Latest / Bloomberg Law / Weekend Law: Election Fears, Judges Frustrated & SEC Changes

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Weekend Law: Election Fears, Judges Frustrated & SEC Changes · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
0:08
Speaker 2: At the Republican midterm convention in September, President Trump led
0:13
Speaker 2: the crowd in a mock pledge to cheat in the midterms.
0:17
Speaker 3: I will go out with my family, my friends. I'll
0:21
Speaker 3: do it anyway. I don't care if I'm registered or not.
0:24
Speaker 3: I'm going to try and cheat like hell like they do.
0:28
Speaker 3: There's never been bigger cheaters. I don't care.
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Speaker 2: That kind of rhetoric amplifies fears that the administration won't
0:36
Speaker 2: play fair in the upcoming elections. For years, Trump has
0:40
Speaker 2: made baseless claims of widespread voter fraud. and his administration
0:45
Speaker 2: has been pursuing extraordinary legal tactics to try to assert
0:49
Speaker 2: greater federal control over the midterms. So far, they've failed
0:54
Speaker 2: in court, and now the question is whether the administration
0:58
Speaker 2: will take steps to interfere with voting on November 3rd.
1:02
Speaker 2: Joining me is Jonathan Diaz, Director of Voting Advocacy and
1:06
Speaker 2: Partnerships at the Campaign Legal Center. Jonathan, I want to
1:10
Speaker 2: start by focusing on concerns about what might happen on
1:14
Speaker 2: Election Day. One that's mentioned over and over again is
1:18
Speaker 2: the possibility the administration will send armed federal agents or
1:23
Speaker 2: even troops to the polls. And the Secretary of Homeland
1:27
Speaker 2: Security hasn't ruled out ICE entering polling places in, quote,
1:32
Speaker 2: certain circumstances.
1:34
Speaker 4: You know, anything is possible, but it could not be clearer.
1:39
Speaker 4: under federal law that the deployment of armed federal agents,
1:43
Speaker 4: whether military or civilian, to any place where an election
1:47
Speaker 4: is being held is flatly illegal. It is a federal
1:51
Speaker 4: crime to order armed men to the polls. So not
1:55
Speaker 4: just the soldiers or the FBI or ICE agents who
1:59
Speaker 4: go there, but whoever tells them to go there is
2:01
Speaker 4: on the hook for potential federal criminal liabilities. It's not
2:05
Speaker 4: a prohibition that has ever really been tested because we've
2:08
Speaker 4: never had an administration who was willing to deploy armed
2:12
Speaker 4: agents of the federal government to a polling place. I
2:15
Speaker 4: think if that's something that we did see, it would
2:18
Speaker 4: be met with such swift legal response that they wouldn't
2:23
Speaker 4: be there long. But even the apprehension that federal agents
2:27
Speaker 4: might be deployed to the polls already has a chilling
2:30
Speaker 4: effect on voters. It's the one thing I get asked
2:32
Speaker 4: about most. People are worried about it. because people like
2:36
Speaker 4: Secretary Mullen and FBI Director Kash Patel and Attorney General
2:40
Speaker 4: Blanch keep bringing it up. They keep saying, oh, well,
2:43
Speaker 4: I don't know, maybe we will, even though they know
2:45
Speaker 4: it's illegal. And I think that's the point. They want
2:47
Speaker 4: people to be afraid. They want people not to participate
2:51
Speaker 4: in the elections. whether or not they actually send agents
2:55
Speaker 4: to the polls or not. But, you know, it is
2:58
Speaker 4: completely illegal. And we, you know, our partners in the
3:02
Speaker 4: kind of nonpartisan election protection space are prepared to respond
3:06
Speaker 4: if it happens. That's one of the many reasons why
3:08
Speaker 4: we have encouraged people to vote as early as is
3:12
Speaker 4: possible in your state or county.
3:14
Speaker 3: Go.
3:15
Speaker 4: Don't go by yourself. Take people with you. Have a
3:17
Speaker 4: backup plan. Don't let fear or the possibility of federal
3:22
Speaker 4: intrusion prevent you from exercising your freedom to vote in
3:26
Speaker 4: this election.
3:27
Speaker 2: The Justice Department is planning to send 1,000 election monitors
3:32
Speaker 2: to the polls. That's the largest number in history and
3:36
Speaker 2: nearly double the number sent in 2024. So this isn't
3:40
Speaker 2: out of the ordinary, but now we have a civil
3:43
Speaker 2: rights division that's flipped its mission from protecting the right
3:47
Speaker 2: to vote to going after alleged election fraud. So is
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Speaker 2: there danger that the election monitors might interfere?
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Speaker 4: Again, there shouldn't be. This is a program, like you said,
4:00
Speaker 4: that has been around for decades. The Department of Justice
4:03
Speaker 4: has long sent monitors, usually attorneys from the Civil Rights Division,
4:07
Speaker 4: out into the field to just monitor, to observe the
4:11
Speaker 4: conduct of elections and to ensure that federal civil rights
4:17
Speaker 4: laws are being followed. Things like making sure that polling
4:22
Speaker 4: places are accessible to voters with disabilities, that voters are
4:25
Speaker 4: not being turned away in a discriminatory or unlawful fashion.
4:30
Speaker 4: But the DOJ observers are not there to correct problems
4:34
Speaker 4: in real time. They are not there to intercede. They
4:36
Speaker 4: are not there to interrupt the conduct of the election.
4:39
Speaker 4: They are there to observe and then report back to
4:41
Speaker 4: main justice and potentially then initiate some kind of civil
4:46
Speaker 4: rights action by the government to protect voters. Now, our
4:50
Speaker 4: current civil rights division is not super interested in enforcing
4:55
Speaker 4: the civil rights laws on the books. What they are
4:58
Speaker 4: interested in is weaponizing claims of voter fraud and going
5:02
Speaker 4: after voters and election officials who they think have violated
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Speaker 4: some kind of criminal law. The Department of Justice has
5:08
Speaker 4: also seen a massive exodus in terms of experienced Attorneys,
5:13
Speaker 4: especially in the Civil Rights Division, they have staffed up
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Speaker 4: with people who have promoted conspiracy theories and falsehoods about
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Speaker 4: our elections, people with relative inexperience or who have been
5:25
Speaker 4: engaged in proven misconduct in their careers. So I think
5:29
Speaker 4: that there is cause to be a little anxious, a
5:31
Speaker 4: little nervous about how these observers might behave. But federal
5:35
Speaker 4: election monitors, just like everyone else, are subject to restrictions
5:39
Speaker 4: around voter intimidation. They cannot go into non-public areas of
5:42
Speaker 4: a polling place. And if election officials tell them that
5:46
Speaker 4: they have to leave, they have to leave. So again,
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Speaker 4: I think that it's worth keeping an eye on. I
5:52
Speaker 4: would expect some of these DOJ officials under this Department
5:56
Speaker 4: of Justice and Harmeet Dhillon to make a lot of
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Speaker 4: hay out of anything that they see and to spread
6:02
Speaker 4: potential misinformation about how the elections are being run. But
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Speaker 4: they should not have the actual ability to interfere with
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Speaker 4: the conduct of the election. And if they try, I
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Speaker 4: think that they will suffer the consequences under any number
6:18
Speaker 4: of state and federal laws that prohibit election interference.
6:21
Speaker 2: There's also the possibility that the federal government might get
6:24
Speaker 2: warrants to seize ballots or voting machines. Are election officials
6:29
Speaker 2: prepared for these contingencies?
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Speaker 5: I think so.
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Speaker 4: I mean, election officials have never really had to worry
6:35
Speaker 4: about the federal government before during an election. If anything,
6:39
Speaker 4: the federal government used to be a really key partner
6:42
Speaker 4: for state and local election officials. You know, there was
6:44
Speaker 4: an entire agency within DHS that provided resources and trainings
6:50
Speaker 4: to election officials on how to keep their data systems secure,
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Speaker 4: how to keep their polling places safe. You know, the
6:57
Speaker 4: FBI and U.S. attorney's offices used to coordinate with local
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Speaker 4: law enforcement and election officials so that they could, you know,
7:05
Speaker 4: respond to things like in 2024, there were bomb threats
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Speaker 4: at polling places in Atlanta and Philadelphia. And the federal
7:11
Speaker 4: government helped to coordinate the response so that polling places
7:14
Speaker 4: could reopen. That is mostly gone. There is really no
7:17
Speaker 4: trust from state and local election officials to the federal
7:20
Speaker 4: government because for two years now, the federal government has
7:23
Speaker 4: been trying to get in their way. And so I think,
7:26
Speaker 4: you know, state and local election officials are talking to
7:29
Speaker 4: their attorneys to make sure that they know how to
7:31
Speaker 4: respond if, you know, there is a deployment of federal
7:34
Speaker 4: agents to the polls or if federal law enforcement shows
7:37
Speaker 4: up with a warrant trying to seize ballots or voting machines,
7:40
Speaker 4: you know, because they have to be ready. The same
7:42
Speaker 4: way that election officials in the Gulf prepare for hurricanes,
7:47
Speaker 4: you're seeing election officials across the country prepare for the
7:50
Speaker 4: possibility of federal interference in the conduct of the election.
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Speaker 2: As you mentioned, the Trump administration has been threatening election
7:58
Speaker 2: officials with criminal prosecution. Are they concerned about that?
8:03
Speaker 4: I don't know if concerned is the right word. You know,
8:06
Speaker 4: I think for some of them, they are used to
8:08
Speaker 4: it by now, unfortunately, to getting these threats of prosecution from,
8:12
Speaker 4: you know, Todd Blanch and before him, Pam Bondi and
8:15
Speaker 4: from the president himself. But they know their role. They
8:18
Speaker 4: know their laws that they have to follow. You know,
8:21
Speaker 4: they've unfortunately, over the last couple of years, gotten a
8:23
Speaker 4: lot of practice standing up to threats. Even in the
8:26
Speaker 4: last week, we've seen DOJ make threats of criminal prosecution
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Speaker 4: against election officials. And, you know, that's not how democracy
8:34
Speaker 4: is supposed to happen in America. You know, it is
8:37
Speaker 4: far more reminiscent of other kind of more repressive regimes
8:41
Speaker 4: across the world. But election officials are, I think, much
8:45
Speaker 4: tougher than most people realize, especially in given the threats
8:49
Speaker 4: that they have faced over the last several years. And
8:52
Speaker 4: I think that they are ready for whatever comes their way.
8:55
Speaker 2: But some voters might not be ready, and fears of
8:59
Speaker 2: what could happen at the polls might keep them home.
9:02
Speaker 4: I think that apprehension is reasonable, even if the actual
9:07
Speaker 4: risk of direct intervention by the feds into the election,
9:10
Speaker 4: I think, is probably less than most people think. They
9:13
Speaker 4: just don't have the capacity to, you know, be at
9:17
Speaker 4: every polling place in America. They just can't do it.
9:19
Speaker 4: But even if they're only at a few, or even
9:21
Speaker 4: if they might be at a few, and that's enough
9:24
Speaker 4: to keep people from voting, that's a problem for democracy.
9:28
Speaker 4: That's why, you know, you've seen so much litigation over
9:31
Speaker 4: the last, you know, six months, especially, because there is
9:34
Speaker 4: a whole constellation of legal organizations working to make sure
9:39
Speaker 4: that these elections remain free and fair.
9:42
Speaker 2: According to a recent survey conducted by The Washington Post,
9:45
Speaker 2: ABC News and Ipsos, seven out of 10 Americans believe
9:50
Speaker 2: that Trump won't accept the results of the midterms if
9:55
Speaker 2: Republicans suffer losses. I mean, Trump is still arguing that
9:59
Speaker 2: he won the 2020 election. So it seems like a
10:02
Speaker 2: foregone conclusion that after the midterms, we'll hear Trump making
10:07
Speaker 2: accusations that non-citizens voted, that voting machines were compromised, and
10:13
Speaker 2: who knows what else.
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Speaker 4: I fully expect the president to continue to to make
10:20
Speaker 4: his false claims about how the elections are run. He's
10:22
Speaker 4: never really stopped since 2020 and actually long before that.
10:26
Speaker 4: So he's going to make wild claims about whatever comes
10:31
Speaker 4: to mind, voting machines, mail ballots, whether voters are eligible
10:36
Speaker 4: or not. You know, I don't think he is going
10:38
Speaker 4: to be particularly circumspect in his comments. And I'm sure
10:42
Speaker 4: that his deputies at the Department of Justice and at
10:46
Speaker 4: DHS are going to take whatever comments he makes and
10:49
Speaker 4: run with them and try and use them to justify
10:52
Speaker 4: intervening in the election in some way. I don't think
10:55
Speaker 4: it will work. It didn't work in 2020. It didn't
10:58
Speaker 4: work in 2022. It's not going to work this time.
11:02
Speaker 4: And it's one thing for the president to say all
11:05
Speaker 4: of this stuff on Truth Social or on TV at
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Speaker 4: a press gaggle or whatever. It's another thing for the
11:13
Speaker 4: attorney general or other DOJ attorneys to stand up in
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Speaker 4: court under oath and say the same things. They have
11:21
Speaker 4: to have evidence to back up their claims. And if
11:23
Speaker 4: they don't, they are going to lose. And they may
11:26
Speaker 4: find themselves facing contempt or other professional sanctions if they
11:31
Speaker 4: try and bring these false claims in front of a court.
11:33
Speaker 2: And the courts have certainly proven over the years they
11:36
Speaker 2: know how to handle these cases involving claims of election fraud.
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Speaker 2: Thanks so much for joining me today, Jonathan. That's Jonathan
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Speaker 2: Diaz of the Campaign Legal Center. Coming up next on
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Speaker 2: the Bloomberg Law Show, mistrust, frustration, and even anger are
11:52
Speaker 2: on display as judges deal with Justice Department lawyers. I'm
11:56
Speaker 2: June Grosso, and you're listening to Bloomberg. President Donald Trump
12:02
Speaker 2: has repeatedly railed against federal judges and even Supreme Court justices.
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Speaker 3: Radical left judges. This judge is so conflicted.
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Speaker 1: You understand that.
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Speaker 4: You'll take a look at that.
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Speaker 3: There's never been a judge so conflicted as this.
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Speaker 4: It's ridiculous.
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Speaker 3: Extreme far left judges.
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Speaker 2: His attorney general, Todd Blanche, has described the administration's relationship
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Speaker 2: with judges as a war.
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Speaker 1: There's a group of judges that are repeat players, and
12:29
Speaker 1: that's obviously not by happenstance.
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Speaker 4: That's intentional.
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Speaker 3: And it's a war, man.
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Speaker 2: And the Justice Department has followed through by treating judges
12:40
Speaker 2: as adversaries, at times even violating court orders and filing
12:46
Speaker 2: complaints and motions for recusals. So it's no wonder that
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Speaker 2: judges have become increasingly mistrustful of the government's representations and
12:55
Speaker 2: hearings have become heated and confrontational. My guest is Judge
13:00
Speaker 2: Jeremy Fogel, who formerly sat on the United States District
13:04
Speaker 2: Court for the Northern District of California. Judge Vogel, I
13:07
Speaker 2: want to start with the cases in D.C. over Trump's
13:11
Speaker 2: attempts to put his mark on the nation's capital, whether
13:15
Speaker 2: it's the White House ballroom, building an arch, renovating the
13:19
Speaker 2: golf course, the Kennedy Center. At least nine judges are
13:23
Speaker 2: handling these cases. And several of them have expressed frustrations
13:27
Speaker 2: during hearings, basically because they're having trouble dealing with an
13:31
Speaker 2: administration that's trying to outrun them and their orders.
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Speaker 5: I mean, you know, the legal process is meant to
13:38
Speaker 5: be deliberate and orderly and, you know, people submit briefs
13:41
Speaker 5: and they make arguments and, you know, you have an
13:43
Speaker 5: opportunity to weigh what the correct course of action is
13:46
Speaker 5: under the law. And the speed at which things are
13:48
Speaker 5: happening makes that impossible. So everything is being done on
13:51
Speaker 5: a urgent basis and with partial information. I live in D.C.,
13:55
Speaker 5: so I've seen it up close. We saw it with
13:57
Speaker 5: the Kennedy Center. We saw it with the trees on
13:59
Speaker 5: the golf course. We saw it with the ballroom. They're
14:02
Speaker 5: all similar in the sense that things are being done
14:05
Speaker 5: in the moment, and the judges are being asked by
14:07
Speaker 5: people who object to those things to act. And the
14:09
Speaker 5: courts just aren't really in a position to move quite
14:12
Speaker 5: that quickly. They move as quickly as they can, but
14:14
Speaker 5: the judges want to give reasoned opinions. They want to
14:17
Speaker 5: explain why they're doing. That's the way they've been trained.
14:19
Speaker 5: That's what their obligation is. The ballroom case is really
14:21
Speaker 5: the perfect example because by the time the issue got
14:24
Speaker 5: to the Supreme Court, basically it had been done. I mean,
14:27
Speaker 5: it was at a point where there really wasn't much
14:28
Speaker 5: that a court could do, even if it felt that
14:31
Speaker 5: what had been done was incorrect. Same thing happened most
14:34
Speaker 5: recently with the golf course. I mean, the trees were
14:36
Speaker 5: cut down before the judge was really even in a
14:38
Speaker 5: position to deal with the fact that she had made
14:40
Speaker 5: an order that they were supposed to inform her of
14:42
Speaker 5: any meaningful developments. So, you know, I think it's really
14:44
Speaker 5: hard on the judges. It's hard on them procedurally. I'm
14:47
Speaker 5: not asking for sympathy. It's just in order for them
14:50
Speaker 5: to do their jobs correctly, they can't do it in
14:52
Speaker 5: that kind of a timeframe with that kind of aggressive
14:55
Speaker 5: action being taken by a party. And then what happens
14:58
Speaker 5: is when they do speak up and when they do
15:00
Speaker 5: try to raise caution flag or, you know, raise the
15:03
Speaker 5: stop sign, then they get vilified. And, you know, it
15:06
Speaker 5: happened to Judge Cooper in the Kennedy Center case. It
15:09
Speaker 5: happened to Judge Reyes in the Tree case. So it's
15:11
Speaker 5: happening pretty much across the board. And I think it's
15:14
Speaker 5: challenging both judicially and personally.
15:16
Speaker 2: Judge Reyes said she was furious about the government cutting
15:20
Speaker 2: down those hundreds of trees over a holiday weekend with
15:25
Speaker 2: little notice. And she said in her memorandum, breakneck speed
15:30
Speaker 2: to clear trees that pose no harm, the reason disputed,
15:33
Speaker 2: the budget unclear, the environmental impact unstudied, the urgency none,
15:39
Speaker 2: next steps, bulldoze, hundreds more. She said that she was
15:42
Speaker 2: furious in the courtroom and, you know, she chastised the
15:46
Speaker 2: government attorney. Apparently, she raised her voice. At what point
15:51
Speaker 2: does it cross the line?
15:53
Speaker 5: Well, judges shouldn't yell in the courtroom ever, in my
15:56
Speaker 5: humble opinion. And I was a judge for 37 years
15:58
Speaker 5: and I tried very hard not to yell at people.
16:00
Speaker 5: I just think I think judicial demeanor is really important.
16:04
Speaker 5: It's what people remember the most sometimes, even more than
16:06
Speaker 5: the ruling that's made. You know, in a high stakes
16:08
Speaker 5: case like this, that's not really true. But, you know,
16:10
Speaker 5: I think it is unusual for a judge to be
16:12
Speaker 5: so pushed by circumstances that she or he does that.
16:17
Speaker 5: One of the things that troubles me here is I'm
16:18
Speaker 5: not defending Judge Reyes or any judge losing their temper
16:21
Speaker 5: in the courtroom, but what's happening here is that it's
16:24
Speaker 5: been used as a diversion. It's been used as a
16:26
Speaker 5: distraction from what the actual issues are. I don't blame
16:29
Speaker 5: her for being angry. I mean, one can look at
16:31
Speaker 5: how that anger was regulated or not regulated in the
16:34
Speaker 5: particular situation, but the fact that she was angry is
16:36
Speaker 5: totally understandable given the circumstances. So It is somewhat disingenuous
16:41
Speaker 5: to use one of my least favorite words that lawyers use.
16:44
Speaker 5: It's somewhat disingenuous to say, well, this is all about
16:46
Speaker 5: Judge Reyes being emotional in the courtroom. And it's much
16:50
Speaker 5: more about, well, the government had a court order which
16:52
Speaker 5: it disregarded. And that's what that's about. And I have
16:55
Speaker 5: to add here, I think Judge Reyes has been quite
16:58
Speaker 5: unfairly targeted, not only in this case, but in other
17:00
Speaker 5: cases she's handled. And personal attacks referring to her gender,
17:04
Speaker 5: her sexual orientation, her national origin, all sorts of things
17:08
Speaker 5: that are really kind of irrelevant to the legal issues
17:10
Speaker 5: in the cases before her. And I think that's really unfortunate.
17:14
Speaker 2: Judge Reyes was the first Latina and first openly gay
17:18
Speaker 2: judge on the D.C. District Court. And after Trump called
17:21
Speaker 2: her a crazed lunatic in a Truth Social post, she
17:26
Speaker 2: said she got death threats.
17:28
Speaker 5: But what happens is when they use language like that,
17:30
Speaker 5: when they make these ad hominem attacks and they call
17:33
Speaker 5: people crazed lunatics and worse, that incites other people. And
17:37
Speaker 5: you see it on social media. You see within minutes
17:40
Speaker 5: after things like that are said, you can see the
17:42
Speaker 5: viral comments on social media, which... do involve threats. And
17:45
Speaker 5: some of the threats are taken quite seriously by the
17:48
Speaker 5: marshal service, which needs to protect the judges. And I
17:50
Speaker 5: need to say, it's not just against the judges. I mean,
17:53
Speaker 5: the judges are used to controversy. A judge has to
17:55
Speaker 5: have a certain amount of thick skin to deal with controversy.
17:58
Speaker 5: It comes with the job. But your family didn't sign
18:00
Speaker 5: up for it. And threats are being directed against them.
18:03
Speaker 5: You know, I have to say it's not partisan in
18:05
Speaker 5: the sense that it's not only against judges who are
18:07
Speaker 5: on the Democratic side. Justice Barrett's family was threatened when
18:11
Speaker 5: she made a ruling the president didn't like. And Justice
18:14
Speaker 5: Kavanaugh was threatened with assassination by somebody who didn't like
18:17
Speaker 5: rulings that he had made. So it is kind of bipartisan,
18:19
Speaker 5: but there's an atmosphere where rhetoric that attacks judges personally.
18:23
Speaker 5: I want to be really clear. I mean, under the
18:25
Speaker 5: First Amendment, if people want to criticize a ruling, they
18:27
Speaker 5: have every right to do that. And they can criticize
18:29
Speaker 5: the ruling in very sharp terms and they can appeal
18:31
Speaker 5: the ruling and they can... try to stir up public
18:34
Speaker 5: outcry against the ruling, that's fine. But it's out of
18:36
Speaker 5: bounds to go after the judges personally, and it's certainly
18:39
Speaker 5: out of bounds to go after the judges' families personally.
18:42
Speaker 5: And that's what's happened.
18:44
Speaker 2: And those threats have become a serious problem for judges
18:47
Speaker 2: across the country. Getting back to the D.C. cases and
18:52
Speaker 2: the less serious problems the judges are facing, several of
18:56
Speaker 2: the judges have expressed annoyance at having to basically micromanage
19:03
Speaker 2: these construction projects. Judge Christopher Cooper, who is handling the
19:07
Speaker 2: Kennedy Center case, said, can it close for two weeks?
19:11
Speaker 2: Can it close for a season? Can it close for
19:13
Speaker 2: the summer while the air conditioner is being repaired? You're
19:16
Speaker 2: asking me to micromanage the Kennedy Center's construction projects, which, quote,
19:22
Speaker 2: obviously I'm not in a position to do. and it's
19:25
Speaker 2: not my role to do. And Judge Reyes said, I
19:29
Speaker 2: don't want to be the overseer of parks and rec.
19:32
Speaker 2: I'm no Amy Poehler.
19:33
Speaker 5: I mean, Judge Reyes said you don't take any significant
19:36
Speaker 5: actions without getting court approval. That was what her order said.
19:39
Speaker 5: It was an oral order. She did not say, do
19:41
Speaker 5: not cut down this tree located in the middle of
19:44
Speaker 5: the East Potomac golf course. You know, she didn't get
19:46
Speaker 5: down to that level of specificity. And if she tries
19:49
Speaker 5: to do anything about it, if she tries to impose
19:51
Speaker 5: sanctions or, you know, initiate a contempt proceeding, one of
19:54
Speaker 5: the things that DOJ will do is they'll say, well,
19:56
Speaker 5: the order was unclear and, you know, it didn't say
19:59
Speaker 5: we couldn't cut trees down and everything. And this happened
20:01
Speaker 5: with the Kennedy Center, too. It had to do with
20:03
Speaker 5: scaffolding and locking the doors and building a fence and
20:05
Speaker 5: all these other things that Judge Cooper had to deal with.
20:08
Speaker 5: He didn't anticipate all the things they were going to do.
20:10
Speaker 5: And I think the result of the government's actions was
20:13
Speaker 5: that he really was put in the position where he
20:15
Speaker 5: had to micromanage that situation. And judges are not well
20:17
Speaker 5: situated to do that. And that's not their job.
20:20
Speaker 2: What may be more concerning is the judges' growing mistrust
20:25
Speaker 2: of the government lawyers. and doubts about whether they can
20:29
Speaker 2: believe the government lawyers' representations. So in the golf course case,
20:34
Speaker 2: the Justice Department lawyers said there are no final plans.
20:38
Speaker 2: But President Trump, in a Truth Social post, said renovations
20:42
Speaker 2: were starting immediately. And Judge Tanya Chutkin, who's overseeing the
20:47
Speaker 2: Arch case, said the lawyers come in and they say,
20:51
Speaker 2: I don't know. I'm not aware of anything. But that
20:54
Speaker 2: doesn't mean it's not happening. And she said she doesn't
20:57
Speaker 2: want to wake up in the morning to a nightmare
20:59
Speaker 2: scenario where there are bulldozers in Washington's memorial circle.
21:04
Speaker 5: You've really put your finger on what I think is
21:06
Speaker 5: perhaps the most significant thing here. And I don't want
21:09
Speaker 5: to minimize the attacks on the judges or their having
21:12
Speaker 5: to deal with the threats and their having to deal
21:14
Speaker 5: with their families being exposed to this kind of stuff.
21:16
Speaker 5: I mean, I think that's incredibly serious. But I think
21:19
Speaker 5: on a systemic level, the most serious thing is that
21:22
Speaker 5: I think the federal judiciary around the country is really
21:25
Speaker 5: starting to lose trust in the Department of Justice. Now,
21:27
Speaker 5: you know, there's a concept called the presumption of regularity
21:30
Speaker 5: that when DOJ comes into court and says, Judge, this
21:33
Speaker 5: is what's what, and this is what we're doing. There's
21:35
Speaker 5: a presumption that they're doing their jobs in a regular way,
21:38
Speaker 5: that whether you agree with them or not, you can
21:40
Speaker 5: trust that they're telling you something that's truthful. I was
21:42
Speaker 5: a judge, as I said, for 37 years. For 20
21:45
Speaker 5: of those years, I was a federal judge, and I
21:47
Speaker 5: dealt with the DOJ on a pretty regular basis. And
21:49
Speaker 5: I can think of any number of situations where I
21:52
Speaker 5: didn't agree with them about something. They took a legal
21:54
Speaker 5: position I didn't like, or they took a sentencing position
21:56
Speaker 5: I didn't like. There were things we could disagree about.
21:58
Speaker 5: I don't remember a time that I didn't trust them,
22:01
Speaker 5: you know, where I thought somebody was telling me something
22:02
Speaker 5: that wasn't true or that somebody was telling me something
22:05
Speaker 5: for an improper motive, you know, that they were doing
22:08
Speaker 5: something that was outside the scope of their mission as
22:10
Speaker 5: prosecutors or as representatives of the government in civil cases.
22:13
Speaker 5: And I think that's been the experience of judges of
22:15
Speaker 5: my vintage, you know, around the country, that one thing
22:18
Speaker 5: you can count on is that DOJ lawyers are going
22:20
Speaker 5: to be ethical. And that's not presumed anymore. And then
22:23
Speaker 5: you have examples like this that I think really are
22:25
Speaker 5: kind of shaking that faith. And I think that is
22:28
Speaker 5: a serious problem if you think about it, because these
22:30
Speaker 5: people have the power of the state. They represent the government.
22:33
Speaker 5: They are the agents through which the government does so
22:36
Speaker 5: many things in the legal arena. And you really have
22:38
Speaker 5: to be able to trust them. You don't have to
22:40
Speaker 5: agree with them, but you have to be able to
22:41
Speaker 5: trust them. And I think that's the larger narrative here.
22:44
Speaker 2: And there seems to be an uptick in this Justice
22:47
Speaker 2: Department movement. asking judges to recuse themselves or filing complaints
22:53
Speaker 2: against judges. So, for example, after Judge Reyes chastised the
22:58
Speaker 2: government lawyers, they asked her to recuse herself. So, I mean,
23:02
Speaker 2: it's not that they're saying, you know, we're sorry, we
23:04
Speaker 2: should have given you more notice, blah, blah, blah, we
23:07
Speaker 2: shouldn't have cut down the trees. They're saying, No, we
23:10
Speaker 2: want you off this case because you're biased against us.
23:13
Speaker 5: Yeah, because you yelled at us, basically. See, this is
23:16
Speaker 5: what I mean about it's a diversionary tactic. You know,
23:18
Speaker 5: the cases, as you were just describing, I mean, there
23:20
Speaker 5: was an order made. The order, at least arguably, was violated.
23:23
Speaker 5: She said no major actions. They represented that no major
23:26
Speaker 5: actions were going to be taken. Then they cut down
23:28
Speaker 5: hundreds of trees. Well, so that's a problem, right? That's
23:32
Speaker 5: what got her mad. And you can say, well, she
23:35
Speaker 5: probably can look back on it and say, it would
23:36
Speaker 5: have been nice if I had regulated my voice a
23:39
Speaker 5: little bit. But that has nothing to do with the
23:41
Speaker 5: legal merits of the case. It has nothing to do
23:42
Speaker 5: with the correctness of the order she made or its incorrectness.
23:45
Speaker 5: And so what they've done is they've made her the issue,
23:48
Speaker 5: which is... just tremendously unfair to her. And it's misleading
23:52
Speaker 5: to the public as to what the case is about.
23:54
Speaker 5: You know, if she had made an order out of
23:56
Speaker 5: the blue that didn't have any evidentiary basis, it was
23:58
Speaker 5: outside of her powers. It was just, you know, a
24:01
Speaker 5: judge being high handed and doing things that she didn't
24:03
Speaker 5: have the power to do. That's different. I mean, that's
24:06
Speaker 5: something that you might want to recuse a judge who
24:07
Speaker 5: exhibited that kind of behavior. That's not what happened.
24:10
Speaker 2: Well, I have a feeling there may be more fireworks
24:13
Speaker 2: coming soon to a D.C. courtroom because the Trump administration
24:17
Speaker 2: has said that it's going to go forward with building
24:20
Speaker 2: the arch in early November, despite the court case not
24:25
Speaker 2: being resolved. We'll see what Judge Chutkin has to say
24:28
Speaker 2: about that. Thanks so much for the discussion, Judge Fogel.
24:31
Speaker 2: It's always great to hear a judge's point of view.
24:34
Speaker 2: That's former Judge Jeremy Fogel. Coming up next. The SEC
24:39
Speaker 2: is taking a one-person-is-king approach. I'm June Grosso, and this
24:44
Speaker 2: is Bloomberg. As chairman of the Securities and Exchange Commission,
24:49
Speaker 2: Paul Atkins has been true to President Trump's deregulatory agenda.
24:54
Speaker 1: We at the SEC are delivering on your agenda. We're
24:57
Speaker 1: making IPOs great again, to continue on your theme, by
25:00
Speaker 1: cutting red tape that discourages companies from going public. Under
25:04
Speaker 1: your leadership, Mr. President, the IPO market is booming.
25:07
Speaker 2: Under Atkins, Wall Street's top regulator has been cutting red
25:12
Speaker 2: tape and doing less regulating. There's been a dramatic reduction
25:16
Speaker 2: in enforcement actions, with the number of enforcement cases falling 57%
25:22
Speaker 2: below the average for the last eight years. It signals
25:26
Speaker 2: a new norm, and now a rule change will give
25:29
Speaker 2: Atkins even more power to run an agency historically independent
25:35
Speaker 2: and bipartisan, basically alone. The SEC has approved a quorum
25:41
Speaker 2: change without advance notice and comment that allows a single
25:45
Speaker 2: commissioner vote if only two commissioners are serving and one
25:49
Speaker 2: is disqualified. My guest is business law professor Eric Talley
25:54
Speaker 2: of Columbia Law School. Eric, the SEC is supposed to
25:57
Speaker 2: have a bipartisan makeup with no more than three commissioners
26:01
Speaker 2: belonging to one party. What's the makeup of the SEC
26:05
Speaker 2: right now?
26:06
Speaker 1: Well, the makeup right now is three going on two.
26:09
Speaker 1: They're basically about to end up with only two commissioners
26:12
Speaker 1: on a five-member body. And you're exactly right. It's supposed
26:17
Speaker 1: to be no more than a 3-2 breakdown favoring the
26:21
Speaker 1: president's party. So fully staffed, the SEC should be three
26:25
Speaker 1: Republicans and two Democrats. They're now basically two Republicans. And
26:31
Speaker 1: that creates all kinds of interesting issues when it comes
26:34
Speaker 1: not only to like Democratic legitimacy and so forth, but
26:37
Speaker 1: also just the plumbing of how the SEC goes about
26:41
Speaker 1: doing its business.
26:42
Speaker 2: They approved a quorum change without advance notice and comment.
26:47
Speaker 3: Yes.
26:48
Speaker 1: So they recently basically with the two remaining members of
26:52
Speaker 1: the commission, both Republicans, they passed at the beginning of
26:56
Speaker 1: October a rule change that basically says the following, that
27:00
Speaker 1: If either of the two commissioners or if even in
27:04
Speaker 1: broader sense, if we're more fully staffed, commissioners have to
27:07
Speaker 1: drop out of a decision because of a conflict of interest.
27:10
Speaker 1: Maybe they worked for a company that's implicated in a
27:12
Speaker 1: particular decision and they therefore have to recuse themselves. It
27:16
Speaker 1: is possible for as little as a single commissioner to
27:19
Speaker 1: constitute a quorum and then vote on a particular rule
27:23
Speaker 1: change or issue related to a litigation or enforcement matter.
27:28
Speaker 1: some people sort of viewed that that was kind of really,
27:31
Speaker 1: really sort of liberalizing and possibly causing the SEC to
27:36
Speaker 1: become very unrepresentative. And to some extent, that argument is true,
27:41
Speaker 1: but it's important to realize that the starting point for
27:44
Speaker 1: this rule change was actually set into motion in the mid-1990s.
27:50
Speaker 1: The last time that we had a two-person commission, Arthur
27:53
Speaker 1: Levitt and Stephen Wallman both Democrats who were left over
27:58
Speaker 1: on the commission, there was a 1995 rule change that
28:02
Speaker 1: kind of went most of the way to where this
28:05
Speaker 1: current rule change was. It wasn't dealing with recusals and conflicts,
28:09
Speaker 1: but it basically said, you know, if the SEC is
28:12
Speaker 1: understaffed and it only has two commissioners, that's enough to
28:15
Speaker 1: constitute a quorum or one commissioner and that's enough to
28:18
Speaker 1: constitute a quorum.
28:20
Speaker 2: And were there any challenges to the rule? Any lawsuits?
28:23
Speaker 1: It was challenged in the mid-1990s as being beyond the
28:28
Speaker 1: scope of what the SEC could do, and they needed
28:30
Speaker 1: to open up to notice and comment. And in a
28:33
Speaker 1: couple of cases in 1996, courts both in New York
28:37
Speaker 1: and the District of Columbia sort of rejected those challenges
28:40
Speaker 1: and said, no, the SEC actually has been empowered to
28:44
Speaker 1: set its own protocols for establishing what its quorum is,
28:48
Speaker 1: and it is legitimate for the SEC then, a Democrat-controlled
28:51
Speaker 1: SEC of two people, to basically change the rules. And
28:55
Speaker 1: so that was the backdrop. And the key change made
28:58
Speaker 1: in this most recent move is to deal with what
29:01
Speaker 1: happens when you have possibly two, but one of them
29:04
Speaker 1: has to recuse themselves. That wasn't covered in the earlier
29:07
Speaker 1: rule change. And that's essentially what the SEC has done here.
29:12
Speaker 1: You know, I think when they made this rule change,
29:14
Speaker 1: they certainly were looking at these mid-1990s cases that basically
29:18
Speaker 1: said it's within your authority to do it. You don't
29:21
Speaker 1: have to work around the notice and comment period when
29:24
Speaker 1: you do it as well. So those Clinton administration era
29:29
Speaker 1: legal precedents were already sort of setting the stage for
29:32
Speaker 1: what the SEC did this time.
29:34
Speaker 2: Senator Elizabeth Warren said, I get that right now the
29:37
Speaker 2: Republicans are entitled to be in the majority. This just
29:45
Speaker 2: has the SEC mimicking how Donald Trump thinks the world
29:49
Speaker 2: is supposed to work.
29:50
Speaker 1: Senator Warren's not incorrect. In fact, there's one angle that
29:54
Speaker 1: you could look at this rule change and say, look,
29:56
Speaker 1: what the SEC is trying to do is to adapt
29:59
Speaker 1: to situations that, for whatever reason, it turns out to
30:03
Speaker 1: be short-staffed. And there are a lot of rationales for
30:07
Speaker 1: arguing why the SEC should still be able to continue
30:10
Speaker 1: to do business, even when it's short-staffed. If the commission
30:13
Speaker 1: ground to a halt because there just weren't enough commissioners
30:17
Speaker 1: to constitute a quorum, that would in some ways be
30:20
Speaker 1: disastrous for the well-functioning sort of operation of securities markets.
30:25
Speaker 1: So viewed from that perspective, this rule change seems like minor,
30:29
Speaker 1: and it also is not something that one would necessarily
30:33
Speaker 1: on pragmatic grounds want to push back on. But Senator
30:35
Speaker 1: Warren also has an interesting point when she notes that, look,
30:38
Speaker 1: there's kind of a question of when does a temporary
30:42
Speaker 1: urgency or emergency become a permanent strategy, right? If this
30:47
Speaker 1: turns out to be something that the SEC is able
30:50
Speaker 1: to do and able to do on an ongoing basis
30:53
Speaker 1: without any compulsion to go up to $ 5. permanent members
30:58
Speaker 1: of the FCC, then if the chair is kind of
31:01
Speaker 1: well aligned with the president, then the president might be
31:04
Speaker 1: perfectly happy just letting things continue to go forward with
31:08
Speaker 1: only one or two commissioners that are very much aligned
31:11
Speaker 1: with him. And it almost becomes like a policy option
31:14
Speaker 1: from the standpoint of the president. And there clearly comes
31:17
Speaker 1: some point where the congressional intent in setting up this
31:21
Speaker 1: split commission was exactly to avoid that process These were
31:26
Speaker 1: sort of Band-Aid fixes that were put into place to
31:29
Speaker 1: take account of those situations where, for whatever reason, the
31:32
Speaker 1: commission is short-staffed. But there is definitely a danger, and
31:36
Speaker 1: this was cited back in the mid-90s as well under
31:38
Speaker 1: the Clinton administration, you know, that temporary Band-Aid may actually
31:42
Speaker 1: turn out to be like the gauze that wrapped up
31:44
Speaker 1: the entire mummy, right? And there's really no alternative other
31:48
Speaker 1: than to wait for the president to nominate and the
31:51
Speaker 1: Senate to confirm more people onto the commission. And so
31:55
Speaker 1: that is sort of the battle that I think we
31:57
Speaker 1: are locked in. It is a legitimate complaint to say
32:00
Speaker 1: that this sort of sows the seeds of almost like
32:03
Speaker 1: a permanent strategy of keeping the SEC short-staffed. But by
32:07
Speaker 1: the same token, the SEC also needs some flexibility if
32:11
Speaker 1: for independent reasons it finds itself sort of understaffed relative
32:15
Speaker 1: to its official regulatory roster.
32:18
Speaker 2: This seems to be a bit of a pattern of
32:21
Speaker 2: the Trump administration. Right now, the EEOC has only three
32:26
Speaker 2: out of five commissioners, and it needs four for a quorum,
32:30
Speaker 2: so it can't act. Similarly, the Federal Election Commission has
32:35
Speaker 2: only two of six commissioners, so it doesn't have a
32:38
Speaker 2: quorum either. The FTC has two out of five commissioners.
32:44
Speaker 2: The CFTC has one out of five. And the Election
32:48
Speaker 2: Assistance Commission has zero commissioners instead of four. So does
32:54
Speaker 2: this seem to be a strategy, a tactic?
32:57
Speaker 1: It sort of is. And in many ways, I think
32:59
Speaker 1: that this represents a longstanding collision of where sort of,
33:04
Speaker 1: you know, the schoolhouse rock kind of design of how
33:07
Speaker 1: you want to set these administrative agencies up collides with
33:10
Speaker 1: both the political reality and also the functional reality that
33:13
Speaker 1: they may be understaffed. I will note that this isn't
33:17
Speaker 1: the first rodeo both at the SEC. I already talked
33:20
Speaker 1: about the mid-1990s change. And also the Federal Trade Commission,
33:23
Speaker 1: the FTC, in September of 2005, also changed its quorum
33:27
Speaker 1: rule to count a majority of commissioners in office and
33:31
Speaker 1: not recused as being a quorum. And they relied on
33:34
Speaker 1: one of the cases that basically upheld the SEC's rule.
33:37
Speaker 1: So there is a little bit of a sense that
33:40
Speaker 1: over time, probably over the span of about 30 years,
33:43
Speaker 1: the agencies have sort of pushed, sometimes under Democrat administrations,
33:48
Speaker 1: sometimes under Republican administrations, for some wiggle room to compensate
33:52
Speaker 1: for situations where they're short-staffed. I think a lot of
33:55
Speaker 1: people in all of these eras have pointed out that
33:58
Speaker 1: this is kind of an invitation, sort of catnip for
34:01
Speaker 1: Tom Fuller and shenanigans to sort of keep the commission
34:04
Speaker 1: permanently understaffed and therefore answerable in a much more homogenous
34:09
Speaker 1: way to the president. And, you know, in some ways,
34:12
Speaker 1: the Trump administration didn't create this problem, but they have
34:16
Speaker 1: absolutely noticed it and have sort of exploited it on
34:20
Speaker 1: multiple fronts.
34:21
Speaker 2: Eric, despite the precedents you were talking about, could someone
34:25
Speaker 2: sue over this or will someone sue over this? Or
34:28
Speaker 2: could defendants challenge the quorum change?
34:32
Speaker 1: The rule change itself is probably going to be very
34:36
Speaker 1: difficult to challenge. We've got 30 years of precedents. other
34:39
Speaker 1: commissions that have essentially relied on these important cases. But
34:44
Speaker 1: one of the things that's happening at the same time
34:47
Speaker 1: is a movement, particularly within the Supreme Court, to pull
34:51
Speaker 1: back on how much deference they give to administrative agencies
34:56
Speaker 1: when those agencies change their own rules. Starting about a
35:01
Speaker 1: year ago, the Supreme Court said, we're not going to
35:03
Speaker 1: believe everything you say, agency. You're going to have to
35:06
Speaker 1: justify everything. why you're doing what you're doing and why
35:09
Speaker 1: it fits within your regulatory and statutory mandate. And so
35:14
Speaker 1: there is a real sense in which even though the
35:17
Speaker 1: Trump administration has seized upon almost a pre-existing hall pass
35:22
Speaker 1: for these agencies to reduce their quorum requirements while they're
35:25
Speaker 1: short staffed, at the same time, the Supreme Court has
35:29
Speaker 1: ratcheted up its scrutiny on these administrative agencies, largely kind
35:33
Speaker 1: of responding to legacy problems from 10 or 20 years ago,
35:37
Speaker 1: But I would not be surprised if there were challenges
35:40
Speaker 1: made along those lines. And in fact, there's one sort
35:43
Speaker 1: of shareholder advocate, James McRitchie, who's filed a petition asking
35:47
Speaker 1: the SEC to rescind this amendment or put it into
35:51
Speaker 1: the notice and comment process. Now, this is an administrative petition.
35:55
Speaker 1: It's not really a lawsuit yet, but it certainly could
35:58
Speaker 1: mature into one.
35:59
Speaker 2: Eric, some on Wall Street may be breathing sighs of
36:02
Speaker 2: relief because of the dramatic reduction in the SEC's enforcement actions.
36:08
Speaker 2: Is part of that due to the lack of Democratic commissioners,
36:11
Speaker 2: or is it all about Atkins?
36:13
Speaker 1: I would be very surprised if it weren't more along
36:16
Speaker 1: the lines of, we just want to implement a policy
36:19
Speaker 1: that is more deregulatory. So the SEC sort of pulling back,
36:23
Speaker 1: both pragmatically, because there aren't that many commissioners anymore, and
36:26
Speaker 1: also as a policy matter, than there would seem to
36:30
Speaker 1: be at least currently in place. Fewer sort of swords
36:33
Speaker 1: of Damocles swaying over companies and CEOs and boards of directors.
36:38
Speaker 1: But one thing to remain mindful of as well, June,
36:41
Speaker 1: is we're halfway through the second Trump administration. In a
36:45
Speaker 1: lot of securities fraud situations, that statute of limitations is
36:50
Speaker 1: far longer. It can be up to five years. And
36:52
Speaker 1: so if you're a company right now sort of saying, hey, look,
36:55
Speaker 1: the SEC is asleep at the wheel, Maybe we're not
36:59
Speaker 1: going to have to worry too much about compliance with
37:01
Speaker 1: their mandates because they're really not going to turn around
37:04
Speaker 1: and start enforcement actions against us. I'd be a little
37:07
Speaker 1: bit reserved about that. First of all, private plaintiffs can
37:09
Speaker 1: still be suing you. And second, who knows what's going
37:11
Speaker 1: to happen in the next presidential election? Who knows where
37:13
Speaker 1: the SEC is going to become newly energized to start
37:17
Speaker 1: going after situations that haven't yet hit their statute of limitations?
37:21
Speaker 2: A new administration can mean a complete turnaround at these agencies. Thanks, Eric.
37:27
Speaker 2: That's Professor Eric Talley of Columbia Law School. And that's
37:31
Speaker 2: it for this edition of the Bloomberg Law Show. Remember,
37:34
Speaker 2: you can always get the latest legal news on our
37:36
Speaker 2: Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,
37:40
Speaker 2: and at www.bloomberg.com slash podcast slash law. And remember to
37:46
Speaker 2: tune into the Bloomberg Law Show every weeknight at 10 p.m.
37:50
Speaker 2: Wall Street time. I'm June Grosso, and you're listening to Bloomberg.