WEBVTT - Trump Takes the Stand & SEC Policy Under Fire 0:00:03.200 --> 0:00:08.000 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:09.880 --> 0:00:12.799 Donald Trump was on and off the witness stand in 0:00:12.880 --> 0:00:16.720 less than four minutes today at the defamation trial by e. 0:00:16.880 --> 0:00:20.160 Gene Carroll, the writer who won a related sexual abuse 0:00:20.239 --> 0:00:23.920 case against him last year. Federal Judge Lewis Kaplan, who's 0:00:23.960 --> 0:00:28.240 overseeing the trial, has already held Trump libel for defaming Carroll, 0:00:28.640 --> 0:00:31.479 and now the jury in this second trial will decide 0:00:31.560 --> 0:00:34.680 the damages shall be awarded. Joining me from the courthouse 0:00:34.760 --> 0:00:37.920 is Bloomberg Legal reporter Patricia Hurtado, who was in the 0:00:37.960 --> 0:00:41.600 courtroom for Trump's testimony. So Patty tell us about this 0:00:41.800 --> 0:00:43.960 brief appearance on the stand by Trump. 0:00:44.280 --> 0:00:48.440 Donald Trump is on the stand unbelievably brief, four minutes 0:00:48.520 --> 0:00:53.360 at most, unlike the four hours he spent railing at 0:00:53.400 --> 0:00:56.840 the system in the New York State Civil FRAU trial 0:00:57.120 --> 0:01:01.480 in November when he testified. The judge took great pains 0:01:01.720 --> 0:01:06.120 to strictly limit what Trump was allowed to say, and 0:01:06.360 --> 0:01:12.000 he made Trump's lawyer, Elena Hobbock, answer specifically what was 0:01:12.040 --> 0:01:15.319 the question she was going to ask him and what 0:01:15.440 --> 0:01:17.959 was the answer Trump was going to get. So the 0:01:18.120 --> 0:01:21.080 judge wanted to put the guardrails out there, and no 0:01:21.360 --> 0:01:25.119 strain off of reservation on this one. Don't go off 0:01:25.120 --> 0:01:27.800 on the off land, you're not allowed. So you could 0:01:27.840 --> 0:01:32.200 hear some grumbling going on because Trump was muttering to 0:01:32.360 --> 0:01:36.759 himself and to his lawyers and Sean Crowley, she's another 0:01:36.959 --> 0:01:41.480 Carol lawyer. She said, mister Trump is making statements such as, 0:01:41.720 --> 0:01:44.920 I don't know who this woman is. I never met her, 0:01:45.319 --> 0:01:47.840 I don't know who this woman is before this trial. 0:01:48.480 --> 0:01:51.720 And so the judge basically shot a grant at Trump, like, 0:01:51.840 --> 0:01:55.040 you know, cool it, and then that the judge continued 0:01:55.080 --> 0:01:58.720 to ask Trump's lawyer these questions. He said, very pointedly, 0:01:59.360 --> 0:02:04.560 will mister Trump comply basically to his lawyer? Of course, 0:02:04.640 --> 0:02:08.000 Trump is not supposed to speak, and Trump started mouthing 0:02:08.120 --> 0:02:11.399 off and saying something, and the judge shot him down 0:02:11.440 --> 0:02:14.919 and said, quote, I'm sorry, mister Trump, you're talking as 0:02:14.960 --> 0:02:19.000 your lawyer is talking. But he really stern with him, 0:02:19.520 --> 0:02:23.440 and then Trump looked grumpy and annoyed and stopped talking. 0:02:24.160 --> 0:02:27.760 So basically the judge put these rules on and the 0:02:27.840 --> 0:02:31.320 judge ruled before trial in September that the statements that 0:02:31.360 --> 0:02:35.560 Trump has made about miss Carroll are as infanatory. So 0:02:35.639 --> 0:02:38.840 now this story is just determining damages, right, So it's 0:02:38.919 --> 0:02:41.520 sort of game over. So Trump was not allowed to 0:02:41.520 --> 0:02:44.440 get on the stand and claim I never said this, 0:02:44.680 --> 0:02:48.160 she's a liar. He couldn't say any extra stuff. He 0:02:48.240 --> 0:02:51.200 had to limit it very carefully to you know, like 0:02:51.360 --> 0:02:55.600 why did you make these statements? And Olena Habba tried 0:02:55.600 --> 0:02:58.519 to get in the judge to allow Trump to testify 0:02:58.639 --> 0:03:01.280 what was his state of mom when he made the 0:03:01.320 --> 0:03:05.760 statements originally back in twenty nineteen that our defanatory and 0:03:05.800 --> 0:03:08.480 the judge shut that down. So I think it was 0:03:08.520 --> 0:03:11.519 a grand total of four minutes Trump was on the stand. 0:03:12.280 --> 0:03:16.760 Judge Kaplin does run a tight courtroom. So what exactly 0:03:16.760 --> 0:03:19.320 did Trump testify to in those four minutes? 0:03:19.720 --> 0:03:23.000 For example, do you stand by your testimony and your 0:03:23.040 --> 0:03:27.800 deposition answer one hundred percent? Yet did you make these statements? Yes, 0:03:28.360 --> 0:03:33.240 she said some things I took as falsely accusatory, and 0:03:33.280 --> 0:03:36.680 then the judge said sustained because it's not false anymore. 0:03:36.760 --> 0:03:39.800 The judges found them not to be false. Did you ever? 0:03:40.040 --> 0:03:44.880 And ten? And basically Carol alleges that she was just 0:03:44.960 --> 0:03:48.480 saying because Trump's comments from the White House triggered a 0:03:48.520 --> 0:03:52.920 barrage of hate speech at her from Trump's followers, and 0:03:52.920 --> 0:03:56.120 that she got death threats, and so Alena Haba, Trump 0:03:56.160 --> 0:03:58.760 flayer was able to ask did you ever intend for 0:03:58.880 --> 0:04:02.160 anyone to harm her? And he said no, I just 0:04:02.200 --> 0:04:06.240 wanted to defend myself, my family, and in fact the presidency. 0:04:06.680 --> 0:04:10.200 The judge shot back part of this, answered is stricken. 0:04:10.640 --> 0:04:13.480 I just wanted to defend myself. It was the only 0:04:13.560 --> 0:04:16.200 part he was allowed, and the judge told the jury ignore, 0:04:16.440 --> 0:04:19.600 I wanted to defend my family, and then back the presidency. 0:04:20.000 --> 0:04:20.480 That was it. 0:04:20.760 --> 0:04:24.359 That was it for direct and then cross Ervererta Catlan. 0:04:24.480 --> 0:04:28.599 Carol's lawyer said, you gave a deposition in October twenty 0:04:28.680 --> 0:04:31.080 twenty two, didn't you, And he goes, I believe so, yes. 0:04:31.880 --> 0:04:35.440 And after that, months after that, there was a trial 0:04:35.480 --> 0:04:38.760 that took place in this very courtroom, and then from 0:04:38.800 --> 0:04:42.000 Claire objected and the judge sustained it, so that jury 0:04:42.040 --> 0:04:45.400 to ignore them. She literally got four questions off, two 0:04:45.520 --> 0:04:48.400 of which were sustained, and the jury was told to 0:04:48.440 --> 0:04:52.240 ignore them. Are you aware that was another trial? And 0:04:52.279 --> 0:04:57.360 then Trump answered yes, But then Lena Haba objected, and 0:04:57.400 --> 0:05:01.320 then the judge said, yes, sustained, and and Lena always 0:05:01.360 --> 0:05:04.320 wants to have the last word, and she said, thank you, judge. 0:05:04.360 --> 0:05:08.599 And then Carol lawyer, the final question is is this 0:05:08.680 --> 0:05:11.719 the first time you've been at a trial that's involving 0:05:11.760 --> 0:05:14.599 Miss Carol that you've actually attended And he said yes, 0:05:14.800 --> 0:05:17.960 and that was it. So it was very very limited. 0:05:18.960 --> 0:05:22.920 This is about the damages. How effective was it when 0:05:22.960 --> 0:05:26.240 the jury was shown a video of Trump bragging about 0:05:26.279 --> 0:05:28.800 his wealth in a deposition. 0:05:28.800 --> 0:05:31.800 Very powerful, and you have to remember, this jury is 0:05:31.800 --> 0:05:34.320 sort of like a clean slate. They don't know what 0:05:34.400 --> 0:05:38.680 the earlier jury and the first Carol trial saw, but 0:05:38.800 --> 0:05:43.000 the jury saw a videotape deposition that Trump gave in 0:05:43.040 --> 0:05:47.720 the State simple broadcase in which he's asked how much 0:05:47.760 --> 0:05:50.760 money or you were, and Trump brags that he has 0:05:50.800 --> 0:05:54.279 at least four hundred million dollars in cash, and he 0:05:54.360 --> 0:05:58.719 also claimed that he's worth quote unquote billions of dollars, 0:05:59.080 --> 0:06:03.279 and he said that his brand is almost like Coca cola. 0:06:03.360 --> 0:06:07.160 It's worth billions of dollars. So that money isn't even 0:06:07.279 --> 0:06:11.520 counting the billions of dollars the Trump name is worth. 0:06:11.960 --> 0:06:15.039 So now the jury has bat to rollover that Trump's 0:06:15.040 --> 0:06:17.640 worth quite a chunk of change in his own estimation, 0:06:17.920 --> 0:06:19.040 he's like a billionaire. 0:06:19.600 --> 0:06:20.200 And then the. 0:06:20.200 --> 0:06:24.479 Jury saw the deposition he gave in the Eging Carol case, 0:06:24.960 --> 0:06:28.159 where you know, it's quite powerful, where he says, this 0:06:28.200 --> 0:06:32.839 woman's not my type. I've never met her. So then ROBERTA. Kaplan, 0:06:32.960 --> 0:06:37.280 Carol's lawyer, shows Trump a black and white photo from 0:06:37.320 --> 0:06:42.880 the nineteen eighties or early nineties of Egen Carrol as 0:06:42.880 --> 0:06:47.920 a young woman, her then husband, and there's Evanna Trump, 0:06:48.520 --> 0:06:51.760 Trump's first wife, and Donald Trump in some kind of 0:06:52.120 --> 0:06:55.600 black tie event and everyone's wearing foremost and he goes, oh, 0:06:55.640 --> 0:06:58.880 in fact, that's my second wife. That's Marlon Marla Maple. 0:06:59.279 --> 0:07:02.120 And then his own lawyer has to correct Trump and go, 0:07:02.640 --> 0:07:06.719 that's Eging Carroll Trump and mistook eg and Carroll for 0:07:07.080 --> 0:07:08.799 Marlon Mabeles, his second wife. 0:07:09.480 --> 0:07:12.280 Why did the judge let that in that seems like 0:07:12.520 --> 0:07:15.200 that's already been determined. Why did he let this jury 0:07:15.240 --> 0:07:15.520 hear that? 0:07:15.760 --> 0:07:19.440 Because this jury gets to see it again to show 0:07:19.720 --> 0:07:23.760 that there is the lie to Trump saying that none 0:07:23.760 --> 0:07:26.480 of this is true. Because they have to determine damages 0:07:26.640 --> 0:07:30.120 and if there's any doubt in their mind. There is 0:07:30.240 --> 0:07:34.000 that very limited portion of the deposition that wasn't long. 0:07:34.680 --> 0:07:38.360 It's limited to very brief statements that Trump made while 0:07:38.600 --> 0:07:42.120 president of the United States. I've never met this woman. 0:07:42.840 --> 0:07:46.280 She's not my type. And there's the lie to those two. Right, 0:07:47.160 --> 0:07:51.160 he had met her before and she looked, according to him, 0:07:51.440 --> 0:07:54.560 like his second wife. So that's why it was allowed 0:07:54.600 --> 0:07:57.640 in to basically in case the jury needed any kind 0:07:57.680 --> 0:08:00.840 of comfort that yes, he had met her before, and 0:08:00.880 --> 0:08:03.040 here's exhibit A that they had met. 0:08:03.600 --> 0:08:07.640 In an attempt to limit damages, the defense brought out 0:08:07.760 --> 0:08:13.520 testimony that Carol enjoyed the fame that came with coming forward. 0:08:14.040 --> 0:08:14.960 How did that go over? 0:08:15.280 --> 0:08:18.920 It's kind of a very hard argument to believe, because 0:08:19.040 --> 0:08:24.600 you know, she says she basically lost jobs after she 0:08:24.760 --> 0:08:29.480 accuses Trump. She loses her job, as they asked Egene Carroll, 0:08:29.640 --> 0:08:34.760 columns in El magazine and all of her TV appearances 0:08:35.200 --> 0:08:39.400 and writing assignments all dry up only for the limited 0:08:39.440 --> 0:08:42.079 purposes of what do you have to say about Donald Trump? 0:08:42.559 --> 0:08:44.800 And that's the only time she's ever been on TV 0:08:45.040 --> 0:08:47.360 or been asked to write an article. Is please tell 0:08:47.480 --> 0:08:49.439 us again about what happened? To you with Donald Trump. 0:08:49.840 --> 0:08:53.679 So the harm that her expert was testifying about is, 0:08:54.520 --> 0:08:57.480 you know, how do you repair your reputation when the 0:08:57.679 --> 0:09:00.959 President of the United States on the lawn of the 0:09:01.040 --> 0:09:05.079 White House has is getting into the President's helicopter to 0:09:05.160 --> 0:09:08.560 go to Camp David and calls her a liar. How 0:09:08.600 --> 0:09:11.920 do you repair the reputation from the statement that is 0:09:12.000 --> 0:09:14.240 made by one of the most powerful men in the 0:09:14.320 --> 0:09:16.760 world who calls you a liar? And how do you 0:09:16.880 --> 0:09:19.719 repair it? So that's what she's alleged. And so the 0:09:19.840 --> 0:09:22.640 argument you could say is your name gets out there, 0:09:23.360 --> 0:09:26.280 but you're not popular. Your name gets out there because 0:09:26.360 --> 0:09:29.920 people are talking trash about you. So you're mentioned seventy 0:09:30.000 --> 0:09:32.240 five thousand times, but it's not in a good way. 0:09:32.840 --> 0:09:35.200 And that's what she was saying. You know, you can't 0:09:35.240 --> 0:09:38.520 make money off Twitter, and she has no job anymore. 0:09:38.840 --> 0:09:42.000 She can't really make money off substat columns she's writing, 0:09:42.200 --> 0:09:45.199 but she's everything is basically dried up for her. What 0:09:45.400 --> 0:09:50.000 was her testimony like, it's a much more muted eging Carol. 0:09:50.160 --> 0:09:52.880 You know, she tells the story of I didn't want it, 0:09:53.200 --> 0:09:56.720 saying I wanted to be the truth teller about what women. 0:09:57.240 --> 0:10:00.240 You know that she writes this book describing different time 0:10:00.360 --> 0:10:04.280 she's been assaulted by men and do women really need men? 0:10:04.760 --> 0:10:05.439 What are meant for? 0:10:05.600 --> 0:10:08.560 As the book is titled. So, I mean, she comes 0:10:08.720 --> 0:10:12.520 off as kind of like a freewheeling, total New York 0:10:12.720 --> 0:10:17.040 woman who was for a brief period Saturday night live 0:10:17.280 --> 0:10:21.280 television show writer, and then she worked at, you know, 0:10:21.559 --> 0:10:26.080 a bunch of different magazines and whittled out a career 0:10:26.240 --> 0:10:30.559 for herself of being this advice columnist for Elle magazine. 0:10:31.080 --> 0:10:34.920 They just had the editor. Her former boss, Robbie Myers, 0:10:35.360 --> 0:10:39.719 testified about how she thought Eging Carroll was very, very 0:10:39.840 --> 0:10:44.439 popular with their readers, and she left EL in twenty seventeen, 0:10:44.640 --> 0:10:47.400 and she said that she had given Eging Carroll a 0:10:47.640 --> 0:10:51.079 raise because she thought she was so popular that people 0:10:51.160 --> 0:10:52.760 went to the magazine to read. 0:10:53.480 --> 0:10:56.360 Trump couldn't hold any press conferences in the halls of 0:10:56.440 --> 0:10:59.880 this federal courthouse. But I understand he had a mess 0:11:00.640 --> 0:11:01.680 for the media. 0:11:02.080 --> 0:11:04.760 As he was leaving the courtroom, he sauntered out of 0:11:04.840 --> 0:11:08.040 the courtroom. He knew their spectators in the audience, that 0:11:08.160 --> 0:11:11.720 there were reporters, and he turns to us and he muttered, 0:11:12.360 --> 0:11:18.280 this is not America. Not America. This is not America. 0:11:18.840 --> 0:11:21.679 And then he sauntered out. So he really wanted to 0:11:21.800 --> 0:11:25.000 have his stay to tell everybody in the courtroom, that included, 0:11:25.160 --> 0:11:28.200 you know, the likes of famous journalists that have covered 0:11:28.240 --> 0:11:30.559 him at the White House, that he didn't think that 0:11:30.679 --> 0:11:31.680 this trial is there. 0:11:32.480 --> 0:11:35.880 They'll be closing arguments tomorrow morning, and then the case 0:11:36.280 --> 0:11:40.439 will go to the jury, possibly as early as tomorrow afternoon. 0:11:40.920 --> 0:11:44.480 Egene Carol is asking for ten million dollars in damages 0:11:44.640 --> 0:11:48.160 plus punitive damages. So we'll see how the jury comes out. 0:11:48.240 --> 0:11:50.800 I know you'll be there, Patty. Thanks so much. That's 0:11:50.840 --> 0:11:54.040 Bloomberg Legal reporter Patricia Hurtado. Coming up next on the 0:11:54.040 --> 0:11:58.720 Bloomberg Law Show, a challenge to the SEC's controversial policy 0:11:59.120 --> 0:12:02.800 of silencing defendants who agree to settlements with the agency. 0:12:03.240 --> 0:12:07.560 I'm June Grosso and you're listening to Bloomberg. Billionaire Mark 0:12:07.640 --> 0:12:11.640 Cuban famously refused to settle the SEC's case against him 0:12:11.720 --> 0:12:15.520 for insider trading, instead going to trial, where a Texas 0:12:15.640 --> 0:12:19.520 jury cleared him in twenty thirteen, a rebuke to the SEC. 0:12:20.200 --> 0:12:23.440 Cuban described the trauma of that legal fight in an 0:12:23.480 --> 0:12:24.640 interview at CNBC. 0:12:25.080 --> 0:12:27.000 When you get accused of this, it isn't just about 0:12:27.040 --> 0:12:29.800 the money. It isn't just a fight. It's about your family, 0:12:29.880 --> 0:12:32.440 trying to explain to your kids during those eight years 0:12:32.480 --> 0:12:34.840 when I was fighting there, waking up in the middle 0:12:34.840 --> 0:12:37.440 of the night, sending emails, doing searches, looking for things, 0:12:37.520 --> 0:12:41.520 trying to find more information. It just consumes you when 0:12:41.559 --> 0:12:43.320 the government is fighting you on justly. 0:12:43.720 --> 0:12:48.760 And now a controversial SEC policy of silencing defendants who 0:12:48.880 --> 0:12:52.920 settle that's been challenged before by Cuban and Elon Musk 0:12:53.320 --> 0:12:56.560 is under fire again, and this time before a federal 0:12:56.640 --> 0:12:59.920 appeals court that's shown a willingness to strike down law 0:13:00.040 --> 0:13:04.640 longstanding practices of the agency. Christopher Novinger, a financial planner 0:13:04.720 --> 0:13:07.880 and radio host from Texas who settled with the SEC 0:13:08.280 --> 0:13:12.880 after he was accused in twenty fifteen of fraudulently selling securities, 0:13:13.480 --> 0:13:17.640 is making a constitutional challenge to the agency's policy of 0:13:17.760 --> 0:13:22.440 requiring defendants who settle to promise not to publicly deny 0:13:22.559 --> 0:13:27.600 the SEC's allegations. Joining me, a securities law expert, Anthony Sabino, 0:13:27.960 --> 0:13:30.280 a professor in the Department of Law at the Peter J. 0:13:30.520 --> 0:13:34.520 Tobin College of Business at Saint John's University tell us 0:13:34.600 --> 0:13:39.960 about the SEC's policy on settlements and this no deny policy, 0:13:40.120 --> 0:13:42.800 which is sometimes referred to as the gag rule. 0:13:43.360 --> 0:13:46.520 This is a policy that the Securities and Exchange Commission 0:13:46.559 --> 0:13:49.959 has had in place for many decades June. And basically 0:13:50.040 --> 0:13:52.240 what it says is here, we are the SEC. We 0:13:52.360 --> 0:13:55.160 have charged you, we have investigated you, we have brought 0:13:55.240 --> 0:13:58.680 an enforcement action, in other words, charging you with various 0:13:58.720 --> 0:14:02.559 wrongdoing under the federal securities laws. Now we've reached a 0:14:02.640 --> 0:14:05.600 settlement whereby you're going to pay money. Because once again, 0:14:06.000 --> 0:14:10.520 the SEC's jurisdiction is to bring civil actions seeking monetary 0:14:10.600 --> 0:14:14.000 relief and sometimes injunctive relief enjoined people from being in 0:14:14.080 --> 0:14:16.760 the industry and so forth, whereas the Department of Justice 0:14:16.800 --> 0:14:19.840 will bring criminal cases that involve prison time. And the 0:14:20.000 --> 0:14:22.600 SEC says, okay, fine, we've reached the settlement with you 0:14:23.200 --> 0:14:26.120 without going to trial. You're going to pay money, all right. 0:14:26.600 --> 0:14:30.320 And the benefit of this to the accused is that 0:14:30.440 --> 0:14:34.080 they get to say that we settle this case neither 0:14:34.320 --> 0:14:37.480 admitting nor denying. We don't admit anything, we don't deny 0:14:37.560 --> 0:14:41.360 anything with respect to our liability. However, says the SEC. 0:14:41.520 --> 0:14:45.440 Here's one more condition, and that is once this is done, 0:14:45.840 --> 0:14:50.120 you cannot comment on this publicly. You cannot issue press releases, 0:14:50.320 --> 0:14:53.840 you can't say anything. And the counterpointing might say, well, gee, 0:14:53.920 --> 0:14:57.120 for how long, and the sec says until the end 0:14:57.240 --> 0:15:01.240 of time okay, in other words, forever and ever and 0:15:01.480 --> 0:15:03.600 really June. What this comes down to with this present 0:15:03.640 --> 0:15:06.280 case here that we're talking about today with novndury is 0:15:06.320 --> 0:15:08.840 the fact that from my perspective, that it's a matter 0:15:09.000 --> 0:15:13.600 of expediency on the government side and the Constitution with 0:15:13.720 --> 0:15:15.680 respect to the first memory and speech on the other, 0:15:16.200 --> 0:15:19.920 and in the vast majority of cases, the Constitution wins 0:15:20.120 --> 0:15:22.440 as well it should, which is what makes this case 0:15:22.520 --> 0:15:25.600 so interesting and sure to make for a rollicking opinion 0:15:25.640 --> 0:15:27.920 from the Fifth Circuit which is hearing it, and in 0:15:28.000 --> 0:15:31.000 all likelihood, because of the dissonance and the circuits, I 0:15:31.160 --> 0:15:33.440 think the Supreme Court not only will hear this case, 0:15:33.720 --> 0:15:35.400 I think they should and finally resolve it. 0:15:36.080 --> 0:15:39.680 Well, it seems like the parties being sued are giving 0:15:39.800 --> 0:15:42.400 up something, but they're getting something as well. They don't 0:15:42.440 --> 0:15:44.680 have to fight the case in court, and they don't 0:15:44.720 --> 0:15:47.080 have to say they were wrong, but they can't say 0:15:47.120 --> 0:15:47.640 they were right. 0:15:48.080 --> 0:15:51.040 That is correct, okay, And essentially to the SEC's point 0:15:51.080 --> 0:15:54.080 of view, which is saying, look, of all sides are 0:15:54.280 --> 0:15:56.960 giving up the right to go to trial where the 0:15:57.120 --> 0:15:59.760 SEC could win big, or to the converse, you could 0:15:59.760 --> 0:16:02.760 win big accused party and therefore walk away without paying 0:16:02.800 --> 0:16:05.280 any money. All right, we've reached the settlements, which is 0:16:05.480 --> 0:16:08.480 fairly common in SEC cases and frankly very common in 0:16:08.560 --> 0:16:10.800 court rooms across the land on all sorts of cases. 0:16:11.280 --> 0:16:14.200 So the quick pro quot the something for something is, look, 0:16:14.520 --> 0:16:16.840 you don't have to admit anything, you don't have to 0:16:16.920 --> 0:16:18.680 deny anything. You basically are silent. 0:16:19.080 --> 0:16:21.320 You just pay money. But as a condition of that, 0:16:21.400 --> 0:16:22.800 so not to undercut. 0:16:22.440 --> 0:16:25.400 Our enforcement efforts, we don't want you at any time, 0:16:25.720 --> 0:16:28.280 okay until the end of the world, to make any 0:16:28.400 --> 0:16:31.480 sort of comment whatsoever. And the Commission's point of view, 0:16:31.800 --> 0:16:34.080 and there's some grains of truth in this, I must admit, 0:16:34.520 --> 0:16:36.960 is the fact that the Commission doesn't want any let's 0:16:37.000 --> 0:16:42.080 call it contrary opinions, contrary information coming out after the fact, 0:16:42.120 --> 0:16:44.480 whereby the party says, well, yeah, we settled and we 0:16:44.560 --> 0:16:47.320 didn't admit or deny anything, We just paid money. But 0:16:47.640 --> 0:16:50.760 isn't it true to some extent that if afterwards you 0:16:50.960 --> 0:16:53.560 issue a press released saying, yes, we settled, but we 0:16:53.640 --> 0:16:56.880 think the SEC was all wet and the accusations were meritless, 0:16:57.360 --> 0:17:00.480 then aren't you in a way reciting a denial. So 0:17:00.640 --> 0:17:03.680 one can see again the reasoning behind the SEC's position. 0:17:04.160 --> 0:17:06.400 But on the other hand is the fact that when 0:17:06.440 --> 0:17:10.200 the SEC issues its press release, and they always do 0:17:10.400 --> 0:17:13.520 j okay, they always issue a long press release that 0:17:13.640 --> 0:17:18.399 says okay, SEC had put investigation and file charges in 0:17:18.560 --> 0:17:23.080 enforcement action against XYZ Corp. For failure to disclose material information, 0:17:23.320 --> 0:17:25.960 whatever it may be under the filal securities laws. And 0:17:26.320 --> 0:17:30.120 then the SEC goes on and it describes in detail, 0:17:30.480 --> 0:17:33.000 and many times exquisite detail, the nature of the charges, 0:17:33.480 --> 0:17:36.159 the who's, the what's, the whares, they name names, and 0:17:36.280 --> 0:17:38.880 so forth, and then at the end is one little 0:17:38.960 --> 0:17:44.280 paragraph whereby it states XYZ Corporation as it's agreed to 0:17:44.280 --> 0:17:47.320 settle this case, admit nor deny guilt and its pain 0:17:47.400 --> 0:17:50.119 and the amount of XYZ. So when you look at 0:17:50.160 --> 0:17:55.400 that press release, both quantitatively and qualitatively, the vast bulk 0:17:55.480 --> 0:17:59.200 of it is the SEC espousing its position, whereas the 0:17:59.440 --> 0:18:03.120 accused the settling party is saying we neither admit nor 0:18:03.240 --> 0:18:06.359 denied liability, but then they're foreclosed. 0:18:05.960 --> 0:18:07.719 Till the end of time from saying anything. 0:18:08.000 --> 0:18:10.800 And isn't that a little bit unfair? And that is 0:18:10.840 --> 0:18:13.520 certainly the argument that's being made by mister Norbyn during 0:18:13.600 --> 0:18:16.240 this case and by other folks who've been in similar 0:18:16.280 --> 0:18:19.240 situations with various results, which is one of the reasons 0:18:19.280 --> 0:18:21.879 why they should go to the Supreme Court eventually. And 0:18:22.000 --> 0:18:24.040 also I think any America would say, well, isn't that 0:18:24.040 --> 0:18:27.040 a little bit unfair? Because the government here has the 0:18:27.119 --> 0:18:29.480 heavy hand. The government has the hammer, I few will. 0:18:29.520 --> 0:18:31.680 They're saying we're going to drag you through court like 0:18:31.800 --> 0:18:33.600 they did with more Cuban on those inside of trading 0:18:33.680 --> 0:18:35.879 charges many years ago, just the way they're doing now 0:18:35.920 --> 0:18:37.879 with Elon Musk and so on and so forth. So 0:18:38.040 --> 0:18:40.880 we at the edge and now we're going to use 0:18:40.920 --> 0:18:42.920 that to our advantage by saying all the things we 0:18:43.000 --> 0:18:45.040 want to say. But what do you get to say nothing? 0:18:45.359 --> 0:18:47.399 And this is a First Amendment challenge, right. 0:18:47.920 --> 0:18:50.200 I am not a First Amendment scholar, but I don't 0:18:50.280 --> 0:18:53.440 have to be, because this clearly falls within the purview 0:18:53.760 --> 0:18:56.760 of what we call prior restraint of speech, which in 0:18:57.280 --> 0:19:00.440 the legion of cases and with extremely rare exceptions, the 0:19:00.480 --> 0:19:04.040 Supreme Courters said, no, okay, no one can issue a 0:19:04.200 --> 0:19:08.040 prior restraint of someone's speech, especially the government. So again 0:19:08.119 --> 0:19:10.119 we can see the SEC's point, and I admit to 0:19:10.240 --> 0:19:13.680 some rationality to it, but once again we're talking about 0:19:13.720 --> 0:19:17.080 someone's constitution right to say, Look, yeah, I settled. Yeah, 0:19:17.160 --> 0:19:19.640 I have the benefit of neither admitting nor to nine guild. 0:19:19.840 --> 0:19:22.160 But you're taking away one of my more precious liberties, 0:19:22.359 --> 0:19:23.520 which is the ability. 0:19:23.240 --> 0:19:25.840 To comment after the fact and June. 0:19:25.640 --> 0:19:28.040 Without naming names, because I don't want to get anywhere 0:19:28.080 --> 0:19:30.560 near that. But as we well know, in America today, 0:19:30.800 --> 0:19:34.919 there are many celebrated cases where the parties involved are 0:19:35.080 --> 0:19:39.160 highly critical and very vocal about criticizing the government, the prosecutor, 0:19:39.200 --> 0:19:41.320 and even the judge. So if they can do that, 0:19:41.920 --> 0:19:44.200 basically the parties in these kinds of situations with the 0:19:44.359 --> 0:19:48.160 SEC are saying, Gee, we want to be exercised all rights, 0:19:48.280 --> 0:19:50.679 just like any other American And why does the government 0:19:50.680 --> 0:19:52.800 have the ability to be so heavy handed and able 0:19:52.840 --> 0:19:54.720 to silence us for the rest of time. 0:19:55.359 --> 0:19:59.680 This no deny policy has been criticized by legal scholars 0:19:59.760 --> 0:20:04.640 and federal judges as potential First Amendment violations. Well known 0:20:04.720 --> 0:20:08.320 judge Jed Rakeoff in the Southern District of New York 0:20:08.400 --> 0:20:12.240 Manhattan said it created a stew of confusion and hypocrisy 0:20:12.520 --> 0:20:16.399 unworthy of such a proud agency as the SEC and 0:20:16.600 --> 0:20:20.639 Fifth Circuit Judge Edith Jones said a more effective prior 0:20:20.760 --> 0:20:25.440 restraint is hard to imagine is the weight of legal 0:20:25.560 --> 0:20:28.760 scholarship against this no deny policy. 0:20:29.440 --> 0:20:32.600 To some extent it is, although some cases also favored 0:20:32.600 --> 0:20:35.000 the SEC as well, and basically just dealing with the 0:20:35.040 --> 0:20:38.000 two individuals who you've mentioned, who I hold in high 0:20:38.040 --> 0:20:40.440 esteem and Jed Raykoff is one of the stars, the 0:20:40.520 --> 0:20:44.000 true stars of the securities law area. And also he 0:20:44.240 --> 0:20:46.359 is in the Southern District of New York where he 0:20:46.440 --> 0:20:49.480 has sat on many, many cases to citing securities law issues. 0:20:49.880 --> 0:20:52.720 He's acknowledges probably even the top three, if not number one, 0:20:52.800 --> 0:20:55.920 of securities law scholars in the terms of judges and 0:20:56.080 --> 0:20:58.280 also lets him. The Southern District of New York sits 0:20:58.320 --> 0:21:01.879 within the Second Circuit, renowned by no less than the 0:21:01.920 --> 0:21:05.440 Supreme Court as the mother court of federal securities law. 0:21:05.960 --> 0:21:09.199 Judge the Duplan Jones of the Fifth Circuit, again an 0:21:09.280 --> 0:21:12.840 extremely erudite and astute judge and very highly regarded in 0:21:13.000 --> 0:21:15.119 years past. She is on the very short list to 0:21:15.160 --> 0:21:18.080 be a nominee for the US Supreme Court, and their 0:21:18.359 --> 0:21:20.840 voices lend a great deal of waiting credibility to these 0:21:20.880 --> 0:21:23.720 criticisms against the agency. But one of the interesting things 0:21:23.840 --> 0:21:25.879 is is that, as I said, there are cases that 0:21:26.040 --> 0:21:28.320 also cut in the favor of the agency, and one 0:21:28.359 --> 0:21:31.840 of those is sec versus Romero. That's where the Second Circuit, 0:21:31.880 --> 0:21:34.560 which presides over Judge Raycot, and therefore he really can't 0:21:34.920 --> 0:21:37.160 take issue with them. He has to follow their precedence. 0:21:37.560 --> 0:21:40.240 They said, no, no, no, this policy's perfectly fine. And 0:21:40.359 --> 0:21:44.359 once again the Second Circuit states, similar to the comments 0:21:44.400 --> 0:21:45.920 you made earlier June, is that it's part of the 0:21:46.000 --> 0:21:49.239 quid pro quote. Okay, here's X y Z Corporation. They 0:21:49.280 --> 0:21:52.080 are accused of wrongdoing by the Securities and Exchange Commission. 0:21:52.440 --> 0:21:54.800 They agree to settle, they pay a monetary fine, they 0:21:54.880 --> 0:21:57.960 avoid the course and expense and even possibly the embarrassment 0:21:58.040 --> 0:22:00.960 of trial, and now they have the benefit of neither 0:22:01.040 --> 0:22:04.399 admitting nor denying linability. But on the other hand, there's silence. 0:22:04.440 --> 0:22:07.000 But again they voluntarily gave up their right. And that's 0:22:07.119 --> 0:22:10.520 essentially what the second Circuit has offended, its hopes upon 0:22:10.920 --> 0:22:13.639 the essence of its rationale is when you settle with 0:22:13.640 --> 0:22:17.920 the SEC it's just like any other settlement, whereby you 0:22:18.040 --> 0:22:19.600 are agreeing to give up when you're right and in 0:22:19.680 --> 0:22:22.440 this instance, the right to talk about these settlements after 0:22:22.480 --> 0:22:22.840 the fact. 0:22:23.359 --> 0:22:24.640 And I think this was a very. 0:22:24.600 --> 0:22:29.239 Interesting contrast June, as follows certainly in civil litigation all 0:22:29.240 --> 0:22:31.399 across the land. Okay, even as you and I are 0:22:31.440 --> 0:22:34.080 speaking right now. The bottom line is that people all 0:22:34.119 --> 0:22:36.760 across America settle cases all the time, and it is 0:22:36.920 --> 0:22:40.560 fairly common and becoming even more pervasive for people to 0:22:40.720 --> 0:22:44.960