Mueller Protection Bill Passes Judiciary Committee

in the White House and on Capitol Hill. During his testimony yesterday, Attorney General Jeff Sessions was asked by Senator Chris Coons whether he's discussed the possibility of pardoning Michael Cohen with the President or any other White House officials. As the President or anyone in the administration discussed with

you the possibility of President Trump pardnering Michael Cohen. Um, I'm not able to reveal the contents of any communications I might have what the President of the United States are his top staff Sessions uh, issuing a no comment, basically as he did to all questions involving communications with

the President. Joining me as constitutional law experts, Steven Vladdock, professor at the University of Texas Law School, Steve Cohen followed the declaration in Federal Court in Los Angeles saying he'll plead the fifth in the lawsuit by adult film star Stormy Daniels. Should that reassure the president? That's a great question. I mean, I think it should. It should reassure the president at least for the moment that if,

in fact, Michael Cohen has information that might incriminate the president. Um, it's not necessarily going to come out in this case, you know, June. I think the larger point here is all of this maneuvering and all of this, all these headlines, you know, would be out of place. I think if there was no there there, and if the president didn't

have at least some real concern that there's exposure for him. Um, if not in the Stormy Daniel suit in California, then perhaps in some of the materials that were seized from Michael Cohen's offices through those searches a couple of weeks ago. And speaking of those materials, prosecutors gave in today and they agreed to use a special master to review all those documents. Why did they give in? Well, I think from the government's perspective, this was the easiest way to

move along. I mean this, you know, the issue had been basically frozen before a federal judge, Manhattan Judge kimball Wood, as the parties were fighting over what the government should be allowed to do with the materials they seized from Michael Cohen's offices. I think the special Master was always

the obvious compromise here. Um. The courts have used those before in these kinds of high profile cases because it's a neutral party where you're not going to have you know, the defendant being able to basically assert privilege before turning things over, but you're also not giving them the government

the first bye at the Apple June. I actually think this is a perfectly fair, reasonable compromise, and I think, most importantly from the government's perspective, one that will allow the case to move ahead and that will be difficult for the President and his supporters to criticize. A lot of breaking news this morning in this in this case, the Senate Judiciary Committee just passed an amended version of legislation aimed at protecting Special Counsel Robert Mueller fourteen to

seven vote, with four Republicans voting in favor. Tell us about that bill and the important parts of it. Yeah, I actually think This is perhaps the most important story of the day um and a rare moment of bipartisan cooperation on something that's politically sensitive in Congress. So, you know, this legislation has been pending June since last summer um, and at its core, what it basically does is it

provides for judicial review of the existing removal standard. It's already the case under federal law that Muller can only be removed upon a finding by the Attorney General or in this case Roy Rosenstein, of good cause. What wasn't available, what still isn't available until unless this bill passes, is an opportunity for Mueller to object if he is fired

because of what he thinks is not good cause. And so the core of this bill is basically providing a mechanism for Muller to go to court if the government tries to fire him in a case where they where he doesn't since they have good cause, and to get three judges on the d C. District Court to review whether the government was right or whether Mueller actually should

still be on the job. You know, Steve, a lot of people think that the Special counsel is going to make a report and everyone's going to get to read it and see what it's about. But the way it is now under the current regulations, he'll provide a confidential report to Deputy Attorney General Rod Rosenstein, who will then

decide what to do with it. What does grass Lee's amendment change that it actually does, June, I mean, so if this actually gets out of Congress, and you know, the President either signs it or it's passed over his veto, one of me thinks the real salutary features of this bill that got out of the Judiciary Committee today, besides providing producial review, is it also requires a report upon the closing of an investigation or the termination of a

special counsel, not just to the Attorney General, but to the chair and ranking members of both the House and Senate Judiciary committees. So it would be impossible for you know, the President to basically bury um an adverse report from Mueller. I think that's actually part of why this is such an important development. And June, frankly a pretty important contribution that came not from the Democrats on the Senate Judiciary

Committee but from Chairman Grassley. Let's let's talk about the chances that this has actually just getting through getting through Congress, let alone getting a signature from the President. Yeah. I mean, listen, there's no question it's an uphill battle. I mean, I think, you know, Senatementary Leader McConnell has said that he sees no need to bring this bill to the floor, that

he doesn't think it's necessary. Um. I think, you know, at least based on today's vote, four of his pretty senior colleagues disagree with him, and so I think it's gonna be really interesting to see if you know, Leader McConnell's tone changes at all in like of what happened today. Um. The other part of this June is it's also the case that the bill allows for um retro perspective enforcement

of its provisions. And so if the bill is sort of sitting in Congress and the President were to try to remove Mueller, you know, perhaps that would finally motivate Congress to act. But you know, the politics of the Synik are really hard to predict their change in every day.

I don't think there was any sense as recently as a month ago that this even had the votes to get out of committee, and so now that it's out of the committee, I think the pressure ships to Leader McConnell um and to whether he's going to face, you know, pressure from his own caucus to actually put this to a vote of before the full sentence. We run out of time. Steve, It's it's great to have you on again. And you know you said change every day. This changes

every minute, it seems. Thanks so much that Stephen Vladikey's griffest at the University of Texas Law School. It's the first acquittal in a spoofing case since the practice was outlawed in eight years. A jury has cleared former UBS Precious metals trader Andre Flotron of conspiracy to engage in commodities fraud. My guess is Professor John on Coffee of Columbia Law School. Jack. The Justice Department has been cracking

down on spoofing. What was Floatron accused of doing? And explain spoofing in that simply stated, spoofing is submitting a large number of orders that you are going to prevent every being executed if you submit them and then you cancel them in order to feign a market interests that will move the other side. UH. Typically this is done to defraud the computer. There is a lot of high speed alagar rhythmic trading on computers, and they see the orders coming in and they move their prices up in

light of that seemingly higher demand. Then you trade on the other side of the market, taking advantage of that increase in the computers prices. Uh. In this case it didn't involve computers, but essentially submission of a large number of orders that you intend never to be executed is seen as the kind of fraud on the market. It's creating a feigned false demand on one side. Uh. That's

what he was accused of. The jury acquitted after only five hours, suggesting that they weren't convinced at all and found it a simple case. Well, Jack, you had two former traders flipping on him and testifying against him. The government had trading data and patterns. What was the problem with the government's case. After five days of the case, they had five hours of acquittal. I agree that it's a surprising reversal for the government to elaborate on what

you just said. They had both of his deputies, people he had trained how to trade, and both of those people had pled guilty and testified against him and said they learned how to spoof by watching over his shoulder.

That's usually very strong evidence. The attorney for the defendant, Michael Mukasey, who was the son of the former Attorney General, was apparently able to discredit those witnesses by convincing the jury they were only making these statements to save their own skin under great plea bargaining pressure, and he attacked the entire cases trial by statistics. You didn't seem to

have an injured victim saying I was cheated. You had lots of datas showing that the market was being influenced by this flow of faults and quickly canceled orders, but that didn't convince the jury, and maybe the jury didn't see a real victim in all of this. How big a setback is this for the government's efforts to crack

down on spoofing. No question, it's a setback. I think that most the people in the industry are going to be more influenced by the fact that the government did indict and did prosecute and got the subordinates to plea bargain against their superior. Very few people in the trading business are going to want to take the chance of beending a year of their lives defending themselves from a teleny conviction where they could get a lengthy sentence. So

the government lost, but the government's won other cases. And as long as the government's making it a priority, I think you're going to see a lot of deterrents still generated. Let's change topics and talk about Japan, A's biggest bank is accused of dodging regulatory scrutiny by swapping license and the Senate's Permanent Subcommittee on Investigation is looking into how Mitsubishi uf J dropped its New York license to get

a federal license. According to a person with knowledge of the matter, tell us the concern here, Oh, I think this is a frightening example of regulatory arbitrage. You need to understand that almost any major bank in the world has to have a branch in New York City in order to engage in what is called dollar clearing, making transactions and dollars so that they're major clients or major nations can have dollars, which is the basic currency of the world, and you have to grease the wheels of

commerce using dollars. So they all have offices in New York. Generally they had only regular registered with the New York State Office and avoided any kind of national registration with the Office of the Controller of the Currency. But what happened beginning now about seven or eight years ago, was that the Department Financial Services in New York became much

more aggressive. They had found that a number of banks worldwide were engaged in violating the Iranian sanctions by doing dollar clearing transactions for Iran and other prohibited countries, and the New York State Department was very tough, much tougher than had been the Office of the Control of the Currency and their initial supervisor because it's a new agency, impolished something like six billion dollars of fines in just four years. That made a number of these banks very nervous.

They complained to the U. S. Government, and they eventually decided maybe the best thing to do was to switch over to the o c C, the Office of the Control of the Currency, and become registered on a national basis. Now it's frightening in this case is that the application to switch from New York State to the o c C was made and then fully approved within just seven days.

That's a very quick switch without much notice being given to New York State, And it suggests that to uh they were being assisted by the o ce C and escaping New York State oversight where there had been some suspicion that there were inadequate controls, and where a court appointed monitor had reported that the bank was not adequately complying with the original settlement agreement it had entered. So

all this deserves a good deal of further inquiry. So Jack, what other what implications are there for other global enders who have considered trying to get away from New York's financial services regulator? Well, they are trying. There have been other such cases. I believe Deutsche Bank just succeeded and was able to escape New York State on or about March thirty. It didn't come in that quick seven day turnaround.

The Deutsche Bank had even more troubled regulatory history, but they did escape New York moving to the o c C on March thirty. And frankly, the o c C has changed its tone and changed its policies. It had been a tough regulator after the financial crisis, but now under President Trump, they're much more interested in trying to facilitate and ease regulation. Hey, in order to make the business world one run smoother, and I think that signal has been picked up by a number of other banks.

I suspect we'll see other such transitions. About thirty seconds here, Jack, how does the New York Bank stand in in the defiance of this Well, I mean, I think that every bank had to have a New York office, and they didn't want to get more fully involved with the more thorough going oversight of the Office of the Control of

the Currency. Now that's changed because beginning under Governor Cuoma, there were a succession of rather tough, aggressive regulators at this Department of Financial Services, and that's produced what I called originally regulatory arbitrage. You are seeking to find the easiest, softest, and most accommodating regulator, and right now, under President Trump, that appears to be the total regulator. Thanks Jack, always a pleasure. That's Professor John Coffey of Columbia Law School.

Thanks for listening to the Bloomberg Law Podcast. You can sub grib and listen to the show on Apple podcast, SoundCloud and on Bloomberg dot com slash podcast. I'm June Brosso. This is Bloomberg m