WEBVTT - Potash Sags as Sanctions Fail to Crimp Supply: Commodity Outlook 0:00:13.800 --> 0:00:17.119 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:17.120 --> 0:00:20.840 by the litigation and policy team at Bloomberg Intelligence, the 0:00:20.840 --> 0:00:25.160 investment research platform of Bloomberg LP. Just a quick word 0:00:25.160 --> 0:00:28.760 about Bloomberg Intelligence for those who are unfamiliar. We are 0:00:28.840 --> 0:00:31.960 the investment research platform on the Bloomberg terminal, with five 0:00:32.040 --> 0:00:36.199 hundred analysts and strategists working across the globe and focused 0:00:36.240 --> 0:00:40.000 on all major markets. Our coverage includes over two thousand 0:00:40.000 --> 0:00:42.879 equities and credits, and we have outlooks on more than 0:00:42.960 --> 0:00:47.239 ninety industries and one hundred market industries, currencies, and commodities. 0:00:48.320 --> 0:00:52.800 This podcast series examines the intersection of business policy and law, 0:00:53.280 --> 0:00:56.160 and today we'll be looking at the litigation and policy 0:00:56.200 --> 0:00:59.000 catalysts that our team is watching in the second half 0:00:59.040 --> 0:01:01.720 of twenty twenty four and that we think will impact 0:01:01.800 --> 0:01:05.800 companies across a number of different sectors. My name is 0:01:05.880 --> 0:01:09.959 Elliot Stein. I'm a senior litigation analyst covering litigation in 0:01:09.959 --> 0:01:12.840 the financial sector, and I'll be your host for today, 0:01:13.240 --> 0:01:17.039 July tenth, twenty twenty four. If you have any questions 0:01:17.080 --> 0:01:19.520 about any of the matters that we'll be talking about 0:01:19.560 --> 0:01:22.520 on this episode, please don't hesitate to reach out to 0:01:22.600 --> 0:01:27.400 us at your convenience with questions. So we'll be discussing 0:01:27.440 --> 0:01:31.360 a handful of sectors today. First, we'll start with financials 0:01:31.400 --> 0:01:35.480 and we'll bring in Nathan Dean, our senior financials policy analysts, 0:01:35.560 --> 0:01:38.840 to discuss the US elections in November and their potential 0:01:38.880 --> 0:01:42.280 impact on the Inflation Reduction Act and the energy and 0:01:42.360 --> 0:01:45.600 healthcare sectors in particular. And then Nathan will also talk 0:01:45.640 --> 0:01:48.480 about the Basel three endgame and what it means for 0:01:48.600 --> 0:01:53.360 potential capital requirements for banks. Sticking with financials, I'll discuss 0:01:53.480 --> 0:01:57.240 litigation that I expect will strike down the CFPB's credit 0:01:57.240 --> 0:02:00.480 card late fee rule, and I'll also talk about what 0:02:00.480 --> 0:02:04.280 we're watching in the SEC's case against Coinbase, and then 0:02:04.360 --> 0:02:07.400 i'll also mention a few money laundering probes of big 0:02:07.440 --> 0:02:11.800 banks that we're watching. After that, Jenrie, our senior anti 0:02:11.840 --> 0:02:14.360 trust analyst, will give us an update on several cases 0:02:14.360 --> 0:02:18.440 against Google, as well as FTC lawsuits to block deals 0:02:18.480 --> 0:02:23.400 like Kroger, Albertson's and Tapestry Capri. Sticking with anti trust, 0:02:23.600 --> 0:02:27.320 justin Teresi, we'll discuss the thirty billion dollar visa and 0:02:27.440 --> 0:02:31.280 MasterCard interchange fees settlement with merchants that will need to 0:02:31.320 --> 0:02:36.000 be reworked after a court order recently, and Justin will 0:02:36.000 --> 0:02:40.880 also talk about a potential doj antitrust lawsuit against United Health, 0:02:41.680 --> 0:02:44.880 and he'll also talk about the proliferation of cases alleging 0:02:45.280 --> 0:02:48.560 price collusion between real page and landlords in the real 0:02:48.680 --> 0:02:52.880 estate rental market. After that, Matt Schttenhelm, who covers TMT 0:02:53.000 --> 0:02:58.040 policy and litigation, we'll discuss potential internet legislation, including a 0:02:58.120 --> 0:03:01.760 law to protect kids online, and Matt will also discuss 0:03:01.840 --> 0:03:06.320 TikTok's litigation to up end US lawmakers sale or ban law, 0:03:06.480 --> 0:03:10.040 and then he'll also walk us through litigation in California 0:03:10.480 --> 0:03:15.080 that could bring Lift and Uber a big win. Sticking 0:03:15.080 --> 0:03:18.919 with tech Tamlin Basin, who covers techip litigation, we'll discuss 0:03:19.240 --> 0:03:24.120 pegasystems pending effort to slash Appian's two billion dollar jury award. 0:03:24.760 --> 0:03:29.000 After that, Holly Frome will discuss litigation concerning Zantac, Johnson 0:03:29.000 --> 0:03:32.760 and Johnson talcum powder, and the forever chemicals known as pfas. 0:03:33.040 --> 0:03:36.120 And last, but not least, Dwyane Wright, who covers healthcare 0:03:36.160 --> 0:03:39.920 policy in Washington, d C. Will discuss the Biosecure Act, 0:03:40.000 --> 0:03:43.440 which aims to bolster US manufacturing at the expense of China, 0:03:43.880 --> 0:03:48.080 and also a medicare advantage shakeup that could benefit Humana 0:03:48.240 --> 0:03:51.760 and United Health. So all of this research is available 0:03:51.840 --> 0:03:55.760 on the Bloomberg terminal at bi GO. And with all 0:03:55.840 --> 0:03:58.880 that out of the way, let's get started with the content. Nathan, 0:03:59.080 --> 0:04:02.960 let's bring you in. The biggest catalyst in the second 0:04:03.000 --> 0:04:06.040 half of this year in our coverage world is probably 0:04:06.080 --> 0:04:09.040 the US elections in November. Why don't you come in 0:04:09.120 --> 0:04:11.440 and tell us what you're watching related to the elections. 0:04:11.800 --> 0:04:13.080 Yeah, so, thanks, Elliot. 0:04:13.240 --> 0:04:15.520 So just a couple of dates to keep in mind 0:04:15.560 --> 0:04:18.039 as you think of headline risk and what can happen 0:04:18.080 --> 0:04:22.760 with the election between now and November fifth. So it 0:04:22.800 --> 0:04:26.440 will start though on July fifteenth, which is the start 0:04:26.480 --> 0:04:30.960 of the Republican Convention that will go through July eighteenth, 0:04:30.960 --> 0:04:33.480 and at that point we will see that President Trump 0:04:33.760 --> 0:04:37.120 will have picked the vice president nominee and he and 0:04:37.240 --> 0:04:39.800 this vice president nominee will be nominated to the ticket. 0:04:40.279 --> 0:04:43.360 The next major date is around July twenty first. This 0:04:43.400 --> 0:04:46.440 is when the Democrats are going to probably hold a 0:04:46.560 --> 0:04:48.960 virtual role call that state is not sent in stone, 0:04:49.240 --> 0:04:52.120 but think of it around July twenty first, this virtual 0:04:52.200 --> 0:04:56.120 roll call will essentially be a meeting to nominate President 0:04:56.120 --> 0:04:59.320 Biden and Vice President Kamala Harris to the ticket in 0:04:59.400 --> 0:05:01.680 order to get that onto the ballot in the state 0:05:01.680 --> 0:05:04.480 of Ohio, Ohio law states that the nominee has to 0:05:04.520 --> 0:05:07.880 be picked by August seventh. And because the Democratic Convention 0:05:08.000 --> 0:05:11.480 in our third catalyst is on August nineteenth, which is 0:05:11.520 --> 0:05:15.719 when the Democrats meet in Chicago, you know that July 0:05:15.800 --> 0:05:18.120 twenty first date is important because then it would put 0:05:18.120 --> 0:05:21.880 President Biden on the ticket. The third date, the August nineteenth, 0:05:21.880 --> 0:05:25.640 that's when President Biden and Vice President Kamala Harris would 0:05:25.680 --> 0:05:28.800 be formally nominated. And I think a lot of the 0:05:28.880 --> 0:05:32.919 talk of whether President Biden and whether would he continue 0:05:32.960 --> 0:05:35.880 to run or not will drop at that point if 0:05:35.880 --> 0:05:39.880 he is formulated nominated. And then finally on September second, 0:05:39.920 --> 0:05:44.240 you have the second debate between the presidential candidates leading 0:05:44.600 --> 0:05:47.080 until the election to number fifth. So that's just some 0:05:47.160 --> 0:05:50.040 dates to keep in mind. Now in terms of the election, 0:05:50.240 --> 0:05:52.960 how to think about that, Well, you know, a lot 0:05:53.000 --> 0:05:55.520 of things can change, and we're actually working on a 0:05:55.560 --> 0:05:59.280 fairly large and comprehensive report on the election. But one 0:05:59.320 --> 0:06:01.080 of the things we are telling our clients to look 0:06:01.120 --> 0:06:04.240 at is the Inflation Reduction Act because it is so 0:06:04.440 --> 0:06:09.719 important in terms of future growth for clean energy, pharmaceuticals, 0:06:10.200 --> 0:06:14.120 other types of utilities, construction companies, and so forth like that. Now, 0:06:14.160 --> 0:06:15.760 the way that you should think about the tax of 0:06:15.800 --> 0:06:19.040 the Inflation Reduction Act is unlike the Infrastructure Investment in 0:06:19.160 --> 0:06:23.720 Jobs Act, which was this bipartisan infrastructure bill that had 0:06:23.200 --> 0:06:27.279 five hundred billion dollars in new spending, this is seven 0:06:27.320 --> 0:06:30.320 hundred and thirty nine billion in terms of tax changes 0:06:30.360 --> 0:06:34.480 in enforcement. So the IRA is carrots and incentives, if 0:06:34.520 --> 0:06:39.040 you will, rather than direct monies going out to boost 0:06:39.040 --> 0:06:42.320 the economy. Now, our thesis has to always been that 0:06:42.400 --> 0:06:44.840 the IRA will not be fully repealed. The votes are 0:06:44.880 --> 0:06:48.200 just not there. A lot of the beneficiaries of the 0:06:48.240 --> 0:06:50.560 IRA are GOP states. 0:06:50.800 --> 0:06:52.560 And we don't think that those. 0:06:54.000 --> 0:06:56.040 Lawmakers, if you will, will want to go to their 0:06:56.080 --> 0:06:59.080 constituents and say, let's go back and roll back something 0:06:59.080 --> 0:07:03.520 that is actuallyinging money to our district. However, because the 0:07:03.560 --> 0:07:06.520 twenty seventeen Trump era tax cuts expired at the end 0:07:06.560 --> 0:07:10.400 of twenty twenty five, tax changes are going to be 0:07:10.440 --> 0:07:13.360 in the cards next year, and so as we approach 0:07:13.400 --> 0:07:16.239 between now and the election, it's important to start looking 0:07:16.320 --> 0:07:19.240 at some of the tax changes in particular that could 0:07:19.280 --> 0:07:22.960 play out as part of the IRA, namely electric vehicles. 0:07:23.120 --> 0:07:24.640 Justin did a lot of work on this on the 0:07:24.720 --> 0:07:27.520 terminal in terms of looking at what the impact could 0:07:27.520 --> 0:07:30.840 be for Tesla, Rivian, even Ford and GM because if 0:07:30.880 --> 0:07:33.320 the EV tax credits, if you will go away as 0:07:33.400 --> 0:07:36.320 part of this tax reform effort, a big charge of 0:07:36.360 --> 0:07:37.640 the IRA could be at risk. 0:07:38.000 --> 0:07:38.840 So that's just a taste. 0:07:38.880 --> 0:07:40.520 There's going to be a lot more out there to 0:07:40.560 --> 0:07:42.800 keep in mind, not for and a lot of that 0:07:42.840 --> 0:07:46.480 will come out as the RNC continues to develop their agenda, 0:07:46.520 --> 0:07:48.920 which they just recently put out, and we get more 0:07:48.960 --> 0:07:51.440 policy statements from President Trump going on and on as 0:07:51.480 --> 0:07:54.800 we get closer to the election date. Now turning away 0:07:54.840 --> 0:07:58.960 from the legislative and the presidential branch and moving more 0:07:58.960 --> 0:08:02.240 towards the regulatory side, it's also important to talk about 0:08:02.280 --> 0:08:04.960 BASO three endgame. This is the proposal that came out 0:08:05.000 --> 0:08:08.280 in twenty twenty three that would raise as proposed capital 0:08:08.320 --> 0:08:11.240 requirements for Bank America at JP, Morgan City Group and 0:08:11.280 --> 0:08:17.200 so forth. Nineteen percent under the proposed that's a dramatic increase. Now, 0:08:17.640 --> 0:08:20.200 the FED has always said that broad in material changes, 0:08:20.200 --> 0:08:22.360 and I'm using that in their quotes broad in material 0:08:22.440 --> 0:08:25.440 changes is coming because that's their words. And we finally 0:08:25.480 --> 0:08:28.720 got confirmation from FED Chairman Jerome Poll when he testified 0:08:28.720 --> 0:08:31.600 to the State Banking Committee on July ninth that a 0:08:31.640 --> 0:08:33.880 reproposal is coming. Now it is not going to be 0:08:34.000 --> 0:08:37.320 a reproposal of the entire rule, but rather they are 0:08:37.320 --> 0:08:41.200 going to repropose certain portions of that rule. Now, we 0:08:41.280 --> 0:08:43.320 think that's going to come out in September. Look for 0:08:43.360 --> 0:08:46.040 that September timeframe. We think it will be a sixty 0:08:46.120 --> 0:08:49.000 day comment period, so look for comments to go into 0:08:49.120 --> 0:08:53.080 say late November early December. But what this does mean 0:08:53.160 --> 0:08:55.000 is that the BOSO three endgame is not going to 0:08:55.000 --> 0:08:58.000 be finalized in twenty twenty four, and it's going to 0:08:58.040 --> 0:08:59.560 be punted to twenty twenty five. 0:09:00.120 --> 0:09:00.320 Now. 0:09:00.480 --> 0:09:03.480 Chairman Powell is insinuating that it's going to be finalized 0:09:03.480 --> 0:09:05.920 in the early half of twenty twenty five, and we 0:09:06.000 --> 0:09:08.040 think our ultimate impact is going to be around seven 0:09:08.080 --> 0:09:11.640 to ten percent increase in capital requirements for those large banks. 0:09:11.920 --> 0:09:14.040 But it's important to note that this is the FED view, 0:09:14.320 --> 0:09:16.560 this is not the FDIC or the Office of the 0:09:16.559 --> 0:09:19.800 Comptroller of the Currency view, and they may disagree. Now 0:09:19.840 --> 0:09:24.600 if they disagree, essentially just means stagnation, nothing happens. So ultimately, 0:09:24.640 --> 0:09:27.239 I think what will happen is is that this reproposal 0:09:27.280 --> 0:09:31.000 will come out. Obviously, it's depending on President Biden winning 0:09:31.040 --> 0:09:33.199 the election. And President Trump wins, the head of the 0:09:33.240 --> 0:09:35.839 OCC would almost immediately flip and they would not be 0:09:35.960 --> 0:09:38.959 on board with this. But if President Biden does win, 0:09:39.000 --> 0:09:43.000 you're looking at a much less dramatic, less much less 0:09:43.120 --> 0:09:47.319 impacting Bossel three endgame rule being finalized, probably in the second. 0:09:47.080 --> 0:09:48.760 Or third quarter of twenty twenty five. 0:09:49.240 --> 0:09:51.760 So I know that's a lot, but I'll pass it 0:09:51.800 --> 0:09:52.160 back to you. 0:09:52.640 --> 0:09:56.320 No, that's good stuff, thanks, Nathan. All Right, we'll stick 0:09:56.320 --> 0:09:59.400 with financials and I'll jump in here and talk about 0:10:00.240 --> 0:10:02.480 just a few cases and issues that I'm watching in 0:10:02.520 --> 0:10:04.880 the second half. You know, there's obviously a number of 0:10:04.920 --> 0:10:08.360 lawsuits we're tracking that are challenging financial rules that the 0:10:08.400 --> 0:10:13.360 Biden administration has promulgated. And with the demise of judicial 0:10:13.360 --> 0:10:17.160 deference to regulatory agencies, you know, as exemplified by the 0:10:17.200 --> 0:10:20.400 Supreme Courts overruling of the Chevron doctrine just about ten 0:10:20.480 --> 0:10:23.640 days ago. We expect a lot of those lawsuits to succeed. 0:10:23.920 --> 0:10:25.800 I want to focus on one of them, and that's 0:10:25.840 --> 0:10:29.720 a lawsuit by bank trade groups challenging the CFPB's credit 0:10:29.720 --> 0:10:32.520 card late fee rule. I've spoken about this case on 0:10:32.559 --> 0:10:35.280 this podcast previously, but I want to give another update 0:10:35.320 --> 0:10:38.640 because it's a pretty active docket and there's things happening 0:10:38.679 --> 0:10:42.600 all the time. I'll give some background first. The CFPB, 0:10:42.720 --> 0:10:45.640 of course, is the Consumer Financial Protection Bureau that's the 0:10:45.679 --> 0:10:49.080 main regulator for the consumer finance sector. In March, the 0:10:49.160 --> 0:10:52.400 agency issued a rule that would effectively reduce the typical 0:10:52.480 --> 0:10:56.240 late fee that credit card issuers charge from thirty two 0:10:56.280 --> 0:11:00.439 dollars down to eight dollars. That would eliminate roughly billion 0:11:00.480 --> 0:11:03.400 dollars in credit card late fees for credit card issuers 0:11:03.400 --> 0:11:06.560 with at least one million open accounts. So think of 0:11:06.679 --> 0:11:11.200 credit card issuers like JP Morgan, American Express, City Bank, 0:11:11.320 --> 0:11:16.680 Capital One, Bank of America, Discover, Synchrony Financial, etc. The 0:11:16.720 --> 0:11:19.480 bank trade groups are challenging the rule in court, and 0:11:19.559 --> 0:11:22.720 they've succeeded so far in putting the rule on hold. 0:11:23.080 --> 0:11:26.880 They've also succeeded in rebuffing CFPB efforts to move the 0:11:26.920 --> 0:11:30.480 case to Washington, d C. From Texas. Texas, of course, 0:11:30.559 --> 0:11:35.920 is a much more favorable jurisdiction and venue, So as 0:11:35.920 --> 0:11:38.439 of right now, the case is in Texas Federal Court, 0:11:38.480 --> 0:11:41.679 which we think will ultimately help the bank trade groups 0:11:42.080 --> 0:11:44.480 in terms of things we're watching in two h In 0:11:44.520 --> 0:11:48.760 this litigation, First, the CFPB is trying to lift the 0:11:48.840 --> 0:11:51.880 preliminary injunction of the rule that the court entered earlier 0:11:51.920 --> 0:11:55.520 in the case. That injunction was based on a Fifth 0:11:55.559 --> 0:11:58.600 Circuit decision in twenty twenty three that found the CFPB's 0:11:58.640 --> 0:12:03.079 funding mechanism on constitutional But since then the Supreme Court 0:12:03.120 --> 0:12:05.720 has reversed the Fifth Circuit on that issue. So the 0:12:05.760 --> 0:12:08.600 banks now need to show that they're likely to prevail 0:12:08.640 --> 0:12:12.600 in this litigation, but you know, for different reasons, and 0:12:12.679 --> 0:12:15.240 I think they have good arguments, namely that the CFPB 0:12:15.440 --> 0:12:19.640 exceeded its statutory authority in issuing the rule. The argument 0:12:19.679 --> 0:12:23.960 here being that the CFPB didn't sufficiently consider factors it 0:12:24.040 --> 0:12:28.000 was supposed to under the relevant statutes, things like post 0:12:28.120 --> 0:12:33.320 charge off costs, the turrent effects, and cardholder conduct. So 0:12:33.800 --> 0:12:36.920 you know, the judge actually found these other arguments compelling 0:12:37.000 --> 0:12:40.440 when he issued the preliminary injunction a couple months ago, 0:12:40.640 --> 0:12:42.760 but he didn't actually need to reach the merits of 0:12:42.760 --> 0:12:45.199 them because he ruled on a different basis. But as 0:12:45.240 --> 0:12:48.440 a result, I think he will now have to decide 0:12:48.440 --> 0:12:50.559 on these other arguments, and I think he'll agree with 0:12:50.600 --> 0:12:54.360 the bank trade groups, and as a result, you know, 0:12:54.400 --> 0:12:57.480 I think the bank trade groups will use the same 0:12:57.600 --> 0:13:00.920 arguments to ultimately prevail on the merits of the higher litigation, 0:13:01.360 --> 0:13:04.800 which is why we think they'll win ruling striking down 0:13:05.040 --> 0:13:09.040 this CFIB rule, likely by year end. So that's one 0:13:09.080 --> 0:13:11.800 of the things we're watching in two h The next 0:13:11.800 --> 0:13:14.120 case I want to talk about is the SEC's enforcement 0:13:14.120 --> 0:13:18.000 action against crypto platform Coinbase. Arguably one of the most 0:13:18.080 --> 0:13:20.959 important cases in crypto and it raises a lot of 0:13:21.080 --> 0:13:25.600 very interesting securities laws issues as background. Again, the SEC 0:13:25.640 --> 0:13:29.040 sued Coinbase in June of last year, accusing it of 0:13:29.160 --> 0:13:34.560 violating federal securities laws by essentially allegedly operating as an 0:13:34.679 --> 0:13:39.280 unregistered securities exchange broker and clearing agency. Coinbase has a 0:13:39.320 --> 0:13:42.280 lot of money at stake here, potentially billions of dollars 0:13:42.480 --> 0:13:46.840 representing what the SEC has alleged to be ill gotten 0:13:47.000 --> 0:13:51.640 gains that the agency wants to disgorge. In March, the 0:13:51.720 --> 0:13:55.440 court dismissed one of the SEC claims against the company, 0:13:55.960 --> 0:13:58.560 but it did allow the rest of the case to proceed, 0:13:58.640 --> 0:14:02.079 including the SEC claims that you know, trading of digital 0:14:02.120 --> 0:14:07.720 assets on the coin base platform constituted transactions of unregistered securities. 0:14:08.080 --> 0:14:11.840 This is one of the biggest unresolved legal issues in crypto. 0:14:12.240 --> 0:14:16.959 That is, you know, when do digital asset transactions constitute 0:14:17.000 --> 0:14:20.480 securities transactions which the SEC could then oversee. Of course, 0:14:21.760 --> 0:14:26.480 Coinbase is currently asking for an immediate appeal of that 0:14:26.600 --> 0:14:29.960 March ruling, and that's sort of the next thing we're 0:14:30.000 --> 0:14:33.440 looking for in two h We think Coinbase is a 0:14:33.480 --> 0:14:37.960 good chance of being allowed to appeal immediately, you know, 0:14:38.080 --> 0:14:40.200 rather than having to wait until the end of the case, 0:14:40.200 --> 0:14:42.840 as you often have to do in federal court. And 0:14:42.880 --> 0:14:44.320 the reason I think that is that, you know, the 0:14:44.600 --> 0:14:49.080 legal question at issue really permeates so many crypto crypto 0:14:49.160 --> 0:14:53.440 cases currently, including you know, other SEC cases against companies 0:14:53.480 --> 0:14:58.560 like Binance, Ripple, Krack and Consensus and others. So on 0:14:58.600 --> 0:15:00.960 the merits, you know, I think Base is likely to 0:15:01.080 --> 0:15:06.680 prevail ultimately, but you know, a Merit's ruling is probably 0:15:06.720 --> 0:15:10.360 not coming this year. It could come next year, but 0:15:10.400 --> 0:15:11.880 I don't think it'll be by this by the end 0:15:11.920 --> 0:15:14.920 of this year. And you know the reason I think 0:15:14.920 --> 0:15:18.120 that is, I think the sales of digital assets on 0:15:18.440 --> 0:15:22.800 secondary markets on public exchanges like those on Coinbase don't 0:15:22.880 --> 0:15:26.600 really fit neatly into the Howie test, which is you know, 0:15:26.640 --> 0:15:29.120 comes from a Supreme Court decision in nineteen forty six 0:15:29.440 --> 0:15:33.920 and is used to determine what constitutes an investment contract, 0:15:33.960 --> 0:15:37.920 which is a security. That was actually the main takeaway 0:15:37.960 --> 0:15:41.280 from a very recent decision in the SEC versus Binance case. 0:15:41.440 --> 0:15:45.000 There was also, you know, the takeaway from the Court's 0:15:45.040 --> 0:15:48.480 decision last year in the SEC's case against Ripple, and 0:15:48.640 --> 0:15:51.680 essentially in secondary transactions, you know, I just think there's 0:15:51.960 --> 0:15:55.840 less likely to be a common enterprise or reasonable expectation 0:15:55.920 --> 0:15:58.880 of profits from the efforts of others, both of which 0:15:58.920 --> 0:16:01.640 are key elements of the Howie test. So, you know, 0:16:02.280 --> 0:16:05.360 this area of law is still developing. But the next 0:16:05.400 --> 0:16:08.280 thing to watch in this particular case is whether Coinbase 0:16:08.480 --> 0:16:13.120 can appeal immediately appeal the decision in March that allowed 0:16:13.120 --> 0:16:16.320 part of the SEC's case to go forward. And then 0:16:16.440 --> 0:16:18.480 just lastly, I know I've been talking for a little bit, 0:16:18.480 --> 0:16:21.640 but the last issue I'm keeping an eye on. These 0:16:21.680 --> 0:16:26.080 are a few money laundering probes of various large banks. 0:16:26.640 --> 0:16:30.280 A probe of TD Bank Toronto Dominion is probably the 0:16:30.360 --> 0:16:34.120 highest profile one that we're watching, following the banks four 0:16:34.200 --> 0:16:37.560 hundred and fifty million dollar provision at the end of 0:16:37.680 --> 0:16:42.520 April for the investigation. Now, these probes are handled confidentially, 0:16:42.560 --> 0:16:45.280 so we don't get updates like we do in litigation. 0:16:45.360 --> 0:16:48.320 There's no docket to track, but based on what we 0:16:48.360 --> 0:16:51.240 know so far as well as comparable cases, I think 0:16:51.320 --> 0:16:54.680 TD Bank could face a potential fine of between six 0:16:54.800 --> 0:16:58.280 hundred million dollars and one point one billion dollars, and 0:16:58.320 --> 0:17:03.080 I think the fines could come by year end. We're 0:17:03.120 --> 0:17:05.680 also keeping an eye on a probe of Morgan Stanley 0:17:05.720 --> 0:17:11.239 by several federal agencies. Again, the timing here, you know, 0:17:11.320 --> 0:17:15.199 of a potential resolution is a little less certain, and 0:17:15.240 --> 0:17:18.439 I think, you know, given the conduct here, I think 0:17:18.480 --> 0:17:20.840 it's less egregious as well, so I think fines are 0:17:20.920 --> 0:17:24.320 likely to be under five hundred million dollars from Morgan Stanley. 0:17:24.640 --> 0:17:27.680 And then finally, we've been tracking a US money money 0:17:27.760 --> 0:17:31.600 laundering probe of Swedish bank sweat Bank for a few 0:17:31.640 --> 0:17:34.680 years now. You know, the probes themselves have been going 0:17:34.720 --> 0:17:38.080 on since like twenty twenty, maybe even earlier, and so 0:17:38.119 --> 0:17:40.840 I do think a resolution by by the end of 0:17:40.880 --> 0:17:44.760 this year is a distinct possibility. And my estimate of 0:17:44.800 --> 0:17:47.719 a fine for sweat Bank is between three hundred and 0:17:47.720 --> 0:17:50.439 eighty five million dollars in about seven hundred and seventy 0:17:50.480 --> 0:17:53.560 million dollars, and that's based on the bank's profits during 0:17:53.560 --> 0:17:57.360 the relevant period and a settlement by Danish bank Donska 0:17:57.440 --> 0:18:00.840 Bank with US authorities from a couple of years ago. 0:18:01.119 --> 0:18:02.960 So a lot of things we're watching in terms of 0:18:03.000 --> 0:18:07.240 litigation and also enforcement actions. I'll stop here, but feel 0:18:07.280 --> 0:18:09.440 free to reach out to me with any questions about 0:18:09.440 --> 0:18:13.720 these matters or any other matters concerning litigation in the 0:18:13.720 --> 0:18:17.199 financial sector. All right, So with that, let's move on 0:18:17.280 --> 0:18:21.880 to a different area. Jen, Let's bring you into talk antitrust. 0:18:22.359 --> 0:18:25.560 As always, you know, there's a ton going on. Let's 0:18:25.560 --> 0:18:28.600 start with Google. There's a pair of DOJ cases against 0:18:28.640 --> 0:18:31.720 the company you're watching. There's the Epic Games case, why 0:18:31.720 --> 0:18:33.600 don't you come in and tell us what you're watching? 0:18:33.640 --> 0:18:36.320 And sure, thanks Elliott. I mean, it's so much going 0:18:36.320 --> 0:18:38.399 on in two h with respect to politics and the 0:18:38.440 --> 0:18:41.959 financial markets, and I guess likewise and anti trust. So 0:18:42.080 --> 0:18:43.760 and as you said, most of it has to do 0:18:43.840 --> 0:18:47.480 with Google. The company has been accused of monopolistic conduct 0:18:47.520 --> 0:18:50.120 with respect to three separate different parts of its business. 0:18:50.160 --> 0:18:53.080 It's search engine, it's ad tech stack. I'll get into 0:18:53.080 --> 0:18:56.080 what that is later, and it's play store. And there 0:18:56.119 --> 0:18:59.200 are lawsuits targeting all of these businesses that are ongoing, 0:18:59.240 --> 0:19:01.600 and they all have important catalyst in the second half. 0:19:01.600 --> 0:19:04.600 So let me start with search. So the Justice Department 0:19:04.600 --> 0:19:07.439 had to accuse Google of monopolistic conduct in search and 0:19:07.440 --> 0:19:11.800 search advertising because mostly it pays third parties billions of 0:19:11.840 --> 0:19:14.800 dollars every year to set Google Search as the default 0:19:14.840 --> 0:19:17.920 search engine pretty much wherever you have an Internet access point, 0:19:18.000 --> 0:19:22.280 so like behind Apple Safari browser or behind Mozilla's Firefox browser. 0:19:22.560 --> 0:19:26.040 And the DOJ says this forecloses search engine competitors and 0:19:26.119 --> 0:19:29.000 importantly it denies them the ability to get the scale 0:19:29.040 --> 0:19:32.160 they need to improve. Most people like Google Search better, 0:19:32.240 --> 0:19:35.439 let's say, than Bing, but they say, well, search engines 0:19:35.520 --> 0:19:37.720 learn and improve with every single search that's done, and 0:19:37.760 --> 0:19:39.400 if they can't get in there and do the searches, 0:19:39.400 --> 0:19:42.160 they can't improve. So in this one, the trial ended 0:19:42.200 --> 0:19:45.720 in late twenty twenty three and the closing arguments were 0:19:45.720 --> 0:19:49.200 in early May, So I do expect a decision soon. 0:19:49.400 --> 0:19:51.520 I mean it could be any day. I sort of 0:19:51.520 --> 0:19:53.480 think it's going to be later this year, but likely 0:19:53.560 --> 0:19:57.200 this year. We're slightly leaning toward the DOJ winning this 0:19:57.240 --> 0:20:00.600 one on liability only, and if that that's the case, 0:20:00.640 --> 0:20:03.680 we have to restart proceedings on remedy. I mean, discovery 0:20:03.720 --> 0:20:05.600 has to be done on what the proper remedy is. 0:20:05.960 --> 0:20:08.200 Expert work has to be done. There will be another hearing, 0:20:08.240 --> 0:20:11.600 So that's very much a next year event. Now let's 0:20:11.600 --> 0:20:15.439 talk about Google's Playstore. So Google lost in a jury 0:20:15.480 --> 0:20:18.640 trial in December of twenty twenty three against Epic Games. 0:20:19.800 --> 0:20:22.720 The jury had decided that Google's refusal to allow, or 0:20:22.720 --> 0:20:25.040 at least google would make it difficult. I shouldn't say 0:20:25.080 --> 0:20:28.600 they completely refused to allow third party app stores on 0:20:28.680 --> 0:20:32.879 Android devices and third party payment processors within its own playstore. 0:20:33.200 --> 0:20:37.040 That this conduct is unlawful, and so that's the decision 0:20:37.080 --> 0:20:39.600 even though Google is appealing. Now the judge is going 0:20:39.640 --> 0:20:42.040 to have to decide on the remedies, and that phase 0:20:42.119 --> 0:20:44.919 is ongoing, and I really suspect the judge is going 0:20:44.960 --> 0:20:47.399 to order the company to allow third party app stores 0:20:47.400 --> 0:20:51.160 on Android devices and allow for alternative payment services within 0:20:51.240 --> 0:20:54.520 the pay store. The judge might even go as far 0:20:54.560 --> 0:20:57.479 as requiring Google to share its whole catalog of apps 0:20:57.840 --> 0:21:02.600 with third party app stores with developers' permissions for some 0:21:02.680 --> 0:21:04.399 amount of time to sort of give a leg up 0:21:04.440 --> 0:21:06.960 to these new third party app stores. That decision is 0:21:06.960 --> 0:21:08.879 probably going to come out this year, but I should 0:21:08.960 --> 0:21:12.199 say that given that Google's appealing, that if there's a remedy, 0:21:12.200 --> 0:21:15.639 it's going likely going to be stayed. And now, last 0:21:15.720 --> 0:21:18.080 is this ad tech stack matter. This is a really 0:21:18.080 --> 0:21:22.000 complex market and there are actually three different lawsuits over 0:21:22.280 --> 0:21:24.680 ads tech stack, but I'm just going to talk about 0:21:24.680 --> 0:21:26.639 one by the DOJ in a group of states because 0:21:26.640 --> 0:21:29.399 that's going to trial in the Eastern District of Virginia 0:21:29.480 --> 0:21:32.760 in September. And the judges acted really really fast in 0:21:32.760 --> 0:21:35.639 this case, so a decision this year is even possible. 0:21:35.920 --> 0:21:38.040 But because the matter is very complex, I kind of 0:21:38.080 --> 0:21:40.960 think first half twenty five is more likely. So the 0:21:41.000 --> 0:21:44.840 ad tech stack group of technologies include two where Google 0:21:45.359 --> 0:21:49.040 allegedly has dominance, a publisher ad server and an ad exchange, 0:21:49.040 --> 0:21:52.480 and they obtain these technologies be an acquisition of a 0:21:52.520 --> 0:21:56.080 company called double Click. Now, the publisher ad Server acts 0:21:56.119 --> 0:21:59.960 as a manager for large publishers AD inventory that's impressions 0:22:00.119 --> 0:22:02.840 websites for ads, and the AD exchange is a real 0:22:02.880 --> 0:22:06.200 time auction marketplace that matches up multiple buyers and sellers 0:22:06.240 --> 0:22:09.280 on an impression by impression basis. Now, there's this really 0:22:09.359 --> 0:22:13.480 long laundry list of very specific and kind of detailed 0:22:13.480 --> 0:22:17.520 and complex anti competitive conduct. The DJ alleges Google has 0:22:17.600 --> 0:22:20.439 engaged in all of which kind of results in a 0:22:20.520 --> 0:22:24.080 manipulation of the whole process by Google to benefit itself, 0:22:24.240 --> 0:22:27.760 take fees all along the way, and it access to 0:22:27.840 --> 0:22:30.479 the detriment of publishers and advertisers. And this is an 0:22:30.480 --> 0:22:33.040 important case because the DJ is really gunning for a 0:22:33.040 --> 0:22:36.679 structural remedy the divestiture of Google's publisher ad server and 0:22:36.840 --> 0:22:39.359 or at exchange. Now that's a really tall order for 0:22:39.400 --> 0:22:42.320 a judge, and this is a really complex, complex case. 0:22:42.640 --> 0:22:44.960 I think it's probably unlikely that that would be the 0:22:45.000 --> 0:22:47.240