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Comey Charged for Third Time & Anthropic IPO · Bloomberg Law

• 0:02
  Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
• 0:08
  Speaker 2: They say the third time is a charm, and the
• 0:11
  Speaker 2: Trump administration is charging former FBI Director James Comey for
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  Speaker 2: the third time in a little over a year. Federal
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  Speaker 2: prosecutors charged Comey with leaking secret national defense information to
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  Speaker 2: the media a decade ago when he was FBI Director.
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  Speaker 2: Comey has denied the allegations and vowed to fight the charges.
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  Speaker 3: Well, they're back again. It would almost be funny if
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  Speaker 3: it weren't such an appalling abuse of the Department of Justice,
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  Speaker 3: one that we cannot become numb to. Nothing's changed with me.
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  Speaker 3: I'm still innocent. I'm still not afraid of these people.
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  Speaker 3: And I still believe in the independent federal judiciary.
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  Speaker 2: President Trump has repeatedly criticized Comey and continued to do
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  Speaker 2: so when asked about the new charges.
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  Speaker 4: Well, I think he's a dirty cop, James Comey, but
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  Speaker 4: I know nothing about it.
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  Speaker 2: He's a dirty cop. The charges were originally filed under
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  Speaker 2: seal earlier this month, and the case has been playing
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  Speaker 2: out in secret for weeks. Joining me is former federal
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  Speaker 2: prosecutor Robert Mintz, a partner in McCarter and English. Bob,
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  Speaker 2: what do we know about the charges against Comey this time?
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  Speaker 4: Well, this is the third federal case that this Department
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  Speaker 4: of Justice has brought against former FBI Director James Comey.
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  Speaker 4: And in this case, what we know is that he
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  Speaker 4: is being charged by criminal information with two counts, transmission
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  Speaker 4: of national defense information and conspiracy to transmit national defense information.
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  Speaker 4: The allegations are tied to a New York Times article
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  Speaker 4: in October 2016 that related.
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  Speaker 1: To a secret court order that required Yahoo!
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  Speaker 4: to scan emails for messages potentially linked to a foreign
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  Speaker 4: terrorist organization.
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  Speaker 1: The story cited two government officials.
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  Speaker 4: Who spoke on condition of anonymity about the order from
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  Speaker 4: a judge on the Foreign Intelligence Surveillance Court, also known
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  Speaker 4: as the FISA Court, that Yahoo was barred from publicly disclosing.
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  Speaker 4: The allegation is, according to prosecutors, that James Comey directed
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  Speaker 4: his then general counsel to the FBI, to disclose information
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  Speaker 4: that was classified, part of the Foreign Intelligence Surveillance Court's
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  Speaker 4: information that was then not to be disclosed publicly in
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  Speaker 4: order to correct information that he viewed as inaccurate so
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  Speaker 4: that the New York Times could write a more accurate story.
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  Speaker 2: Bob, is there any way that they could have given
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  Speaker 2: the Times that information without disclosing classified information, or don't
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  Speaker 2: we know that?
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  Speaker 1: Well, we really don't know.
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  Speaker 4: At this point, James Comey's defense team has simply denied
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  Speaker 4: these allegations. And what we do know is that this
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  Speaker 4: issue about this particular leak dating back to October 2016
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  Speaker 4: has been investigated twice prior by the Trump Department of
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  Speaker 4: Justice during the first Trump term. Then Special Counsel John
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  Speaker 4: Durham began investigating this leak. dating back to October 5th, 2016,
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  Speaker 4: involving the New York Times. He began that investigation in
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  Speaker 4: 2017 and ultimately ended up writing a classified memo. This
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  Speaker 4: is according to Comey's defense lawyers that recommended no criminal
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  Speaker 4: charges be brought against anybody in connection with that disclosure.
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  Speaker 4: It's also been alleged that in January 2019, the U.S.
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  Speaker 4: Attorney's Office for the District of Columbia opened a second
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  Speaker 4: investigation into the same alleged improper leak and close that
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  Speaker 4: investigation without any charges filed in February 2020. These are
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  Speaker 4: all allegations that the Comey defense team are going to
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  Speaker 4: use to try to argue that this prosecution is vindictive
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  Speaker 4: prosecution and should not be allowed to be pursued by
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  Speaker 4: the Department of Justice and should be dismissed by the court.
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  Speaker 2: Prosecutors didn't go to a grand jury to get an
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  Speaker 2: indictment here. They filed a criminal information. Explain what that is.
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  Speaker 4: That's very important to understand here because all felony charges,
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  Speaker 4: meaning any charge that carries a penalty of imprisonment of
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  Speaker 4: more than one year, has to go before a grand jury.
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  Speaker 4: The framers of the Constitution did not want to give
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  Speaker 4: prosecutors the ability to bring criminal charges, serious criminal charges,
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  Speaker 4: where someone can go to jail for more than a year.
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  Speaker 4: And so they set up a system in the Constitution
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  Speaker 4: that says the prosecutors have to bring this case These
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  Speaker 4: allegations before a federal grand jury, which is a panel
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  Speaker 4: of between 16 and 23 average citizens who are summoned
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  Speaker 4: by the court to sit on grand jury duty to
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  Speaker 4: hear these allegations and to make a determination as to
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  Speaker 4: whether or not there's something known as probable cause, which
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  Speaker 4: means enough evidence to at least allow the case to
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  Speaker 4: move forward. And this right to have your case heard
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  Speaker 4: before a grand jury is rooted in the Fifth Amendment.
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  Speaker 4: So there is an absolute legal requirement that any felony
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  Speaker 4: case go before a grand jury and be voted by
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  Speaker 4: that grand jury before it can proceed. One exception to
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  Speaker 4: that is what's called a criminal information. That is a
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  Speaker 4: case in which prosecutors can directly charge a defendant with
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  Speaker 4: a felony without going in front of a grand jury.
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  Speaker 4: But in that case, there has to be an explicit
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  Speaker 4: waiver of the right to proceed before a grand jury
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  Speaker 4: by a defendant. And the circumstance that you see that
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  Speaker 4: coming up often as a federal prosecutor is when prosecutors
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  Speaker 4: have worked out a criminal plea with a defendant. In
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  Speaker 4: other words, no indictment has yet been returned. And prosecutors
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  Speaker 4: have been negotiating a possible plea resolution with the defendant.
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  Speaker 4: They ultimately reach a deal and they want to proceed
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  Speaker 4: with criminal charges. There is no real reason at that
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  Speaker 4: point to go before a grand jury because that's set
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  Speaker 4: up to protect the rights of the defendant. In the
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  Speaker 4: case in which a defendant has already agreed to plead guilty,
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  Speaker 4: they can go before the federal judge immediately. who will
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  Speaker 4: ask them whether they're willing to give up their right
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  Speaker 4: to have their case go before a grand jury.
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  Speaker 1: It's explained to.
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  Speaker 4: The defendant on the record that they have an absolute
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  Speaker 4: constitutional right to have their case presented to a grand jury,
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  Speaker 4: and that by pleading guilty to an information, they're waiving
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  Speaker 4: that right.
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  Speaker 1: And once they waive that.
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  Speaker 4: Right, then the court will accept the criminal information as
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  Speaker 4: a charging document and allow that case to proceed. But
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  Speaker 4: critical to that analysis is that the defendant has to
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  Speaker 4: waive the right to proceed before a grand jury. In
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  Speaker 4: this case, there was no such waiver. James Comey did
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  Speaker 4: not agree to proceed with any criminal charges by waiving
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  Speaker 4: his right to have the case go before a grand jury.
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  Speaker 4: And so what happened here is that there was a
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  Speaker 4: 10-year statute of limitations that was set to expire on
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  Speaker 4: these charges, and prosecutors went into court and filed this
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  Speaker 4: criminal information solely for the purpose of tolling.
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  Speaker 1: That statute of limitations.
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  Speaker 4: And the Comey defense team has argued that that was
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  Speaker 4: an improper use of a criminal information that is being
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  Speaker 4: done solely to circumvent the 10-year statute of limitations. And
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  Speaker 4: they've asked the judge to throw out these charges on
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  Speaker 4: that basis.
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  Speaker 2: The Justice Department said in a statement, Filing a criminal
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  Speaker 2: information to toll the statute of limitations is a widely
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  Speaker 2: recognized practice in federal court and has been approved by
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  Speaker 2: multiple circuit courts of appeals. Is that true?
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  Speaker 4: Well, it's certainly not true that it is a widely
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  Speaker 4: used practice because I was a federal prosecutor for 10
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  Speaker 4: years and I've never heard of prosecutors going in seeking
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  Speaker 4: charges based on information in order to toll the statute
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  Speaker 4: of limitations.
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  Speaker 1: It rarely occurs, but it's not improper to say that
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  Speaker 1: it never occurs.
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  Speaker 4: And in fact, there is a case that was brought
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  Speaker 4: in 2025 before the court of appeals for the 11th circuit,
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  Speaker 4: where this very issue was addressed by the court. In
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  Speaker 4: that case, the defendants had been charged with using stolen
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  Speaker 4: social security numbers to get government benefits. And under federal law,
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  Speaker 4: those charges had a five-year statute of limitations. The issue
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  Speaker 4: in that case is, is that during the COVID-19 pandemic,
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  Speaker 4: the court system in South Florida suspended grand juries for
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  Speaker 4: a period of time. And so prosecutors, in order to
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  Speaker 4: avoid letting the statute of limitations expire, went in and
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  Speaker 4: they brought the allegation by way of a criminal information,
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  Speaker 4: and then they later went before the grand jury and
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  Speaker 4: got the indictment. In that case, the defendants tried to
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  Speaker 4: argue that it was too late to get that indictment,
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  Speaker 4: that the criminal charges had already expired because the statute
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  Speaker 4: of limitations expired, and that they couldn't essentially take that
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  Speaker 4: criminal indictment and have it revert back to the criminal
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  Speaker 4: information in order to save it from a statute of
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  Speaker 4: limitations defense. The Court of Appeals there upheld the lower
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  Speaker 4: court and said that it was proper to use the
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  Speaker 4: information for purposes of tolling the statute of limitations, which
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  Speaker 4: is what prosecutors are doing here, So it has rarely
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  Speaker 4: been used. In that case, there was a unique circumstance
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  Speaker 4: of the COVID-19 pandemic where there was no grand jury sitting.
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  Speaker 4: So prosecutors really had no choice but to do it
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  Speaker 4: in that case. This is a different circumstance where this
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  Speaker 4: case has been out there for more than 10 years
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  Speaker 4: and has been investigated twice. And no doubt Comey's lawyers
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  Speaker 4: are going to argue that it is an improper use
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  Speaker 4: of the criminal information process and is done solely to
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  Speaker 4: circumvent a 10-year statute of limitations when prosecutors had plenty
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  Speaker 4: of time to investigate this charge and should have brought
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  Speaker 4: an indictment if they intended to proceed with the case.
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  Speaker 2: I mean, after 10 years, if they still can't bring
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  Speaker 2: a case before a grand jury, it sounds like they
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  Speaker 2: don't have enough evidence then.
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  Speaker 4: That's exactly the question here, because even if the court
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  Speaker 4: allows this case to move forward based on the criminal information,
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  Speaker 4: and the court has not yet ruled on that question,
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  Speaker 4: there's no question that prosecutors still have to go before
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  Speaker 4: a grand jury and get an indictment. In other words,
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  Speaker 4: without a waiver of the grand jury indictment process, which
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  Speaker 4: Comey's defense team is not going to give, prosecutors still
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  Speaker 4: have to go in front of a grand jury and
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  Speaker 4: even if the statute of limitations has been told by
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  Speaker 4: the filing of the information, and they have to convince
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  Speaker 4: at least 12 of those jurors that there's probable cause
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  Speaker 4: that James Comey has committed this crime and that they
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  Speaker 4: should allow this case to proceed.
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  Speaker 2: The 10-year statute of limitations, they went down to the
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  Speaker 2: very day, to the last day they could, right? Because
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  Speaker 2: the article was on October 5th of 2016.
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  Speaker 4: Yeah, there's no question that their back was against the wall.
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  Speaker 4: and that this was essentially a last-ditch effort to try
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  Speaker 4: to preserve this investigation. So it's going to be interesting
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  Speaker 4: to see what the judge does with this motion, whether
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  Speaker 4: he throws out the case or lets it proceed on
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  Speaker 4: the assumption that prosecutors still have to go before a
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  Speaker 4: grand jury and obtain an indictment.
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  Speaker 1: And even then, the defense can.
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  Speaker 4: Still argue by virtue of the 10 years that had
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  Speaker 4: gone by, by virtue of the fact that this case
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  Speaker 4: had been investigated twice before, that this was really a
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  Speaker 4: vindictive prosecution, that it's not based on an effort to
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  Speaker 4: obtain justice here, but it is something like a personal
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  Speaker 4: political vendetta that is being brought against James Comey.
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  Speaker 2: Speaking about vindictive prosecutions, this is the third time They've
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  Speaker 2: charged Comey in just a little over a year.
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  Speaker 1: Well, we'll have to see.
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  Speaker 4: Vindictive prosecution is basically the concept of where prosecutors are
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  Speaker 4: alleged to have retaliated against a defendant by increasing the
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  Speaker 4: number or severity of criminal charges based solely on the
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  Speaker 4: defendant's choosing to exercise a protected constitutional or statutory right.
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  Speaker 4: In this case, the argument would presumably be that James
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  Speaker 4: Comey was exercising his free speech rights. He has been
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  Speaker 4: openly critical of President Trump. He was fired by President
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  Speaker 4: Trump when he was FBI director, and they have been
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  Speaker 4: waging a very.
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  Speaker 1: Public battle ever since.
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  Speaker 4: So there's no love lost between James Comey and President Trump,
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  Speaker 4: and President Trump has gone so far as to attack
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  Speaker 4: James Comey publicly and to suggest, or perhaps you could
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  Speaker 4: argue even direct, his Department of Justice to prosecute him.
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  Speaker 4: So we will certainly see an argument that this is
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  Speaker 4: a vindictive prosecution, that it's unconstitutional, a violation of Mr.
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  Speaker 4: Comey's 5th and 14th Amendment rights to due process. And
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  Speaker 4: they will likely trot out the fact that not only
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  Speaker 4: has this case been investigated twice before, but Mr. Comey
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  Speaker 4: has been charged twice before by this Department of Justice.
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  Speaker 4: As you noted, there was a case brought in North
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  Speaker 4: Carolina that is still pending. where Comey was indicted for
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  Speaker 4: allegations that a photograph he took and posted on social
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  Speaker 4: media in 2025 constituted.
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  Speaker 1: A threat against the president's life.
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  Speaker 4: In that case, the Comey defense has asked the judge
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  Speaker 4: overseeing the case to dismiss the charges as improper.
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  Speaker 1: The judge has not yet ruled on that case.
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  Speaker 4: There was a second prosecution brought in the Eastern District
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  Speaker 4: of Virginia, where Comey was charged with two counts alleging
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  Speaker 4: that he lied to Congress during 2020 testimony about whether
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  Speaker 4: James Comey ever authorized leaks to the media. That case
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  Speaker 4: was ultimately tossed out by a federal judge after the
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  Speaker 4: judge concluded that the prosecutor overseeing the case had been
• 14:01
  Speaker 4: illegally appointed. So there's a long history here between James
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  Speaker 4: Comey and President Trump and the Department of Justice, both
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  Speaker 4: in terms of prior prosecutions and prior investigations of these
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  Speaker 4: very allegations.
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  Speaker 1: And it's ultimately going to be up to the judge.
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  Speaker 4: To decide whether this is a proper prosecution that should
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  Speaker 4: be allowed to proceed to trial.
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  Speaker 2: And the Justice Department isn't giving up on those Virginia charges.
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  Speaker 2: They've appealed the dismissal. Now, as far as the latest case,
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  Speaker 2: the prosecutors and the defense attorneys have been arguing over
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  Speaker 2: this in secret. There are papers under seal. Why do
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  Speaker 2: you think they were doing it in secret? Usually this
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  Speaker 2: Justice Department would come out and say, we're charging him
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  Speaker 2: with this.
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  Speaker 4: Yeah, but that's a great question. It's unclear at this
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  Speaker 4: point why this charge was ultimately filed under seal by
• 14:51
  Speaker 4: federal prosecutors. But ultimately, Comey's lawyers decided that they wanted
• 14:56
  Speaker 4: it unsealed. It's usually kind of the reverse where prosecutors
• 15:00
  Speaker 4: want a case unsealed and charges unsealed and a defendant
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  Speaker 4: might prefer to have the information that they've been charged
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  Speaker 4: with a crime not publicly known. Here, Comey's lawyers specifically
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  Speaker 4: requested the judge to unseal these.
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  Speaker 1: Allegations, and the court ruled in their favor.
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  Speaker 4: The court said criminal charges against a former FBI director
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  Speaker 4: for his conduct while in office are of significant public interest,
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  Speaker 4: and he ordered that.
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  Speaker 1: These allegations be unsealed.
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  Speaker 4: And so all this burst into the public view and
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  Speaker 4: now there's this huge debate over whether what the government
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  Speaker 4: did here is proper in trying to avoid a statute
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  Speaker 4: of limitations defense to this and there's also a question
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  Speaker 4: as to what these charges will ultimately look like when
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  Speaker 4: prosecutors presumably present it to a grand jury at some
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  Speaker 4: point in the future.
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  Speaker 2: And that will be before a federal grand jury in D.C.,
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  Speaker 2: where the D.C.
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  Speaker 3: U.S.
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  Speaker 2: Attorney's Office has not always fared well.
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  Speaker 4: Assuming the court allows this case to proceed based upon
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  Speaker 4: the criminal information, prosecutors will still have to bring this
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  Speaker 4: case before a federal grand jury. in order to obtain
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  Speaker 4: an indictment. And in this case, the prosecution will have
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  Speaker 4: to go.
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  Speaker 1: Forward in the District of Columbia.
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  Speaker 4: Grand juries in the District of Columbia have shown a
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  Speaker 4: propensity for independence where they have recently refused to bring
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  Speaker 4: an indictment in cases presented by the U.S. Attorney's Office
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  Speaker 4: in the District of Columbia. So it's going to be
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  Speaker 4: interesting to see not only what charges prosecutors are going
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  Speaker 4: to present before the grand jury, but will those grand
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  Speaker 4: jurors in fact vote in favor of this indictment and
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  Speaker 4: allow the case to proceed.
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  Speaker 2: Maybe a fear of D.C. grand juries is why the
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  Speaker 2: prosecutors brought this by criminal information. Before that, though, there'll
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  Speaker 2: have to be a finding by the federal judge about
• 16:57
  Speaker 2: whether prosecutors can proceed with the charges. Thanks so much
• 17:00
  Speaker 2: as always, Bob. That's Robert Mintz of McCarter & English.
• 17:05
  Speaker 2: Anthropic has filed for its long-awaited IPO. a landmark moment
• 17:10
  Speaker 2: in the artificial intelligence industry hungry for cash to power ahead.
• 17:15
  Speaker 2: The company behind Claude expects to begin trading on the
• 17:19
  Speaker 2: Nasdaq global select market under the symbol ANT, according to
• 17:24
  Speaker 2: a filing with the SEC on Monday. The filing moves
• 17:28
  Speaker 2: Anthropic a step closer to being the first company focused
• 17:32
  Speaker 2: primarily on developing the most advanced AI models to go public.
• 17:37
  Speaker 2: Joining me is Dorothy Lund, a professor at Columbia Law
• 17:40
  Speaker 2: School with an expertise in corporate law and governance. Dorothy,
• 17:45
  Speaker 2: tell us a little about the IPO, Anthropic IPO.
• 17:50
  Speaker 5: So Anthropic has been operating for a while as a
• 17:53
  Speaker 5: private company, which means that its shares don't trade on
• 17:57
  Speaker 5: a public market. You can't go and buy them on
• 18:00
  Speaker 5: a stock exchange. But it's been a very, very valuable
• 18:03
  Speaker 5: private company with a lot of people participating. who've been
• 18:07
  Speaker 5: excited to invest. And so when Anthropic goes public, it
• 18:11
  Speaker 5: will mean that individuals like you and me can go
• 18:14
  Speaker 5: out and buy a share of Anthropic stock. And more likely,
• 18:17
  Speaker 5: our retirement plans will now include shares of Anthropic stock.
• 18:22
  Speaker 2: Is there anything unusual about Anthropic's IPO?
• 18:27
  Speaker 5: I think there's a few things that make this really unusual.
• 18:30
  Speaker 4: And I.
• 18:35
  Speaker 5: You know, typically with a public company, the default rule
• 18:38
  Speaker 5: is that every shareholder gets a vote. And sometimes companies
• 18:42
  Speaker 5: will depart from that default by giving, you know, certain
• 18:45
  Speaker 5: shareholders more say. So, you know, think about like Meta, right?
• 18:50
  Speaker 5: So in Meta, you have Mark Zuckerberg, who holds a
• 18:53
  Speaker 5: small fraction of the equity, but has voting control as
• 18:55
  Speaker 5: a result of having these special Class B shares with
• 18:58
  Speaker 5: 10 votes per share. So this is a way of saying, well,
• 19:01
  Speaker 5: we've got some visionary person but we think should have
• 19:04
  Speaker 5: say over what's going on with this company over the
• 19:06
  Speaker 5: long term. And so here with Anthropix IPO, public investors
• 19:10
  Speaker 5: are going to end up owning most of the outstanding equity,
• 19:14
  Speaker 5: but they're going to have none of the control. And
• 19:17
  Speaker 5: the thing that makes this unique is that they're not
• 19:20
  Speaker 5: doing this in the typical sort of Mark Zuckerberg meta way.
• 19:24
  Speaker 5: They are splitting the control of the board between two
• 19:27
  Speaker 5: groups of shareholders that basically have no economic stake. So
• 19:32
  Speaker 5: one is this long-term benefit trust that's going to be
• 19:35
  Speaker 5: composed of outside experts. And by design, these experts are
• 19:40
  Speaker 5: given zero equity stake in the company. And then you
• 19:44
  Speaker 5: also have this LLC that's controlled by these seven founders,
• 19:49
  Speaker 5: and each of them get some board seats that they
• 19:52
  Speaker 5: get to elect. You know, again, this is very different
• 19:55
  Speaker 5: than having control with a single individual who has a
• 19:58
  Speaker 5: big equity stake, but not enough to get you over
• 20:00
  Speaker 5: that 50% hurdle. And so we're kind of building a
• 20:04
  Speaker 5: coalition of people who don't really have a very large
• 20:06
  Speaker 5: equity stake at all in the company.
• 20:08
  Speaker 2: Are there any disadvantages to that structure? Any dangers?
• 20:13
  Speaker 5: Well, so one danger is you might worry. One of
• 20:18
  Speaker 5: the things that's nice about not having a controlling shareholder
• 20:21
  Speaker 5: in a company is that over time, if things change,
• 20:24
  Speaker 5: outside investors can use their governance rights and kind of
• 20:27
  Speaker 5: sword rattle. They can wage proxy fights. They can do
• 20:30
  Speaker 5: all sorts of things that make the company redirect. So here... Basically,
• 20:35
  Speaker 5: Anthropic is saying trust that these seven people and the
• 20:39
  Speaker 5: founder LLC checked by this long-term benefits trust, they're going
• 20:44
  Speaker 5: to make the right decisions into the future. And that
• 20:47
  Speaker 5: there's not going to be any need for some outsider
• 20:51
  Speaker 5: to come in and check what they're doing. In fact,
• 20:53
  Speaker 5: having an outsider come in and weigh in or try
• 20:56
  Speaker 5: to redirect their vision is actually going to be harmful
• 20:59
  Speaker 5: for our goals. And so, you know, a risk you
• 21:02
  Speaker 5: might have is like, well, what if they don't have
• 21:04
  Speaker 5: the right ideas, right? What if this coalition, you know,
• 21:07
  Speaker 5: doesn't actually make the right choices? You know, there won't
• 21:12
  Speaker 5: be a lot of ways for investors to redirect the ship.
• 21:15
  Speaker 5: There's also, I think, sort of, it's an interesting governance
• 21:18
  Speaker 5: structure that is sort of a version of this was
• 21:21
  Speaker 5: used in the private company and also in OpenAI where
• 21:25
  Speaker 5: But I worry a little bit about, you know, you
• 21:27
  Speaker 5: have this long-term benefit trust that controls a majority of
• 21:31
  Speaker 5: the board seats. You've got the founder LLC that controls
• 21:35
  Speaker 5: the other three seats. What happens if they start to
• 21:38
  Speaker 5: disagree with each other about what the right path forward is, right?
• 21:42
  Speaker 5: And we saw something like this happen with OpenAI, right?
• 21:45
  Speaker 5: We had the trust that basically the directors who populated
• 21:50
  Speaker 5: the foundation decided to fire Sam Altman, right? They didn't
• 21:53
  Speaker 5: think it was a good idea. to have Sam Altman
• 21:56
  Speaker 5: at the helm, the people on the ground really disagreed
• 21:59
  Speaker 5: with that, right? And so you had this clash between
• 22:02
  Speaker 5: the trust and the founders. And, you know, could there
• 22:06
  Speaker 5: be similar power struggles going forward? I mean, there's room
• 22:10
  Speaker 5: for dealing with disagreement here. But, you know, again, these
• 22:13
  Speaker 5: are the two power brokers in this governance structure and
• 22:16
  Speaker 5: conflict can emerge.
• 22:18
  Speaker 2: The prospectus has flagged various risks to humanity. Extensive, it
• 22:23
  Speaker 2: runs for more than 90 pages, so it highlights the
• 22:26
  Speaker 2: existential risk that could be posed by its AI, including
• 22:31
  Speaker 2: attempts to resist shutdown and conceal or manipulate information, to
• 22:37
  Speaker 2: behave in unintended, misaligned, or autonomous ways. I mean, how
• 22:41
  Speaker 2: unusual is it to see something like that in a prospectus?
• 22:45
  Speaker 5: Yeah, I mean, there are so many things about this
• 22:47
  Speaker 5: company in this moment that are quite singular. Although I
• 22:51
  Speaker 5: will say, you know, in the SpaceX IPO, right, there
• 22:54
  Speaker 5: were a lot of highfalutin statements about the potential of
• 22:58
  Speaker 5: this technology to, you know, sort of take over the
• 23:01
  Speaker 5: whole market. And so I think we are in this
• 23:04
  Speaker 5: moment of these mega tech IPOs. People have high expectations
• 23:09
  Speaker 5: for them and the founders, of course, have ever reason
• 23:12
  Speaker 5: to want to convince you that there's incredible transformative potential
• 23:16
  Speaker 5: of the technology. Of course, you know, a big difference
• 23:18
  Speaker 5: between SpaceX and Anthropic is SpaceX wasn't going around and saying, well,
• 23:23
  Speaker 5: there's a chance that, you know, we'll all be extinct
• 23:25
  Speaker 5: in five years as a result of what we're doing.
• 23:27
  Speaker 5: And so that, I think, again, is quite singular.
• 23:31
  Speaker 2: What has Anthropic said about safety commitments once it's publicly traded?
• 23:37
  Speaker 2: And can we believe them?
• 23:38
  Speaker 5: This safety concern that takes up so much space in
• 23:41
  Speaker 5: this prospectus actually is also in the DNA of the
• 23:44
  Speaker 5: governance structure as well. And we talked about the way
• 23:47
  Speaker 5: that control of the board is basically split between this trust, right?
• 23:52
  Speaker 5: This nonprofit and these founders. And also another interesting aspect
• 23:58
  Speaker 5: of this that we haven't talked about is that the
• 24:00
  Speaker 5: company is actually incorporated as a public benefit corporation, which
• 24:04
  Speaker 5: gives the people who run the company the charge of
• 24:07
  Speaker 5: balancing shareholder and interest alongside the public interest mission. And here,
• 24:13
  Speaker 5: so if you're running Anthropic, you are duty bound to
• 24:17
  Speaker 5: not just think about your shareholders, but to develop AI
• 24:21
  Speaker 5: for the long-term benefit of humanity. So that's sort of
• 24:24
  Speaker 5: this other added wrinkle here. Again, if we wanted to
• 24:28
  Speaker 5: be a little cynical here, we could say, well, there's
• 24:30
  Speaker 5: probably a good reason to think that people have different
• 24:32
  Speaker 5: ideas about how to do this. And And we hope
• 24:35
  Speaker 5: they have the right ideas. You know, we're putting a
• 24:38
  Speaker 5: lot of trust in these seven people combined with, you know,
• 24:41
  Speaker 5: the people that run the trust to really chart this
• 24:44
  Speaker 5: path forward. And there's nothing about the governance that says
• 24:47
  Speaker 5: if they get it wrong, there's an easy way to redirect.
• 24:51
  Speaker 5: But at least, you know, you've got this sort of
• 24:53
  Speaker 5: protection from shareholder suits saying, you know, you made a
• 24:58
  Speaker 5: choice that was not profitable. You know, you slowed things
• 25:01
  Speaker 5: down and the stock price is suffering as a result.
• 25:04
  Speaker 5: at least the board will be insulated from those types
• 25:08
  Speaker 5: of challenges. It's an interesting thing. There are now about
• 25:11
  Speaker 5: 20 public benefit corporations that have gone public, and most
• 25:17
  Speaker 5: of the ones that have gone public and stayed PBCs
• 25:22
  Speaker 5: are ones that implement some sort of protection from outside shareholders,
• 25:25
  Speaker 5: like a dual-class structure. That's, again, another benefit of this
• 25:29
  Speaker 5: installation is I think so long as they're able to
• 25:33
  Speaker 5: raise the money they need with this structure, they should
• 25:36
  Speaker 5: be able to prioritize safety. Although, you know, again, competitive pressure,
• 25:40
  Speaker 5: capital needs, all sorts of things can erode safety commitments
• 25:45
  Speaker 5: over time.
• 25:46
  Speaker 2: Stay with me, Dorothy. Coming up next on the Bloomberg
• 25:48
  Speaker 2: Law Show, I'll continue this conversation with Columbia Law School
• 25:52
  Speaker 2: Professor Dorothy Lund. What about government intervention or even control?
• 25:59
  Speaker 2: I'm June Grosso, and you're listening to Bloomberg. I've been
• 26:02
  Speaker 2: talking to Columbia Law School professor Dorothy Lund about Anthropic's
• 26:07
  Speaker 2: upcoming IPO. I mean, do you think that there is
• 26:10
  Speaker 2: a high possibility of government interference or control in the future?
• 26:17
  Speaker 2: I'm not saying the Trump administration, but let's say Democratic
• 26:20
  Speaker 2: administrations going forward.
• 26:23
  Speaker 5: Yeah, I absolutely do. You know, I think they themselves
• 26:26
  Speaker 5: have said, things to this degree that, you know, there's
• 26:29
  Speaker 5: a real risk of government regulation and even all the
• 26:33
  Speaker 5: way to nationalization. I mean, if this ends up being
• 26:36
  Speaker 5: as powerful as everyone expects it to be rivaling, you know,
• 26:41
  Speaker 5: governments and what, what this technology can do, you know,
• 26:45
  Speaker 5: every government is going to want to have an interest
• 26:46
  Speaker 5: in and having some way to, to control it. I
• 26:50
  Speaker 5: know regulation at this moment in time is, has not been, um,
• 26:55
  Speaker 5: a priority of the Trump administration. And, you know, you've
• 26:58
  Speaker 5: got a lot of these AI leaders saying we can
• 27:01
  Speaker 5: regulate ourselves and it'll be interesting. One of the other
• 27:03
  Speaker 5: interesting aspects of this being a public company, it's not
• 27:06
  Speaker 5: just that you and I can invest, but it's that
• 27:08
  Speaker 5: now they're going to have to show us a lot
• 27:09
  Speaker 5: more about what they're doing. And I think we'll get
• 27:12
  Speaker 5: some sense of like, Oh yeah, how exactly are you regulating?
• 27:16
  Speaker 5: How are you slowing things down? What steps are you taking? Um,
• 27:19
  Speaker 5: because this is all going to have to be disclosed.
• 27:21
  Speaker 2: Right.
• 27:21
  Speaker 5: Um, So I think that's actually a benefit of these
• 27:25
  Speaker 5: companies going public. But assuming self-regulation isn't up to the
• 27:31
  Speaker 5: task or assuming we get a new administration that's more
• 27:35
  Speaker 5: interested in regulating this technology, I think we will see regulation.
• 27:42
  Speaker 5: And again, I wouldn't be surprised if at some point
• 27:44
  Speaker 5: in the future we see nationalization or attempts at nationalization.
• 27:49
  Speaker 5: If you look back to other really impactful technologies in
• 27:53
  Speaker 5: human history. Think about like the Manhattan Project, right? We
• 27:57
  Speaker 5: didn't have private companies developing these technologies, right? These were
• 28:01
  Speaker 5: all done under the overhead of government authority. And so
• 28:07
  Speaker 5: to the extent that we are talking about really powerful technology,
• 28:10
  Speaker 5: I wouldn't be shocked to see us move in that direction.
• 28:14
  Speaker 2: There will be a lot of investors looking to get
• 28:16
  Speaker 2: in on this once the IPO is out. What risks
• 28:19
  Speaker 2: do investors face?
• 28:21
  Speaker 5: You know, there are some obvious business risks, like if
• 28:24
  Speaker 5: human extinction is happening in the next five years, right,
• 28:26
  Speaker 5: that's not going to be great for your stock portfolio,
• 28:28
  Speaker 5: your anthropic investment. And, you know, again, in this in
• 28:31
  Speaker 5: this sort of cutthroat race to AGI, if it's a
• 28:35
  Speaker 5: winner take all thing, you know, anthropic might in a
• 28:37
  Speaker 5: few years might end up not being very valuable at all.
• 28:40
  Speaker 5: So there are business risks, right? There's also the risks
• 28:44
  Speaker 5: that we talked about, about Do we think that this
• 28:47
  Speaker 5: coalition that has been baked into, you know, the only
• 28:51
  Speaker 5: people that can influence the direction of this company, do
• 28:53
  Speaker 5: we think they have the right ideas? Will they focus
• 28:56
  Speaker 5: too much on safety and not profitability or they focus
• 28:59
  Speaker 5: too little on safety and, you know, run into all
• 29:02
  Speaker 5: sorts of trouble there? And there's also, I think, again,
• 29:05
  Speaker 5: this issue of potential disagreements, right? Like, you know, sure,
• 29:10
  Speaker 5: everybody's friends now, but it's rare to see many people
• 29:14
  Speaker 5: people and companies that, you know, seven people all agree,
• 29:18
  Speaker 5: you know, that the best way to advance our mission
• 29:22
  Speaker 5: is to do X. Well, no, I think the best
• 29:24
  Speaker 5: way to do it is to do Y, right? And
• 29:26
  Speaker 5: then meanwhile, you've got the board with their own ideas, right?
• 29:29
  Speaker 5: And so, again, I kind of worry about how that
• 29:32
  Speaker 5: would look over time. And the empirical literature also studying
• 29:36
  Speaker 5: dual class shares often shows that everything is good early
• 29:41
  Speaker 5: on and then things start to go a little south.
• 29:44
  Speaker 5: But it's hard to pre-specify your leader forever, right? And
• 29:50
  Speaker 5: that one of the benefits of not having a dual
• 29:52
  Speaker 5: class structure is that if somebody stops having the right
• 29:55
  Speaker 5: ideas for the company, you can get rid of them
• 29:57
  Speaker 5: and you can bring somebody else in. So here, You're
• 29:59
  Speaker 5: locking in this power structure. You're locking in, you know,
• 30:02
  Speaker 5: these seven people's views and hoping that everybody gets along,
• 30:05
  Speaker 5: which could present some risks.
• 30:07
  Speaker 2: Let me give you a hypothetical. So suppose Anthropic delays
• 30:12
  Speaker 2: a major model for safety reasons. The stock price drops
• 30:15
  Speaker 2: like 20%. Can shareholders sue?
• 30:19
  Speaker 5: This is one of the key advantages of that public
• 30:21
  Speaker 5: benefit corporation structure. it's going to largely prevent those suits.
• 30:26
  Speaker 5: And instead, you know, a plaintiff would not be able
• 30:29
  Speaker 5: to just say, oh, you're not focusing on my profits
• 30:33
  Speaker 5: and you're choosing to benefit your mission at the expense
• 30:37
  Speaker 5: of profits. Instead, they'd have to look for some conflict
• 30:40
  Speaker 5: of interest or some grossly negligent process to challenge the decision.
• 30:44
  Speaker 5: I actually think, though, that the more likely shareholder suit
• 30:48
  Speaker 5: would happen in the other direction, which is, like, imagine...
• 30:52
  Speaker 5: Anthropics board fails to take safety into consideration for some
• 30:58
  Speaker 5: big decision. And it has huge economic repercussions. It leads
• 31:02
  Speaker 5: to regulation. It leads to fines and all sorts of
• 31:06
  Speaker 5: negative consequences from the company flow from that. A board
• 31:11
  Speaker 5: of directors has something called an oversight duty, a care
• 31:14
  Speaker 5: mark duty, where they're supposed to be looking out for
• 31:16
  Speaker 5: these really big risks. So there, I think if the
• 31:20
  Speaker 5: company really fails or the board really fails to take
• 31:24
  Speaker 5: safety into consideration for some key decision that creates problems
• 31:28
  Speaker 5: for the company, shareholders might be able to actually sue
• 31:30
  Speaker 5: and recover damages from the board for that decision, for
• 31:34
  Speaker 5: the negative harm that came from that.
• 31:36
  Speaker 2: I take it they're doing the IPO route because it's
• 31:39
  Speaker 2: going to be an advantage to them, you know, the
• 31:41
  Speaker 2: infusion of money. How will that affect their competition with other,
• 31:46
  Speaker 2: like OpenAI companies?
• 31:49
  Speaker 5: Yeah, so I'm sure OpenAI is watching this IPO to
• 31:53
  Speaker 5: see what happens. And if this is a smash success
• 31:56
  Speaker 5: for Anthropic, I imagine they're going to follow suit relatively soon. Because,
• 32:01
  Speaker 5: you know, as you said, the road to AGI is expensive, right?
• 32:05
  Speaker 5: We need a lot of money for AI infrastructure in
• 32:09
  Speaker 5: order to, you know, survive in this competitive race. You know,
• 32:13
  Speaker 5: so I think absolutely other, you know, frontier labs are
• 32:17
  Speaker 5: going to be paying attention here. I also think, again,
• 32:20
  Speaker 5: this sort of idea of disclosure, you know, now that
• 32:24
  Speaker 5: Anthropic's going to have to show everything and OpenAI won't, right?
• 32:28
  Speaker 5: They're going to have to show their revenue, their margins,
• 32:30
  Speaker 5: their compute commitments, their customer concentration. All of this is
• 32:34
  Speaker 5: going to be available for other people to see. And
• 32:37
  Speaker 5: in terms of, you know, what that means for the competition,
• 32:40
  Speaker 5: you know, OpenAI will see how well Anthropic is doing.
• 32:44
  Speaker 5: But at the same time, I think Anthropic is also
• 32:47
  Speaker 5: going to be, in being the first mover here, they're
• 32:49
  Speaker 5: going to be able to set sort of the template
• 32:51
  Speaker 5: for restraint. Like, how are we slowing things down, right?
• 32:55
  Speaker 5: And they'll disclose that, they'll show that, and maybe others
• 32:59
  Speaker 5: will follow the lead. You know, there is a risk
• 33:01
  Speaker 5: here too, which is like, if you start to show
• 33:03
  Speaker 5: the world, okay, this is how exactly we're slowing things down,
• 33:07
  Speaker 5: and this is the cost that it has. And if
• 33:10
  Speaker 5: your investors start to become very unhappy about Well, that's
• 33:13
  Speaker 5: also going to send a message, right? How costly is restraint?
• 33:16
  Speaker 5: And that could affect other competitors' choices. But at the
• 33:20
  Speaker 5: end of the day, I think the thing that makes
• 33:22
  Speaker 5: me really happy about this IPO is we are putting
• 33:26
  Speaker 5: so much faith in these companies. And as you mentioned,
• 33:29
  Speaker 5: they're not going to be regulated anytime soon. Instead, we're
• 33:32
  Speaker 5: putting a lot of faith in their ability to regulate themselves,
• 33:36
  Speaker 5: to slow things down, to act safely. And so the
• 33:40
  Speaker 5: more we see about what they're doing, I think that's
• 33:43
  Speaker 5: quite good, right, for the public to know exactly. And
• 33:46
  Speaker 5: so I think there is a public good that's coming
• 33:49
  Speaker 5: from this IPO.
• 33:50
  Speaker 2: Well, that would be nice to see. Thanks so much, Dorothy.
• 33:53
  Speaker 2: That's Professor Dorothy Lund of Columbia Law School. And that's
• 33:57
  Speaker 2: it for this edition of the Bloomberg Law Show. Remember,
• 34:00
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• 34:02
  Speaker 2: Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,
• 34:06
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• 34:12
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• 34:16
  Speaker 2: Wall Street time. I'm June Grosso, and you're listening to Bloomberg.