Latest / Bloomberg Law / Weekend Law: Iran War, Live Nation Trial Back On & War Bets

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Weekend Law: Iran War, Live Nation Trial Back On & War Bets · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
0:08
Speaker 2: We've won. Let me tell it. We've won. You know,
0:11
Speaker 2: you'd never like to say too early. You won. We won.
0:14
Speaker 2: We won the best in the first hour, it was over.
0:16
Speaker 3: They are absolutely being destroyed. Iran is being absolutely decimated.
0:24
Speaker 3: The situation with Iran is moving along very rapidly.
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Speaker 2: It's doing very well. Our military is unsurpassed, has never
0:33
Speaker 2: been anything like it. Nobody's ever seen anything like it.
0:36
Speaker 4: President Trump declared victory over Iran on Wednesday, as the
0:40
Speaker 4: war that's in Gulf, the Middle East and upended energy
0:44
Speaker 4: flows and global markets hits the two week mark with
0:48
Speaker 4: no end in sight, and several Democratic lawmakers like Senator
0:52
Speaker 4: Tammy Baldwin, have labeled it an illegal war.
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Speaker 5: We were not under attack, We were not even under
1:00
Speaker 5: imminent threat of attack, which means this is a war
1:04
Speaker 5: of choice, and it means that the President has violated
1:08
Speaker 5: both the Constitution and law to go to war.
1:13
Speaker 4: Joining me to discuss whether the Iran war is a
1:15
Speaker 4: violation of US law or international law. Is cal Rostiella,
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Speaker 4: a professor at UCLA Law School and an expert in
1:24
Speaker 4: international law. So Cal under the Constitution, the President commands
1:29
Speaker 4: the armed forces and directs foreign relations, but only Congress
1:34
Speaker 4: has the power to declare war. So is the Iran
1:38
Speaker 4: war illegal under US law?
1:41
Speaker 6: I would say that yes, it's correct that Congress is
1:45
Speaker 6: empowered to declare war under the Constitution. But Congress has
1:48
Speaker 6: only done so five times in American history, and we've
1:51
Speaker 6: used force over two hundred times. So it's pretty well
1:54
Speaker 6: established that there's lots of uses of force that the
1:57
Speaker 6: president can engage in without a declaration of war. And
2:01
Speaker 6: in fact, in the post un Charter world, a declaration
2:04
Speaker 6: of war doesn't even really make sense. The system is
2:07
Speaker 6: predicated on the idea of self defense as the main
2:10
Speaker 6: rationale for the use of force. But in any event,
2:12
Speaker 6: the main thing is what's the role of Congress in this?
2:14
Speaker 6: And I think in many other instances we see Congress
2:18
Speaker 6: doing something short of a declaration, like an authorization of
2:22
Speaker 6: some kind. You go back to the Gulf of Tonkin
2:24
Speaker 6: resolution during the Vietnam War, or the authorization to use
2:27
Speaker 6: military force before the Iraq War two thousand and one
2:30
Speaker 6: in Afghanistan. And so it is often the case that
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Speaker 6: Congress plays some supportive role short of a declaration. We
2:38
Speaker 6: obviously don't have that here, and so then would.
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Speaker 4: You say that this is not legal under US law?
2:46
Speaker 1: I wouldn't say it's not legal.
2:47
Speaker 6: It's difficult to answer that because the parameters of Congress's
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Speaker 6: powers and the president's.
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Speaker 1: Powers have sort of evolved over time.
2:55
Speaker 6: I mean, even the Framing generation understood the idea that
2:58
Speaker 6: the president had the authority to hell sudden attacks.
3:01
Speaker 1: What exactly that means.
3:02
Speaker 6: And what role Congress should play has been sort of
3:05
Speaker 6: a you know, a bit of a struggle, a bit
3:07
Speaker 6: of a dance between the two branches. All of that said,
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Speaker 6: I think, you know, it is certainly a kind of
3:12
Speaker 6: customary practice generally to seek some degree of Congressional approval.
3:18
Speaker 6: But it's also the case that the executive branch has
3:19
Speaker 6: always resisted the idea that they have to do it.
3:21
Speaker 6: And so the War Power's Act was a nineteen seventies era,
3:25
Speaker 6: maybe a high point of Congress's attempt to claw back
3:28
Speaker 6: some of its control and the wake of President Nixon
3:31
Speaker 6: and the kind of idea that the presidency was.
3:33
Speaker 1: A bit wayward, But the executive branch has always been.
3:35
Speaker 6: Resistant to it and always kind of argued either that
3:38
Speaker 6: it doesn't apply or it isn't fully legal, or they're
3:40
Speaker 6: providing information but they don't have to. They've given different
3:43
Speaker 6: articulations over time, but they don't like it, and they
3:45
Speaker 6: don't feel that they're really, you know, forced.
3:48
Speaker 1: To do a lot of things that congressponts to do.
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Speaker 6: So it's really hard to say whether this is fully
3:53
Speaker 6: a violation without Congress actually asserting itself in some way.
3:57
Speaker 6: It's more of an invitation to struggle between these two
4:00
Speaker 6: branches rather than clear, brightline rules.
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Speaker 4: What about international law, does the Iran war violate the
4:07
Speaker 4: UN Charter?
4:08
Speaker 1: Also a difficult question.
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Speaker 6: I would say most international lawyers outside the US government,
4:13
Speaker 6: and maybe outside state departments and foreign ministries generally would
4:16
Speaker 6: say yes. The framework that's laid out in the UN
4:19
Speaker 6: Charter is essentially that you can use force if an
4:23
Speaker 6: armed attack occurs, and then there's a kind of secondary
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Speaker 6: question about what if it's about to occur, about the
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Speaker 6: imminence to mention of that, or you can use force
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Speaker 6: if the Security Council authorizes it, And those are the
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Speaker 6: only two instances, and neither of those are true here
4:38
Speaker 6: in the view of I think the majority of international
4:40
Speaker 6: lawyers around the world, again, outside governments, outside the US government,
4:44
Speaker 6: the Israeli government, maybe some other governments. So one of
4:46
Speaker 6: the interesting features about this particular conflict is a bit
4:50
Speaker 6: like the Maduro raid earlier this year, there's not an
4:54
Speaker 6: enormous amount of approbrium headed in the direction of the US.
4:58
Speaker 6: So there is some, of course, but there's more approval
5:01
Speaker 6: or acquiescence than you might have expected. And I think
5:04
Speaker 6: that partly reflects the fact that in both of those cases,
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Speaker 6: Venezuela and Iran, these are states that are not widely liked,
5:11
Speaker 6: that are generally viewed as bad actors, and so politically
5:14
Speaker 6: it's more difficult.
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Speaker 1: But it's also the.
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Speaker 6: Case that there's an argument that the US, certainly I
5:18
Speaker 6: think is making and will make. The administration is not
5:21
Speaker 6: great at making its case. In fact, they really have
5:24
Speaker 6: not made much of an effort at all to do that.
5:26
Speaker 6: But to degree they have, it's sort of sounding in
5:28
Speaker 6: some kind of self defense rationale, and you can make
5:30
Speaker 6: the argument, I don't know if it's really persuasive, but
5:33
Speaker 6: you can make the argument that we are in a
5:34
Speaker 6: long term conflict with eromic dates back decades, and that
5:39
Speaker 6: in a sense is the continuation of an ongoing conflict
5:42
Speaker 6: rather than a new conflict. If you accept that idea,
5:45
Speaker 6: then it can be seen as lawful. I think it's
5:48
Speaker 6: a stretch, but there isn't really clear rules about that
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Speaker 6: about how much time passes before a conflict is over.
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Speaker 4: Aren't there strict legal requirements for whether it's considered self
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Speaker 4: defense under Article fifty one of the un Charter? You know,
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Speaker 4: whether you actually need an armed attack, not just a
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Speaker 4: potential threat.
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Speaker 6: Yes, I mean, the black Letter law is pretty clear
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Speaker 6: that if an armed attack occurs, you have a customer
6:15
Speaker 6: international law and a treaty based un Charter based right
6:18
Speaker 6: of self defense.
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Speaker 1: And that could be collective or individual.
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Speaker 6: In other words, you know, you could protect an ally
6:22
Speaker 6: and vice versa, which obviously has relevance for Israel in
6:25
Speaker 6: the United States. But if an armed attack occurs, that
6:29
Speaker 6: language in the un Charter makes it sound as if
6:31
Speaker 6: you have to wait for the attack, But it's long
6:34
Speaker 6: that understood, dating back to the nineteenth century, that that's
6:36
Speaker 6: not the case, and that an imminent attack is sufficient
6:40
Speaker 6: grounds for engaging in self defense. Now, the question of
6:43
Speaker 6: how imminent has been a difficult one. Obviously, you know,
6:47
Speaker 6: just conceptually it's not really clear what does that mean.
6:49
Speaker 6: Does the missiles have to be in the air or
6:51
Speaker 6: something like that over time, especially in the last let's
6:54
Speaker 6: say a couple of decades. This was relevant for the
6:56
Speaker 6: Iraq War. The position the US has taken has been
7:00
Speaker 6: to extend the time period of imminence such that it's
7:04
Speaker 6: more in the role of preemptive war or even preventative war,
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Speaker 6: and that isn't widely accepted, but I think it's fair
7:11
Speaker 6: to say that a lot of states do sort of
7:14
Speaker 6: agree that you can't in a time of let's say,
7:16
Speaker 6: high technology with warfare, weapons of mass destruction, etc. You
7:20
Speaker 6: can't really wait till the attack is ongoing or even
7:24
Speaker 6: about to be launched. You may need to act a
7:26
Speaker 6: bit beforehand. But you know, that's a very slippery slope,
7:29
Speaker 6: and many international lawyers find that concerning. And of course
7:32
Speaker 6: most countries in the world are going to find a
7:34
Speaker 6: rule like that concerning because they are much more likely
7:37
Speaker 6: to be attacked than to be attacking, so they worry
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Speaker 6: about that.
7:41
Speaker 4: Broading this out, there's been a string of unilateral military
7:45
Speaker 4: actions taken by the Trump administration since December. The US
7:51
Speaker 4: bombed Nigeria, killed alleged drug smugglers in more than forty
7:55
Speaker 4: strikes in the Caribbean and the Pacific, attacked Venezuela and
7:59
Speaker 4: kidnap app It's president and now attacked Auran. Would those
8:03
Speaker 4: other strikes be considered a violation of international law?
8:08
Speaker 6: Yeah, I mean, it's an amazing string of events, disturbing string.
8:13
Speaker 6: Some of them are really blatant violations of international law. So,
8:17
Speaker 6: for example, the boat strikes would maybe be the most
8:20
Speaker 6: blatant in the sense that really they haven't even offered
8:23
Speaker 6: a very coherent argument about it. But taking out those
8:27
Speaker 6: are civilians by almost all accounts, we're not actually in
8:30
Speaker 6: a conflict with cartels, so that may be the most
8:33
Speaker 6: extreme kind of clear case. And then maybe Iran might
8:36
Speaker 6: be at the other end, if you buy the argument
8:38
Speaker 6: that we're in some kind of long standing conflict that's
8:40
Speaker 6: continuing on. But when you put them all together, stepping
8:43
Speaker 6: out of the law for a second, obviously the political
8:45
Speaker 6: pattern is really striking and disturbing for a number of reasons.
8:48
Speaker 6: One because the United States is increasingly using force abroad
8:53
Speaker 6: in ways that are I think upsetting to many states
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Speaker 6: violating many rules of international law. Let just many norms
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Speaker 6: of behavior, whether they're legal or not. A good example
9:04
Speaker 6: would be threatening Greenland, even if that was not a
9:06
Speaker 6: serious threat, sort of an offhand threat or something like that.
9:09
Speaker 6: First of all, you're not allowed to threaten to use
9:11
Speaker 6: force under the UN Charter. That's also a violation. But
9:14
Speaker 6: regardless of whether the threat was really a serious one
9:16
Speaker 6: or not, just the very idea that a NATO ally
9:19
Speaker 6: would be subjected to some kind of threat is really
9:23
Speaker 6: shocking and was shocking to many of.
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Speaker 1: Our closest allies. So when you put all.
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Speaker 6: Of these things together, it does seem sort of incredible.
9:30
Speaker 6: The amount of intervention that's taking place, the amount of
9:33
Speaker 6: military force. Why is it happening? I cannot answer that question.
9:37
Speaker 6: I think no one really knows. There are so many
9:40
Speaker 6: different theories of various conspiratorial levels about whether there's a
9:43
Speaker 6: pattern here. It does seem like the Trump administration often
9:46
Speaker 6: acts without any of the elaborate process that would go
9:50
Speaker 6: on normally in an administration, and maybe even occurred in
9:53
Speaker 6: the first Trump administration with regard to the use of force,
9:56
Speaker 6: meaning lots of process through the National Security Council, through
9:59
Speaker 6: the State Department, through DoD, et cetera. Thinking these things through,
10:03
Speaker 6: elaborating a strategy, examining risks, that all seems to be
10:06
Speaker 6: short circuited in a lot of these cases, and so
10:09
Speaker 6: it's not clear that there is a strategy.
10:12
Speaker 1: In fact, I sort of doubt it.
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Speaker 4: So there are reports that Iran maybe planning to retaliate
10:19
Speaker 4: against the US with drone strikes in California. How would
10:23
Speaker 4: international law view that.
10:25
Speaker 6: I have to say, it seems, you know, maybe a
10:27
Speaker 6: bit far fetched. But Iran has shown that it has
10:29
Speaker 6: power to take actions, either through itself or its proxies
10:32
Speaker 6: in other places.
10:32
Speaker 1: So it's not to be dismissed completely under the laws
10:35
Speaker 1: of war.
10:36
Speaker 6: If we are in fact in a conflict, then Iran
10:38
Speaker 6: can attack us as we are attacking them. But you
10:41
Speaker 6: can't attack civilians. You can't deliberately target civilians, and so
10:46
Speaker 6: those same rules would apply on either side. Deliberate targeting
10:50
Speaker 6: of civilians is not permitted. You know, there's a bunch
10:53
Speaker 6: of rules about proportionality and distinction and so forth. Complicated
10:56
Speaker 6: set of rules that sometimes can seem academic when you
10:59
Speaker 6: actual apply the munch real cases. But either way, drone
11:02
Speaker 6: strikes against a school or a hospital or something like
11:05
Speaker 6: that randomly in California, no, that would be a violation.
11:09
Speaker 6: But against a military target. If we are in fact
11:11
Speaker 6: in an armed conflict, then that's part of war. For example,
11:14
Speaker 6: the ship that was targeted by the United States thousands
11:16
Speaker 6: of miles from Iran and sung would be an example
11:19
Speaker 6: of an attack like that.
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Speaker 1: Wasn't a drone, but it's the same idea.
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Speaker 4: And talking about strikes against a school, Defense Secretary Pete
11:27
Speaker 4: Hegseth says the airstrike that killed more than one hundred
11:30
Speaker 4: and eighty people, mostly children at a girls' school in
11:34
Speaker 4: Iran is being investigated. Thanks for joining me, cal that's
11:38
Speaker 4: Professor kl Rostiella of UCLA Law School. Coming up next
11:43
Speaker 4: is Live Nation Off the Hook. I'm June Grosso and
11:46
Speaker 4: you're listening to Bloomberg.
11:49
Speaker 7: It's a pretty bad deal. So the core issue here
11:52
Speaker 7: was that Live Nation and a ticketmaster. When they merged
11:55
Speaker 7: a few years back, they became so powerful that they
11:57
Speaker 7: were able to raise ticket prices.
12:00
Speaker 4: Mark anti trust trial against Live Nation was supposed to
12:03
Speaker 4: fix the exorbitant fees that have made concert tickets a
12:07
Speaker 4: luxury item, not to mention the technology that makes them
12:11
Speaker 4: a headache to purchase. But then on Monday, only four
12:15
Speaker 4: days into the trial, it came crashing to a stop
12:19
Speaker 4: with an unexpected settlement between the Justice Department and the
12:23
Speaker 4: world's largest live events ticket seller. It even took the
12:27
Speaker 4: trial judge by surprise. But the trial isn't over yet.
12:31
Speaker 4: A bipartisan group of more than thirty states has refused
12:35
Speaker 4: to settle and will resume the anti trust trial on Monday,
12:39
Speaker 4: taking over the lead from the Justice Department. Like North
12:43
Speaker 4: Carolina's Attorney General Jeff Jackson, the state ags say it's
12:48
Speaker 4: a bad deal for consumers that keeps Live Nations monopoly
12:52
Speaker 4: in place.
12:54
Speaker 7: The vast majority of the ages who started on this
12:56
Speaker 7: lawsuit are going to stay on this lawsuit. That's Republicans
12:59
Speaker 7: and Democrats, a couple dozen of us from across the country.
13:03
Speaker 7: We're working out the timeline, but we've told Life Nation
13:06
Speaker 7: they can expect to see us back in court very.
13:08
Speaker 4: Soon, in fact, as soon as Monday at eight thirty am.
13:12
Speaker 4: My guest is Anti Truss law expert Harry First, a
13:16
Speaker 4: professor at NYU Law School. Harry, let's start with the
13:19
Speaker 4: trial judge's reaction to this surprise settlement. Judge of Runs
13:24
Speaker 4: Subramani scolded the parties that are hearing on Tuesday. He
13:28
Speaker 4: said the DOJ's lack of transparency about its settlement negotiations
13:33
Speaker 4: was mind boggling, and the party's actions strain the boundaries
13:37
Speaker 4: of acceptable conduct. I mean, four days into the trial,
13:41
Speaker 4: the secrecy, what's up here?
13:44
Speaker 8: Well, these are great questions. You know, we can speculate.
13:48
Speaker 8: I'm glad to speculate, but we don't know for sure.
13:50
Speaker 8: Here's my guess. My guess is the trial staff. They
13:54
Speaker 8: have really top people trying this case. My guess is
13:58
Speaker 8: they were blindsided. Is that they were not involved in
14:03
Speaker 8: this settlement. These are real, long serving professionals, both in
14:08
Speaker 8: and out of the Justice Department. I think that this
14:11
Speaker 8: was done above them, That's a guess. And the termsheet
14:16
Speaker 8: I've never seen. This is the crazy term sheet. What
14:19
Speaker 8: is this a deal? The term sheet is signed by
14:22
Speaker 8: the acting Assistant Attorney General, not by anyone on the
14:25
Speaker 8: trial staff. And for this to become a what's called
14:30
Speaker 8: a consent to cree that the judge enters, it's got
14:33
Speaker 8: to look a little more formal than this. So whether
14:36
Speaker 8: they'll sign it or not, I think would be a
14:38
Speaker 8: good question. And I don't know. I think that's to
14:41
Speaker 8: look forward to. And I would be close to certain
14:45
Speaker 8: that the states were completely out of the loop on this.
14:48
Speaker 8: I think everyone was concerned that this case was going
14:51
Speaker 8: to be sold out, and I mean sold out in
14:54
Speaker 8: the literal sense that this was a political deal. And
15:00
Speaker 8: and you know, whether it's actual money changing hands or
15:03
Speaker 8: just straight lobbying that this is another example of, you know,
15:07
Speaker 8: something happening like that, and you know, people were watching
15:10
Speaker 8: this case to see if was ever going to go
15:12
Speaker 8: to trial, you know, whether it would be settled out
15:15
Speaker 8: before with exactly the thing that we see, which is
15:18
Speaker 8: that Live Nation doesn't have to give up Ticketmaster.
15:21
Speaker 4: You're right that Live Nation CEO Michael Rapino was apparently
15:26
Speaker 4: in DC signing the last minute deal with the acting
15:29
Speaker 4: head of the Antitrust Division. Under the terms, Live Nation
15:33
Speaker 4: will open up concert venues it owns to rival ticketing services,
15:38
Speaker 4: and it will allow rival concert promoters to put on
15:41
Speaker 4: shows at its venues and cap fees at fifteen percent.
15:45
Speaker 4: That doesn't address the main relief sought in the case,
15:47
Speaker 4: which is Live Nations selling Ticketmaster. So what does the
15:51
Speaker 4: public get from this settlement?
15:55
Speaker 8: A little bit older and deeper in debt. Wasn't that
15:58
Speaker 8: the song? I don't think the public interest is served
16:01
Speaker 8: and the public gets very much. There may be some money.
16:04
Speaker 8: Who knows how much the states have to agree to it.
16:07
Speaker 8: There's some pullback. They were negotiating the terms you know,
16:11
Speaker 8: Sunday night before this term sheet was released, so it
16:15
Speaker 8: really isn't clear and if they have to, you know,
16:18
Speaker 8: go back on some of the contracts, the exclusivity. The
16:22
Speaker 8: problem is not in the formal contracts. The problem is
16:25
Speaker 8: in the economics of this business and tying the ticket
16:29
Speaker 8: sellers to the talent. I mean, that's what it is.
16:33
Speaker 8: And you're not going to solve it by saying, excuse me,
16:35
Speaker 8: don't insist on a contract. That's where they started out
16:38
Speaker 8: in twenty ten. It never worked, it never will work.
16:42
Speaker 8: So it's just really not something to advance the public interest.
16:47
Speaker 8: The second part is some access to ticket Master's API
16:51
Speaker 8: so some other ticketing company can do something. They actually
16:56
Speaker 8: tried this before, that was part of the twenty ten settlement,
17:00
Speaker 8: and one of the things that happened is the company
17:02
Speaker 8: that was supposed to be given access to it didn't
17:04
Speaker 8: want it. I mean, it's just it's filed, failed, failed,
17:07
Speaker 8: and it fails because venues will not want to offend
17:12
Speaker 8: Live Nation by using a different ticketing company. And Live
17:15
Speaker 8: Nation has said they said in testimony, they said, you know,
17:19
Speaker 8: we're going to make the choice that makes us the
17:20
Speaker 8: most money. Guess what. So it's sad, but overlaying it
17:25
Speaker 8: is this question of political influence, which has been the
17:30
Speaker 8: song of anti trust from the beginning, and here we
17:33
Speaker 8: are again.
17:34
Speaker 4: I think the states had asked for a mistrial and
17:37
Speaker 4: for sixty days so that their attorneys could get up
17:40
Speaker 4: to speed, because the Justice Department had been leading the litigation,
17:44
Speaker 4: but the judge ordered them to negotiate this week and
17:47
Speaker 4: six Republican led states did settle with Live Nation. But
17:52
Speaker 4: thirty four states are going to resume the trial on Monday.
17:56
Speaker 4: Won't the state's attorneys be at a disadvantage?
17:59
Speaker 8: The state are now in a tough spot. They were
18:02
Speaker 8: sitting there watching the trial. They knew that this could
18:05
Speaker 8: blow up at any point. I don't think they're surprised
18:08
Speaker 8: in that sense. But of course there's a difference between
18:11
Speaker 8: sitting there watching the trial and stepping up there and
18:15
Speaker 8: trying the case before jury. I don't know how it goes.
18:18
Speaker 8: You know, you can see why they'd want to mistrial,
18:20
Speaker 8: not want to have to come before the jury without
18:23
Speaker 8: the Justice Department there and say hi, we're your new friends.
18:27
Speaker 8: You remember those those other folks. Do you explain thission?
18:31
Speaker 8: I don't know how exactly that would work. This is
18:33
Speaker 8: really weird. There have been cases, well, one case in
18:37
Speaker 8: which I'm familiar is the Microsoft case where states and
18:41
Speaker 8: the federal government tried the case together and then the
18:44
Speaker 8: Justice Department settled with Microsoft, but not all the states did,
18:48
Speaker 8: and they continued to litigate the remedy but not you know,
18:52
Speaker 8: whether there's a liability, so it's still a little different.
18:55
Speaker 8: Didn't go so well for them, so it's hard. They're
18:58
Speaker 8: in a hard position. There are two reasons to do it.
19:02
Speaker 8: One is to get good law made, is to get
19:04
Speaker 8: a verdict against Live Nation, and Ticketmaster will help in
19:09
Speaker 8: some other private litigation, maybe not so much help, but
19:13
Speaker 8: a little. And the second is that relief to get
19:16
Speaker 8: to vestiture and you know, maybe they can make the
19:20
Speaker 8: case if they've got the right experts and that this
19:22
Speaker 8: is the only way to solve this problem. Meant to
19:24
Speaker 8: have competition in ticketing is to change the incentives of
19:28
Speaker 8: the parties in this industry.
19:30
Speaker 4: Ensuing Live Nation is also popular with the public because
19:35
Speaker 4: buying concert tickets has become a luxury item. Every time
19:39
Speaker 4: you go to buy tickets on Ticketmaster. It seems like
19:42
Speaker 4: the prices have climbed yet again. So what do the
19:46
Speaker 4: states have to lose by going forward with the trial.
19:49
Speaker 8: Well, part of the answer is that the remedy of
19:52
Speaker 8: splitting them apart will not, you know, the day after,
19:55
Speaker 8: produce lower ticket prices. It's a market process, and you
19:59
Speaker 8: hope that new companies will enter the ticketing business particularly
20:03
Speaker 8: and bring some competition there. But you know, Taylor Swift
20:07
Speaker 8: concerts are still going to be really expensive and there'll
20:11
Speaker 8: still be resale markets, so it's a slow fix. So yes,
20:15
Speaker 8: it looks attractive from the point of view of the
20:18
Speaker 8: states that you know, pushing on and being the public interest,
20:21
Speaker 8: but it is a longer term public interest. So maybe
20:24
Speaker 8: there's some quick fix or something. Everybody who bought a
20:27
Speaker 8: Taylor Swift ticket gets free out, I don't know, you know,
20:32
Speaker 8: get some money, so maybe they'll increase the money in
20:35
Speaker 8: the pot. There's a lot of money here.
20:37
Speaker 4: So when the judge rejected the request and said that
20:40
Speaker 4: if the parties truly want to settle, a deal could
20:43
Speaker 4: be made within the week, and the Innaus attorney for
20:46
Speaker 4: Live Nations. Dan Wall said, I've done this for forty
20:49
Speaker 4: five years and there's zero chance we get this done
20:51
Speaker 4: by Friday. And the judge said, not with that attitude.
20:56
Speaker 2: I love that.
20:56
Speaker 8: That was great. Yeah, Dan Wall is very sure of himself.
21:00
Speaker 8: But the States have now apparently hired a very very
21:03
Speaker 8: successful anti trust trial lawyer, Jeffrey Kessler. It's a smart,
21:07
Speaker 8: sharp move, but they are up against a difficult tactical
21:12
Speaker 8: position here, and they have to be sure that they
21:15
Speaker 8: really want to go ahead and push for divestiture. It's
21:19
Speaker 8: not impossible, but the States don't generally do so well
21:23
Speaker 8: once they've been deserted by the Justice Department. There are
21:26
Speaker 8: past cases, not always, but it's hard now. You know,
21:30
Speaker 8: they need the experts, the economists, industry experts. They need
21:34
Speaker 8: a top lawyer. I guess they have good lawyers in
21:37
Speaker 8: the house, but they've hired a guy who could go
21:39
Speaker 8: up against Dan Wall.
21:41
Speaker 4: I don't envy the State's lawyers walking in on Monday
21:44
Speaker 4: and just picking up where the Justice Department left off.
21:48
Speaker 8: Yeah, I don't know how actively involved they've been in
21:52
Speaker 8: trial prep. Is always an underlying tension between the States
21:56
Speaker 8: and the Fed, even when they're trying cases together. You know,
22:00
Speaker 8: playing with your friends doesn't always go smoothly, even if
22:03
Speaker 8: you're good friends. But my guess also is that the
22:07
Speaker 8: professionals on the staff, the trial staff, will not be
22:12
Speaker 8: the roadblocks, but the front office. Who knows what they'll
22:16
Speaker 8: do with the witnesses they've got and the information they've
22:18
Speaker 8: got and how hard they'll make it for the states,
22:21
Speaker 8: I don't know.
22:22
Speaker 4: And also the judge can always reject the settlement.
22:26
Speaker 8: Right, So there's a legal process for the settlement itself.
22:30
Speaker 8: They have to file what's called a competitive impact statement,
22:33
Speaker 8: they have to let it open for public comment for
22:36
Speaker 8: a period of time. Then there's a hearing before the judge.
22:40
Speaker 8: It's called a Tonny Act, and the judge has to
22:43
Speaker 8: approve the settlement as in the public interest. Now that,
22:47
Speaker 8: as it's been interpreted over time, does not give the judge,
22:52
Speaker 8: you know, the broadest power to say this is a
22:54
Speaker 8: crappy settlement, forget it, I want you to try this case.
22:58
Speaker 8: But the judge does have some power and this will
23:02
Speaker 8: certainly provoke a lot of public comment, and that's a
23:06
Speaker 8: process that will go forward while the case is being tried. Apparently,
23:10
Speaker 8: I mean, this has to be put into a formal decree, yes,
23:14
Speaker 8: and the judge has to eventually review it and approve it,
23:18
Speaker 8: and then it can be appealed. Actually, so we're not
23:21
Speaker 8: at the end of this process.
23:23
Speaker 4: Also, under this agreement, the government could sue them again.
23:27
Speaker 8: So as it's written, this is not we're forever done.
23:32
Speaker 8: It's hard to know what to make of that. I mean,
23:34
Speaker 8: the government did sue in twenty ten when Ticketmaster acquired
23:38
Speaker 8: Live Nation and entered into a consent decree. They re
23:42
Speaker 8: up the consent decree in twenty nineteen where they threatened
23:46
Speaker 8: to sue again. And then this is a suit with
23:49
Speaker 8: a different legal theory that they filed in twenty twenty four.
23:53
Speaker 8: So the standard rule is the government is not stopped
23:57
Speaker 8: from unless they've signed a piece of paper, from bringing
24:00
Speaker 8: a new suit. So the answer to that is, yes,
24:04
Speaker 8: they could bring another suit. I mean, in a way,
24:06
Speaker 8: it's cold comfort. We've now had from twenty ten to
24:10
Speaker 8: twenty twenty six this monopoly. You know, they've made a
24:14
Speaker 8: lot of money off of this, Thank you very much.
24:16
Speaker 8: We could eventually sue them at some point when Yeah.
24:19
Speaker 4: It seems like a lot of litigation that's gone nowhere.
24:22
Speaker 4: Thanks so much. Harry. That's Professor Harry First of NYU
24:26
Speaker 4: Law School. Coming up next was insider trading involved in
24:30
Speaker 4: betting on the Iran war. I'm June Grosso. When you're
24:33
Speaker 4: listening to Bloomberg as US and Israeli bombs fell on
24:39
Speaker 4: Iran on February twenty eighth, better is on poly Market?
24:42
Speaker 4: We're cashing in. Cryptoanalytics firm bubble Maps pointed to six
24:47
Speaker 4: accounts that had all been funded within the previous twenty
24:50
Speaker 4: four hours and made about a million dollars in profit
24:54
Speaker 4: by betting that the US would strike around by the
24:57
Speaker 4: twenty eighth, raising suspicions advanced knowledge of the attacks. The
25:02
Speaker 4: Commodity's Future Trading Commission, which regulates prediction markets in the US,
25:07
Speaker 4: bars contracts tied to assassination, terrorism, or war themes. Poly
25:13
Speaker 4: Market as an offshore venue continues to list. This week,
25:17
Speaker 4: the CFTC gave its first official response to the controversies
25:22
Speaker 4: that have surrounded prediction markets by issuing new guidance. But
25:27
Speaker 4: will it help joining me? Is business?
25:29
Speaker 2: Law?
25:29
Speaker 4: Professor Eric Talley of Columbia Law School Eric tell us
25:33
Speaker 4: about the bets on polymarket that are causing concern.
25:37
Speaker 3: Polymarket is one of two major event driven contract websites
25:44
Speaker 3: that people use that are basically prediction market you know,
25:46
Speaker 3: sort of platforms, and both Polymarket and calse had various
25:51
Speaker 3: types of events, including events that might occur in Iran,
25:55
Speaker 3: and many of those pertained to the continued in tech
26:00
Speaker 3: of the Ayatola Kamenes and whether it would still be
26:05
Speaker 3: you know, in power, say by the end of February
26:08
Speaker 3: or by the end of the first week of March.
26:10
Speaker 3: And these were essentially binary bets, you know, they call
26:14
Speaker 3: them contracts, but they're essentially bets where you can bet
26:17
Speaker 3: on yes or bet on no. And it became pretty
26:20
Speaker 3: apparent in the hours before the Israelian US strike on
26:25
Speaker 3: Iran that ended up killing both Iotola Khamene and many
26:29
Speaker 3: other senior members of the Iranian government that was essentially
26:33
Speaker 3: betting against the continuing viability of the Hominy government passed.
26:39
Speaker 2: Some future date.
26:40
Speaker 3: The interesting part about this June is that while there
26:43
Speaker 3: were a lot of bets that were being placed on
26:45
Speaker 3: this most were small scale and.
26:47
Speaker 2: Kind of went on both sides of the transaction.
26:50
Speaker 3: But there were some really big ones that got placed
26:53
Speaker 3: literally within hours of the bombing that were all betting
26:56
Speaker 3: against the Iotola's fate, and all of them at least
27:00
Speaker 3: purportedly paid out. That gave rise, unsurprisingly to a pretty
27:05
Speaker 3: significant kerfuffle about who created these brand new accounts, Why
27:09
Speaker 3: were they placing hundreds of thousands, even millions of dollars
27:12
Speaker 3: in betting on this particular event when these accounts hadn't
27:16
Speaker 3: made any bets before.
27:17
Speaker 4: And Bubble Maps, which is a company that tracks data
27:21
Speaker 4: on crypto transactions, identified what it called six suspected insiders
27:27
Speaker 4: who made one point two million dollars in wagers that
27:30
Speaker 4: the US would strike Iran Senator Chris Murphy was one
27:34
Speaker 4: of the people who said, you know, it's insane that
27:37
Speaker 4: this is legal, and that the unusual betting suggested that
27:42
Speaker 4: even decision makers might have had a stake in the outcome,
27:47
Speaker 4: which the White House denied. But insider trading look.
27:51
Speaker 3: So a couple of points to pick apart in that statement.
27:53
Speaker 3: The first has to do with is this in fact
27:57
Speaker 3: legal or not legal?
27:58
Speaker 2: Now?
27:59
Speaker 3: You know, because predict markets are new in the US,
28:01
Speaker 3: there's still a battle raging about how exactly these contracts
28:06
Speaker 3: get classified. I think most people think that they are
28:09
Speaker 3: a type of derivative contract that's kind of my belief
28:13
Speaker 3: as well. They tend to have a lot of the
28:15
Speaker 3: look and feel of a lot of other call options,
28:17
Speaker 3: put options, various exotic options that you can buy and
28:21
Speaker 3: sell on the Chicago mercantele Exchange. And so those are
28:26
Speaker 3: in fact, to the extent that they are derivative contracts.
28:29
Speaker 3: They are in fact regulated by the Commodities Future Trading
28:33
Speaker 3: Commission or CFTC, and that commission has a pretty robust
28:38
Speaker 3: insider trading prohibition. But I think that the Senator, all
28:42
Speaker 3: due respect, might be leaping to conclusions to say that
28:45
Speaker 3: this wasn't prohibited by law. In addition, there are a
28:49
Speaker 3: lot of state laws that might also sweep in to
28:52
Speaker 3: prohibit this type of inside trading that can also.
28:56
Speaker 2: Have criminal implications.
28:57
Speaker 3: So, irrespective of you know, bills pending in Congress, this
29:02
Speaker 3: is definitely something that I would expect that CFTC lawyers
29:07
Speaker 3: might be kicking the tires of As to who did it,
29:10
Speaker 3: we still.
29:10
Speaker 2: Don't really know. We don't know who the owners of
29:13
Speaker 2: these accounts were.
29:14
Speaker 3: And you know, the fact of the matter is this
29:16
Speaker 3: could range from anyone from senior decision makers in the
29:20
Speaker 3: process in the room of making these decisions to potentially
29:24
Speaker 3: mid level staffers or even White House interns who are
29:27
Speaker 3: asked to run papers back and forth.
29:30
Speaker 5: Plum.
29:30
Speaker 3: Thing is kind of interesting, June, is that you know,
29:33
Speaker 3: I don't know whether you have a polymarket or Calci account.
29:36
Speaker 1: Absolutely not.
29:37
Speaker 3: Yeah, I'm just gonna say that there is a definite
29:40
Speaker 3: generational skew on who has these accounts.
29:44
Speaker 2: I have them.
29:45
Speaker 3: But the only reason that I have these accounts is
29:47
Speaker 3: that I teach finance to twenty four year olds and
29:50
Speaker 3: they all have them, and so I have to kind
29:52
Speaker 3: of get inside their head to figure out, you know,
29:54
Speaker 3: how I'm going to present the material. So I would say, yeah,
29:57
Speaker 3: it's certainly possible that senior leadership in that Trump administration
30:01
Speaker 3: White House was engaged in some of this trading. But
30:04
Speaker 3: I wouldn't be surprised if a twenty four year old
30:07
Speaker 3: intern wasn't also asked to shuffle some papers back and forth,
30:11
Speaker 3: put two and two together and then got on Calshi
30:13
Speaker 3: and you borrowed a bunch of money to make a
30:16
Speaker 3: one directional bet.
30:17
Speaker 4: The CFTC has the authority to investigate this, but doesn't
30:21
Speaker 4: seem to be doing that now. Last month, Israeli authorities
30:25
Speaker 4: arrested several people and charged to a civilian and a
30:29
Speaker 4: military reservist with using classified information to place bets on polymarket.
30:35
Speaker 4: Anyone in the US who used classified information to place
30:39
Speaker 4: a bet, I mean it would be subject to criminal prosecution.
30:44
Speaker 4: Right Is anybody looking into that? Is there an agency
30:47
Speaker 4: besides the CFTC.
30:49
Speaker 3: I'm pretty positive there are some state attorneys general that
30:52
Speaker 3: are looking at this as well. One of the things
30:55
Speaker 3: that's kind of interesting about this tune is that it
30:57
Speaker 3: gets a little bit into the details of how inside
31:00
Speaker 3: trading law works, and there are a couple of theories
31:03
Speaker 3: behind it, but the one that would most likely apply
31:05
Speaker 3: to this situation is something that lawyers call the misappropriation theory,
31:10
Speaker 3: and what it basically means is if my employer or
31:14
Speaker 3: someone with whom I have some kind of a relationship
31:17
Speaker 3: of trust and confidence reveals inside information to me that
31:22
Speaker 3: is going to happen with either the stated or implied
31:26
Speaker 3: restriction that I have to keep that confidential. So if
31:29
Speaker 3: I go out and trade on it, then I have
31:31
Speaker 3: breached that confidentiality and that is effectively what triggers a
31:36
Speaker 3: lot of criminal and civil liability for inside of trading,
31:39
Speaker 3: the fact that I've misappropriated I've violated this order or
31:44
Speaker 3: this command of confidentiality that came from the source. Maybe
31:47
Speaker 3: it's my employer or someone else. But the thing it's
31:50
Speaker 3: always been weird about this theory, and that applies also
31:52
Speaker 3: in the derivatives context, is that it hinges very very
31:57
Speaker 3: critically on what does your employer permit and not permit, right,
32:02
Speaker 3: And so you could, in principle, have an employer who
32:06
Speaker 3: develops a lot of confidential information, and their inside employee
32:09
Speaker 3: policies say, you know what, rather than paying you salaries,
32:13
Speaker 3: We're just going to let you trade rampantly on this
32:15
Speaker 3: inside information. And the third party is the third party
32:18
Speaker 3: suckers who trade with.
32:19
Speaker 2: These informed folks.
32:20
Speaker 3: They have no idea even who they're trading with or
32:22
Speaker 3: what the inside policy is of the employer. But that's
32:25
Speaker 3: going to have a huge effect on whether there will
32:27
Speaker 3: be civil or criminal liability, whether there was such a prohibition.
32:31
Speaker 3: So you transport this over to the administration, in which
32:35
Speaker 3: clearly for classified information there's both an implicit and an
32:39
Speaker 3: explicit prohibition on, you know, trying to make money off
32:43
Speaker 3: of your own private knowledge of classified information. On the
32:47
Speaker 3: other hand, as we learned from the first Trump administration's
32:52
Speaker 3: you know, classified Documents Gate. There's a big question about, well,
32:55
Speaker 3: what constitutes classified and not classified and who gets to
32:59
Speaker 3: determine when something is suddenly classified or declassified and went,
33:03
Speaker 3: and President Trump basically made the claim on behalf of
33:07
Speaker 3: himself that as he spirited these documents out of the
33:10
Speaker 3: White House at the end of his first administration, he
33:13
Speaker 3: basically declared, possibly to himself or possibly in passing, that
33:17
Speaker 3: they're all declassified now and therefore he doesn't have any liability.
33:22
Speaker 3: So query whether I don't know some staffer or employee
33:26
Speaker 3: or person higher up in the administration was placing some
33:29
Speaker 3: of these bets. The way that it would trigger, you know,
33:33
Speaker 3: most directly inside of trading prohibitions is because they were classified.
33:37
Speaker 3: If you know, President Trump said, oh no, I declassified
33:40
Speaker 3: that in a meeting. I did it orally, But it's
33:42
Speaker 3: totally fine. Who knows what's going to happen there now.
33:45
Speaker 3: Having said that, that doesn't necessarily take these folks off
33:48
Speaker 3: the hook for state level offenses, and there are some
33:50
Speaker 3: state level offenses that easily could be applied here. California
33:53
Speaker 3: and New York have pretty rigorous prohibitions on inside trading transactions.
33:57
Speaker 3: There are also various other types of provisions out there,
34:01
Speaker 3: the wire fraud acts, the computer fraud and abuse acts
34:04
Speaker 3: that might also kind of play a peripheral role in
34:08
Speaker 3: this context. You know, at the federal level, that's only
34:11
Speaker 3: going to be as strong as the stomach of the
34:13
Speaker 3: federal prosecutors who are going to bring these cases, and
34:17
Speaker 3: if they've gotten a command from on high that they
34:19
Speaker 3: shouldn't bring any of them, that I think is largely
34:22
Speaker 3: going to be left up to state attorneys general?
34:25
Speaker 4: Are they difficult to investigate? Because the main prediction platform
34:29
Speaker 4: operates offshore, the bets are placed on the blockchain, the
34:34
Speaker 4: identities of the accounts making the trades are anonymous. So
34:38
Speaker 4: let's say state attorneys general investigating, would it be difficult
34:42
Speaker 4: for them to get through all those layers?
34:44
Speaker 3: This has always been a difficult thing in investigating trades
34:47
Speaker 3: made on the blockchain. Compared to ten years ago, it's
34:50
Speaker 3: much easier to trace the identity of who was making
34:53
Speaker 3: these trades. You know, where was this wallet created, Who
34:56
Speaker 3: did the creation of this wallet? It's possible to get
34:58
Speaker 3: that information. LIVA would rest on subpoena power that might
35:02
Speaker 3: have to be applied extra territorially because ice companies are
35:05
Speaker 3: based in Ireland or England and so forth. So that
35:08
Speaker 3: creates a stumbling block, not one that is necessarily insurmountable.
35:13
Speaker 3: I could certainly imagine various regulators inside the EU or
35:17
Speaker 3: the UK being equally worried about the use of prediction
35:21
Speaker 3: markets for insider trading and being perfectly willing to assist
35:26
Speaker 3: a request from say the New York State Attorney General
35:29
Speaker 3: or the California State Attorney General for some of that information,
35:32
Speaker 3: or at least to say, yeah, we were willing to
35:34
Speaker 3: serve your subpoena.
35:35
Speaker 2: In Europe.
35:36
Speaker 4: On Thursday, the CFTC issued new guidance for prediction markets.
35:41
Speaker 4: Will that solve any of the problems we've been talking about, It.
35:44
Speaker 2: Remains to be seen. This is going to be a
35:46
Speaker 2: long road ahead.
35:47
Speaker 3: The CFTC has put out a notice of proposed rule
35:51
Speaker 3: making and guidance that basically tries to do two things.
35:55
Speaker 3: First of all, it tries to convince everyone that CFTC
35:59
Speaker 3: is the only regulator for these event driven contracts, and
36:04
Speaker 3: that's in dispute, by the way. And then the second
36:07
Speaker 3: is that it basically tries to remind people that because
36:11
Speaker 3: the CFTC is the regulator of these contracts. They are
36:14
Speaker 3: subject to CFTC rules, including rules on insider trading and
36:19
Speaker 3: various types of fraudulent activities. But to back up a
36:23
Speaker 3: little bit June, the question about whether these prediction market
36:27
Speaker 3: contracts constitute derivatives or whether they constitute some form of
36:33
Speaker 3: gambling or gaming is still very very much up in
36:37
Speaker 3: the air. A lot of state attorneys general as well
36:40
Speaker 3: as Native American tribes as well as organized groups of
36:44
Speaker 3: gaming outfits have challenged the CFTC's ability to claim a
36:49
Speaker 3: lot of the types of event driven contracts that would
36:52
Speaker 3: have traditionally fit into the category of sports betting.
36:56
Speaker 2: And the CFTC has in its own rules.
36:58
Speaker 3: That it's there to basically regulate commodities and derivatives but
37:02
Speaker 3: not gaming. And so there's going to be an interesting
37:05
Speaker 3: question about whether the CFTC's jurisdiction extends across all of
37:10
Speaker 3: the different types of prediction market contracts.
37:13
Speaker 4: More questions than answers, it seems. Thanks so much, Eric.
37:17
Speaker 4: That's Professor Eric Tally of Columbia Law School. And that's
37:21
Speaker 4: it for this edition of the Bloomberg Law Show. Remember
37:23
Speaker 4: you can always get the latest legal news on our
37:25
Speaker 4: Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,
37:30
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Speaker 4: and remember to tune into The Bloomberg Law Show every
37:38
Speaker 4: weeknight at ten pm Wall Street Time. I'm Jim Grosso
37:42
Speaker 4: and you're listening to Bloomberg