1 00:00:03,200 --> 00:00:10,800 Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio. 2 00:00:12,600 --> 00:00:16,200 Speaker 2: The prosecution's case against Donald Trump in his hush money 3 00:00:16,200 --> 00:00:19,680 Speaker 2: trial has been building up to today the testimony of 4 00:00:19,680 --> 00:00:23,720 Speaker 2: its star witness, Michael Cohen, Trump's one time lawyer and 5 00:00:23,840 --> 00:00:27,639 Speaker 2: fixer and now the main witness against him. Trump is 6 00:00:27,680 --> 00:00:31,360 Speaker 2: accused of falsifying business records to cover up hush money 7 00:00:31,360 --> 00:00:34,600 Speaker 2: payments that Cohen made as part of efforts to buy 8 00:00:34,680 --> 00:00:38,040 Speaker 2: in barry stories that might hurt the former president's twenty 9 00:00:38,080 --> 00:00:42,960 Speaker 2: sixteen campaign. In his testimony today, Cohen connected his former 10 00:00:43,040 --> 00:00:46,519 Speaker 2: boss to the payoff to keep adult film actress Stormy 11 00:00:46,640 --> 00:00:50,520 Speaker 2: Daniels from going public about their alleged dallions to save 12 00:00:50,640 --> 00:00:54,760 Speaker 2: his presidential campaign. Joining me is Bloomberg Legal reporter David 13 00:00:54,840 --> 00:00:59,080 Speaker 2: voriankis who's covering the trial. David, everyone has seen interviews 14 00:00:59,160 --> 00:01:03,520 Speaker 2: with Michael Cohen and where he's very energetic and very 15 00:01:03,600 --> 00:01:05,960 Speaker 2: vocal about his dislike for Trump. 16 00:01:06,319 --> 00:01:08,080 Speaker 1: What was he like on the stand today? 17 00:01:08,480 --> 00:01:13,360 Speaker 3: Michael Cohen was very subdued and factual today. He displayed 18 00:01:13,480 --> 00:01:19,400 Speaker 3: very little emotion. He answered questions from the prosecutor Susan 19 00:01:19,440 --> 00:01:28,520 Speaker 3: Hoffinger succinctly and didn't elaborate, and he referred repeatedly to 20 00:01:29,160 --> 00:01:33,120 Speaker 3: Donald Trump as mister Trump. He didn't insult him, he 21 00:01:33,160 --> 00:01:37,480 Speaker 3: didn't belittle him, And he essentially took jurors back in 22 00:01:37,640 --> 00:01:44,080 Speaker 3: time to twenty fifteen and twenty sixteen when he almost 23 00:01:44,080 --> 00:01:48,640 Speaker 3: seemed to be in awe of Trump and spoken of 24 00:01:48,720 --> 00:01:53,840 Speaker 3: him and behaved toward him glowingly. And that he made 25 00:01:53,960 --> 00:01:57,440 Speaker 3: clear to jurors that he wanted to do anything he 26 00:01:57,480 --> 00:02:01,640 Speaker 3: could to protect Trump and to protect his presidential campaign. 27 00:02:02,360 --> 00:02:03,200 Speaker 1: Before he got. 28 00:02:03,080 --> 00:02:06,960 Speaker 2: To the stormy Daniel's payment, how did the prosecution. 29 00:02:06,560 --> 00:02:07,440 Speaker 1: Build up to that? 30 00:02:07,840 --> 00:02:11,000 Speaker 3: They went through his career history, how he had worked 31 00:02:11,720 --> 00:02:16,440 Speaker 3: for the Trump organization for ten years, He'd taken care 32 00:02:16,480 --> 00:02:20,800 Speaker 3: of a number of you know, messy disputes involving Trump, 33 00:02:21,360 --> 00:02:25,840 Speaker 3: that he had won Trump's confidence, and that he also 34 00:02:26,360 --> 00:02:29,480 Speaker 3: made clear to Trump that he was willing and able 35 00:02:29,520 --> 00:02:33,160 Speaker 3: to do anything necessary to help out Trump, and that 36 00:02:33,240 --> 00:02:37,440 Speaker 3: included dealing with media people and anyone that sought to 37 00:02:37,520 --> 00:02:41,880 Speaker 3: harm Trump in any way. Cohen made clear that he 38 00:02:42,000 --> 00:02:46,480 Speaker 3: was willing to bully and badger people so that Trump 39 00:02:46,520 --> 00:02:49,120 Speaker 3: would get his way. You know, he was willing to 40 00:02:49,160 --> 00:02:55,760 Speaker 3: try to reduce bills and either persuade reporters to soften 41 00:02:55,880 --> 00:03:00,680 Speaker 3: or kill stories. He also testified about a he meeting 42 00:03:01,040 --> 00:03:04,160 Speaker 3: at the heart of this case, which was in August 43 00:03:04,280 --> 00:03:09,040 Speaker 3: twenty fifteen. Trump met with David Pecker, who was the 44 00:03:09,080 --> 00:03:12,280 Speaker 3: CEO of the company that owned the National Inquirer, and 45 00:03:12,680 --> 00:03:15,680 Speaker 3: the three of them sat down and made this agreement 46 00:03:16,240 --> 00:03:19,760 Speaker 3: that prossecuers say was the corrupt agreement, in which the 47 00:03:19,840 --> 00:03:25,600 Speaker 3: National Inquirer and David Pecker would publish flattering stories about Trump, 48 00:03:25,800 --> 00:03:30,400 Speaker 3: would attack his rivals, and would also that the National 49 00:03:30,400 --> 00:03:34,120 Speaker 3: Inquirer would look out for any negative stories about Trump 50 00:03:34,200 --> 00:03:38,480 Speaker 3: involving women and would then alert Cohen. That's in fact 51 00:03:38,560 --> 00:03:43,440 Speaker 3: what happened, and that Pecker or his editor at the 52 00:03:43,520 --> 00:03:49,480 Speaker 3: National Inquirer, Dylan Howard, told Michael Cohen about potentially unflattering 53 00:03:49,560 --> 00:03:51,640 Speaker 3: stories about Trump and women. 54 00:03:52,400 --> 00:03:55,720 Speaker 2: At one point, they played a tape that he had 55 00:03:55,800 --> 00:03:57,320 Speaker 2: made of a. 56 00:03:57,240 --> 00:04:00,400 Speaker 1: Conversation he had with Trump. Tell us about that right. 57 00:04:00,480 --> 00:04:05,920 Speaker 3: That conversation was in early September twenty sixteen, so a 58 00:04:05,960 --> 00:04:11,120 Speaker 3: few months before the election. There was a former Playboy playmate, 59 00:04:11,240 --> 00:04:16,520 Speaker 3: Karen McDougall, who had a story to sell that she 60 00:04:17,360 --> 00:04:20,119 Speaker 3: had had an affair with Trump for nearly a year, 61 00:04:21,000 --> 00:04:24,080 Speaker 3: and Trump and Cohen did not want that story to 62 00:04:24,080 --> 00:04:28,719 Speaker 3: get out. She had been in negotiations with ABC to 63 00:04:28,839 --> 00:04:34,039 Speaker 3: tell that story publicly, and she was also in negotiations 64 00:04:34,080 --> 00:04:38,200 Speaker 3: with American media Inkwa Joe the National Enquirer to sell 65 00:04:38,240 --> 00:04:43,560 Speaker 3: that story to them through a so called catching kill agreement, 66 00:04:43,560 --> 00:04:47,040 Speaker 3: in which the Inquirer would buy the story or AMI 67 00:04:47,120 --> 00:04:50,440 Speaker 3: would buy the story and not run it, and they 68 00:04:50,440 --> 00:04:54,080 Speaker 3: would give her a number of columns. The purpose of 69 00:04:54,120 --> 00:04:57,400 Speaker 3: the deal, you know, we've learned through this trial, was 70 00:04:57,440 --> 00:05:02,760 Speaker 3: to protect the campaign. So this call took place in 71 00:05:02,920 --> 00:05:08,160 Speaker 3: early September twenty sixteen because, according to Cohen, David Pecker 72 00:05:08,360 --> 00:05:12,240 Speaker 3: was concerned that Donald Trump was not going to repay 73 00:05:12,400 --> 00:05:17,760 Speaker 3: him the one hundred and fifty thousand dollars, and so 74 00:05:17,839 --> 00:05:22,320 Speaker 3: Trump spoke to Cohen, who was secretly recording him on 75 00:05:22,440 --> 00:05:27,239 Speaker 3: his iPhone, and Trump understood the terms of the deal 76 00:05:27,920 --> 00:05:32,520 Speaker 3: and mentioned one hundred and fifty you know, which Cohen explained, 77 00:05:32,800 --> 00:05:37,080 Speaker 3: was Trump acknowledging that this was the deal with Karen McDougal. 78 00:05:37,200 --> 00:05:40,480 Speaker 3: They would pay her one hundred and fifty thousand, and 79 00:05:40,920 --> 00:05:44,040 Speaker 3: Cohen would use a shell company to handle the deal. 80 00:05:45,000 --> 00:05:48,120 Speaker 2: I wonder if that tape cuts both ways because it 81 00:05:48,200 --> 00:05:52,120 Speaker 2: seems like it's Cohen leading. Trump says cash and Cohen goes, no, 82 00:05:52,320 --> 00:05:55,680 Speaker 2: I have this all handled. You know I've got the details. Basically, 83 00:05:56,360 --> 00:05:58,960 Speaker 2: I mean, does that cut against the prosecution in a 84 00:05:58,960 --> 00:06:01,919 Speaker 2: certain way because you know Cohen's taking the ball and 85 00:06:02,000 --> 00:06:03,360 Speaker 2: running with it. 86 00:06:03,360 --> 00:06:06,240 Speaker 3: It's possible to read it that way. I mean, it's 87 00:06:06,320 --> 00:06:11,080 Speaker 3: not completely explicit. So there's certainly room on cross examination 88 00:06:11,320 --> 00:06:15,440 Speaker 3: to craft an alternative narrative, as there is on a 89 00:06:15,560 --> 00:06:20,960 Speaker 3: number of other aspects of Owen's testimony. For instance, in 90 00:06:21,040 --> 00:06:26,599 Speaker 3: the agreements with Thormy Daniels, they used pseudonyms, including David 91 00:06:26,600 --> 00:06:31,840 Speaker 3: Denison and Peggy Peterson, and when it came time to 92 00:06:31,960 --> 00:06:36,280 Speaker 3: sign a side agreement that spelled out who the actual 93 00:06:36,320 --> 00:06:41,920 Speaker 3: identities of Dennison and Peterson were Trump and Doormy Daniels, 94 00:06:41,960 --> 00:06:45,520 Speaker 3: Trump never signed it, and in fact, later in that 95 00:06:45,640 --> 00:06:50,359 Speaker 3: document Cohen signed DD's initials and he said that he 96 00:06:50,480 --> 00:06:53,640 Speaker 3: was doing that on behalf of Trump. But there's certainly 97 00:06:53,760 --> 00:06:59,400 Speaker 3: room for vigorous cross examination on that front by Trump's lawyers. 98 00:06:59,440 --> 00:07:02,440 Speaker 3: When it's beans probably tomorrow, tell. 99 00:07:02,360 --> 00:07:08,040 Speaker 2: Us how Michael Cohen explained the stormy Daniels' payoff and 100 00:07:08,680 --> 00:07:11,240 Speaker 2: whether he had any document to back him up. 101 00:07:11,720 --> 00:07:17,360 Speaker 3: The Stormy Daniels payoff came in late October of twenty sixteen, 102 00:07:17,480 --> 00:07:23,400 Speaker 3: right before the election, and it came after the release 103 00:07:23,880 --> 00:07:29,440 Speaker 3: in early October twenty sixteen of a very damaging video 104 00:07:30,200 --> 00:07:35,520 Speaker 3: known as the Access Hollywood tape, in which Trump spoke about, 105 00:07:35,840 --> 00:07:39,680 Speaker 3: you know, women and the different ways he could behave 106 00:07:39,800 --> 00:07:44,240 Speaker 3: with women. And it was seemingly a devastating tape, and 107 00:07:44,840 --> 00:07:50,560 Speaker 3: the campaign was quite concerned about its impact on women voters. 108 00:07:50,640 --> 00:07:55,360 Speaker 3: So when Stormy Daniels came forward, they were anxious to 109 00:07:55,400 --> 00:07:59,360 Speaker 3: settle this case. And you know, jury heard a lot 110 00:07:59,400 --> 00:08:03,680 Speaker 3: about them agotiations to settle the Stormy Daniels matter, and 111 00:08:03,720 --> 00:08:10,480 Speaker 3: that Trump told Cohen that he wanted it settled. Cohen, however, 112 00:08:11,800 --> 00:08:15,320 Speaker 3: could not get Trump to pay it himself, and Pecker 113 00:08:15,440 --> 00:08:18,800 Speaker 3: refused to pay it. So Cohen took out a home 114 00:08:18,840 --> 00:08:22,760 Speaker 3: equity line of credit at First Republic Bank and paid 115 00:08:22,760 --> 00:08:25,440 Speaker 3: it with his own money. So now this gets to 116 00:08:25,560 --> 00:08:30,200 Speaker 3: the heart of the cave. The case is about thirty 117 00:08:30,240 --> 00:08:35,319 Speaker 3: four Selene counts alleging that the Trump Organization and Donald 118 00:08:35,400 --> 00:08:41,280 Speaker 3: Trump specifically falsified business records to cover up the reimbursement 119 00:08:41,960 --> 00:08:46,040 Speaker 3: to Michael Cohen for making the Stormy Daniels payment. 120 00:08:47,160 --> 00:08:49,640 Speaker 2: Tell us about the notes on the one hundred and 121 00:08:49,640 --> 00:08:53,959 Speaker 2: thirty thousand dollars wire and how that plays in here. 122 00:08:54,480 --> 00:08:58,920 Speaker 3: There's a very powerful document in which Alan Weiselberg, who 123 00:08:59,040 --> 00:09:03,560 Speaker 3: had been the cf OH the Trump Organization, made handwritten 124 00:09:03,600 --> 00:09:08,640 Speaker 3: notes on a bank statement that Cohen brought to him 125 00:09:08,800 --> 00:09:13,520 Speaker 3: from First Republic Bank. And that statement showed that Cohen 126 00:09:13,679 --> 00:09:18,200 Speaker 3: had paid one hundred thirty thousand dollars to Stormy Daniel's lawyer. 127 00:09:18,760 --> 00:09:25,120 Speaker 3: And so what the the statement shows is that in 128 00:09:25,280 --> 00:09:30,440 Speaker 3: his own writing, Weifelberg wrote down that Cohen would be 129 00:09:30,559 --> 00:09:35,520 Speaker 3: paid one hundred thirty thousand dollars plus fifty thousand dollars 130 00:09:35,600 --> 00:09:40,120 Speaker 3: that was going to another tech firm that Cohen claims 131 00:09:40,160 --> 00:09:43,960 Speaker 3: he paid. And so that's one hundred and eighty thousand dollars, 132 00:09:44,080 --> 00:09:48,440 Speaker 3: and according to Weifelberg's notes, it would be grossed up, 133 00:09:49,000 --> 00:09:52,560 Speaker 3: which meant they would double it so that Cohen could 134 00:09:52,600 --> 00:09:56,320 Speaker 3: pay taxes. And then they added a sixty thousand dollars 135 00:09:56,320 --> 00:10:00,960 Speaker 3: bonus for four hundred and twenty thousand dollars, and it 136 00:10:01,000 --> 00:10:03,920 Speaker 3: was divided by twelve which gets you to thirty five 137 00:10:03,960 --> 00:10:07,679 Speaker 3: thousand dollars a month, which was the reimbursement amount to 138 00:10:07,760 --> 00:10:13,920 Speaker 3: Michael Cohen. What Cohen testified was that he did no 139 00:10:14,160 --> 00:10:19,240 Speaker 3: legal work and there was no legal retainer outlining work. 140 00:10:19,960 --> 00:10:24,679 Speaker 3: It was really only a payments for the reimbursement, which 141 00:10:24,760 --> 00:10:29,040 Speaker 3: makes it non taxable. And so he says that calling 142 00:10:29,120 --> 00:10:34,000 Speaker 3: these payments payments under a retainer was a fraud essentially, 143 00:10:34,280 --> 00:10:38,880 Speaker 3: and that that was a sham agreement. And so that 144 00:10:39,120 --> 00:10:42,280 Speaker 3: really gets to the heart of the cave because what 145 00:10:42,559 --> 00:10:46,880 Speaker 3: makes the business record's fault in the eyes of the 146 00:10:46,960 --> 00:10:51,800 Speaker 3: government is that Cohen was not being paid income under 147 00:10:51,800 --> 00:10:54,520 Speaker 3: a retainer. He was being reimbursed. 148 00:10:54,920 --> 00:10:58,360 Speaker 2: The prosecution has to show that Trump knew about this, 149 00:10:58,880 --> 00:11:01,400 Speaker 2: right and the reason for it is that as close 150 00:11:01,440 --> 00:11:02,880 Speaker 2: as they've come so far. 151 00:11:03,640 --> 00:11:09,440 Speaker 3: We've previously seen this exhibit with Weiseelberg's handwritten notes, but 152 00:11:09,720 --> 00:11:15,280 Speaker 3: Cohen testified that Trump knew that this was a reimbursement, 153 00:11:15,520 --> 00:11:20,319 Speaker 3: and so that's the closest we've gotten to Trump's state 154 00:11:20,360 --> 00:11:21,720 Speaker 3: of mind and intent here. 155 00:11:22,800 --> 00:11:27,360 Speaker 2: Cohen's testimony will continue tomorrow, and it's expected because it's 156 00:11:27,400 --> 00:11:31,600 Speaker 2: moving so quickly, that cross examination will start tomorrow as well. 157 00:11:31,640 --> 00:11:35,600 Speaker 2: Thanks so much, David. That's Bloomberg Legal reporter David Voriakis 158 00:11:36,080 --> 00:11:39,600 Speaker 2: coming up. Another trial just starting across the street from 159 00:11:39,600 --> 00:11:42,400 Speaker 2: the Trump trial. It's one that Wall Street will be watching. 160 00:11:42,679 --> 00:11:46,280 Speaker 2: You're listening to Bloomberg at the Federal Courthouse in Lower Manhattan. 161 00:11:46,760 --> 00:11:50,079 Speaker 2: Just across from the courthouse where Donald Trump's hush money 162 00:11:50,120 --> 00:11:53,240 Speaker 2: trial is playing out is what promises to be one 163 00:11:53,240 --> 00:11:57,200 Speaker 2: of the most closely washed Wall Street trials. Bill huang 164 00:11:57,320 --> 00:12:00,480 Speaker 2: A masked a fortune of thirty six billion dollars in 165 00:12:00,559 --> 00:12:04,800 Speaker 2: near total secrecy through his family office known as Arkago's 166 00:12:04,840 --> 00:12:08,640 Speaker 2: Capital Management, But it was a very public collapse when 167 00:12:08,880 --> 00:12:13,199 Speaker 2: Arkagos suddenly melted down in March twenty twenty one, all 168 00:12:13,240 --> 00:12:17,400 Speaker 2: but erasing Wung's fortune. The collapse also cost the firm's 169 00:12:17,480 --> 00:12:20,960 Speaker 2: lenders ten billion dollars and contributed to the downfall of 170 00:12:21,000 --> 00:12:25,720 Speaker 2: Credit Suisse. Here's Manhattan US attorney Damian Williams describing what 171 00:12:25,800 --> 00:12:29,440 Speaker 2: he called a massive fraud and market manipulation scheme. 172 00:12:31,080 --> 00:12:35,079 Speaker 4: He alleged that defendants and their compenskiers live banks to 173 00:12:35,160 --> 00:12:39,000 Speaker 4: retain billions of dollars that they then used to inflete 174 00:12:39,040 --> 00:12:42,640 Speaker 4: the stock price of a number of public retreated companies, 175 00:12:43,640 --> 00:12:44,480 Speaker 4: the lies. 176 00:12:44,679 --> 00:12:47,719 Speaker 3: That the inflation and the inflation. 177 00:12:47,840 --> 00:12:53,760 Speaker 4: That more lives round and round it way. The last 178 00:12:53,840 --> 00:12:58,600 Speaker 4: year the music stopped, the bowl verse, the crisis dropped, 179 00:12:59,280 --> 00:13:02,280 Speaker 4: and when they did billions of dollars. 180 00:13:02,120 --> 00:13:06,640 Speaker 2: You were oporated over The drevel began in earnest today 181 00:13:06,679 --> 00:13:10,600 Speaker 2: with opening statements from the prosecution and defense. Joining me 182 00:13:10,640 --> 00:13:14,480 Speaker 2: is securities law expert James Park, a professor at UCLA 183 00:13:14,559 --> 00:13:15,160 Speaker 2: Law School. 184 00:13:16,080 --> 00:13:16,600 Speaker 1: Jim, will you. 185 00:13:16,600 --> 00:13:19,640 Speaker 2: Explain what the prosecutors are accusing Huang of doing? 186 00:13:20,360 --> 00:13:24,199 Speaker 5: Well, there are a couple of major allegations. The first 187 00:13:24,240 --> 00:13:29,199 Speaker 5: is this is a market manipulation case. They're accusing Huang 188 00:13:29,360 --> 00:13:34,960 Speaker 5: and Archagos of purchasing stock in order to inflate the 189 00:13:35,040 --> 00:13:39,640 Speaker 5: price beyond natural market forces, and that by leads federal 190 00:13:39,679 --> 00:13:45,520 Speaker 5: securities law. Secondly, they're alleging that he and his subordinates 191 00:13:45,640 --> 00:13:48,280 Speaker 5: lied to banks in order to get the funds to 192 00:13:48,320 --> 00:13:52,720 Speaker 5: speculate in the stocks. And so the first allegation I 193 00:13:52,720 --> 00:13:56,119 Speaker 5: think is probably the more difficult one for the prosecution. 194 00:13:56,280 --> 00:13:59,640 Speaker 5: It's a little bit unclear as to how we define 195 00:13:59,679 --> 00:14:04,760 Speaker 5: market manipulation. There have not been very many prosecutions of 196 00:14:05,160 --> 00:14:09,400 Speaker 5: manipulation involving what we call open market purchases of stock, 197 00:14:09,480 --> 00:14:15,079 Speaker 5: where you're just buying securities in the marketplace. The second 198 00:14:15,280 --> 00:14:19,720 Speaker 5: set of allegations, though, I think, is more straightforward, more established, 199 00:14:19,840 --> 00:14:22,480 Speaker 5: and it could be just a simple federal wire fraud. 200 00:14:22,720 --> 00:14:25,400 Speaker 5: So there are really two sets of allegations here. 201 00:14:26,200 --> 00:14:30,080 Speaker 2: Wang's lawyers have described the prosecution as the most aggressive 202 00:14:30,200 --> 00:14:32,600 Speaker 2: open market manipulation case ever. 203 00:14:32,880 --> 00:14:33,680 Speaker 1: Do you agree with that? 204 00:14:34,120 --> 00:14:37,040 Speaker 5: It certainly is the biggest that I have heard of, 205 00:14:37,520 --> 00:14:43,320 Speaker 5: And you know, any open market manipulation case is somewhat 206 00:14:43,360 --> 00:14:46,800 Speaker 5: novel because they are not brought very frequently and the 207 00:14:46,920 --> 00:14:52,080 Speaker 5: laws unclear. And I think that there, you know, is 208 00:14:52,080 --> 00:14:55,160 Speaker 5: certainly going to be sort of a challenge, I think 209 00:14:55,240 --> 00:14:59,440 Speaker 5: in terms of whether or not the facts will support 210 00:14:59,640 --> 00:15:04,760 Speaker 5: a violation of market manipulation. And I think that you know, 211 00:15:04,840 --> 00:15:08,440 Speaker 5: this set effects that was unprecedented, and I think that 212 00:15:09,040 --> 00:15:11,440 Speaker 5: is part of the novelty of the case is that 213 00:15:11,840 --> 00:15:14,680 Speaker 5: at one point in time he had a position of 214 00:15:14,680 --> 00:15:17,480 Speaker 5: one hundred and sixty billion dollars in a number of 215 00:15:17,480 --> 00:15:21,640 Speaker 5: these publicly traded securities. So it is certainly the largest 216 00:15:21,760 --> 00:15:25,920 Speaker 5: market manipulation case involving open market purchases of stocks that 217 00:15:26,000 --> 00:15:30,400 Speaker 5: I am aware of. And that makes it somewhat unique 218 00:15:30,680 --> 00:15:34,200 Speaker 5: as to whether or not it is something that is 219 00:15:34,240 --> 00:15:37,680 Speaker 5: an abuse of federal authority. I think there has been 220 00:15:37,680 --> 00:15:40,160 Speaker 5: at least one decision in the SEC civil case that 221 00:15:40,280 --> 00:15:44,920 Speaker 5: did find there were sufficient allegations to support a manipulation claim. 222 00:15:45,240 --> 00:15:49,400 Speaker 5: So certainly there is some support for the federal prosecutor's position. 223 00:15:50,800 --> 00:15:54,880 Speaker 2: I've read that looking back, his strategy seems like market suicide. 224 00:15:55,400 --> 00:15:59,720 Speaker 2: In the opening statements, the prosecution said that Wang wanted more, 225 00:16:00,200 --> 00:16:03,240 Speaker 2: more money, more success, more power, that he wanted to 226 00:16:03,280 --> 00:16:07,280 Speaker 2: be a Wall Street legend. But the judges said he 227 00:16:07,440 --> 00:16:10,720 Speaker 2: was bewildered by wong strategy of simply buying more and 228 00:16:10,760 --> 00:16:14,880 Speaker 2: more shares. At a hearing, judge Hellerstein said, what did 229 00:16:14,920 --> 00:16:17,240 Speaker 2: he want? What did he want to achieve being a 230 00:16:17,240 --> 00:16:20,520 Speaker 2: big shot. I suppose that's possible, but it doesn't seem 231 00:16:20,560 --> 00:16:22,440 Speaker 2: to me that was his aim. 232 00:16:23,280 --> 00:16:26,120 Speaker 5: The prosecutor said he wanted to be a Wall Street legend. 233 00:16:26,280 --> 00:16:31,800 Speaker 5: That certainly is a possibility. Another explanation is that he 234 00:16:32,200 --> 00:16:35,200 Speaker 5: basically dug a hole for himself. He got too aggressive. 235 00:16:35,320 --> 00:16:39,280 Speaker 5: He established a really large position that left him vulnerable 236 00:16:39,280 --> 00:16:43,080 Speaker 5: if the market changed, and so he did everything he 237 00:16:43,120 --> 00:16:47,040 Speaker 5: could in order to get himself out of significant losses. 238 00:16:47,080 --> 00:16:49,840 Speaker 5: And so it may be partly that he wanted to 239 00:16:49,880 --> 00:16:53,680 Speaker 5: be this legend. He was not content being a billionaire. 240 00:16:53,760 --> 00:16:57,440 Speaker 5: That was fairly obscure. But you know, the other motivation 241 00:16:57,560 --> 00:17:00,920 Speaker 5: I think might have been just desperation and that he 242 00:17:01,560 --> 00:17:04,919 Speaker 5: was in trouble and he wanted to do everything he 243 00:17:04,960 --> 00:17:08,080 Speaker 5: could in order to make sure that he didn't lose 244 00:17:08,160 --> 00:17:11,199 Speaker 5: a lot of money on these various trades. And you know, 245 00:17:11,240 --> 00:17:14,000 Speaker 5: it would have been humiliating, and it was humiliating when 246 00:17:14,359 --> 00:17:18,360 Speaker 5: he lost billions of dollars in money that was borrowed 247 00:17:18,400 --> 00:17:21,720 Speaker 5: and his own money in these trades. So I think 248 00:17:21,760 --> 00:17:23,520 Speaker 5: there are a number of ways you could look at 249 00:17:23,840 --> 00:17:26,919 Speaker 5: what his motivation might have been. Now in terms of 250 00:17:26,920 --> 00:17:30,440 Speaker 5: whether or not this is completely irrational, I think that 251 00:17:30,440 --> 00:17:33,399 Speaker 5: that'll be a critical part of the prosecution's case. 252 00:17:33,760 --> 00:17:33,959 Speaker 2: You know. 253 00:17:34,040 --> 00:17:35,600 Speaker 5: I think one of the things they may do is 254 00:17:35,640 --> 00:17:37,760 Speaker 5: they may say, well, here were the things that he 255 00:17:37,880 --> 00:17:40,800 Speaker 5: was planning to do to earn a profit. On this 256 00:17:41,200 --> 00:17:43,440 Speaker 5: position that there's a way he could have gotten out 257 00:17:43,480 --> 00:17:47,240 Speaker 5: of it with some profits. And I expect that various 258 00:17:47,240 --> 00:17:50,040 Speaker 5: cooperating witnesses will give us a little bit more insight 259 00:17:50,200 --> 00:17:53,320 Speaker 5: into what the strategy was, so there was a motivation 260 00:17:53,400 --> 00:17:56,320 Speaker 5: asserted by the prosecution. In addition, I think we're going 261 00:17:56,400 --> 00:17:59,280 Speaker 5: to learn more facts at trial as to what the 262 00:17:59,320 --> 00:18:00,480 Speaker 5: motivation have been. 263 00:18:01,040 --> 00:18:04,119 Speaker 2: Some of what the defense lawyers say is that it 264 00:18:04,160 --> 00:18:09,840 Speaker 2: was a family office and they weren't required to disclose positions. Also, 265 00:18:10,240 --> 00:18:12,000 Speaker 2: though I don't know how much, the judges don't allow this, 266 00:18:12,160 --> 00:18:15,080 Speaker 2: that the banks were sophisticated lenders who were doing their 267 00:18:15,119 --> 00:18:15,760 Speaker 2: own research. 268 00:18:16,480 --> 00:18:20,320 Speaker 5: They are sophisticated lenders, but you can commit fraud against 269 00:18:20,359 --> 00:18:24,880 Speaker 5: sophisticated lenders. And we're going to probably hear some testimony 270 00:18:25,000 --> 00:18:28,679 Speaker 5: from these banks as to, you know, what they expected 271 00:18:28,720 --> 00:18:32,120 Speaker 5: and what type of information they were looking for, and 272 00:18:32,320 --> 00:18:36,280 Speaker 5: how the lies affected what they would have done. Would 273 00:18:36,280 --> 00:18:39,680 Speaker 5: they have, you know, pulled the low and is there 274 00:18:39,720 --> 00:18:43,280 Speaker 5: some precedent for doing so. Did he prevent them from 275 00:18:43,520 --> 00:18:46,840 Speaker 5: really responding and preventing what actually happened. I think we're 276 00:18:46,840 --> 00:18:51,080 Speaker 5: going to get some testimony from these fairly sophisticated lenders. 277 00:18:51,440 --> 00:18:53,640 Speaker 5: But I think he has a point, right. The defense 278 00:18:53,680 --> 00:18:56,320 Speaker 5: does have a point that you know, these are banks 279 00:18:56,320 --> 00:18:59,359 Speaker 5: that should have done more due diligence. They should have 280 00:18:59,520 --> 00:19:02,800 Speaker 5: taken care of themselves and they were quite capable of 281 00:19:03,240 --> 00:19:06,359 Speaker 5: doing so. But what the banks will say is that 282 00:19:06,640 --> 00:19:09,159 Speaker 5: we didn't expect we'd be lied to. We didn't expect 283 00:19:09,160 --> 00:19:12,600 Speaker 5: that we would be lied to by this individual investor. 284 00:19:13,080 --> 00:19:16,640 Speaker 2: Where does it fit in that this was a family office. 285 00:19:17,200 --> 00:19:24,000 Speaker 5: Family office basically manages only the fund of a particular 286 00:19:24,080 --> 00:19:27,400 Speaker 5: wealthy individual. That's what a family office is. It doesn't 287 00:19:27,640 --> 00:19:31,560 Speaker 5: take in money from outside investors. And because it is 288 00:19:31,600 --> 00:19:35,840 Speaker 5: a family office, you could argue that there's less need 289 00:19:35,880 --> 00:19:38,919 Speaker 5: for regulation because the only person who would be harmed 290 00:19:39,000 --> 00:19:43,160 Speaker 5: from losses would be mister Wang himself and his family. 291 00:19:43,480 --> 00:19:46,320 Speaker 5: They're the only ones who have money invested in the fund, 292 00:19:46,359 --> 00:19:51,280 Speaker 5: and therefore we don't really need disclosure requirements registration requirements 293 00:19:51,280 --> 00:19:55,000 Speaker 5: with respect to a fund like that. But as we 294 00:19:55,560 --> 00:19:58,840 Speaker 5: can see though, that a fund of this size, even 295 00:19:58,880 --> 00:20:02,119 Speaker 5: though it's a family fund, and can cause havoc on 296 00:20:02,200 --> 00:20:05,040 Speaker 5: other people and third parties such as the banks, and 297 00:20:05,160 --> 00:20:08,320 Speaker 5: more importantly, the general market as a whole. Just the 298 00:20:08,440 --> 00:20:13,280 Speaker 5: instability of unwinding these positions affected a lot of individual 299 00:20:13,320 --> 00:20:17,320 Speaker 5: investors and reduced trust in the marketplace, And so there 300 00:20:17,359 --> 00:20:22,000 Speaker 5: are additional consequences for family offices of this size that 301 00:20:22,080 --> 00:20:24,720 Speaker 5: may support some additional regulation. 302 00:20:25,240 --> 00:20:27,640 Speaker 2: I've been reading a Bloomberg News story which said that 303 00:20:27,960 --> 00:20:30,000 Speaker 2: one of the defenses will be a time honored Wall 304 00:20:30,000 --> 00:20:34,080 Speaker 2: Street argument that he's not responsible for the other side's losses. 305 00:20:34,600 --> 00:20:36,560 Speaker 1: Has that worked in these kinds of cases? 306 00:20:37,200 --> 00:20:39,119 Speaker 5: I think that there are two types of losses that 307 00:20:39,160 --> 00:20:41,800 Speaker 5: we might think about here. One is that, you know, 308 00:20:41,880 --> 00:20:46,760 Speaker 5: individual investors might have lost money because the stock was 309 00:20:46,800 --> 00:20:51,440 Speaker 5: inflated and they came and embodied inflated prices if there 310 00:20:51,520 --> 00:20:54,760 Speaker 5: was in fact market manipulation. Though, the federal securities laws 311 00:20:54,800 --> 00:20:58,719 Speaker 5: are in place in order to provide remedies for this 312 00:20:58,880 --> 00:21:01,560 Speaker 5: type of manipulation, and that was one of the core 313 00:21:01,600 --> 00:21:05,480 Speaker 5: reasons why federal securities laws were passed, because of the 314 00:21:05,520 --> 00:21:11,639 Speaker 5: perception that corporate insiders market insiders were basically manipulating markets 315 00:21:11,720 --> 00:21:16,600 Speaker 5: for their own gain and basically defrauding individual investors who 316 00:21:16,880 --> 00:21:21,199 Speaker 5: cannot trust stock markets because of this manipulative activity. So 317 00:21:21,240 --> 00:21:24,800 Speaker 5: the federal securities laws would be a fairly good rebuttal 318 00:21:24,880 --> 00:21:28,040 Speaker 5: to that type of losses. The other type of losses 319 00:21:28,040 --> 00:21:31,159 Speaker 5: are with respect to the losses of the banks that 320 00:21:31,240 --> 00:21:35,000 Speaker 5: provided the funding the money that was used to invest 321 00:21:35,000 --> 00:21:38,480 Speaker 5: in these stocks, and even there the federal securities laws 322 00:21:38,520 --> 00:21:42,320 Speaker 5: do apply, and there are some technical issues, I guess 323 00:21:42,359 --> 00:21:45,200 Speaker 5: in terms of the types of misrepresentations that were made 324 00:21:45,320 --> 00:21:47,800 Speaker 5: that will have to be worked out, But at least 325 00:21:47,880 --> 00:21:50,800 Speaker 5: in theory, if you are lying about loans that are 326 00:21:50,840 --> 00:21:53,960 Speaker 5: being used to purchase securities, then that would also be 327 00:21:54,000 --> 00:21:56,800 Speaker 5: covered by the federal securities laws. Those laws are in 328 00:21:56,840 --> 00:22:00,359 Speaker 5: place for a reason, and they say that, you know, 329 00:22:00,440 --> 00:22:04,280 Speaker 5: we don't have a system where the buyer has to beware. 330 00:22:04,840 --> 00:22:09,720 Speaker 5: We can trust securities markets, and that's why in certain circumstances, 331 00:22:09,720 --> 00:22:15,280 Speaker 5: investor losses are recoverable from those who manipulate stock markets, 332 00:22:15,280 --> 00:22:19,080 Speaker 5: who lie to investors and other parties. So I think 333 00:22:19,119 --> 00:22:22,520 Speaker 5: that the federal security laws are a powerful rejoiner to 334 00:22:22,560 --> 00:22:25,760 Speaker 5: the argument that investors should simply bear all of their losses. 335 00:22:26,000 --> 00:22:28,960 Speaker 2: So the biggest challenge you mentioned at trial will be 336 00:22:28,960 --> 00:22:32,879 Speaker 2: the two cooperating witnesses. So far, we saw that in 337 00:22:32,920 --> 00:22:37,080 Speaker 2: the opening statement, the defense attorney called the former head 338 00:22:37,080 --> 00:22:41,440 Speaker 2: of risk management, Scott Becker, manipulative and a very very 339 00:22:41,520 --> 00:22:45,600 Speaker 2: convincing liar. So it seems like the defense is going 340 00:22:45,680 --> 00:22:50,400 Speaker 2: to attack the star witnesses in part by saying they're 341 00:22:50,480 --> 00:22:52,880 Speaker 2: lying because they wanted to get out of the charges 342 00:22:53,359 --> 00:22:55,919 Speaker 2: and get a plea deal, which we've heard over and 343 00:22:55,960 --> 00:22:58,920 Speaker 2: over and over again, whenever there's a cooperating witness. 344 00:22:59,000 --> 00:23:02,520 Speaker 5: Basically the standard defense in these types of cases. If 345 00:23:02,520 --> 00:23:05,520 Speaker 5: you have a cooperating witness who is testifying against you, 346 00:23:05,640 --> 00:23:09,600 Speaker 5: that's the job of a defense attorney to undermine their credibility. 347 00:23:10,160 --> 00:23:12,840 Speaker 5: And that's the reason why we have trials, the reason 348 00:23:12,840 --> 00:23:16,120 Speaker 5: we have a jury look at this evidence and hear 349 00:23:16,240 --> 00:23:21,159 Speaker 5: this testimony, is that a group of twelve ordinary individuals 350 00:23:21,200 --> 00:23:23,840 Speaker 5: may be the best way of assessing whether or not 351 00:23:24,400 --> 00:23:27,359 Speaker 5: somebody is lying or telling the truth. And this is 352 00:23:27,760 --> 00:23:30,119 Speaker 5: you know, this is the sort of argument that is 353 00:23:30,200 --> 00:23:34,000 Speaker 5: made every single day in federal courtse throughout America. Whether 354 00:23:34,040 --> 00:23:37,720 Speaker 5: it's a drug possession case or a drug dealing case, 355 00:23:37,880 --> 00:23:42,040 Speaker 5: or something more more of a financially sophisticated crime. These 356 00:23:42,080 --> 00:23:46,320 Speaker 5: federal cases depend upon cooperating witnesses. It's the job of 357 00:23:46,320 --> 00:23:50,240 Speaker 5: the federal prosecutor to make sure they believe the cooperating 358 00:23:50,280 --> 00:23:53,720 Speaker 5: witness and they have to try to independently verify what 359 00:23:53,760 --> 00:23:56,880 Speaker 5: that witness is saying. And you know, hopefully they did 360 00:23:56,880 --> 00:24:00,399 Speaker 5: a good job in this case. And that's up jury 361 00:24:00,440 --> 00:24:03,280 Speaker 5: to decide that whether they believe the cooperating witness or not. 362 00:24:04,000 --> 00:24:07,920 Speaker 5: More recently, this is what the FPX trial. I'm also 363 00:24:07,960 --> 00:24:12,480 Speaker 5: hinged upon. Sam Begman Free was charged with various counts 364 00:24:12,520 --> 00:24:15,680 Speaker 5: of wire fraud and securities fraud, and the reason he 365 00:24:16,119 --> 00:24:19,800 Speaker 5: was convicted was because his top lieutenants testified against him 366 00:24:20,119 --> 00:24:23,120 Speaker 5: and there were attempts to try to reduce their credibility. 367 00:24:23,320 --> 00:24:26,399 Speaker 5: So this is what these trials ultimately come down to. 368 00:24:26,600 --> 00:24:29,359 Speaker 5: Who do you believe? Do you believe the cooperating witnesses 369 00:24:29,920 --> 00:24:32,280 Speaker 5: or do you believe the defenders? And the other interesting 370 00:24:32,359 --> 00:24:34,480 Speaker 5: question I think that will come up is will this 371 00:24:35,080 --> 00:24:37,640 Speaker 5: defendant actually testify in his own defense? 372 00:24:38,119 --> 00:24:41,320 Speaker 2: Hold that thought, Jim coming up, I'll continue this conversation 373 00:24:41,480 --> 00:24:45,399 Speaker 2: with UCLA law professor James Park and we'll discuss the 374 00:24:45,440 --> 00:24:49,360 Speaker 2: impediments to Bill Wong taking the stand. I'm June Grosso 375 00:24:49,400 --> 00:24:53,000 Speaker 2: and you're listening to Bloomberg trial began today for the 376 00:24:53,000 --> 00:24:56,240 Speaker 2: founder of a hedge fund that costs leading global investment 377 00:24:56,320 --> 00:25:00,639 Speaker 2: banks and brokerages billions of dollars when he collapsed. In 378 00:25:00,720 --> 00:25:05,119 Speaker 2: opening statements, the prosecution portrayed Billhang, the founder of Arcago's 379 00:25:05,160 --> 00:25:08,520 Speaker 2: Capital Management, as a greedy man hoping to become a 380 00:25:08,560 --> 00:25:12,000 Speaker 2: Wall Street legend, while Wang's lawyer said he was an 381 00:25:12,080 --> 00:25:16,239 Speaker 2: honest investor, fearless about losing money in stocks he believed in. 382 00:25:16,960 --> 00:25:20,600 Speaker 2: Two of the main prosecution witnesses are insigners who reached 383 00:25:20,600 --> 00:25:24,040 Speaker 2: plea deals with the prosecution. I've been talking to Professor 384 00:25:24,160 --> 00:25:27,359 Speaker 2: James Park of UCLA Law School, and what are some 385 00:25:27,440 --> 00:25:29,800 Speaker 2: of the reasons why you think he might want to 386 00:25:29,840 --> 00:25:31,680 Speaker 2: take the stand in his own defense. 387 00:25:33,200 --> 00:25:38,200 Speaker 5: I think that after the cooperating witnesses testify that there 388 00:25:38,200 --> 00:25:40,520 Speaker 5: will be a lot of explaining to this right if 389 00:25:40,520 --> 00:25:44,800 Speaker 5: he really wants to come and defend himself. I think 390 00:25:44,840 --> 00:25:48,200 Speaker 5: that it all comes down to his state of mind, 391 00:25:48,440 --> 00:25:51,400 Speaker 5: and so the only way the jury can really understand 392 00:25:51,440 --> 00:25:54,480 Speaker 5: his state of mind is if he comes and testifies 393 00:25:54,520 --> 00:25:59,080 Speaker 5: and basically argues that you know they were wrong, they're lying, 394 00:25:59,160 --> 00:26:01,879 Speaker 5: and this is the reason and why. Now, if he 395 00:26:01,960 --> 00:26:05,359 Speaker 5: does testify, though, that puts him at great risk because 396 00:26:05,800 --> 00:26:08,040 Speaker 5: you know, about a decade ago, in one of his 397 00:26:08,400 --> 00:26:12,600 Speaker 5: prior hedge funds, he had to settle a case that 398 00:26:12,680 --> 00:26:15,840 Speaker 5: the sec brought and the Department of Justice brought against 399 00:26:15,920 --> 00:26:19,359 Speaker 5: him for insider trading, and then also in the SEC case, 400 00:26:19,400 --> 00:26:24,359 Speaker 5: there were allegations of similar types of market manipulation, where 401 00:26:24,400 --> 00:26:28,919 Speaker 5: he was ordering subordinates to enter into losing trades in 402 00:26:29,040 --> 00:26:32,280 Speaker 5: order to create the impression that his position was a 403 00:26:32,320 --> 00:26:35,960 Speaker 5: profitable one, and that would be very bad I think 404 00:26:36,040 --> 00:26:39,560 Speaker 5: for his defense if the jury learns that he has 405 00:26:39,600 --> 00:26:43,760 Speaker 5: been charged with similar types of misconduct in the past, 406 00:26:43,920 --> 00:26:46,720 Speaker 5: and that's why he's running a family office, is because 407 00:26:47,040 --> 00:26:50,000 Speaker 5: he had to settle with the SEC and the Department 408 00:26:50,080 --> 00:26:53,720 Speaker 5: of Justice, and that's why he's not able to really 409 00:26:53,800 --> 00:26:56,560 Speaker 5: manage outside funds by investors. 410 00:26:57,400 --> 00:27:02,360 Speaker 2: His defense attorney and opening statements said that the prosecutions 411 00:27:02,640 --> 00:27:04,760 Speaker 2: argument that he risked everything because he. 412 00:27:04,680 --> 00:27:07,480 Speaker 1: Wanted more money, more money, more money, more success, more power. 413 00:27:07,520 --> 00:27:09,520 Speaker 2: He said, it doesn't make sense because he didn't live 414 00:27:09,560 --> 00:27:12,360 Speaker 2: the life of a billionaire, and much has been made 415 00:27:12,400 --> 00:27:15,919 Speaker 2: of his sort of low key, average lifestyle. 416 00:27:16,240 --> 00:27:19,160 Speaker 5: You know, I'm not sure is it a persuasive argument 417 00:27:19,359 --> 00:27:22,560 Speaker 5: that he was not spending the money. You know, I 418 00:27:22,600 --> 00:27:25,520 Speaker 5: think the thing that happens, I think when your life 419 00:27:25,560 --> 00:27:30,040 Speaker 5: is built around investing and trading is that it's kind 420 00:27:30,040 --> 00:27:32,399 Speaker 5: of a game in a sense, and that you know, 421 00:27:32,440 --> 00:27:34,760 Speaker 5: this is what he does and he has done it 422 00:27:34,880 --> 00:27:38,080 Speaker 5: very very well. I mean, he wants to win right 423 00:27:38,160 --> 00:27:40,760 Speaker 5: and regardless of whether he spends the money, I think 424 00:27:40,760 --> 00:27:44,760 Speaker 5: he gets some sense of pride and sense of fulfillment 425 00:27:45,000 --> 00:27:48,840 Speaker 5: out of showing that he can beat the stock market. 426 00:27:49,359 --> 00:27:52,360 Speaker 5: And you know, Warren Buffett, for example, is somebody who 427 00:27:52,359 --> 00:27:55,800 Speaker 5: lives very modestly but spent his full life investing in 428 00:27:55,880 --> 00:27:59,560 Speaker 5: companies and and he you know, I think the reason 429 00:27:59,600 --> 00:28:02,160 Speaker 5: why he does it is because he enjoys it, and 430 00:28:02,280 --> 00:28:06,000 Speaker 5: he gets some self worth out of being somebody who 431 00:28:06,080 --> 00:28:09,840 Speaker 5: can outperform the marketplace. And that's what Bill Wang might 432 00:28:09,880 --> 00:28:10,760 Speaker 5: have been trying to do. 433 00:28:11,640 --> 00:28:16,120 Speaker 2: So the jury is this typical cross section of New Yorkers, 434 00:28:16,920 --> 00:28:20,679 Speaker 2: and jury candidates who had Wall Street ties were excused. 435 00:28:21,440 --> 00:28:24,720 Speaker 2: So if you have financial backgrounds, the judge has said 436 00:28:24,800 --> 00:28:25,720 Speaker 2: the trial will be. 437 00:28:25,680 --> 00:28:27,840 Speaker 1: Financed one oh one. For many of them. 438 00:28:27,880 --> 00:28:30,439 Speaker 2: He said, if you sit through eight weeks of trial, 439 00:28:30,480 --> 00:28:33,200 Speaker 2: you'll be able to go out and manipulate the market. 440 00:28:33,480 --> 00:28:35,840 Speaker 1: I mean, is that a downside for the prosecution? 441 00:28:36,040 --> 00:28:40,040 Speaker 2: Not having people who would understand these sophisticated transactions. 442 00:28:41,440 --> 00:28:44,880 Speaker 5: It poses a challenge. It poses a challenge to explain 443 00:28:44,960 --> 00:28:50,280 Speaker 5: things like a total return swap and exactly what sorts 444 00:28:50,320 --> 00:28:55,320 Speaker 5: of practices were happening at this particular fund. There's always 445 00:28:55,320 --> 00:28:57,760 Speaker 5: a risk the jury will get confused, and so the 446 00:28:57,800 --> 00:29:00,840 Speaker 5: prosecutors are going to really have to go step by 447 00:29:00,880 --> 00:29:05,959 Speaker 5: step and explain just exactly what the fund was doing, 448 00:29:06,560 --> 00:29:10,000 Speaker 5: and you know that that is going to take some time. 449 00:29:10,680 --> 00:29:13,000 Speaker 5: There's always the risks that the jury will tune out 450 00:29:13,080 --> 00:29:17,400 Speaker 5: and not really understand all of the details. On the 451 00:29:17,440 --> 00:29:19,840 Speaker 5: other hand, I think there are some aspects of the 452 00:29:19,880 --> 00:29:24,160 Speaker 5: case that should be fairly simple to understand, where you know, 453 00:29:24,240 --> 00:29:27,840 Speaker 5: I borrowed money essentially from this bank, and they want 454 00:29:27,920 --> 00:29:31,400 Speaker 5: to essentially know what's going on, and I don't tell 455 00:29:31,440 --> 00:29:33,880 Speaker 5: them the truth, right. I think that's a very simple, 456 00:29:34,560 --> 00:29:38,880 Speaker 5: uh set of facts that that any the most ordinary 457 00:29:38,960 --> 00:29:41,960 Speaker 5: jurors will be able to understand. I think the more 458 00:29:42,120 --> 00:29:46,120 Speaker 5: challenging kind of part of the cases the market manipulation 459 00:29:46,320 --> 00:29:49,960 Speaker 5: case and trying to distinguish, you know, what exactly did 460 00:29:49,960 --> 00:29:54,320 Speaker 5: he do wrong in relation to normal practices on Wall Street, 461 00:29:55,000 --> 00:30:00,760 Speaker 5: normal practices that an aggressive trader might essentially use in 462 00:30:00,880 --> 00:30:05,320 Speaker 5: order to beat the market, And so there are you know, 463 00:30:05,520 --> 00:30:09,760 Speaker 5: questions about you know, is it manipulative to phone in 464 00:30:09,840 --> 00:30:11,800 Speaker 5: a lot of orders at the end of the day 465 00:30:12,000 --> 00:30:14,479 Speaker 5: when there's not a lot of trading. Is that something 466 00:30:14,560 --> 00:30:17,920 Speaker 5: that we can say is deceptive and intent or is 467 00:30:17,960 --> 00:30:21,720 Speaker 5: it simply industry practice? And so I think the jury 468 00:30:21,760 --> 00:30:25,480 Speaker 5: will need some information in order to make that determination, 469 00:30:25,680 --> 00:30:27,680 Speaker 5: and I think it'll be difficult. I think it'll be 470 00:30:27,760 --> 00:30:33,960 Speaker 5: difficult for prosecutors to clearly explain, you know why this 471 00:30:34,080 --> 00:30:38,760 Speaker 5: sort of trading crosses a line into manipulation that biolates 472 00:30:38,800 --> 00:30:42,600 Speaker 5: federal securities law and gives enough facts for the jury 473 00:30:42,640 --> 00:30:46,960 Speaker 5: to distinguish this type of manipulative trading from what would 474 00:30:46,960 --> 00:30:52,120 Speaker 5: be normal, aggressive but non manipulative tactics that are used 475 00:30:52,160 --> 00:30:54,960 Speaker 5: by hedge funds and other investors. 476 00:30:55,400 --> 00:30:59,480 Speaker 2: So he's Jim being tried alongside his the former Chief 477 00:30:59,480 --> 00:31:03,600 Speaker 2: Financial Office, Sir Patrick Halligan. Halligan's attorney, seemed to be 478 00:31:03,680 --> 00:31:08,280 Speaker 2: trying to distinguish them in opening statements. Do you think 479 00:31:08,280 --> 00:31:10,480 Speaker 2: that their cases rise or fall together? 480 00:31:11,040 --> 00:31:14,880 Speaker 5: There could be differences in terms of the defenses. I 481 00:31:14,920 --> 00:31:19,000 Speaker 5: think what Wang would say is that, you know, my 482 00:31:19,080 --> 00:31:22,800 Speaker 5: subordinates were doing all this stuff that I was not 483 00:31:22,960 --> 00:31:26,360 Speaker 5: completely aware of. I didn't realize all of the specifics 484 00:31:26,400 --> 00:31:28,720 Speaker 5: of what was being said to the banks that could 485 00:31:28,760 --> 00:31:31,840 Speaker 5: be his defense. I fairly confident that that's the sort 486 00:31:31,840 --> 00:31:34,200 Speaker 5: of thing that he's going to try to argue, is that, 487 00:31:34,400 --> 00:31:39,080 Speaker 5: you know, my subordinates they they went overboard, right, they lied, 488 00:31:39,160 --> 00:31:41,080 Speaker 5: and I didn't know it. I didn't actually speak to 489 00:31:41,120 --> 00:31:44,880 Speaker 5: the banks my subordinates did. The CFO may have different 490 00:31:44,920 --> 00:31:48,080 Speaker 5: interests than Wang, and he may point the finger back 491 00:31:48,520 --> 00:31:51,720 Speaker 5: at Wang and say, well, actually, no, he was the 492 00:31:51,720 --> 00:31:56,040 Speaker 5: one telling me to basically lie. And so there could 493 00:31:56,040 --> 00:32:00,120 Speaker 5: be different interests here in these defenses, and different and 494 00:32:00,160 --> 00:32:03,160 Speaker 5: positions that they may end up taking in the trial. 495 00:32:03,720 --> 00:32:07,960 Speaker 2: This case is one of several that the US Attorney 496 00:32:08,120 --> 00:32:12,520 Speaker 2: in the Southern District, Damien Williams, brought that alleges wrongdoing 497 00:32:12,600 --> 00:32:17,680 Speaker 2: by powerful investors amid the market swings during the pandemic. 498 00:32:18,120 --> 00:32:21,520 Speaker 2: Do some of these cases just go, you know, too far? 499 00:32:21,720 --> 00:32:23,880 Speaker 2: It's like, is the effort too broad? 500 00:32:25,000 --> 00:32:27,680 Speaker 5: I'm not really aware of a particular case that has 501 00:32:27,720 --> 00:32:31,480 Speaker 5: gone too far. I think that they are challenging cases, though, 502 00:32:31,520 --> 00:32:33,760 Speaker 5: I will say that, you know, cases like this are 503 00:32:34,400 --> 00:32:39,200 Speaker 5: pretty challenging in terms of establishing fraudulent intent. But you know, 504 00:32:39,240 --> 00:32:41,400 Speaker 5: I think it is conduct though that has to be 505 00:32:41,480 --> 00:32:44,680 Speaker 5: looked at. Because there was a period of market turmoil, 506 00:32:44,840 --> 00:32:47,720 Speaker 5: and you could argue that there's certain individuals who try 507 00:32:47,800 --> 00:32:51,560 Speaker 5: to exploit that and take advantage of it. I think 508 00:32:51,560 --> 00:32:54,640 Speaker 5: what Wang would say, though, in response, is that I 509 00:32:54,720 --> 00:32:57,200 Speaker 5: really believe that the market was going to come back, 510 00:32:57,280 --> 00:32:59,480 Speaker 5: and so I really just made a big, big bet 511 00:32:59,600 --> 00:33:03,280 Speaker 5: that the market overreacted to the effects of the pandemic, 512 00:33:03,480 --> 00:33:07,680 Speaker 5: and so I really invested a lot in making that 513 00:33:07,760 --> 00:33:10,280 Speaker 5: bet and it just didn't work out. And you know, 514 00:33:10,320 --> 00:33:14,440 Speaker 5: why should I be criminally charged in serve prison time 515 00:33:14,680 --> 00:33:18,320 Speaker 5: for making a mistake and when I really believed that 516 00:33:18,800 --> 00:33:22,800 Speaker 5: these stocks would go up in value. And I think 517 00:33:22,920 --> 00:33:25,440 Speaker 5: that's the type of defense that we heard a little 518 00:33:25,480 --> 00:33:29,600 Speaker 5: bit in the defense's opening argument that he had conviction 519 00:33:29,800 --> 00:33:32,600 Speaker 5: about the value of the stocks. He sincerely believed that 520 00:33:32,680 --> 00:33:37,200 Speaker 5: they were good investments, and so he was not deceiving anyone. 521 00:33:37,440 --> 00:33:40,080 Speaker 2: It promised us to be a very interesting trial. Thanks 522 00:33:40,080 --> 00:33:42,320 Speaker 2: so much, Jim for giving us this preview of it. 523 00:33:42,760 --> 00:33:46,320 Speaker 2: That's Professor James Park of UCLA Law School. And that's 524 00:33:46,360 --> 00:33:49,320 Speaker 2: it for this edition of the Bloomberg Law Podcast. Remember 525 00:33:49,360 --> 00:33:52,080 Speaker 2: you've can always get the latest legal news by subscribing 526 00:33:52,120 --> 00:33:55,560 Speaker 2: and listening to the show on Apple Podcasts, Spotify, and 527 00:33:55,680 --> 00:33:58,840 Speaker 2: at bloomberg dot com, slash podcast slash Law. 528 00:33:59,160 --> 00:34:01,800 Speaker 1: I'm June gross Know, and this is Bloomberg