more Cuban on those inside of trading

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Speaker 1: charges many years ago, just the way they're doing now

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Speaker 1: with Elon Musk and so on and so forth. So

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Speaker 1: we at the edge and now we're going to use

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Speaker 1: that to our advantage by saying all the things we

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Speaker 1: want to say. But what do you get to say nothing?

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Speaker 2: And this is a First Amendment challenge, right.

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Speaker 1: I am not a First Amendment scholar, but I don't

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Speaker 1: have to be, because this clearly falls within the purview

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Speaker 1: of what we call prior restraint of speech, which in

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Speaker 1: the legion of cases and with extremely rare exceptions, the

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Speaker 1: Supreme Courters said, no, okay, no one can issue a

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Speaker 1: prior restraint of someone's speech, especially the government. So again

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Speaker 1: we can see the SEC's point, and I admit to

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Speaker 1: some rationality to it, but once again we're talking about

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Speaker 1: someone's constitution right to say, Look, yeah, I settled. Yeah,

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Speaker 1: I have the benefit of neither admitting nor to nine guild.

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Speaker 1: But you're taking away one of my more precious liberties,

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Speaker 1: which is the ability.

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Speaker 4: To comment after the fact and June.

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Speaker 1: Without naming names, because I don't want to get anywhere

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Speaker 1: near that. But as we well know, in America today,

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Speaker 1: there are many celebrated cases where the parties involved are

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Speaker 1: highly critical and very vocal about criticizing the government, the prosecutor,

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Speaker 1: and even the judge. So if they can do that,

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Speaker 1: basically the parties in these kinds of situations with the

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Speaker 1: SEC are saying, Gee, we want to be exercised all rights,

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Speaker 1: just like any other American And why does the government

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Speaker 1: have the ability to be so heavy handed and able

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Speaker 1: to silence us for the rest of time.

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Speaker 2: This no deny policy has been criticized by legal scholars

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Speaker 2: and federal judges as potential First Amendment violations. Well known

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Speaker 2: judge Jed Rakeoff in the Southern District of New York

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Speaker 2: Manhattan said it created a stew of confusion and hypocrisy

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Speaker 2: unworthy of such a proud agency as the SEC and

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Speaker 2: Fifth Circuit Judge Edith Jones said a more effective prior

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Speaker 2: restraint is hard to imagine is the weight of legal

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Speaker 2: scholarship against this no deny policy.

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Speaker 1: To some extent it is, although some cases also favored

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Speaker 1: the SEC as well, and basically just dealing with the

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Speaker 1: two individuals who you've mentioned, who I hold in high

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Speaker 1: esteem and Jed Raykoff is one of the stars, the

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Speaker 1: true stars of the securities law area. And also he

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Speaker 1: is in the Southern District of New York where he

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Speaker 1: has sat on many, many cases to citing securities law issues.

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Speaker 1: He's acknowledges probably even the top three, if not number one,

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Speaker 1: of securities law scholars in the terms of judges and

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Speaker 1: also lets him. The Southern District of New York sits

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Speaker 1: within the Second Circuit, renowned by no less than the

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Speaker 1: Supreme Court as the mother court of federal securities law.

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Speaker 1: Judge the Duplan Jones of the Fifth Circuit, again an

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Speaker 1: extremely erudite and astute judge and very highly regarded in

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Speaker 1: years past. She is on the very short list to

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Speaker 1: be a nominee for the US Supreme Court, and their

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Speaker 1: voices lend a great deal of waiting credibility to these

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Speaker 1: criticisms against the agency. But one of the interesting things

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Speaker 1: is is that, as I said, there are cases that

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Speaker 1: also cut in the favor of the agency, and one

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Speaker 1: of those is sec versus Romero. That's where the Second Circuit,

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Speaker 1: which presides over Judge Raycot, and therefore he really can't

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Speaker 1: take issue with them. He has to follow their precedence.

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Speaker 1: They said, no, no, no, this policy's perfectly fine. And

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Speaker 1: once again the Second Circuit states, similar to the comments

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Speaker 1: you made earlier June, is that it's part of the

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Speaker 1: quid pro quote. Okay, here's X y Z Corporation. They

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Speaker 1: are accused of wrongdoing by the Securities and Exchange Commission.

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Speaker 1: They agree to settle, they pay a monetary fine, they

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Speaker 1: avoid the course and expense and even possibly the embarrassment

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Speaker 1: of trial, and now they have the benefit of neither

387
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Speaker 1: admitting nor denying linability. But on the other hand, there's silence.

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Speaker 1: But again they voluntarily gave up their right. And that's

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Speaker 1: essentially what the second Circuit has offended, its hopes upon

390
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Speaker 1: the essence of its rationale is when you settle with

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Speaker 1: the SEC it's just like any other settlement, whereby you

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Speaker 1: are agreeing to give up when you're right and in

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Speaker 1: this instance, the right to talk about these settlements after

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Speaker 1: the fact.

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Speaker 4: And I think this was a very.

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Speaker 1: Interesting contrast June, as follows certainly in civil litigation all

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Speaker 1: across the land. Okay, even as you and I are

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Speaker 1: speaking right now. The bottom line is that people all

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Speaker 1: across America settle cases all the time, and it is

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Speaker 1: fairly common and becoming even more pervasive for people to

401
00:22:40,720 --> 00:22:44,960
Speaker 1: put in non disparagement clauses, and basically are the provisions

402
00:22:45,000 --> 00:22:48,159
Speaker 1: that call for the parties to not disclose publicly the

403
00:22:48,280 --> 00:22:51,320
Speaker 1: terms of the settlements, to not disparage each other after

404
00:22:51,400 --> 00:22:54,720
Speaker 1: the settlement, to basically settle the case, pay the money,

405
00:22:55,000 --> 00:22:57,920
Speaker 1: reach the resolution, and then close the book. And both

406
00:22:58,040 --> 00:23:02,600
Speaker 1: sides are absolutely completely silent. So that same logic applies here.

407
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Speaker 1: But on the other hand, let's remember the situation I

408
00:23:05,880 --> 00:23:09,720
Speaker 1: just described is private parties in private litigation, saying okay,

409
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Speaker 1: we mutually agree we're both going to be silent about this.

410
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Speaker 1: In the instance we're talking about with mister Nabringer, in

411
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Speaker 1: cases yet to come, we're talking about a private citizen

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Speaker 1: dealing with the government, and this is where the government

413
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Speaker 1: is basically making you be silenced. And that very much

414
00:23:26,040 --> 00:23:28,840
Speaker 1: falls within what Judge Ronnie Abrams has characterized as in

415
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Speaker 1: prior restraint of speech, which has always been looked at

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Speaker 1: with great abhorrence in our judicial system.

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Speaker 2: What bothers a lot of people is that while the

418
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Speaker 2: defendant is silenced, the SEC is not. As you mentioned before,

419
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Speaker 2: we have the point of oh, well.

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Speaker 1: Wait a minute, all right, I have to be silenced.

421
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Speaker 1: But when this settlement is reached and it's finalized, the SEC,

422
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Speaker 1: as I mentioned before, puts out a press release in

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Speaker 1: great detail talking about their side. So really that's the

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00:23:55,800 --> 00:23:58,880
Speaker 1: inherent imbalance, if you will, Okay, is it unfair? That's

425
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Speaker 1: yet to be decided or though I think it is.

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Speaker 4: But at the very least there's the imbalance.

427
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Speaker 1: The SEC gets tell you all about the charges they brought,

428
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Speaker 1: and they go on for a few pages. Then you

429
00:24:09,080 --> 00:24:11,960
Speaker 1: get to basically say, in one little paragraph yeah, we

430
00:24:12,119 --> 00:24:14,639
Speaker 1: neither admit nor denyal liability, and yeah, we're gonna pay

431
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Speaker 1: x amount of money, and no, we can't say anything else.

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00:24:17,840 --> 00:24:20,399
Speaker 1: And I think that's the thing that rankles various judges,

433
00:24:20,800 --> 00:24:24,880
Speaker 1: Judges Raykoff, Jones, and probably the Fifth Circuit, which, again,

434
00:24:24,920 --> 00:24:27,879
Speaker 1: as you know, is right now in the epicenter of

435
00:24:28,080 --> 00:24:31,280
Speaker 1: litigation challenging the power of the SEC. For example, the

436
00:24:31,359 --> 00:24:33,840
Speaker 1: Charcasy case where I have to fire to make us brief. Again,

437
00:24:33,880 --> 00:24:35,679
Speaker 1: different issues coming up next on.

438
00:24:35,680 --> 00:24:38,880
Speaker 2: The Bloomberg Law Show. I'll continue this conversation with Professor

439
00:24:38,960 --> 00:24:42,520
Speaker 2: Anthony Sabino. Is the SEC sort of in the hot

440
00:24:42,600 --> 00:24:45,320
Speaker 2: seat with the Supreme Court. I'm June Grosso and you're

441
00:24:45,400 --> 00:24:50,200
Speaker 2: listening to Bloomberg. A controversial SEC policy is being challenged

442
00:24:50,280 --> 00:24:53,480
Speaker 2: before a federal appeals court that's shown a willingness to

443
00:24:53,600 --> 00:24:58,240
Speaker 2: strike down long standing practices of the agency for constitutional reasons.

444
00:24:58,600 --> 00:25:02,280
Speaker 2: The challenge is to the SEC policy of requiring defendants

445
00:25:02,480 --> 00:25:06,200
Speaker 2: who settle with the agency to promise not to publicly

446
00:25:06,359 --> 00:25:10,600
Speaker 2: deny the SEC's allegations. I've been talking to Anthony Sabino,

447
00:25:10,720 --> 00:25:13,119
Speaker 2: a professor in the Department of Law at the Peter J.

448
00:25:13,400 --> 00:25:17,199
Speaker 2: Tobin College of Business at Saint John's University, tell us

449
00:25:17,240 --> 00:25:19,240
Speaker 2: how the SEC is in the hot seat with the

450
00:25:19,320 --> 00:25:21,760
Speaker 2: Supreme Court and how it could get even worse.

451
00:25:22,080 --> 00:25:24,360
Speaker 1: For example, the DARCAESA case where I have to fire

452
00:25:24,440 --> 00:25:26,639
Speaker 1: to make us brief. Again, different issues, but the bottom

453
00:25:26,720 --> 00:25:29,639
Speaker 1: line is late November, the Supreme Court did hear the

454
00:25:29,720 --> 00:25:32,720
Speaker 1: appeal of the DRCASA case where they sharply questioned the

455
00:25:33,119 --> 00:25:37,040
Speaker 1: power of the SEC to bring enforcement actions against individuals

456
00:25:37,119 --> 00:25:40,840
Speaker 1: and companies but doing so administratively and denying them the

457
00:25:40,920 --> 00:25:43,600
Speaker 1: right to a jury trial. And the SEC is in

458
00:25:43,720 --> 00:25:45,440
Speaker 1: many respects on the hot seat right now with the

459
00:25:45,480 --> 00:25:48,520
Speaker 1: Supreme Court. Which is why, as I said, I firmly

460
00:25:48,600 --> 00:25:50,920
Speaker 1: believe the Supreme Court should hear this case.

461
00:25:51,160 --> 00:25:52,600
Speaker 4: Assuming the Fifth Circuit.

462
00:25:52,440 --> 00:25:55,479
Speaker 1: Rules against the Commission, I feel very strong the Supreme

463
00:25:55,520 --> 00:25:57,920
Speaker 1: Court will take the case because they've not shied away

464
00:25:57,960 --> 00:26:02,960
Speaker 1: from challenges to administrative agent see authority recently getting it mildly.

465
00:26:03,800 --> 00:26:06,800
Speaker 2: Yes, some people say it's a war on the administrative state.

466
00:26:07,040 --> 00:26:09,440
Speaker 1: It definitely is. Oh yeah, and the battle has been joined. Okay,

467
00:26:09,480 --> 00:26:11,680
Speaker 1: there's a warrant administrative state, and as you well know,

468
00:26:11,760 --> 00:26:15,480
Speaker 1: there's the Local Bright case challenging the Chevron doctrine of

469
00:26:15,600 --> 00:26:19,680
Speaker 1: deference to administrative agency rulings. Right now, Basically, you've already

470
00:26:19,720 --> 00:26:23,719
Speaker 1: got teed up lower Bright challenging Chevron deference. You've got

471
00:26:23,760 --> 00:26:27,160
Speaker 1: the Trakzy case challenging the SEC's power to hold administrative

472
00:26:27,240 --> 00:26:29,720
Speaker 1: hearings and deny people the right to a jury trial

473
00:26:29,760 --> 00:26:31,080
Speaker 1: with the SEC accuses.

474
00:26:30,680 --> 00:26:31,360
Speaker 4: You're wrong doing.

475
00:26:31,680 --> 00:26:34,080
Speaker 1: Okay, why not go for the trick? Why not fill

476
00:26:34,119 --> 00:26:36,440
Speaker 1: this out at some future pointing and could be probably

477
00:26:36,480 --> 00:26:38,840
Speaker 1: would be a year away for the twenty twenty fourth term.

478
00:26:39,000 --> 00:26:42,040
Speaker 1: And remember the Fifth Circuit decided Tarchesy and basically said

479
00:26:42,160 --> 00:26:45,639
Speaker 1: to the SEC, you're wrong. It's unconstitutional for you deny

480
00:26:46,240 --> 00:26:48,320
Speaker 1: accused parties are right to a jury trial when you

481
00:26:48,400 --> 00:26:51,520
Speaker 1: accuse them of securities fraud and such. So I'm not

482
00:26:51,560 --> 00:26:53,040
Speaker 1: a betting man, but if this is the kind of

483
00:26:53,119 --> 00:26:55,119
Speaker 1: thing you saw on draftings, yeah, I would put some

484
00:26:55,200 --> 00:26:57,879
Speaker 1: money down in favor that the Fifth Circuit is going

485
00:26:57,960 --> 00:27:00,920
Speaker 1: to rule against the Commission. And again that primes it

486
00:27:01,000 --> 00:27:02,280
Speaker 1: because of the Rameral case.

487
00:27:02,320 --> 00:27:03,359
Speaker 4: As we mentioned, the.

488
00:27:03,400 --> 00:27:06,000
Speaker 1: Second Circuit decided in favor of the Commission on this

489
00:27:06,080 --> 00:27:09,240
Speaker 1: and said, oh yeah, these gig orders are just fine. Again,

490
00:27:09,320 --> 00:27:11,960
Speaker 1: it's it's been sharpened up enough for a Supreme Court review.

491
00:27:12,040 --> 00:27:13,840
Speaker 1: So I think that's going to happen, and frankly I

492
00:27:13,960 --> 00:27:15,879
Speaker 1: welcome it, no matter what the outcome may be.

493
00:27:16,240 --> 00:27:18,240
Speaker 2: I think that's a very safe bet you're making on

494
00:27:18,320 --> 00:27:21,560
Speaker 2: the Fifth Circuit, the most conservative appellate court in the country.

495
00:27:21,600 --> 00:27:24,600
Speaker 2: As I always say, I have any other circuit courts

496
00:27:25,040 --> 00:27:26,800
Speaker 2: besides the Second Circuit.

497
00:27:26,560 --> 00:27:29,680
Speaker 1: Ruled on this or something like this, Yes, I believe, so.

498
00:27:29,880 --> 00:27:33,320
Speaker 1: I don't recall all the decisions per se. But again

499
00:27:33,359 --> 00:27:34,840
Speaker 1: I think a few of the other circuits have come

500
00:27:34,880 --> 00:27:38,200
Speaker 1: out against it. It might be the third and one other,

501
00:27:38,640 --> 00:27:40,600
Speaker 1: so there is again, there is a dissonance there with

502
00:27:40,760 --> 00:27:44,080
Speaker 1: respect to the various circuits here. Certainly, it's interesting because

503
00:27:44,119 --> 00:27:46,480
Speaker 1: you have, as you say, and rightly so I completely agree,

504
00:27:46,560 --> 00:27:49,639
Speaker 1: the Fifth Circuit is one of the most probably, yes,

505
00:27:49,680 --> 00:27:52,280
Speaker 1: I would say, the most conservative court among the numbered

506
00:27:52,359 --> 00:27:55,680
Speaker 1: circuit courts of appeals in the federal system, but especially

507
00:27:55,840 --> 00:27:58,960
Speaker 1: on issues of limiting the power of governments, Okay, limiting

508
00:27:58,960 --> 00:28:01,400
Speaker 1: the power of the ministry. Invasion sees against your casey

509
00:28:01,480 --> 00:28:04,399
Speaker 1: being a prime example of that, a paramount's example. The

510
00:28:04,480 --> 00:28:07,680
Speaker 1: Second Circuit, of course, has the weight of history behind it,

511
00:28:07,800 --> 00:28:10,080
Speaker 1: and being again as the Supreme Court is characterized that

512
00:28:10,359 --> 00:28:12,840
Speaker 1: the mother court of federal securities laws, because let's face it,

513
00:28:13,240 --> 00:28:15,760
Speaker 1: bad stuff allegedly happens on Wall Street, it goes to

514
00:28:15,800 --> 00:28:18,560
Speaker 1: the Southern District to judges like Jed Raykoff and Ronnie Abrams,

515
00:28:18,640 --> 00:28:21,040
Speaker 1: and then it gets appealed literally in the same building,

516
00:28:21,359 --> 00:28:24,280
Speaker 1: to the Second Circuit. So they have tremendous expertise. So

517
00:28:24,720 --> 00:28:27,960
Speaker 1: while I'm leaning towards disagreeing with the Second Circuit in

518
00:28:27,960 --> 00:28:31,920
Speaker 1: the Ramoluh case, the bottom line is that again their

519
00:28:32,040 --> 00:28:34,399
Speaker 1: wisdom in this area carries a lot of weight. So

520
00:28:34,520 --> 00:28:37,800
Speaker 1: once again that simply makes it all the more imperative

521
00:28:37,960 --> 00:28:40,480
Speaker 1: that the Supreme courts they find. Okay, we have the

522
00:28:40,560 --> 00:28:44,320
Speaker 1: circuit conflict, which is in many ways the raison detch

523
00:28:44,360 --> 00:28:46,760
Speaker 1: why we have a Supreme Court to resolve these inter

524
00:28:46,920 --> 00:28:48,640
Speaker 1: circuit conflicts. So let's get to this.

525
00:28:49,080 --> 00:28:52,880
Speaker 2: So the sec besides saying that you know, the parties

526
00:28:52,920 --> 00:28:56,480
Speaker 2: who enter these agreements voluntarily weigh their First Amendment rights,

527
00:28:57,040 --> 00:29:00,920
Speaker 2: it defends this as necessary. It says the no deny

528
00:29:01,040 --> 00:29:04,240
Speaker 2: provision ensures that if defendants were to publicly deny the

529
00:29:04,320 --> 00:29:08,520
Speaker 2: allegations after settling without admissions, the Commission can seek to

530
00:29:08,600 --> 00:29:11,640
Speaker 2: have its day in court and obtain findings of fact

531
00:29:11,720 --> 00:29:13,040
Speaker 2: and conclusions of law.

532
00:29:13,440 --> 00:29:17,120
Speaker 1: That is basically a conditional statement. There Robert saying, okay, look,

533
00:29:17,480 --> 00:29:19,959
Speaker 1: we truncate the proceedings, the proceedings come to an end.

534
00:29:20,440 --> 00:29:23,520
Speaker 1: You pay us money. You don't have to admit liability,

535
00:29:23,560 --> 00:29:25,320
Speaker 1: you don't have to deny liability, and you I'm making

536
00:29:25,320 --> 00:29:28,040
Speaker 1: any kind of confession. And this is very important for companies,

537
00:29:28,160 --> 00:29:31,640
Speaker 1: especially in the financial sector and on Wall Street Journal,

538
00:29:31,800 --> 00:29:34,360
Speaker 1: for Corporate America as a whole. Okay, financial as well

539
00:29:34,360 --> 00:29:37,400
Speaker 1: as industrial to say that, look, if we admitted liability,

540
00:29:37,520 --> 00:29:39,600
Speaker 1: Oh okay, here we go. Now here come the plaintiffs,

541
00:29:39,640 --> 00:29:43,840
Speaker 1: lawyers representing shareholders, and now we have just engendered dozens

542
00:29:43,840 --> 00:29:45,960
Speaker 1: of lawsuits and class actions and what have you. So

543
00:29:46,080 --> 00:29:49,280
Speaker 1: the companies and the individuals definitely benefit by having the

544
00:29:49,400 --> 00:29:54,160
Speaker 1: ability to neither admit nor deny it basically forestalls further litigation.

545
00:29:54,680 --> 00:29:56,840
Speaker 1: But the SEC also says, well, okay, the other condition,

546
00:29:56,880 --> 00:29:59,640
Speaker 1: as we've been discussing, is you cannot comment on this.

547
00:29:59,760 --> 00:30:02,520
Speaker 1: Here the fact all right, and again one can see

548
00:30:02,600 --> 00:30:05,000
Speaker 1: the grains of truth, the grains of realism in the

549
00:30:05,120 --> 00:30:08,360
Speaker 1: SEC's position is that they're saying, look, we don't want

550
00:30:08,680 --> 00:30:11,600
Speaker 1: other folks to come around and say opposing things. You've

551
00:30:11,640 --> 00:30:13,680
Speaker 1: settled and we've asked you to keep your mouth shut

552
00:30:13,720 --> 00:30:15,720
Speaker 1: and day, and that's why the SEC reserves the right.

553
00:30:16,000 --> 00:30:18,720
Speaker 1: They say, Look, the conditions were you pay the money

554
00:30:18,880 --> 00:30:21,480
Speaker 1: and you keep your mouth shut. Well, if you open

555
00:30:21,600 --> 00:30:24,600
Speaker 1: your mouth, now you blow up the settlements, and now

556
00:30:24,640 --> 00:30:26,520
Speaker 1: we get to sue you. And now you're back to

557
00:30:26,680 --> 00:30:28,880
Speaker 1: exactly where you started. And by the way, I've never

558
00:30:28,920 --> 00:30:31,360
Speaker 1: heard of the situation where the commissioners said, okay, oh,

559
00:30:31,440 --> 00:30:33,640
Speaker 1: we'll also refund you the settlement money and then we'll

560
00:30:33,680 --> 00:30:34,080
Speaker 1: sue for it.

561
00:30:34,160 --> 00:30:34,800
Speaker 4: Now I don't think so.

562
00:30:35,080 --> 00:30:37,280
Speaker 1: I think they owe the Hunts of money. And then

563
00:30:37,360 --> 00:30:40,000
Speaker 1: they still so anyway to get more money because obviously

564
00:30:40,200 --> 00:30:41,880
Speaker 1: you're going to settle for less than the amount the

565
00:30:42,000 --> 00:30:44,800
Speaker 1: SEC was originally seen to denolize you for. And then

566
00:30:44,840 --> 00:30:47,160
Speaker 1: once again the question I have, June, is is it

567
00:30:47,320 --> 00:30:51,080
Speaker 1: right again? Remember the SEC gets to say you can't

568
00:30:51,120 --> 00:30:53,360
Speaker 1: talk about this, but we can. You see, that's why

569
00:30:53,360 --> 00:30:55,960
Speaker 1: it's a gig order that only gags one side, and

570
00:30:56,080 --> 00:30:59,320
Speaker 1: there's an inherent injustice in that in my opinion. And

571
00:30:59,480 --> 00:31:02,840
Speaker 1: also let's remember the fact that look the street. They're

572
00:31:02,920 --> 00:31:06,040
Speaker 1: sophisticated investors, they're sophisticated business people.

573
00:31:06,160 --> 00:31:06,520
Speaker 4: All right.

574
00:31:06,640 --> 00:31:09,680
Speaker 1: So when they see SEC versus X y Z, and

575
00:31:09,800 --> 00:31:13,520
Speaker 1: they see the settlements and they see the SEC gives, well,

576
00:31:13,560 --> 00:31:15,760
Speaker 1: we brought these charges, blah blah blah. Came the company

577
00:31:15,840 --> 00:31:19,040
Speaker 1: neither settles without neither admitting nor to nine liability. Okay,

578
00:31:19,120 --> 00:31:21,640
Speaker 1: if the company comes out and issues oppressibly saying yes

579
00:31:21,760 --> 00:31:24,400
Speaker 1: we settled, we neither admit nor denial liability, but we

580
00:31:24,480 --> 00:31:27,400
Speaker 1: thought this suit had no merit. Yeah, that's what you

581
00:31:27,560 --> 00:31:30,120
Speaker 1: expect people to say. And really, what's the harm in that?

582
00:31:30,480 --> 00:31:33,920
Speaker 1: The market, the investment community, the business community, they're intelligent

583
00:31:34,000 --> 00:31:36,680
Speaker 1: enough to say, look, the SEC says this, the other

584
00:31:36,800 --> 00:31:37,360
Speaker 1: side says that.

585
00:31:37,560 --> 00:31:38,880
Speaker 4: And you know, June, it's just a.

586
00:31:38,920 --> 00:31:41,440
Speaker 1: Play on the age, old adage, these two sides to

587
00:31:41,480 --> 00:31:44,200
Speaker 1: every story. And once again in America, don't we want

588
00:31:44,240 --> 00:31:46,680
Speaker 1: to hear both sides? Don't we want to hear the

589
00:31:46,800 --> 00:31:49,520
Speaker 1: accused say, yeah, I settled, I paid money. But you

590
00:31:49,600 --> 00:31:51,720
Speaker 1: know what, this was really a meritless case. This was

591
00:31:51,760 --> 00:31:54,360
Speaker 1: a stupid case. And that's essentially what more Cuban and

592
00:31:54,440 --> 00:31:56,640
Speaker 1: Elon Musk have said in their cases, and also they

593
00:31:56,640 --> 00:31:57,440
Speaker 1: are amiga spreaks.

594
00:31:57,480 --> 00:31:58,880
Speaker 4: Mister Cuban basically.

595
00:31:59,000 --> 00:32:01,320
Speaker 1: Now ever since he defeated the SEC on the inserted

596
00:32:01,360 --> 00:32:05,040
Speaker 1: traded charges, oh my gosh, I see him. I saw

597
00:32:05,120 --> 00:32:07,240
Speaker 1: him in jor casey, I see him in every case.

598
00:32:07,400 --> 00:32:11,920
Speaker 1: He and his very competent lawyers file a brief against

599
00:32:11,960 --> 00:32:14,080
Speaker 1: the SEC at the drop of the act.

600
00:32:14,240 --> 00:32:16,920
Speaker 4: And you know what, lover hate Mark Cuban. It doesn't matter.

601
00:32:17,080 --> 00:32:17,840
Speaker 4: He's an American.

602
00:32:18,080 --> 00:32:19,840
Speaker 1: He's got a right to file an amigas brief just

603
00:32:19,880 --> 00:32:22,040
Speaker 1: the way I do or you do, and so all

604
00:32:22,120 --> 00:32:23,880
Speaker 1: to the better. Okay, That's how justice gets done in

605
00:32:23,960 --> 00:32:27,720
Speaker 1: this country, Okay, by debate, discussion, and then intelligent deliberation.

606
00:32:28,400 --> 00:32:31,000
Speaker 2: Let's say the Supreme Court takes this. Let's say the

607
00:32:31,080 --> 00:32:35,240
Speaker 2: Supreme Court decides that the no denied condition is unconstitutional.

608
00:32:35,840 --> 00:32:41,000
Speaker 2: How would that affect the SEC's policing of financial markets?

609
00:32:41,080 --> 00:32:43,320
Speaker 2: I mean, would there be less settlements? What do you

610
00:32:43,320 --> 00:32:44,720
Speaker 2: think the ramifications would be.

611
00:32:45,080 --> 00:32:48,160
Speaker 1: It's difficult to quantify that, because there's really an absence,

612
00:32:48,200 --> 00:32:50,640
Speaker 1: a vacuum of empirical data that would lead to affward

613
00:32:50,680 --> 00:32:53,880
Speaker 1: looking conclusion like that. But in all honesty, my prediction

614
00:32:53,960 --> 00:32:55,520
Speaker 1: would be it's not going to affect it a lot,

615
00:32:55,920 --> 00:32:58,160
Speaker 1: because the key point about these settlements Trewn is this.

616
00:32:58,560 --> 00:33:04,080
Speaker 1: The SEC brings charges llegius Securities for violations by Xyz Corporation.

617
00:33:04,360 --> 00:33:07,680
Speaker 1: They discuss, they start to do discovery whatever, and then

618
00:33:07,760 --> 00:33:10,080
Speaker 1: both sides say, all right, let's settle this. The SEC

619
00:33:10,360 --> 00:33:13,080
Speaker 1: extracts money. And we all know that the best way

620
00:33:13,200 --> 00:33:16,920
Speaker 1: to tail wrongful activity is to hit somebody where it

621
00:33:17,000 --> 00:33:19,160
Speaker 1: hurts most in business, which is the wild So the

622
00:33:19,320 --> 00:33:21,840
Speaker 1: SEC extracts the fine. The company is injured by that,

623
00:33:22,480 --> 00:33:24,840
Speaker 1: and still the shareholders, while they don't have any further information,

624
00:33:24,840 --> 00:33:26,280
Speaker 1: we're going to be angry. It's the mere fact that

625
00:33:26,360 --> 00:33:28,640
Speaker 1: there were charges and the settlement because that sharehold of

626
00:33:28,680 --> 00:33:30,840
Speaker 1: money flying out the window in the government's hands. The

627
00:33:30,840 --> 00:33:34,400
Speaker 1: accused benefits by being able to state we neither admit

628
00:33:34,520 --> 00:33:38,800
Speaker 1: nor deny liability. The fact that the accused now gets

629
00:33:38,920 --> 00:33:41,000
Speaker 1: to talk about say, well, you know, we thought this

630
00:33:41,120 --> 00:33:43,720
Speaker 1: case was always maryerless. We just settled it because it

631
00:33:43,800 --> 00:33:46,360
Speaker 1: was expedient. It was in the best interests of shareholders

632
00:33:46,400 --> 00:33:48,720
Speaker 1: to bring us to a conclusion, have a resolution.

633
00:33:49,000 --> 00:33:50,680
Speaker 4: All right. I don't think that's going to deter the.

634
00:33:50,760 --> 00:33:53,800
Speaker 1: SEC in the least from bringing these cases, and in fact,

635
00:33:53,840 --> 00:33:57,240
Speaker 1: to some extent, I think it might help promote settlements

636
00:33:57,280 --> 00:33:59,920
Speaker 1: of cases, because no doubt there are some parties out

637
00:33:59,920 --> 00:34:02,000
Speaker 1: there who have been reluctant to settle because of the

638
00:34:02,040 --> 00:34:04,320
Speaker 1: gag rule. But now if they say, okay, look all right,

639
00:34:04,560 --> 00:34:07,360
Speaker 1: we pay the SEC money, fine, we neither admit nor

640
00:34:07,440 --> 00:34:11,560
Speaker 1: deny liability. And afterwards, if we want to criticize the SEC, nothing's.

641
00:34:11,239 --> 00:34:11,840
Speaker 4: Going to stop us.

642
00:34:12,280 --> 00:34:15,040
Speaker 1: And once again, both the SEC and the private parties

643
00:34:15,080 --> 00:34:19,279
Speaker 1: involved should recognize the fact your investors, your shareholders, your creditors,

644
00:34:19,360 --> 00:34:22,480
Speaker 1: your counterparties and contracts, the market in general, they're going

645
00:34:22,560 --> 00:34:24,440
Speaker 1: to make their own decisions. They're going to read the

646
00:34:24,560 --> 00:34:27,480
Speaker 1: SEC press release if they care to. They're going to

647
00:34:27,760 --> 00:34:30,600
Speaker 1: read your press release if they care to, and they're

648
00:34:30,640 --> 00:34:33,120
Speaker 1: going to give each the weight that they feel it deserves,

649
00:34:33,360 --> 00:34:35,439
Speaker 1: and they're going to make their own decisions. And while

650
00:34:35,480 --> 00:34:37,120
Speaker 1: some folks would say, oh, okay, I don't want to

651
00:34:37,160 --> 00:34:38,880
Speaker 1: own stock in this company anymore, I don't want to

652
00:34:38,920 --> 00:34:41,279
Speaker 1: do this with it. That's fine, But other people say,

653
00:34:41,360 --> 00:34:42,160
Speaker 1: it's for the course.

654
00:34:42,200 --> 00:34:44,800
Speaker 4: This happens in business, this happens with the SEC.

655
00:34:45,040 --> 00:34:48,080
Speaker 1: So what's the big deal. The SEC's major concern as

656
00:34:48,120 --> 00:34:51,560
Speaker 1: they've particulated the cases, as you've been discussing gim is

657
00:34:51,640 --> 00:34:54,719
Speaker 1: the fact that they are concerned that if it were

658
00:34:54,800 --> 00:34:57,040
Speaker 1: not for the gag order, this would mean that they

659
00:34:57,120 --> 00:35:01,920
Speaker 1: could be potential misinformation confusion about the nature of the

660
00:35:02,000 --> 00:35:05,000
Speaker 1: charges on and so forth. Well, forgive me, but I

661
00:35:05,120 --> 00:35:07,120
Speaker 1: have to be very critical of the Commission in that regard.

662
00:35:07,200 --> 00:35:09,799
Speaker 1: I think that statement does not hold water at all.

663
00:35:10,000 --> 00:35:12,919
Speaker 1: I think basically what the SEC is not saying is, well, again,

664
00:35:12,960 --> 00:35:16,200
Speaker 1: they're not realizing the realities of the marketplace, and that again,

665
00:35:16,280 --> 00:35:19,799
Speaker 1: the market is an intelligent, impersonal beast, if you will.

666
00:35:20,200 --> 00:35:23,880
Speaker 1: It analyzes all the data points and reaches its own conclusions. Certainly,

667
00:35:23,960 --> 00:35:26,480
Speaker 1: that argument is very convenient for the SEC because it

668
00:35:26,560 --> 00:35:29,279
Speaker 1: basically supports their position to say, wellkay, we get to

669
00:35:29,360 --> 00:35:31,560
Speaker 1: talk about why we brought the case and the charges

670
00:35:31,600 --> 00:35:33,800
Speaker 1: that we're going to make that were eventually settled, but

671
00:35:33,960 --> 00:35:36,000
Speaker 1: you don't get to talk about it, okay. And I

672
00:35:36,080 --> 00:35:38,600
Speaker 1: think that's the issue. Is this the SEC, and my

673
00:35:38,800 --> 00:35:42,239
Speaker 1: estimation with all the respect is dead wrong. What it

674
00:35:42,360 --> 00:35:44,520
Speaker 1: says that oh, we need to gag go over to

675
00:35:44,560 --> 00:35:47,840
Speaker 1: prevent misinformation confusion out there, I say, no, it's the

676
00:35:47,920 --> 00:35:51,520
Speaker 1: exact opposite. The gag order should be non existent because

677
00:35:51,640 --> 00:35:54,480
Speaker 1: you need the other side to have its day to

678
00:35:54,520 --> 00:35:57,320
Speaker 1: say in its press release. Okay, we settled both. We

679
00:35:57,440 --> 00:36:00,480
Speaker 1: thought these charges were meritless and full of nonsense to

680
00:36:00,520 --> 00:36:03,120
Speaker 1: start with, so let both sides speak again. The gay

681
00:36:03,280 --> 00:36:06,160
Speaker 1: order prevents one side from speaking, whereas the other side

682
00:36:06,320 --> 00:36:08,719
Speaker 1: is at liberty to speak all at once. To me,

683
00:36:08,840 --> 00:36:12,080
Speaker 1: that's very unfair and basically on American, and also in

684
00:36:12,200 --> 00:36:15,440
Speaker 1: a way it denies the market the material information that

685
00:36:15,560 --> 00:36:17,280
Speaker 1: it needs to make its own analysis.

686
00:36:17,400 --> 00:36:21,120
Speaker 2: I'll be listening to those Fifth Circuit arguments come February eighth,

687
00:36:21,280 --> 00:36:23,480
Speaker 2: as I'm sure you will too. Anthony, thanks so much.

688
00:36:24,080 --> 00:36:26,879
Speaker 2: That's Anthony Sabino, a professor in the Department of Law

689
00:36:26,960 --> 00:36:29,759
Speaker 2: at the Peter J. Tobin College of Business at Saint

690
00:36:29,840 --> 00:36:30,799
Speaker 2: John's University,