WEBVTT - DOJ Ramping Up Probe Into Trump's Inner Circle 0:00:03.160 --> 0:00:07.960 This is Bloomberg Law with June Bresso from Bloomberg Radio. 0:00:11.200 --> 0:00:14.840 Frustration with the pace of the Johnstice Department's investigation into 0:00:14.840 --> 0:00:18.560 the January sixth attack on the Capitol has spilled over 0:00:18.640 --> 0:00:23.040 into public criticism, including this direct message in March for 0:00:23.160 --> 0:00:29.040 Attorney General Merrick Garland from Democratic Congresswoman Elaine Luria. Attorney 0:00:29.080 --> 0:00:33.720 General Garland, do your job so that we can do ours. 0:00:34.040 --> 0:00:38.240 And a federal judge, David Carter, has basically given prosecutors 0:00:38.320 --> 0:00:41.320 a blueprint for how they can indict the former president 0:00:41.640 --> 0:00:44.800 and wrote, based on the evidence, the court finds it 0:00:44.880 --> 0:00:48.680 more likely than not that President Trump corruptly attempted to 0:00:48.760 --> 0:00:54.240 obstruct the joint session of Congress on January six. It's 0:00:54.240 --> 0:00:56.800 been a year and a half since thousands of Trump 0:00:56.880 --> 0:01:00.840 die hards overran the capital, and the House is January six. 0:01:00.880 --> 0:01:04.600 Committee will hold hearings in primetime Thursday. But as far 0:01:04.680 --> 0:01:08.840 as the Justice Department's massive investigation into the most serious 0:01:08.880 --> 0:01:13.160 attack on American democracy in the modern era, seventeen months 0:01:13.200 --> 0:01:17.800 in and prosecutors have scored relatively few felony convictions and 0:01:17.840 --> 0:01:21.840 face growing pressure to go after higher level targets, including 0:01:21.880 --> 0:01:25.920 the organizers and the former president himself. However, there are 0:01:26.000 --> 0:01:30.080 indications that the investigation is entering a more aggressive phase 0:01:30.400 --> 0:01:34.959 with respect to potential felonies committed by lawyers and organizers 0:01:35.000 --> 0:01:39.399 ahead of January six to stop the vote certification. Joining 0:01:39.440 --> 0:01:43.080 me is Chris Strom Bloomberg Legal Reporter. Give a sort 0:01:43.080 --> 0:01:47.000 of the scorecard for the investigation so far. You know 0:01:47.040 --> 0:01:51.360 how many prosecutions, how many convictions? Give a sort of 0:01:51.400 --> 0:01:55.360 the scorecard for the investigation so far. You know how 0:01:55.400 --> 0:02:01.240 many prosecutions, how many convictions. The investigation has been criticized 0:02:01.280 --> 0:02:04.080 for moving at the glacial pace, and I think the 0:02:04.160 --> 0:02:07.600 statistics back up some of the criticism. So far, as 0:02:07.600 --> 0:02:10.640 the Department has brought charges against about eight hundred and 0:02:10.680 --> 0:02:14.560 fifty individuals, but by far most of the charges are 0:02:14.840 --> 0:02:18.480 for misdemeanors on the day of January six, such as, 0:02:18.520 --> 0:02:22.400 you know, illegally entering the Capitol building, as opposed to 0:02:22.760 --> 0:02:27.480 any kind of major offenses like felony offenses. Those offenses 0:02:27.520 --> 0:02:30.760 are much more limited in terms of the charges that 0:02:30.840 --> 0:02:34.440 the Department is bringing. So far, the department has charged 0:02:34.639 --> 0:02:39.720 about two hundred fifty people with assaulting or resisting officers, 0:02:39.880 --> 0:02:42.600 which is one of the most serious charges that has 0:02:42.639 --> 0:02:46.000 been brought. In terms of resolutions to some of these cases, 0:02:46.200 --> 0:02:50.080 two hundred fifty people have pleaded guilty to misdemeanors and 0:02:50.560 --> 0:02:55.040 sixty impleatly guilty to felony. In terms of sentencing, by far, 0:02:55.280 --> 0:03:00.160 most people are getting probation or finds that are very limited, 0:03:00.440 --> 0:03:04.680 and the most serious punishment so far has gone to 0:03:04.800 --> 0:03:09.080 one person who was sentenced to about five years in prison, 0:03:09.200 --> 0:03:12.880 So that's a significant prison sentence, but that's an exception. 0:03:13.120 --> 0:03:16.680 It's believed that two thousand to two thousand people are 0:03:16.760 --> 0:03:19.480 ultimately going to be charged, but the Department has only 0:03:19.520 --> 0:03:22.440 brought charges against eight hundred and fifty people so far, 0:03:22.760 --> 0:03:27.200 and there's been no charges brought for the potentially criminal 0:03:27.320 --> 0:03:31.880 activities that were taking place before January six by former 0:03:31.919 --> 0:03:36.720 President Trump and his lawyers and his inner circle in 0:03:36.840 --> 0:03:41.560 terms of bringing charges related to creating false electors or 0:03:41.680 --> 0:03:46.440 trying to alter vote, or organizing and fundraising to prevent 0:03:46.520 --> 0:03:51.320 the certification of the election. Attorney General Merrick Garland has said, 0:03:51.760 --> 0:03:55.360 I think several times that they're going to follow the 0:03:55.440 --> 0:03:58.960 evidence wherever it leads, but there seems to be no 0:03:59.120 --> 0:04:04.400 confidence that they will pursue the former president, if that's 0:04:04.400 --> 0:04:07.880 where the evidence leads, well, there's an interesting dichotomy that 0:04:07.960 --> 0:04:12.840 that's happening with the investigation now. The charges against people 0:04:12.920 --> 0:04:17.039 who had stormed the capital in January six are moving very, 0:04:17.160 --> 0:04:22.120 very slow and have seemed to stagnate. But the investigative 0:04:22.160 --> 0:04:26.160 activity against the small group of people who were part 0:04:26.200 --> 0:04:30.720 of Trump's inner circle who were working to overturn the election, 0:04:31.080 --> 0:04:34.919 the investigative activity against them is actually increasing at a 0:04:34.920 --> 0:04:38.920 greater pace. The Justice Department has started issuing grand jury 0:04:39.000 --> 0:04:43.599 subpoenas for information about organizing and fundraising activities in the 0:04:43.680 --> 0:04:47.720 days before January six, about efforts to create false electors 0:04:47.880 --> 0:04:52.360 in key states, and the Justice Department is now increasing 0:04:52.560 --> 0:04:55.840 the pace of the investigation in the amount of investigative 0:04:55.880 --> 0:05:01.279 activity into the actions of Trump and the key people 0:05:01.600 --> 0:05:04.279 that we're working with Trump to try to overturn the election. 0:05:05.080 --> 0:05:08.960 Deputy Attorney General Lisa Monico said, it's the most complex 0:05:09.000 --> 0:05:14.640 and wide ranging investigation that I've seen in the Department's history. 0:05:14.640 --> 0:05:19.360 Why so so current and former law enforcement officials, including 0:05:19.440 --> 0:05:24.160 police of Monico will say that the volume of material 0:05:24.279 --> 0:05:26.200 that has to be sorted through in order to bring 0:05:26.240 --> 0:05:31.599 criminal charges is immense they are looking through terabytes of 0:05:31.839 --> 0:05:38.679 data that includes surveillance footage, that includes mobile device location history, 0:05:38.720 --> 0:05:43.480 that includes social media activity, and they have to piece 0:05:43.520 --> 0:05:47.800 together these disparate pieces of information and connect them to 0:05:48.360 --> 0:05:53.720 an individual who they positively identify in order to bring 0:05:53.800 --> 0:05:57.400 charges against one person. And so just bringing charges against 0:05:57.400 --> 0:06:00.960 one person for something they did on January six is 0:06:01.040 --> 0:06:05.120 a complex process that investigators have to go through because 0:06:05.279 --> 0:06:08.880 they need to bring charges that they believe they will 0:06:08.880 --> 0:06:11.400 be able to prove in court to a jury and 0:06:11.400 --> 0:06:14.880 that will withstand the criticism of judges and defense lawyers. 0:06:14.960 --> 0:06:18.160 So the amount of material in order to bring charges 0:06:18.839 --> 0:06:23.320 is significant for the activity on January six. And then 0:06:23.360 --> 0:06:27.880 when you add in the additional investigative activity to look 0:06:27.920 --> 0:06:29.720 at what was happening in the days and weeks leading 0:06:29.760 --> 0:06:33.839 up to January six with efforts to prevent the certification 0:06:33.880 --> 0:06:36.320 of the election and overturn the results of the election, 0:06:36.600 --> 0:06:39.520 that is a whole another can of worms that the 0:06:39.560 --> 0:06:43.640 Department is undertaking now, which includes grand jury subpoenas to 0:06:43.680 --> 0:06:49.920 get information about activities and communications that Trump and Trump 0:06:49.960 --> 0:06:53.719 allies and Trump lawyers were doing. And so the Department 0:06:54.000 --> 0:06:57.840 is only really beginning that second process of getting at 0:06:58.120 --> 0:07:02.359 information related to the activities that were taking place in 0:07:02.360 --> 0:07:06.320 the days and weeks before January six, and the Department 0:07:06.320 --> 0:07:10.760 has to collect that information and is facing resistance from 0:07:10.840 --> 0:07:13.560 some of the people who are being subpoenas, and so 0:07:13.680 --> 0:07:16.880 the Department has to go to court in order to 0:07:16.920 --> 0:07:21.160 try to win rulings to force people to turn over 0:07:21.160 --> 0:07:24.040 that information. And then the department has to use that 0:07:24.120 --> 0:07:27.400 information and sort through it and determine what, if any, 0:07:27.440 --> 0:07:31.200 criminal charges can actually be brought again with the standard 0:07:31.480 --> 0:07:35.280 of proving to a jury that crimes were committed. So 0:07:35.640 --> 0:07:39.520 in totality, the amount of information and the activity of 0:07:39.560 --> 0:07:44.280 the investigation is what people describe as the most significant 0:07:44.320 --> 0:07:48.080 undertaking that the Department has ever has ever done. While 0:07:48.080 --> 0:07:51.520 we're on this point, do we know why the department 0:07:51.600 --> 0:07:58.720 decided not to file charges against Mark Meadows and Dance Cavino. 0:07:59.200 --> 0:08:03.040 So the department has provided very limited information about its 0:08:03.080 --> 0:08:07.520 decision making process and specifically with regard to Meadows and Scavino. 0:08:08.160 --> 0:08:11.560 The Department sent a letter to the Health Committee that 0:08:11.600 --> 0:08:16.400 did the criminal referrals, telling the committee that a prosecution 0:08:16.680 --> 0:08:20.240 is not is not justified because Meadows and Scoveno have 0:08:20.440 --> 0:08:24.280 provided some cooperation to the committee and to the Department, 0:08:24.560 --> 0:08:29.720 and also that they also have executive privileged claim and 0:08:29.760 --> 0:08:33.439 so the Department hasn't provided a full explanation, but those 0:08:33.440 --> 0:08:36.000 are two reasons that that they've cited. How large a 0:08:36.040 --> 0:08:40.079 staff does d o J have handling the investigation in 0:08:40.200 --> 0:08:46.439 the cases, so the investigation is involved d o J 0:08:46.600 --> 0:08:51.480 staff across the country, including FBI field offices across the country. 0:08:51.800 --> 0:08:55.440 The number of people who are actually dedicated to the 0:08:55.480 --> 0:08:59.480 investigation full time is actually pretty small. It's about fifty 0:08:59.520 --> 0:09:03.080 people on a full time basis. But the department rotates 0:09:03.080 --> 0:09:07.480 in people as needed for certain cases, and it assigns 0:09:07.840 --> 0:09:12.200 field offices and u S attorney offices to people in 0:09:12.240 --> 0:09:16.560 those offices across the country to do certain work as needed. 0:09:16.840 --> 0:09:19.559 And the Justice Department is looking for thirty four million 0:09:19.640 --> 0:09:24.360 dollars to hire a hundred thirty one more lawyers to 0:09:24.440 --> 0:09:28.360 work on the case. Now. Just this week, prosecutors added 0:09:28.520 --> 0:09:32.880 charges of seditious conspiracy to its case against members of 0:09:32.920 --> 0:09:36.680 the Proud Boys. Do we know why they're amping up 0:09:36.760 --> 0:09:40.360 the charges? Does it tell you anything? Yeah? The new 0:09:40.440 --> 0:09:42.880 charges against against members of the Proud Boys are the 0:09:42.920 --> 0:09:46.040 most significant charges that the Department has brought to dates. Uh, 0:09:46.160 --> 0:09:50.319 the seditious conspiracy charge is the most significant charge that 0:09:50.400 --> 0:09:53.600 the Department has brought. It's been brought against a few 0:09:53.600 --> 0:09:57.360 members of the oath Keepers, and now it's been added 0:09:57.440 --> 0:10:01.040 to previous charges against some members of the Proud Boys. 0:10:01.160 --> 0:10:04.920 And so what it signals is that, um, the government 0:10:05.240 --> 0:10:11.119 is getting more information about how many people were involved 0:10:11.360 --> 0:10:15.760 in actively plotting to stop the certification of the election 0:10:16.600 --> 0:10:20.280 and has what the Department believes is enough evidence to 0:10:20.320 --> 0:10:23.400 prove that in court. And so it just shows the 0:10:23.440 --> 0:10:28.280 progression of the investigation and that the Department will bring 0:10:28.760 --> 0:10:33.760 the most significant charges possible when it's warranted. You write 0:10:33.760 --> 0:10:36.679 that among the cases well along the courts, the Justice 0:10:36.720 --> 0:10:40.520 Department's biggest test will come in August. Tell us about that. 0:10:40.960 --> 0:10:43.320 So in August, the members of the Proud Boys are 0:10:43.320 --> 0:10:46.280 going to go on trial. The Justice Department will will 0:10:46.440 --> 0:10:50.520 begin a trial against members of the Proud Boys on 0:10:50.800 --> 0:10:55.840 felony charges of obstructing Congress from from certifying the election. 0:10:56.360 --> 0:10:59.120 The new charges have been added to members of the 0:10:59.160 --> 0:11:03.040 Proud Boys or seditious conspiracy. It's not clear that the 0:11:03.080 --> 0:11:06.720 Department is going to proceed with those charges in August, 0:11:06.760 --> 0:11:09.840 but the Department does plan to begin the first trial 0:11:10.400 --> 0:11:17.880 alleging a conspiracy against one of the you know, extremist 0:11:17.960 --> 0:11:23.680 organizations that were actively working to stop the certification. Has 0:11:23.720 --> 0:11:27.600 the Department lost any of the trials. The Department has 0:11:27.640 --> 0:11:30.880 not lost any jury trials. The department lost one bench 0:11:30.960 --> 0:11:33.040 trial that that is the trial that was before a 0:11:33.120 --> 0:11:37.640 judge and it was on a misdemeanor that the judge 0:11:38.080 --> 0:11:42.720 acquitted the defendant and that's the only trial that the 0:11:42.760 --> 0:11:46.280 Department has lost. But there's only been six trials. Three 0:11:46.320 --> 0:11:51.800 oath keepers pleaded guilty to seditious conspiracy. Are they testifying 0:11:51.960 --> 0:11:55.240 in any of the trials or are they just helping 0:11:55.280 --> 0:11:58.280 the government behind the scenes, because there is a trial 0:11:58.320 --> 0:12:03.120 of oath keepers on seditious conspiracy in September. Right now, 0:12:03.360 --> 0:12:05.880 we don't have any statement that they're going to testify 0:12:05.960 --> 0:12:08.600 during the trials. They have earned in cooperation agreements with 0:12:08.640 --> 0:12:12.680 the government, so right now is providing investigatives information behind 0:12:12.720 --> 0:12:16.880 the scenes. So from your reporting, the Justice Department is 0:12:17.200 --> 0:12:22.640 entering a more aggressive phase of the investigation. There's kind 0:12:22.640 --> 0:12:26.480 of two massive investigations that are that are going on. 0:12:26.480 --> 0:12:28.880 One is very public in the sense that it's an 0:12:28.920 --> 0:12:31.959 investigation to what happened on January six in the attack 0:12:32.000 --> 0:12:35.120 on the Capitol, and that's where all of the charges 0:12:35.200 --> 0:12:37.560 have focused so far. But the other part of the 0:12:37.600 --> 0:12:42.080 investigation is now picking up momentum, which is looking at 0:12:42.640 --> 0:12:47.439 the conspiracy by Trump and his allies to come up 0:12:47.520 --> 0:12:51.679 with ways to prevent the certification of the election in 0:12:51.720 --> 0:12:56.320 the days and weeks before January six, which includes creating 0:12:56.360 --> 0:13:00.120 false electors, and the Department has now shown that it 0:13:00.400 --> 0:13:05.600 is actively investigating that element of the whole effort to 0:13:05.720 --> 0:13:09.200 stop the election certification. Thanks for being on the show, Chris. 0:13:09.559 --> 0:13:15.000 That's Chris Strom. Bloomberg legal reporter Elon Musk is threatening 0:13:15.040 --> 0:13:17.960 to walk away from his deal to buy Twitter if 0:13:18.000 --> 0:13:20.960 the social network doesn't do more to prove that its 0:13:21.040 --> 0:13:24.800 users are real people. In the securities filing on Monday, 0:13:25.000 --> 0:13:27.920 Musk said he thinks Twitter is in material breach of 0:13:27.960 --> 0:13:31.560 their merger agreement by not meeting his demands for more 0:13:31.600 --> 0:13:36.280 information about spam and fake accounts. Complicating Musk's claims is 0:13:36.320 --> 0:13:39.920 the fact that he's been complaining about Twitter's bots publicly 0:13:40.320 --> 0:13:42.720 since before he made an offer to buy the company. 0:13:43.040 --> 0:13:46.360 Here's Mosk at a Ted Talk in April. Well, a 0:13:46.440 --> 0:13:50.240 top priority I have I would have is eliminating the 0:13:50.760 --> 0:13:54.400 spam and scam butts um and the butt armies that 0:13:54.559 --> 0:13:59.760 are on Twitter. Um. You know, I think I think 0:13:59.880 --> 0:14:05.640 these these fun influence that they're not there, they make 0:14:05.679 --> 0:14:10.400 the product much worse. Um if I you know, if 0:14:10.400 --> 0:14:16.160 I had a dose coin for every cryptoscataway soul. The 0:14:16.240 --> 0:14:19.000 problem for a mosque is not only that the merger 0:14:19.080 --> 0:14:22.320 includes a one billion dollar breakup fee, but that he 0:14:22.360 --> 0:14:26.200 can't just walk away by paying that The agreement includes 0:14:26.240 --> 0:14:30.160 a specific performance provision that allows Twitter to force Musk 0:14:30.240 --> 0:14:33.920 to consummate the deal in court if necessary. My guest 0:14:34.000 --> 0:14:37.600 is Eric Tallely, a professor at Columbia Law School. Tell 0:14:37.680 --> 0:14:42.000 me about this security filing on Monday. So this was 0:14:42.040 --> 0:14:46.120 a letter from Elon Musk's attorney to Twitter. It probably 0:14:46.760 --> 0:14:49.520 wasn't even something that had to be filed as an 0:14:49.560 --> 0:14:53.360 SEC filing. This was a type of a private correspondence 0:14:53.440 --> 0:14:56.880 that wouldn't necessarily be required to be sent out to 0:14:56.920 --> 0:14:59.560 all public investors. But of course a lot of times 0:14:59.600 --> 0:15:02.080 people do that if they want more optics for it 0:15:02.120 --> 0:15:04.840 as well. So I view this as a type of 0:15:04.880 --> 0:15:08.640 correspondence that was intended not just for Twitter, but also 0:15:08.760 --> 0:15:12.680 for a broader audience. But the lawyers saying that Twitter 0:15:12.800 --> 0:15:17.600 breached their agreement by not meeting more demands for information 0:15:17.600 --> 0:15:21.680 about spam and fake accounts. So is this a legitimate 0:15:22.480 --> 0:15:27.360 claim that his lawyer is making. It could be in theory, 0:15:27.600 --> 0:15:30.680 depending on the nature of the context of the claim. 0:15:31.200 --> 0:15:34.400 But this context already has some history behind it. So 0:15:34.840 --> 0:15:38.880 Elon Musk has now for weeks been talking about the 0:15:38.920 --> 0:15:43.000 spam and bought account issues that have caused him to 0:15:43.080 --> 0:15:46.440 reconsider whether he wants to go forward with this transaction. 0:15:46.960 --> 0:15:49.640 But the way that he had been phrasing this that 0:15:49.720 --> 0:15:52.240 didn't really line up with the contract that he signed. 0:15:52.240 --> 0:15:55.920 The contract that he signed didn't really directly allow him 0:15:55.960 --> 0:15:59.280 to walk away just because there were spam or bought accounts. 0:15:59.280 --> 0:16:02.560 In fact, he was loudly proclaiming that was the reason 0:16:02.600 --> 0:16:04.600 that he should buy Twitter, so that he could get 0:16:04.680 --> 0:16:08.200 rid of the spam and bought accounts. So the newest 0:16:08.680 --> 0:16:11.920 strategy that he's undertaken, the one that you know clearly 0:16:11.960 --> 0:16:14.040 has a little bit of involved in by his lawyer, 0:16:14.480 --> 0:16:17.360 is to focus on a different part of the contract, 0:16:17.760 --> 0:16:22.040 but one that still relates to his already professed concern 0:16:22.120 --> 0:16:27.080 about spam accounts, and that's a disclosure obligation that Twitter 0:16:27.200 --> 0:16:30.840 has to make if Musk makes information request to them, 0:16:31.320 --> 0:16:34.760 And in this case, Musk had requested more information about 0:16:34.800 --> 0:16:39.080 how they verify the fraction of accounts at Twitter that 0:16:39.120 --> 0:16:43.480 our spam accounts, and presumably Twitter has been responding to 0:16:43.520 --> 0:16:47.520 those requests for information. This letter states that at least 0:16:47.520 --> 0:16:50.760 in Elon Musk's view, they have not responded adequately, and 0:16:50.800 --> 0:16:54.360 their responses have been so inadequate so as to breach 0:16:54.720 --> 0:16:58.800 the contract from their perspective. Now, that's an interesting move 0:16:59.000 --> 0:17:03.480 because it now re focuses the attention on the conduct 0:17:03.720 --> 0:17:06.320 of Twitter. But we don't know an awful lot about 0:17:06.400 --> 0:17:09.600 exactly what the conduct of Twitter has been. It's pretty 0:17:09.600 --> 0:17:12.560 clear they really want to close this deal. It's pretty 0:17:12.560 --> 0:17:15.960 clear that they have the incentive to try to play ball. 0:17:16.200 --> 0:17:19.280 If there are various types of request for information, they're 0:17:19.280 --> 0:17:22.800 made forward by the same token. Twitter is also under 0:17:22.880 --> 0:17:28.520 a contractual obligation itself to avoid making disclosures that would 0:17:28.600 --> 0:17:31.840 breach someone's privacy rights, or that would be illegal, or 0:17:31.880 --> 0:17:36.280 that would ultimately be inconsistent with their long term strategic 0:17:36.800 --> 0:17:39.560 positioning and so there may be some sort of situations 0:17:39.560 --> 0:17:42.760 where Twitter had said to Musk, yeah, we can give 0:17:42.800 --> 0:17:45.400 you some information, but we can't give you so much 0:17:45.400 --> 0:17:48.359 information that it would essentially undermine our ability to be 0:17:48.400 --> 0:17:52.000 a competitor in this in this space, or would violate 0:17:52.080 --> 0:17:56.639 some regulation or law, or might undermine someone's privacy rights. 0:17:56.920 --> 0:17:58.840 And so my guess is at least viewed in a 0:17:58.960 --> 0:18:02.560 microscope that to where this conflict really is living. But 0:18:02.640 --> 0:18:04.320 in some sense this is all a bit of a 0:18:04.359 --> 0:18:07.199 side show that is fronting for some buyer's remorse that 0:18:07.320 --> 0:18:09.960 Elon Musk, no doubt has having signed up a deal 0:18:10.000 --> 0:18:12.719 for fifty four dollars for a company that's in a 0:18:12.720 --> 0:18:14.840 sector that has been somewhat in free fall for the 0:18:14.920 --> 0:18:18.400 last couple of months. So the context in this situation 0:18:18.880 --> 0:18:21.600 is that everyone kind of knew that he was desperately 0:18:21.640 --> 0:18:23.720 looking around for a way to either get out of 0:18:23.720 --> 0:18:27.840 the deal or renegotiate the price. His first strategy wasn't 0:18:27.840 --> 0:18:31.320 a very good one. His second strategy has gotten lawyered 0:18:31.359 --> 0:18:34.800 up a little bit more. But in the hindsight of 0:18:34.920 --> 0:18:38.120 knowing that he was always trying to do this anyway, 0:18:38.200 --> 0:18:41.960 it makes anyone, including a judge potentially much more skeptical 0:18:42.040 --> 0:18:44.920 about whether this strategy is a bona fide strategy either. 0:18:46.000 --> 0:18:50.400 So let's suppose that Twitter hasn't given all the information 0:18:50.560 --> 0:18:55.960 because of privacy concerns. Is that enough to be a 0:18:56.160 --> 0:19:01.880 material breach of Twitter's obligations under this agree No, generally not. 0:19:02.080 --> 0:19:05.520 So there are two reasons why it's not. First of all, explicitly, 0:19:05.560 --> 0:19:08.520 in the very same section of the contract that Mr 0:19:08.640 --> 0:19:12.600 Musk's lawyer has been citing, Twitter retains the right not 0:19:12.800 --> 0:19:16.720 to hand over information that would be confidential, that might 0:19:16.960 --> 0:19:21.000 cause it to breach someone's privacy rights, or that might 0:19:21.160 --> 0:19:25.359 undermine its future competitive position. And so it's conceivable to 0:19:25.400 --> 0:19:27.800 me that that's the exact claim they're making. He's not 0:19:27.920 --> 0:19:30.600 satisfied with it, but it is in fact baked into 0:19:30.640 --> 0:19:34.960 their contract rights already. Moreover, if these are the types 0:19:35.000 --> 0:19:38.560 of infirmities that can be cured over time, it also 0:19:38.680 --> 0:19:41.280 wouldn't get him off the hook from the deal. It 0:19:41.320 --> 0:19:44.680 would essentially possibly delay the closing of the deal until 0:19:44.720 --> 0:19:47.520 they could resolve what would and would not be disclosed. 0:19:47.920 --> 0:19:50.639 But it's not going to be a likely excuse to 0:19:50.680 --> 0:19:54.080 walk away from the deal. So just explain, we've talked 0:19:54.080 --> 0:19:57.920 about this before. Why it's more than just a one 0:19:58.040 --> 0:20:03.119 billion dollar termination fee. Twitter can can force him to 0:20:03.240 --> 0:20:06.680 go through the contract. Yeah, that as a general matter, 0:20:06.760 --> 0:20:10.760 they can. Now, there are some situations in which he 0:20:10.800 --> 0:20:13.120 would be able to walk away from the contract and 0:20:13.280 --> 0:20:16.720 pay a one billion dollar termination fee, but those are 0:20:16.800 --> 0:20:20.240 relatively small compared to the situations under which, you know, 0:20:20.280 --> 0:20:22.919 Twitter could just force him to go through with his 0:20:23.119 --> 0:20:27.280 side of the deal. Probably the biggest potential out he has, 0:20:27.560 --> 0:20:30.200 and the way that kind of toggle onto this idea 0:20:30.240 --> 0:20:32.280 that he could just walk away with a billion dollars 0:20:32.760 --> 0:20:36.639 is if his financing fails for the transaction, and you know, 0:20:36.760 --> 0:20:40.960 significant component of the purchase price is going to be 0:20:41.040 --> 0:20:43.960 through money that's borrowed from third party lenders who have 0:20:44.000 --> 0:20:49.080 themselves made commitment letters to Twitter. So one of the 0:20:49.119 --> 0:20:52.920 possible reasons why Musk is trying to be so focal 0:20:53.359 --> 0:20:58.200 and vocal about this particular issue is, you know, possibly 0:20:58.320 --> 0:21:01.480 he is trying to encourage the very folks that he 0:21:01.640 --> 0:21:05.080 arranged to lend him money to start getting cold feet 0:21:05.160 --> 0:21:08.000 about lending him money, because if they get cold feet 0:21:08.040 --> 0:21:10.479 and say, sorry, the deal is off, We're not going 0:21:10.520 --> 0:21:13.280 to lend anymore. That's the one or one of a 0:21:13.400 --> 0:21:17.240 few scenarios where he would plausibly be able to walk 0:21:17.280 --> 0:21:20.240 away and be exposed only up to this billion dollar 0:21:20.359 --> 0:21:24.080 termination feet. How long does Twitter have to wait before 0:21:24.119 --> 0:21:29.360 it says, okay, we're going to court to enforce this contract. Well, 0:21:29.440 --> 0:21:32.600 in principle, they could file suit anytime they wanted. I 0:21:32.640 --> 0:21:34.480 think one of the things that you really want to 0:21:34.480 --> 0:21:38.359 try to balance from Twitter's perspective is to assemble a 0:21:38.640 --> 0:21:42.160 track record of acting in good faith, moving things along 0:21:42.200 --> 0:21:45.959 in the direction of trying to close this transaction without 0:21:46.000 --> 0:21:50.199 yourself getting hotheaded or overly demanding. So, you know, the 0:21:50.200 --> 0:21:53.280 executives of Twitter and their legal team has no doubt 0:21:53.400 --> 0:21:56.040 sort of taken this lesson to heart that they're in 0:21:56.080 --> 0:21:59.280 a relatively strong position based on the contract to the 0:21:59.320 --> 0:22:03.040 extent that Musk is trying to goad them into a 0:22:03.080 --> 0:22:07.120 public spat or a spat that causes them to start 0:22:07.160 --> 0:22:10.159 acting petty and withholding things that could just put them 0:22:10.160 --> 0:22:12.320 in breach of this contract. So I think, you know, 0:22:12.400 --> 0:22:16.000 their approach is probably the right one is to say, 0:22:16.480 --> 0:22:20.240 navigate this boat as steadily as we can, realizing that 0:22:20.280 --> 0:22:22.359 we're going to get hit by a tidal wave every 0:22:22.359 --> 0:22:25.480 once in a while that's got Elon Musk's fingerprints all 0:22:25.520 --> 0:22:29.000 over it, but keep sailing towards the north Star. And 0:22:29.040 --> 0:22:32.119 if at some point he does something definitive as a 0:22:32.200 --> 0:22:34.960 move to walk away from the deal, that's when we 0:22:35.000 --> 0:22:37.439 will go ahead and file suit, having put together a 0:22:37.480 --> 0:22:41.000 fairly lengthy track record of all the things that we've 0:22:41.040 --> 0:22:44.399 done to try to consummate this deal, and all the 0:22:44.440 --> 0:22:46.960 things that Mr Musk has done and possibly people who 0:22:46.960 --> 0:22:49.600 are allied with him to try to kneecap the deal. 0:22:49.920 --> 0:22:52.240 And both of these parties are under an obligation to 0:22:52.359 --> 0:22:55.320 try to expend their efforts at at least not to 0:22:55.440 --> 0:22:58.639 undermine the deal, if not to cause the deal to close. 0:22:58.920 --> 0:23:02.160 Does it fit in any way or that must waved 0:23:02.240 --> 0:23:06.320 a chance to look at Twitter's finances beyond what was 0:23:06.400 --> 0:23:10.480 publicly available? Does that count against him in any way? 0:23:10.720 --> 0:23:13.919 In principle it it hugely counts against him. You know, 0:23:14.000 --> 0:23:17.040 this is endemically a problem when a buyer of a 0:23:17.160 --> 0:23:21.679 large company that these are always relatively complex entities. You know, 0:23:21.680 --> 0:23:24.479 it doesn't have always the same information that the seller might. 0:23:24.560 --> 0:23:26.199 So there are a couple different ways to deal with it. 0:23:26.720 --> 0:23:29.120 One is that you could just say, look, I want 0:23:29.160 --> 0:23:32.239 to be able to do what's called due diligence on 0:23:32.400 --> 0:23:35.760 this this purchase, and I want to investigate the value 0:23:35.840 --> 0:23:39.600 of this company. I want access to your detailed proprietary 0:23:39.640 --> 0:23:42.920 books and records. As a very very common way to 0:23:43.280 --> 0:23:47.240 UH to engineer a deal involving, you know, situations where 0:23:47.240 --> 0:23:49.440 buyers are worried that they don't know all the information. 0:23:49.880 --> 0:23:51.560 He waived that, you know, and he was kind of 0:23:51.600 --> 0:23:54.680 public about waiving it. The other way to do it 0:23:54.720 --> 0:23:57.840 is potentially to have the sellers say, Okay, look, you 0:23:58.080 --> 0:24:00.000 don't have to investigate these, but we're going to provide 0:24:00.200 --> 0:24:05.760 various types of warranties and guarantees and representations that this 0:24:05.880 --> 0:24:08.920 is going to be you know, completely fine. Um, you'll 0:24:08.960 --> 0:24:12.600 you'll discover that, you know, what you're buying is as advertised. 0:24:12.880 --> 0:24:15.119 And so I think that's kind of a corner that 0:24:15.160 --> 0:24:17.639 he's backed himself into having not done any of the 0:24:17.720 --> 0:24:21.360 due diligence. You know, He's been trying to formulate arguments 0:24:21.400 --> 0:24:26.120 that suggests that Twitter made a concrete warranty about how 0:24:26.119 --> 0:24:29.480 many spam accounts there are out there. The problem is 0:24:29.520 --> 0:24:33.040 that that's not even all that clear either, there's nothing 0:24:33.080 --> 0:24:36.600 explicitly in the contract. There's an indirect reference to their 0:24:36.600 --> 0:24:40.360 prior securities filings, and that's essentially what he's seizing on. 0:24:40.520 --> 0:24:44.720 But those prior securities filings that talk about the spam 0:24:44.760 --> 0:24:50.119 accounts are themselves heavily lawyered and equivocal as to whether 0:24:50.200 --> 0:24:54.280 they are definitive estimates as opposed to, well, this is 0:24:54.320 --> 0:24:57.240 our best shot at telling you, you know, based on 0:24:57.320 --> 0:25:00.439 our own sampling, what the fraction looks like, but we 0:25:00.520 --> 0:25:02.040 might be wrong, and there are a bunch of different 0:25:02.040 --> 0:25:05.119 ways to measure this. So to sum this all up, 0:25:05.640 --> 0:25:09.360 this letter is it an attempt by Musk to create 0:25:09.400 --> 0:25:13.680 a paper trail in his goal of blowing up the deal. 0:25:14.200 --> 0:25:17.199 I think that's probably the best interpretation of what's going on, 0:25:17.400 --> 0:25:21.879 at least to to create a colorable chance that he 0:25:21.920 --> 0:25:24.680 could blow up the deal so that he could walk 0:25:24.880 --> 0:25:29.080 back into a negotiating room with Twitter representatives and at 0:25:29.160 --> 0:25:32.800 least negotiate for a lower price. It is not the 0:25:32.880 --> 0:25:35.679 strongest hands to be playing, however, it's a It's not 0:25:35.800 --> 0:25:37.760 an uncommon thing to do to sort of say, oh, 0:25:37.760 --> 0:25:41.280 can I get a better price? But usually something really 0:25:41.359 --> 0:25:44.679