This is Bloomberg Law with June Grossel from Bloomberg Radio.
With a stroke of my pen.
On day one, We're going to stop the transgender lunacy, and I will sign executive orders to end child sexual mutilation, get transgender out of the military and out of our elementary schools and middle schools and high school.
President Donald Trump had campaigned on ending what he called the transgender lunacy, and on day one, he began by targeting transgender people in a series of executive orders.
It will henceforth be the official policy of the United States government that there are only two genders, male and female.
Trump's followed that with executive orders barring transgender people from serving in the US military and revoking federal funding from entities that provide gender affirming care to minors and educational institutions that allow transgender female athletes to compete in school sports. All of these executive actions have been challenged in court. Joining me is David Cole, a professor at Georgetown Law
and the former National Legal Director of the ACLU. On the first day of his presidency, he signed an order declaring that only two genders exist. Does that order itself have any effect on transgender people.
Well, it's deeply demigrating of their very humanity. But I don't think the order itself has legal effect. The president can declare whatever he wants, but it doesn't make it.
So let's discuss some of the executive orders he's issued. On January twenty seventh, Trump issued an executive order intended to bar transgender people from serving in the US military, and under new rules released by the Defense Secretary, transgender individuals are blocked from enlistment, and transgender troops already serving are blocked from receiving some gender related medical care. Is a complete ban likely next?
Well, I'm not sure what's next, but what he put in place already is deeply disturbing and very likely unconstitutional. The executive order effectively says, or not effectively, literally says, transgender people cannot serve in the military because we need honest people serving in the military, and if you're transgender, you're not honest. That is simply pure ignorant prejudice. It's nothing more than that there are one point five million
people in this country who are transgender. The fact that they are transgender has nothing whatsoever to do with whether they are honest. Some of them are honest, some of them are probably not, just like some presidents are honest and some are not. But that kind of an order, which is based on nothing more than bear animus against
a minority group, is clearly unconstitutional. The fact that it arises in the context of the military might make it a closer case, because the president, as commander in chief, has special authority. But imagine if the president said black people are not honest and so they can't serve in the military. I don't think that order would stand, nor should the transgender order stand.
There are several lawsuits over that ban. There are suits by six service members. Less Thursday, Land Illegal in the Human Rights Campaign filed a lawsuit, but in twenty nineteen, the Supreme Court allowed Trump's restrictions on transgender people in the military.
The case never reached the Supreme Court in the sense the Supreme Court never agreed to hear the case. The last time around, it was a more limited restriction, and it was not as this one is, on its face, based on pure, unadulterated prejudice and animus. The Court has long ruled that when the government targets a group out of pure animus out of animus against the group, not
based on any rational justification. Its actions are unconstitutional, and so I am quite optimistic that the courts will declare this ban unconstitutional and the Supreme Court will then take it up, because the Supreme Court generally does take up decisions that declare actions of the president unconstitutional. But this is deeply, deeply offensive. It is really no different than writing an order saying black people are not honest and therefore they can't serve in the military.
So the next day, on January twenty eight, he issued in executive order ending federal funding research and education grants to medical institution, including hospitals and medical schools, that provide gender affirming care to patients under nineteen. And you call this protecting children from chemical and surgical mutilation. What about the legality of withholding federal funds here?
Again deeply troubling and illegal. It's been challenged. I know the ACLU has challenged that action. It's illegal both because he is cut off funding that Congress specifically appropriated to be spent for these purposes, and for the same reason that courts have enjoined his efforts to cut off other Congressional funding and other contexts. The president doesn't have the power to simply cut off funding because he disagrees with
Congress's judgment. His job is to execute the laws that Congress passes, and so he can't override that because he happens to be prejudiced against transgender people this lass. It also will be challenged as a form of second discrimination in the provision of healthcare, which violate a federal statute, and the United States Court of Appeals for the Fourth Circuit has held that denying care to transgender people is a form of sex discrimination that violates that federal statute.
So I am quite optimistic that this order will also be struck down once the courts take it up.
Three states, Washington, Oregon, and Minnesota, have also filed a lawsuit over that executive order on medical treatment for transgender minors, saying it violates the Fifth Amendment's equal protection guarantees, the constitutional separation of powers, and the Tenth Amendment. And the tenth Amendment has been invoked in other lawsuits by the states against Trump.
So the tenth Amendment is because it's interfering with the authorities of the states, and so if he's seeking to use federal funding to coerce states in the taking action that they don't want to take. That's a violation of the principles of federalism. And with respect to the Fifth Amendment, singling out a particular group for unequal treatment violates the Fifth Amendments protection of due process, which in turn requires the federal government to treat all people equally.
You represent transgender families challenging Tennessee's ban on gender firming care from minors. At the Supreme Court. The Trump administration flipped the federal government's position in that case, which came as no surprise, and now is in support of Tennessee's ban. Do you think that flip will have any effect on the Supreme Court's decision in the case.
Well, we'll see when they issue their decision. I don't think it's likely to have an effect. The case was presented to the court, the court heard argument. I was actually co counsel for the transgender families with the ACLU in that case, and at the Supreme Court, initially and at our argument, the United States was on our side. Now that President Trump has taken office, he has switched
sides and he's against us. But all he did was submit a letter saying we no longer support the plaintiffs in this case, and we think the law is constitutional. We think you should decide the case. So I suspect that the court will decide the case. I very much doubt that the Trump administration shifting its position will affect
how the court decides the case. There's still a dispute between our clients and Tennessee, which is depriving the parents and their kids of the medical care that they and their doctors have determined as medically necessary.
Let's say the Supreme Court upholds Tennessee's ban. Does that have any implications for Trump's executive order withholding funding from institutions that provide gender firming care for minors.
Yeah, so if the court rules for Tennessee. Depending on how it rules for Tennessee, it would weaken the equal protection challenge to the extent there's an equal protection challenge to the Trump executive order, but it would have no effect on the claims that he can't cut off funding that Congress appropriated, that he can't discriminate on the basis of sex in the provision of healthcare under a federal statute, and that he can't commandeer the states to carry out
programs that they disagree with, so all of those claims would remain. The Fifth Amendment due process slash equal protection claim that is also in the case could be weakened if the court rules against Tennessee, and would obviously be very much strengthened if the court rules in favor of the transgender family.
Last Wednesday, in a ceremony at the White House, Trump signed an executive order denying federal funds to any educational institution that allows transgender female athletes to compete in female categories in school sports.
We're putting every school receiving taxpayer dollars on notice that if you let men take over women's sports teams or invade your locker rooms, you will be investigated for violations of Title NINN and risk your federal funding. There will be no federal fundement.
Well, I think again, this is, you know, consistent with everything else he has done with respect to transgender people, which is that he has targeted a very small minority in this country for disparate treatment that no one else has to suffer. And so he's basically saying we're going to take away funding from schools that allow allow transgender women to play on women's teams. There are many transgender women who are playing on women's teams. Some of them are,
you know, very good, others are not. They're in the NC DOUBLEA, they're governed by NC DOUBLEA rules. If they're club sports, they're governed by whatever the school's rules are. But at the end of the day, sports are about two things, competition and participation. And to say to a trans woman, the only way you can participate or compete is if you deny your gender identity and you act as if you are a man when you are a woman. No one else has to deny who they are to
play a sport. So it's a deeply again, a deeply cruel effort to use the power of the federal purse to coerce universities and schools to harm people who they're simply allowing to participate in extracurricular activities. And there are concerns in the sports context about the fairness of competition and the like, but most of the sport governing bodies
have dealt with that through gender neutral rules. To say, you know, if you're going to play on the women's team, have been identified as a woman for a certain period of time, you have to have low testosterone level so that you're playing essentially on an equal playing field with
the other women on the team. But that's a totally permissible set of rules to apply to come in and say, where a transgender woman is harming nobody, she cannot participate simply because I have an ideological view that rejects the reality of one point five million people in this country. Is again nothing more than pure animus and prejudice, and should be invalid.
And two transgender girls in New Hampshire brought the first legal action against that executive order, and it's actually an expansion of a lawsuit filed last August against a state law prohibiting transgender girls from participating in female sports. So
we'll see where that goes. Trump also issued an order requiring officials to ensure that transgender women detained in federal facilities be housed in men's facilities, and prohibiting the Bureau of Prisons from providing gender affirming care to inmates.
And that has already been challenged by two transgender women and has been and joined by the courts because the law is and President Trump doesn't seem to care what the law is, but the law is, the constitutional law is that prison officials have to keep their detainees safe. They have a lot of discretion in how they make those decisions, but they have to make those decisions on
an individualized basis. And so if a prison official determines that a particular trans inmate cannot be kept safe if she is held in the men's prison where she will be abused, raped, and the like, that's fully within the discretion of the Bureau of Prisons to decide. They have to decide it based on medical and safety concerns, not
based on ideology. What President Trump's executive or says is even where Bureau of Prison officials have determined that the only way to keep a trans woman safe is to hold her in a woman's prison, she must be put into a male prison where she faces abuse, rape, and the like. So it's not surprising that both courts that
have faced that have and enjoined the President Trump's executive order. Again, it's cruelty driven by animus, prejudice, and ideology, and that's not permissible under our constitution.
He campaigned on this, and I assume he knew that there were the fierce opposition and lawsuits challenging these orders.
It's not surprising that he has targeted transgender people. He targeted transgender people during his campaign. He targeted immigrants during his campaign. He knows you know who to target. He targets the vulnerable. He targets those without a voice in the political process. He makes them scapegoats. You know, that's
a tried and true political tactic. Unfortunately, but the Constitution protects the vulnerable, and the Constitution requires you treat everybody equally and you not impose burdens on people simply for political gain or because you entertain prejudice against them. And that's exactly what President Trump has done with his executive orders on the trans community.
And we'll see how the courts react. As you mentioned, a few courts have already blocked some of these orders from taking effect, at least temporarily. Tomorrow is Seattle federal judge is going to hold a hearing on a request for a temporary restraining order on the executive order that haults funding for institutions that provide gender affirming care for minors.
That's in the case brought by the three States, and on February eighteenth, the judge is going to hear arguments for a preliminary injunction that would block the Trump administration and the US military from enacting the executive order barring transgender Americans from the Arms services. And I'm sure there'll be a lot more hearing scheduled in these cases. Thanks so much for joining me today, David. That's Professor David
Cole of Georgetown Law. During his campaign, Donald Trump said he would make the United States the crypto capital of the planet and the bitcoin superpower of the world.
We will have regulations, but from now on, the rules will be written by people who love your industry, not hate your industry. People that want to make it clear and simple, straightforward and fair. People that want to see your industry thrive.
Trump also vowed to end the so called weaponization of the federal government, including the Securities and Exchange Commission. Trump's choice for SEC chair, former SEC Commissioner Paul Atkins, hasn't been confirmed yet, but there are changes underway at the
agency already, with more to come. My guest is securities law attorney Robert him a partner at Tartar, Krinsky and Drogan, and a former SEC Assistant Regional Director, Gary Gensler had an aggressive enforcement agenda and he ended up levying over twenty billion dollars in penalties and other charges. Former SEC Commissioner Paul Atkins. Trump has tapped him to be the SEC chair if confirmed. How different do you think his strategy will be?
Well, I think if mister Atkins is confirmed, there is definitely going to be a sea change at the SEC in terms of their approach and their strategy to crypto. Probably the biggest complaint that the crypto industry had is that the SEC was engaging in regulation by enforcement activities. So instead of promulgating rules and setting guidelines and rules for the road for the industry to follow, the SEC
didn't do any of that. Instead just started bringing enforcement actions against various players in the industry, which was a huge concern to the industry participants because you know these actions can lead to find there's reputational damage and other problems with that approach. So I think mister Atkins is
going to really take a different attack. He's most likely going to start more of a rulemaking process for the industry, so there's going to be clarity on all the different parts of the regulatory system that touch on crypto in terms of whether their securities or whether their commodities.
He previously recommended that the SEC act more predictably and proposed that the agency adopt an open jacket policy to discourage it from bringing cases where evidence was deficient. What does that mean, an open jacket policy.
Well, that could mean a couple of different things. You know. One is it certainly indicates that there was likely going to be much more transparency at the SEC regarding its rulemaking process and its decisions about who it sues and enforcement proceedings or not. One of the complaints that the crypto industry has had is that there has been a lack of transparency at the SEC in terms of, you know,
exactly how the SEC is looking to regulate these products. So, for instance, there are several crypto organizations like Coinbase that had repeatedly tried to come in and meet with the SEC to find out, you know, the SEC's blots on how to register, you know, how to have proper regulatory oversight, what the SEC was expecting from these different organizations and the SEC while they took the meetings, they never provided any sort of guidance or even opened up a path
for crypto firms to register with them, and that's been a huge point of contention because the crypto firms say, you know, we do want to comply and we do want to follow the rules, but you, the SEC, have to let us know what they are. You have to give us transparency into what you're thinking in terms of what the proper steps are that we need to take and not just you know, sue us and see millions of dollars in fines.
The SEC has already created a task force to work with the crypto industry. It's led by Republican Commissioner Hester Pierce, known as Crypto Mom due to her favorable stance toward the sector. I mean, do you think there'll be any regulation of crypto?
Yes, I do think that there's going to be regulation of crypto. And the industry also is not arguing that there shouldn't be any regulation. What the industry is arguing is more for common sense regulation, but also transparency and
clarity on what those regulations are. And yes, the new Crypto task Force I believe is going to be very helpful and playing a big role in that process because what the task Force is doing right now is studying various aspects of the crypto industry and also doing a wholesale review of the SEC's actions in the crypto space,
particularly it's enforcement cases. And we saw the other day probably the first concrete step to come out of the Crypto Task Force is that there was a sixty day pause that was entered in the SEC's enforcement proceedings against Finance, which was a major case the SEC brought against the
Crypto Exchange. So that certainly signals the SEC is taking a deep dive and doing a serious review of the case and may either wind up dropping the case or may wind up proposing terms for a settlement that are much more reasonable than what the Commission was seeking under the prior administration.
So Atkins has said that corporate finds unfairly penalized shareholders. Does that mean that, you know, we're going to see less corporate finds and more concentration on individuals.
Perhaps, Yeah, I do think that is the implication of approach. So, for instance, with with Coinbase, which registered with the SEC and when public you know, had an IPO, one of their chief complaints is that you know, hey, look we put together a registration statement, the SEC reviewed it, were approved.
We're trading our business model has been transparent for years, and all of a sudden, the SEC comes in and sues us for violating the securities laws and not registering as a broken dealer, not following all these other requirements
that we feel don't apply. And you know, if the SEC was to succeed on that sort of case and a large fine was levied against the company, yeah, that comes out of the pockets of shareholders, you know, innocent investors, you know who didn't have anything to do with the violations. You know that being said once, the SEC maybe reduces
their focus on finding corporativities. Yes, the focus con then shift to finding individual bad actors when that's a problem, or potentially having injunctive relief, where a court can order certain changes in a company's business practices so that violations
or other problematic conduct can occur in the future. So just because the corporations themselves may be getting smaller fines doesn't mean that there's not other tools in the toolbox to ensure that companies and the people that work there as senior managers are complying with the relevant laws.
Lawyers at the SEC have been told they need to seek permission from the politically appointed leadership the commissioners before formally launching investigations. That's according to Reuters. So tell us what the old procedure was like and the implications of these changes.
Yeah, that is somewhat of a change. Typically in the past the SEC, where I used to work for about six years, typically the commissioners themselves would delegate the responsibility to determine which enforcement actions to pursue, especially in the early stages, to the Director of Enforcement. There was a lot of discretion in terms of looking at what areas
to focus on, what investigations to launch. You know, ultimately, any enforcement actions even under past administrations, did have to be approved by the commissioners, but they placed a lot of reliance on the judgment and the recommendations of the
Director of Enforcement. Now that's going to change. The commissioners are going to have a much more active role in setting the priorities for not only the Enforcement Division, but other divisions at the SEC, and I think taking a much harder look at what sort of cases are being filed so that they can make sure that the cases are in alignment with the philosophy of the new administration in terms of crypto and other agency priorities and endeavors.
So the Supreme Court delta near fatal blow to the SEC's administrative law judge program. Do you think that under weakens the SEC will weaken the ALJ program even more?
Well, yeah, I think that under Atkins, there really isn't that much of a choice given the Supreme Court's decision in the area. And you know, this gets into people's rights to have a jury trial and whether an administrative forum is appropriate for administrative law judges to be imposing
these substantial civil penalties. But yes, I do think that we're going to see a pretty dramatic shift in SEC enforcement proceedings over to federal courts, where defendants will have much more robust procedural rights in terms of the way cases proceed and they'll also have more rights in terms
of discovery and getting evidence and taking depositions. So certainly from defense perspective, and for the rights of individuals who very often are not part of the securities industry or not you know, licensed brokers, they historically have been dragged into these administrative proceedings where they have a lot less in the way of rights than they would if they were in the federal court.
In accord with Donald Trump's anti DEI focus or obsession. They've ended programs such as affinity groups, things like that. I mean, does that make a difference in the culture at the SEC.
I think to a certain extent, when you eliminate certain programs along those lines, it can have a negative morale
boos for a time. But I think overall, the direction that the SEC and other federal agencies are heading in is more of a back to basics approach, you know, focusing on financial regulation, focus on fighting fraud, focus on traditional investor protections, and not trying to expand, you know, the regulatory powers of the SEC into these very contentious social issues in terms of items like representation on companies boards and certain diversity goals and things that really stray
pretty far from the core mandate of the SEC. So I think in the short term you could see some morale issues with the SEC and other agencies, but in the long term, I don't think it's really going to hamper their core mission of enforcement and investor protection.
Coming up, I'll continue this conversation with securities attorney Robert Heim. Why is Trump putting a pause on enforcement of the Foreign Corrupt Practices Act? You're listening to Bloomberg. I've been talking to securities law attorney Robert Heim, a partner at Tartar, Krinsky and Drogan. So let's turn now to the Foreign Corrupt Practices Act. First of all, explain what the Foreign Corrupt Practices Act is if.
The Foreign Corrupt Practices Act is a law that came into being in the nineteen seventies, and it was designed to prohibit American companies from essentially bribing foreign officials and foreign government officials in particular to help win business for
the companies. It's essentially an anti corruption law that's designed to ensure that US companies when they operate overseas, are playing by the rules and not engaging in corrupt activities like bribes to government officials in order to win contracts and other government concessions.
It's no secret that Donald Trump has hated this law, and so he signed an executive order Monday pausing enforcement of that law and ordered the new age to immediately stop actions under this act. What effect do you think it will have if they just stop bringing actions under the Foreign Corrupt Practices Act.
Well, there's companies American businesses do have in placed very robust systems currently for detecting and preventing corruption and improper payments to foreign government officials. Trump's rationale for this is essentially that, you know, he believes that the Foreign Corrupt Practices Act, which generally the DOJ in the past, you know,
has applied to American companies doing business overseas. President Trump's rationale is that, you know, we were hurting our own businesses and going after companies for practices that perhaps companies from other countries were engaging in. Now that's not to say that if an American company engages in corrupt practices or bribes the local government official, there's still going to
be consequences for that at the local country level. So President Trump is saying that if a bribery occurs, you know, overseas in a foreign country, that's going to have to be something that the local prosecutors and that country handle, and that the DOJ in the United States is not going to be prosecuting US companies for those sort of practices, because in their view, it places unfair competitive restraints on companies that maybe foreign companies from Europe and other regions
of the world don't have. In the same way that the US company would have.
During his first term, Trump asked administration officials to help kill the act that never gained traction. It would take Congress to get rid of this law.
Right, the only way to really get rid of the Financial corupt Practices Act would be to have Congress repeal the law, because Congress was the body that passed the law in the first place, and it is a statue on the books. But the DOJ, under the direction of President Trump, does have a tremendous amount of discretion in terms of what laws it enforces and what law enforcement
priorities it sets. So I think President Trump has accomplished ninety nine percent of what he wants by directing the DOJ not to focus on enforcement of the Foreign Corrupt Practices Act. And really, I don't think it would be necessary for the Congress to repeal the law because under President Trump and the the law, it doesn't look like it's really going to be enforced at all.
I don't know if this is instructive or not, but nine of the ten biggest FCPA prosecutions have actually been against foreign companies. Do you think that DOJ might still try to enforce the law against foreign companies?
I don't think so, because the DOJ today is really going to have a different set of enforcement priorities, particularly with respect to drug cartels and terrorism. So it's not really going to be high on the DJ's list to go after foreign companies that engage in Corrupt Practices Act. That's going to really be up to the home country prosecutors and the local prosecutors in the countries where you know,
any of these acts might be occurring. You know. That being said, other countries in Europe and local laws and countries where a lot of business is done, they all have anti Corrupt Practices Acts of their own. So I don't think we're going to you know, see the Floodgates Unleashing of Corrupt Practices Act, bribery being done by US companies.
There's laws still very much on the books that you know, prevent that, and it's really just a question of what agency is going to be responsible for prosecuting those sort of corrupt practices.
Let's turn to the Consumer Financial Protection Bureau, or what's left of the Consumer Financial Protection Bureau. I'm not quite sure you know what actually is left of it, because the acting Director, Russ Vaught, has ordered the Bureau's work to be stopped and has said he won't be asking for any more funding for the agency. What effect will it have if the CFPB is just shut down.
Well, the CFPP has never really been a favorite agency at all among Republicans and conservatives. You know, the thought on the CFPB is that it was really duplicative of other work that agencies were doing, like the SEC and the Command, these Futures Trading Commission and other financial regulators. And the other issue that Republicans and conservatives have had with this CFP b is that it, you know, every
year it seemed to really be expanding its mandate. And you know, while traditionally it would look at things like credit card charges and credit reports and student loans, that started expanding, you know, into more ideological areas. And the finds that it was imposing on companies was was really
quite high. And I think, you know, in line with President Trump's desire to you know, reduce regulatory burdens and finds on American businesses to try to help the economy and businesses operate more efficiently, they really had this CFPB in their sites. And you know, one of the issues is,
you know, it's a developing situation. We're really in uncharted territory right now to respect to the stop work order at the agency and the fact agencies not drawing down on any more funds from the Federal Reserve to fund
its operations. That raises all sorts of legal questions, because you know, Congress is the body under our constitutional system that sets up agencies with both within the executive branch and independent agencies, and Congress is also the body that passes laws to fund these agencies in the form of
annual appropriations for budgets. So here, you know, the issue that the courts will ultimately have to decide is, you know, is President Trump as the executive overstepping his bounds when he basically moves to shut down agencies that have been established and funded by Congress, Or is this within his purview as an elected official with the mandate to try to make government more efficient.
That same question is going to come up in a lot of other cases as well. Always a pleasure to have you on, Bob, Thanks so much. That's Robert him of tartarkrein Drogen. And that's it for this edition of The Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law podcasts. You can find them on Apple Podcasts, Spotify, and at www dot bloomberg dot com, slash podcast slash Law, and remember to tune into The Bloomberg Law Show every weeknight at ten
pm Wall Street Time. I'm June Grosso and you're listening to Bloomberg