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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud,

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Speaker 1: and on Bloomberg dot com slash podcasts. The Senate Judiciary

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Speaker 1: Committee is refusing to delay a hearing next week as

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Speaker 1: Christine Blasi Ford asked that the FBI investigate accusations of

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Speaker 1: sexual assault against Supreme Court nominee Brett Kavanaugh. Speaking at

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Speaker 1: the White House earlier today, President Trump commented on the matter,

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Speaker 1: we want to get it over with. At the same time,

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Speaker 1: we want to give tremendous amounts of time. If she

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Speaker 1: shows up, that would be wonderful. If she doesn't show up,

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Speaker 1: that would be unfortunate. Joining me is Greg Store, Bloomberg

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Speaker 1: News Supreme Court reporter. So, Greg, the story seems to

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Speaker 1: change by the hour. What's the latest? It sure does well.

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Speaker 1: As you heard the President this morning, uh said he

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Speaker 1: wants to hear from from professor Ford. Uh. He's also

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Speaker 1: again saying he a short delay is is okay with him,

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Speaker 1: But he's reiterating his support for Brett Kavanaugh. In terms

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Speaker 1: of UH. Folks in the Senate Republicans are also saying

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Speaker 1: we'd like to hear from her UM and they have,

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Speaker 1: and Chuck Grassley, the chairman of the Senate Judiciary Committee UH,

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Speaker 1: is signaling he will move ahead one we or another

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Speaker 1: if she does not agree to testify in this hearing

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Speaker 1: that is scheduled for Monday, or in talk to the

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Speaker 1: committee in some other fashion. Well, let's clear up the

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Speaker 1: FBI part of this, because I've heard conflicting reports. If

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Speaker 1: the committee asked the FBI to investigate, will it investigate?

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Speaker 1: As a general matter, the FBI is acting at the

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Speaker 1: behest of the White House, That at least has traditionally

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Speaker 1: been how things have worked. If the White House asked

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Speaker 1: the FBI to look into these allegations, it certainly would.

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Speaker 1: I don't know that it's clear what would happen if

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Speaker 1: it were just a Senate committee that we're asking the FBI.

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Speaker 1: Certainly they don't have the power to order the FBI

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Speaker 1: to do something. UH. That that may be some uncharted waters.

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Speaker 1: Republicans want to handle this in one hearing with just

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Speaker 1: the two witnesses, not even with the third person who

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Speaker 1: Ford claims was in the room. That night. Explain how

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Speaker 1: this differs from what happened at Anita Hills testimony and

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Speaker 1: how many people testified there. Well, in some ways it's

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Speaker 1: similar in the sense that that was a he said,

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Speaker 1: she said situation with Anita Hill and Clarence Thomas. There

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Speaker 1: were other women, women who we now understand UH had

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Speaker 1: had levied UH similar allegations about Clarence Thomas, who might

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Speaker 1: have been willing to testify. They didn't testify. Um. The

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Speaker 1: Republicans seem as though they want to keep this very

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Speaker 1: narrowly focused, not bring in a whole lot of additional

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Speaker 1: complication aations, But they have the same sort of thing

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Speaker 1: where it's just the two people talking. Where do those

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Speaker 1: two critical votes Republican Senators Susan Collins and Lisa Murkowski

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Speaker 1: stand right now? Well, that's the sixty four million dollar question.

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Speaker 1: They have not said how they will will vote. Uh.

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Speaker 1: Senator Collins did uh clearly say she wanted to hear

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Speaker 1: from Professor Ford. Um. It's not clear what would happen

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Speaker 1: if the Republicans moved ahead with a committee vote not

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Speaker 1: having heard from her, because she hadn't agreed to publicly testify. Um. Uh,

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Speaker 1: you know this is one of these things that we're

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Speaker 1: gonna have to watch them very closely, but for now

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Speaker 1: they haven't tipped their hands. Let's turn to another issue.

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Speaker 1: President Trump has demanded the immediate declassification of sensitive materials

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Speaker 1: about the Russia investigation. So here's another what's happening now question? Yeah, so,

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Speaker 1: um uh, these are materials. This is is um uh,

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Speaker 1: perhaps an unprecedented move move. These are materials that Republicans

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Speaker 1: had been clamoring for for quite a long time. As

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Speaker 1: a general matter, the president and the executive branch doesn't

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Speaker 1: reveal these sorts of materials while an investigation is going on.

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Speaker 1: Um uh It. We're gonna be very interesting to see

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Speaker 1: what ultimately happens here. Um Yet another issue. Trump has,

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Speaker 1: as we have discussed many times, been very critical of

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Speaker 1: Attorney General Jeff Sessions, and his latest is perhaps one

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Speaker 1: of the most severe. When he spoke to hill To

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Speaker 1: TV yesterday, tell us how he has sort of ratcheted

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Speaker 1: up this his problems with Sessions. Yeah. He his words were,

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Speaker 1: I don't have an attorney general. It's very sad. Uh,

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Speaker 1: you know the the um. He has frequently said that

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Speaker 1: he is disappointed in the way that Jeff Sessions has

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Speaker 1: has handled this job. Um. You know what is striking

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Speaker 1: about the comments that he made was that, Um, you know,

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Speaker 1: the attorney general is not just somebody who works for

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Speaker 1: the president. It is somebody who is the attorney general

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Speaker 1: of the country. Um. You know, Jeff Sessions is is,

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Speaker 1: by all appearances, you know, performing that job. And the

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Speaker 1: way he thinks is is appropriate. It is not the

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Speaker 1: way that Donald Trump thinks is appropriate. Um. But but

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Speaker 1: Trump uh seems as though he wants somebody who will

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Speaker 1: show more loyalty to him. And he was even critical

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Speaker 1: of Jeff sessions moves in as far as immigration are concerned.

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Speaker 1: In that is an area where it seems as if

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Speaker 1: Sessions was in lock step with what Trump wants. Yeah.

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Speaker 1: One of the great ironies of of Trump's criticisms of

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Speaker 1: Sessions is that putting aside the Russia investigation, where Sessions

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Speaker 1: has recused himself. Um, Sessions has been one of the

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Speaker 1: most active and some would say successful, of Trump's cabinet

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Speaker 1: members and promoting policies, and certainly he has been a

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Speaker 1: staunch advocate for the President's crackdown on illegal immigration. But

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Speaker 1: even there, the president is now saying that that Sessions

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Speaker 1: is not doing enough. And what do you make of

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Speaker 1: his critique now two years later of Sessions hearings for

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Speaker 1: confirmation as a g Yeah, Um, June, I'm gonna duck

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Speaker 1: that question because I missed that part of the interview

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Speaker 1: and I I don't know exactly what he said. A

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Speaker 1: sorry about that. That that's all right? Well, do we

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Speaker 1: see Sessions pushing back in any way? He's done that before.

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Speaker 1: He has done that before. Um. Uh, you know, we

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Speaker 1: may see it again in a sense. You know, Sessions

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Speaker 1: pushes back every day he stays on the job. Every

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Speaker 1: day he stays on the job as a day that Uh,

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Speaker 1: it makes it much more difficult for Trump to squash

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Speaker 1: the Robert Mueller investigation. Um. It may be after the election.

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Speaker 1: There there have been some signals from the President, including

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Speaker 1: in an interview with Bloomberg, uh, that he might make

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Speaker 1: a change after the election. But for now, Uh, Sessions

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Speaker 1: is still Attorney general. He has recused from the Muller investigation,

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Speaker 1: and that that one's going forward. And what it has

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Speaker 1: changed though, is that it seems as if there are

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Speaker 1: several senators on the Republican side who are willing to

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Speaker 1: talk about and think about having Sessions stepped down. Yeah,

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Speaker 1: M Lindsay Graham is perhaps the most prominent name because

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Speaker 1: he has been somebody who has been both a supporter

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Speaker 1: of Jeff Sessions and somebody uh willing to push back

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Speaker 1: against the president and and Senator Graham has said that

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Speaker 1: um uh recently that the president is entitled to an

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Speaker 1: attorney general. He has confidence in um and it's clear

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Speaker 1: he doesn't have confidence in Jeff Sessions right now. All right,

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Speaker 1: thanks so much, Greg. That's Gregg's store. He's a climber

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Speaker 1: news Supreme Court reporter. That funding secured tweet by Chairman

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Speaker 1: Elon Muskin August continues to haunt him and Tesla. The

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Speaker 1: Justice Department has now opened a criminal investigation into Tesla.

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Speaker 1: Joining me is Robert Hockett, professor at Cornell Law School.

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Speaker 1: Bob the sec was already investigating Mosque. Explain how a

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Speaker 1: Justice Department investigation is different? So it really I guess

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Speaker 1: there's some key things to say. The first is the

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Speaker 1: sense in which it would be different is that if

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Speaker 1: it were actually to pan out into something, there would

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Speaker 1: be the prospect of criminal penalties, including even jail time,

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Speaker 1: that could be uh brought against Mr Muskin. Perhaps others

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Speaker 1: as well. That being said, however, I hastened to add

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Speaker 1: the second thing, which is that this is sort of

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Speaker 1: a routine matter. Right. There haven't been subpoenas issued by

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Speaker 1: the d o J so far as far as we know. Um,

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Speaker 1: this is just kind of kind of looking around, sifting

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Speaker 1: through the through the data a bit um. And it

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Speaker 1: would have been actually quite surprising that the o' day

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Speaker 1: didn't do at least that, given the degree to which

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Speaker 1: the SEC has moved forward. The investigation, as you say,

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Speaker 1: is in its early stages. But where could it lead?

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Speaker 1: Are there any restrictions on where prosecutors take this nothing?

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Speaker 1: I mean generally, you know, in order to issue particular subpoenas,

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Speaker 1: which would be sort of the next stage, you would

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Speaker 1: have to sort of explain precisely what you're looking for

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Speaker 1: and precisely why. Right, it can't just be kind of

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Speaker 1: gratuitous across the board fishing expedition. That being said, it's

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Speaker 1: not difficult at all to sort of articulate, um, that

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Speaker 1: which you're looking for or that which you know that

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Speaker 1: the sort of concern in relation to which you're seeking

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Speaker 1: documents fairly broadly, and there do seem to be a

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Speaker 1: number of uh, what are arguably our problems that have

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Speaker 1: afflicted you might say, Tesla of late over the last

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Speaker 1: couple of months. And you could imagine at least the

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Speaker 1: d r J wanted to conduct an inquiry uh in

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Speaker 1: connection with each of those, or maybe a kind of

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Speaker 1: a plenary inquiry that embraces all of those. Well, explain

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Speaker 1: a little further what they'll be looking into, what areas?

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Speaker 1: So you know, there was this tweet ill advised. We

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Speaker 1: know what happened. What's the criminal aspect of that? Yeah,

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Speaker 1: so the criminal the criminal aspect is is exactly the same.

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Speaker 1: It's the same aspect the sec would be looking at,

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Speaker 1: and it's it's it's just that um, it would just uh,

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Speaker 1: the question would really be whether the offense was sort

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Speaker 1: of serious enough as to warrant actual criminal penalties, including

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Speaker 1: possible jiltum. So remember as we talked about this last time,

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Speaker 1: that we we found that the problem was or at

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Speaker 1: least that the possibilities were a that there was a

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Speaker 1: kind of a reckless use of language on the part

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Speaker 1: of Mr musk uh that really wasn't designed to manipulate

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Speaker 1: the market, but that really you know, where he should

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Speaker 1: have been more careful in light of the um obviousness

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Speaker 1: of the fact that this would probably lead to some

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Speaker 1: sort of market changes in the price of the stock.

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Speaker 1: But in a possibility, was that he you know, it

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Speaker 1: was intentional, right, he was sort of trying to sort

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Speaker 1: of reduce the price of the stock before you know,

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Speaker 1: tipping after tipping off friends that he was going to

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Speaker 1: do this, um thereby enabling people to earn money on

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Speaker 1: trade they would otherwise people to do. So far, you know,

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Speaker 1: as far as we know, there's no allegation that anything

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Speaker 1: like that has happened. But but the SEC and the

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Speaker 1: d o J are both interested in whether something like

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Speaker 1: that might have happened, basically what the motive of the

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Speaker 1: tweet was, because you know, depending on the motive, the

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Speaker 1: sanctions could be more or less severe, and indeed they

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Speaker 1: could turn out to be none at all. Right, it

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Speaker 1: might be viewed as a sort of innocent error in

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Speaker 1: the end, and we just don't We have no way

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Speaker 1: of knowing until things go kind of further. We've talked

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Speaker 1: before about Musque's frustrations with short sellers. Does that have

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Speaker 1: anything to do with the criminal probe? It certainly could, right,

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Speaker 1: I mean, because if this was a design. If if

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Speaker 1: the aim was sort of get back at the short

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Speaker 1: sellers um by trying to in effect influence the behavior

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Speaker 1: of the shares in the markets, by you know, conveying

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Speaker 1: information that he knew to be false or that he

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Speaker 1: knew that he was a sort of exaggerating, that would

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Speaker 1: be an offense in its own right, right. It wouldn't

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Speaker 1: be It wouldn't be quite the same thing as insider trading,

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Speaker 1: but it would be sort of on the same level

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Speaker 1: as it were. It would be the same kind of

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Speaker 1: offense in the sense that he would be misusing information

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Speaker 1: with a view to manipulating a share price, in this case,

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Speaker 1: not necessarily to profit himself or his friends, but in

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Speaker 1: order to harm the shaft somebody like the short sellers.

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Speaker 1: And that's not permissible either because it's still been it

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Speaker 1: would still be manipulous behavior if that's in fact what

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Speaker 1: he was doing. Bob, does his recent conduct play any

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Speaker 1: part in this? You know, this this smoking marijuana on

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Speaker 1: a podcast show, and also the you know, the two

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Speaker 1: people in his organization who have left after a brief time.

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Speaker 1: M hmm. I think I think this is very much

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Speaker 1: front and center here. This is the real core story

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Speaker 1: in my book. And remember we talked about this a

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Speaker 1: little bit before the last time we chatted about Mr

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Speaker 1: must But I think you know, he's a little he

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Speaker 1: seems to be a little bit overextended. He wears multiple

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Speaker 1: hats at Tesla itself, but then in addition, he wears

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Speaker 1: multiple hats in so far as he is involved with

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Speaker 1: lots of firms in addition to Tesla, and he seems

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Speaker 1: to have in a way bitten off more than he

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Speaker 1: can chew. Right, he's sort of got too many irons

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Speaker 1: in the fire, as they say, are too many ponds spoiling.

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Speaker 1: He seems to be having a little bit of trouble

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Speaker 1: keeping up with it all. Seems to be chronically sleep

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Speaker 1: deprived and overstressed. That often leads to sort of erratic

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Speaker 1: or irrational behavior. And uh there in a sense, right,

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Speaker 1: this is coming back to sort of fight him. I mean,

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Speaker 1: many people seem to be leaving Tesla now to go

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Speaker 1: back to the tech firms that they originally abandoned in

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Speaker 1: order to go to Tesla. Uh. In the first place,

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Speaker 1: there's this strange lawsuit that's now I shouldn't say, there's

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Speaker 1: this libel suit of course, that's just been filed against

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Speaker 1: him for his strange behavior referring to a British man

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Speaker 1: uh in connection with the Thaie flood last year as

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Speaker 1: a pedophile with apparently no no ground. Um. So he's

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Speaker 1: now brought you know, potential liability against himself on that ground. Um.

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Speaker 1: There's of course, you know, the cannabis smoking on the

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Speaker 1: on the podcast. There's also of course rumors about similar

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Speaker 1: behavior actually at Tesla itself. Who knows the truth or

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Speaker 1: otherwise of these rumors, but there's a general feeling then

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Speaker 1: of kind of chaos, of things kind of spinning out

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Speaker 1: of control. Uh. And it might, as we talked about

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Speaker 1: last time, it might be a good idea I think

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Speaker 1: even for mr Mr Tesla, Mr Tesla, maybe to take

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Speaker 1: a time out, you know, take a little time out

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Speaker 1: and step back, maybe a trim back a little bit

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Speaker 1: on what he does, um, and maybe also divide the

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Speaker 1: role of CEO and UH and chairman of the board

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Speaker 1: at Tesla and so that he's not having to do

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Speaker 1: so many things at the same time. All right, thanks

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Speaker 1: so much, Bob, I'm sure we'll be talking about this again.

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Speaker 1: That's Robert Hocket. He's a professor at Cornell Law School

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Speaker 1: and The SEC already was investigating whether Musk's vehicle production

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Speaker 1: production forecast misled investors before the SEC started scrutinizing whether

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Speaker 1: he had secured funding for a Tesla buyout. Thanks for

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Speaker 1: listening to the Bloomberg Law Podcast. You can subscribe and

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Speaker 1: listen to the show on Apple Podcasts, SoundCloud, and on

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Speaker 1: bloomberg dot com slash podcast. I am June Brosso. This

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Speaker 1: is Bloomberg