Welcome to the Bloomberg Law Show. I'm June Grosso. Ahead in this hour, When do campus protesters lose First Amendment protections? Audio tapes and testimony from a former White House aid In the second week of Trump's hush money trial, Elon Musk's Twitter sitter case turned down by the Supreme Court, and billionaire Binance founder Shang Panjao will be the richest
person ever to do time in a federal prison. Demonstrations against the Israel Hamas war have wreaked havoc on college campuses across the country, escalating in recent weeks as pro Palestinian demonstrators refuse to remove encampments and administrators turned to police to clear them by force, often resulting in violent clashes.
I kinda Gail Gibson, the police captain for the University of Cowboy of other at.
And your right player has to be at my momost break ups, and you do not do so, you may be arrested or subject to other prospections.
At UCLA's campus in Los Angeles on Thursday, police warned protesters for hours over loud speakers that there would be arrests if they didn't disperse, and in the pre dawn hours, police in riot gear confronted demonstrators in helmets and gas masks and arrested two hundred protesters. Similar chaotic scenes are playing out at colleges nationwide. From the White House, President Joe Biden warned against violence and said the protests put
to the test two fundamental American principles. The first is the right to free speech and for people to peacefully assemble and make their voices heard. The second is the rule of law.
Both must be upheld.
The charge situation sp like the difficulty of balancing the right to free speech with the need to provide a space where students feel safe joining me is constitutional law scholar Michael Dorf, a professor at Cornell Law School, explain what the First Amendment protects in the context of these demonstrations.
The First Amendment protects speech and other expressive activity, primarily against government interference or where it's voluntarily undertaken, private university interference that is based on the content of the speech. Right. So the critical distinction is between what are sometimes called time, place and manner restrictions. Right, you can have your rally in this place, but not that place, at this time, but not that time without amplification, except under certain circumstances.
Those are about how you are making your point, and generally the government has considerable leeway to restrict that so long as it does so reasonably. Orsu content based restrictions. You can't have a rally for this side, but you can have it for the other side, right, And so
that's the sort of basic principle that's operating here. The government can restrict speech, but not based on its content, and when it does so, it has to do so reasonably, meaning leave open adequate alternative channels of communication and so forth.
Let me give you an example. An anti semitic chant. Would that be protected under the First Amendment?
Strange as it may sound, the answer to that question is yes. In most constitutional democracies the answer would be no. But in the United States, what is sometimes called hate speech is not unprotected in virtue of the fact that it is hate speech. The leading case is a case from the US Supreme Court in nineteen ninety two called rav against City of Saint Paul, which said that the
First Amendment does not include an exception for hate speech. Now, I should qualify that by saying that an anti Semitic chant under certain circumstances, could be proscribable harassment. So if you think about racial or sexual harassment at the workplace, which is forbidden by Title seven of the nineteen sixty four Civil Rights Act, or at a federally funded college or university, which means just about every college and university in the country, racial harassment is prescribed if a college
university takes federal funds. It's just what all of them do. They're not permitted to tolerate racial harassment. And Department of Education guidelines define anti semitism, Islamophobia, and various other forms of hatred that you might think correlate with religion but have some sort of ethnic and therefore racial component. It defines those as covered by Title six. So if the chant rises to the level of harassment, then it is forbidden by Title six. In the universe, city is not
only permitted, but obligated to stop it. And now the question that naturally raises is does the First Amendment contain an exception for harassment? The Supreme Court has never decided that question. Lower courts have assumed that the answer to that is yes, and I think that is the correct answer. That is to say that what is defined as harassment, which is sort of creating a hostile environment based on
race or sex and so forth, is proscribable. That is to say, the First Moment doesn't protect that, And you have to ask, well, what's the reason for that. Why is it that if there is no exception to the First Moment for hate speech, why is it that the government can forbid harassment that takes the form of hate speech.
The answer to that, I think is that the government can't forbid harassment generally where harassment consists simply of saying offensive things, but it can do so when it's targeted in circumstances where someone can't just sort of look the other way. So if a neo Nazi group or white supremacists want to have a march through Charlottesville, for example,
they're protected by the First Amendment in doing so. But if they want to do that at the workplace of particular individuals, then those people are a kind of captive audience at work. And the crucial question, then, I think, for current purposes, is to what extent is a college or university campus more like a workplace where there's a kind of captive audience rationale for restricting what would otherwise be offensive. But first protected speech versus more like just
the public streets and public parks and so forth. I think that's a question to which we don't have an answer, but it's sort of at the heart of the clash between the First Amendment and crimination principles.
More than twenty three hundred demonstrators have been arrested across the country so far. Let's use Colombia as an example. And let's say that these protesters are charged. Do they have any defense based on the First Amendment?
Say so, that's a complicated question because their right to free speech as against Columbia is of course contractual right because Columbia adopt free speech principles voluntarily. It's not imposed by the First Amendment. There is a New York state law that governs discipline for various reasons, but it doesn't really create a free speech right if they are prosecuted.
And my understanding is a lot of people are being released, although I don't know what's happening with the latest rounds of arrests, I know that was true of the earlier round. But if they are prosecuted, in order to have a successful First Amendment defense, they would need to show that they were being selectively prosecuted by New York State or New York City because of their message, as opposed to because they were engaged in criminal trespass and we're told
to leave and give an opportunity to leave. And it's notoriously difficult to make out a successful case of selective prosecution. And so I think the answer is very likely no, especially because my understanding is the New York City Police only moved in at Columbia's invitation. So even if we think Columbia is acting because they don't like the message, which I don't think it's established. But even if we thought that, that doesn't mean that New York City is
proceeding because they don't like the message. As I said, the MIPD only goes in once they're invited. You can think of it in the following way, right, that is, there is a law against criminal trespass. If somebody comes into your apartment when you're not there, and then you ask them to leave, and they refuse to leave, and you call the comp the police come and they remove them, doesn't matter what your reason was for calling the cups.
Maybe you didn't like that they were there. Because they were saying things that you found offensive that wouldn't convert the police action in removing that person into a violation of the First Amendment.
What's the hardest part of this analysis of what the First Amendment protects and what it doesn't.
I mean, I think the place at which you draw the line between permissible free speech and prescribable harassment. It's complicated by the fact that there are you know, many participants in these encampments, and so you know, in New York, you know, you saw Mayor Adams complaining yesterday about outside agitators sort of infiltrating the Columbia takeover of Hamilton Hall
and the protests generally. And you know, that's an old problem, especially on a political left, that you have movements that attract people who have views that are sort of within a range of sort of within a standard deviation or two of the center of public opinion. And then you have people who are truly radical, and not just radical in their substance views, but in the means that they want to use, who then attach themselves to these movements,
and that can then undercut the other folks. And so, you know, in addition to the question of how do you protect students who feel, in some cases justifiably threatened by the protests without you know, shutting down people's right to express themselves. There's also the question of how do you separate out the people who are really engaged in harassment or threats what have you, from people who are just there legitimately to protest. And I think that's a very very hard question.
There's so much that goes into this analysis, and the Supreme Court has never drawn a line between the two.
No. I mean, so the subcuit has never faced a case in which the issue was somebody is being charged with the racial or sexual harassment, whether it's an employer for failing to shut it down, whatever, and there's a
claim of free speech. On the other side, there are lower court cases that in Supreme Ware cases that seem to just accept that it's permissible for the government to require private employers, private universities, et cetera, to restrict harassment, or even public universities to restrict harassment and harassment includes
creating a hostile environment. But they don't directly address the question of, you know, well, what if the basis for finding that it's a hostile environment is that people are engaged in protests that express a viewpoint but also hit home with other people in the community. That is unexplored territory. There's academic writing on it, but again no definitive Supreme Court.
We'll have to see how the courts handle these cases. Thanks so much, Mike. That's Professor Michael Dorf of Cornell Law School coming up. How's the prosecution doing in the second week of Trump's hush money trial. I'm June Grosso and you're listening to Bloomberg. We are appointing this till we had a fair trial.
If we had a fair judge, I don't think it would to be allowed.
This trial to take place.
Trying to make it a salacious He's allowing things in that have nothing to do with this case.
Nothing to do with it.
Donald Trump once again complaining about the hush money trial on Friday, after a week in which jurors heard first hand accounts of the negotiations to pay off two women to prevent damaging stories about the former president's alleged extramarital affairs from becoming public as part of a scheme to illegally influence the twenty sixteen presidential election, and one of the pivotal pieces of evidence was a recording of a meeting between Trump and Michael Cohen, his former lawyer and fixer,
shortly before the election, in which they in which they discussed a plan to pay off an ex playboy model who claimed to have had an affair with Trump, and I spoke to.
Allan about it.
When it comes time to the financing, which will be.
We'll have to pay you, so'll no no no, I got.
And the last witness this week was Trump's former top aide, Hope Hicks, who gave dramatic testimony about the campaign's panic when explosive stories about Trump's alleged affairs leaked to the public. Joining me for a look at the week is former federal prosecutor Robert Mintz, a partner maccarter in English, Bob tell us about the prosecution's strategy here, particularly in the presentation of the witnesses.
The key witness in this case is certainly going to be Michael Cohene, former President Trump's lawyer and fixer, who was at the very heart of this case. What prosecutors have done is to try to say at the stage building up to the testimony of mister Cohen, which will be the climactic moment of this trial without any question, And they're trying to introduce to jurors the concept of mister Cohen, the role that he played relative to this case,
and his relationship with former President Trump. And they're doing that first through the remarks of people who knew him. Now they have done it more recently by playing a tape where they can hear mister Cohne's voice along with former President Trump, and eventually they will hear from mister Cohen himself. But by the time that mister Cohn takes the stand, jurors will already be very familiar with who he is and what his role in this case is. From the standpoint of the prosecution.
Prosecutors love tapes, and they played a recording that Cohen secretly made in which he's discussing with Trump financing one hundred and fifty thousand dollars payment a few months before the twenty sixteen election. But the tape seems to cut both ways because he's talking about the financing and how he's got it all under control, like he's in charge, and that sort of squares with Trump's defense that this was all, Michael Cohen.
Well, when we talk about the tape that was introduced during this trial, we need to make something very clear because it's critical to how this tape came into being and how we'll be viewed by jurors. When prosecutors make tapes, and you're absolutely right, prosecutors love tapes because it's a way for them to hear from the defendants themselves. Defendants have a Fifth Amendment right not to take the stand
in the criminal case. In most criminal cases, defendants do not testify on their own behalf because that generally does not end well for them. So the only way that jurors will often hear from a defendant is by hearing a tape in which they hear the defendant. According to prosecutors, talking about the criminal activity. It's a way for jurors here the voices of the co conspirators in real time
carrying out the alleged criminal scheme. So tapes are a favorite tool of prosecutors, but typically the tape is done under the supervision and at the direction of the FBI or the DEA or whatever federal agency is running the case. They get the witnesses prepared, They basically give an outline to the witnesses about the conversation. It might be a wiretap. That's another way the tapes are created. But here we had an usual circumstance where Michael Cone made this tape himself.
This was years before any of this started. It was in twenty sixteen, two months before the presidential election, and so Cone made this tape himself. And as a result, it's not a dream tape for prosecutors, but it does help them in some ways and it hurts them in others.
What about the fact that Michael Cohen, a lawyer, is taping his own client.
Well, I think one of the problems with this tape is that it does pain Michael Cohen in a rather unslattering light. It shows that he is taping former President Trump, his own client, without former President Trump's knowledge. Who knows how many other clients he may have tape. And it says something about Michael Cohen and about the way he does business that he's taping his clients in September of
twenty sixteen. And what ends up happening here is we have a tape that does help prosecures by hearing former President Trump's voice talking about the hush money payments, talking about his knowledge about those payments leading up to the election. But the tape is not perfect because it doesn't.
Go into other areas.
And whenever you have a tape, there's always some comments that are made that are helpful, and the defense will always point to other comments that were not made during the tape to suggest that because they weren't made on the tape, then they don't exist.
Let's talk about the strategy of the defense, I mean so far during the prosecution's case, so they're basically attacking the credibility of most of the witnesses, but they're also trying to put a spotlight on the actions Michael Cohen took in these schemes.
The defense lawyer did a pretty good job of showing that the lawyer who represented Stormy Daniels in connections with the payment went right up to the line of extortion by demanding a payment in order not to go public with the statement of this alleged affair. And he beat up that lawyer pretty well to show him at least that someone who was skating on the edge of the law when it came to extortion, he didn't suggest he broke the law. But he certainly tried his best to
paint him in an unflattering light. But really the target for the defense is always going to be Michael Cohne.
Michael Cohne is at the heart of this case. They are going to suggest that Michael Cohne was the architect of this payment scheme, and most critically, they are going to suggest that it was Michael Cohne and not former President Trump who designed the payoff scheme and designed the cover up because remember, this case is not about the hush money payment that was essentially conceded at the opening statement by the Trump defense. It's all about how those
payments were allegedly covered up as a business expense. That's what's made this case of crime, and the defense strategy is going to say that that was all schemed up by Michael Cohne without the involvement or the knowledge of former President Trump at the time.
And now we have the big Friday witness. Prosecutors love to put on witnesses on Friday afternoon that they think are going to be very strong because it supposedly stays with the jurors all weekend. Do you buy that theory or did you fall into it? When you were a prosecutor.
Well, I think at the end of the day, prosecutors have to present their witnesses in an orderly way, so you can't really rejigger the testimony of witnesses. It has to be logical, it has to flow. There's a certain strategy into how you build your case. But as a former prosecutor, I can tell you there's nothing wrong with having a very strong witness the day on Friday.
Hope seems to be a lot different from the other main prosecution witnesses we've heard from so far, because she doesn't have the credibility or morality, shall we say, problems of witnesses like the former publisher of the National Inquirer or the lawyer who broker these hush money deals.
Yeah, Hope Hicks does not have a lot of baggage at all. She is not a leg to being involved in this payoff scheme. She wasn't working for the National Inquirer on these tax and kill questionable practices of varying stories for money. All of that is rather unseemly, and all of those witnesses are open to cross examination based upon only their credibility, but even the morality of what
they were doing. The defense lawyers made a point of attacking them, and so she will be a strong witness for the prosecution, but she doesn't have as much information at the heart of the case as some of the other witnesses are.
And with hicks testimony, the focus of the trial seemed to be moving from the tabloid world to the world of the campaign in White House.
What she adds to the prosecution's argument is to show the campaign's sensitivity to these issues in light of a Hollywood access tape, and how critical the campaign viewed the public perception of Donald Trump, who was then a candidate for president, and doing their best to try to tamp down some of these salacious stories that were beginning to percolate in the press. So it shows from the prosecution standpoint how critical it was for Michael Cohen to try
to bury this story. That's what prosecutors are going to try to argue based upon the testimony of Hope, Hicks and.
Bob The defense is refusing to stipulate to just about every piece of evidence that the prosecution wants to introduce. So, for example, one day we heard from the archivist at c SPAN, so tapes could be introduced. I mean, it slows down the trial, But how much does it really get the defense in in the end that little slow down or annoyance for the prosecution. I guess well.
Often the defense will stipulate to these non controversial, essentially ministerial testimony in order to get certain documents entered into evidence at a trial.
But what the.
Defense seems to be doing here is not agreeing to any of these stipulated situations in order to slow down the prosecution, to try to throw them off their game and to break up the narrative. Now, it really is a strategy that's being used here. They have every right to do that. The defense is not required to stipulate to any of these documents, witnesses, And what they're doing here is slowing the case down, throwing the prosecutors off
their timing, or at least they're trying to. And they're trying to slow this case down to break up the prosecution's case so they can't really build up momentum and tell a streamline narrative, which is what prosecutors are trying to accomplish here.
There's been a lot of report about Trump sitting with his eyes closed during the trial and on truth Social he said that he's not sleeping. I simply close my beautiful blue eyes sometimes listen intently and take it all in. How might the jury see that.
Well, it's really hard to say what's in the mind of jurors, but you can be certain that they are looking at the defendant, as they do in any criminal trial, that they're looking at the reactions to all this testimonies. And generally, if you're a defense lawyer, you want your client to not react to the testimony, to sit there
essentially stoneface. So it could be that the advice that the defenselaers are giving former President trumpet is to act as if none of this testimony really means anything.
Now about the gag order, this week, Judge Murshawn found Trump in contempt of court for violating the gag order on nine occasions and find him nine thousand dollars. He also had a hearing on three additional alleged violations by Trump. These monetary finds are pocket change to Trump. What can the judge do?
Ultimately, the gag order is a problem for the judge because prosecutors are repeatedly bringing up evidence to former President Trump violating the gag order. Talking about witnesses. The other day, he made the statement that the court was not permitting him to testify in his own defense, so the judge had to correct. That's been made clear that he has a constitutional right to testify in his own defense, but
nothing is preventing him from doing that. But at the end of the day, here the judge confine him and does have the right, as he would with any other defendant, to hold former President Trump in contempt and put him in jail. But that's not something that we're going to see happened in this case. He's not going to do that.
So all he can really do is continue to admonish for our President Trump, to talk to defense lawyers to try to get their fine in line, and at the end of the day, continue to stack up fine if the violations continue to occur.
Thanks Bob. That's Robert mant of maccarter and English coming up. The richest person to do time in fact prison. I'm June Grosso and you're listening to Bloomberg. Last November, Attorney General Merrick Garland announced the guilty please of Crypto Giant Finance and its chief executive Shangpen Jao for failures that allowed cyber criminals and terrorist groups to freely trade on the world's largest cryptocurrency exchange. Finance prioritized its profits over
the safety of the American people. The saga ended this week when a judge sentenced the forty seven year old to four months in prison. It's the first time a CEO has ever gone to prison for a Bank Secrecy Act violation, although the Justice Department had wanted a sentence of three years to make an example out of Jao to an industry rebounding from a slew of high profile scandals.
You remember Sam bankman Fried joining me is Bloomberg Legal reporter Ava Benny Morrison, who was in the Seattle courtroom for the sentencing, take us inside the courtroom.
Eva sure Jow, who's better known as cz planned up to the Federal courthouse in Seattle. He had about half a dozen lawyers with him. He didn't say much throughout the proceeding other than getting up to give a statement to the judge where he talked about how remorseful he was, how he had made a mistake, but he took full responsibility and that's why he had traveled from his home in the UAE to America at the end of last year to face the prosecution. While he was sitting at
the table, he was very still. He's sitting up straight, He's staring at the judge. Seemed to be absorbing everything that the judge and the prosecutors were saying. CZ's mother and his sister, Jessica were both seated in the front row, and there were a few other friends and supporters from the crypto industry that were in the courthouse as well.
There was a plea deal here, but prosecutors were asking for twice the sentencing guidelines. What was their reasoning?
Federal prosecutors were trying to make an example out of Cz. He was the CEO of the world's biggest crypto company, they argued, and he committed these as part of a plan to violate US laws that would allow him to make more money, allow big traders to continue using Binance even though it didn't have an adequate anti money laundry progress.
So they were arguing for thirty six months in prison for Cz to really send a message notly to the crypto industry, but to corporate leaders far and wide that this sort of behavior would not be tolerated and would be punished.
As you mentioned, the defense was asking for leniency and probation. What was their argument.
The defense was pleading with the judge to spare cz from prison. They pointed to the fact that he voluntarily came back to America to face these charges at the end of last year. They said that he had cooperated extensively with the government in this investigation and that he
directed Binance to cooperate with the DOJ as well. They pointed out that Finance had settled several investigations with knowing the DOJ, but the CFTC the Treasury Department, which resulted in the company paying four point three billion dollars worth of fines. I think the biggest sticking point in the arguments was over whether a prison sentence was warranted for
this type of offense. Cz was essentially charged with violating the Bank Secrecy Act, which sounds pretty minor on the face of it, but attached to that crime were arguably pretty serious circumstances. Because he didn't have an adequate AML program at Finance, terrorist organizations like al Qaeda and Hamas were able to trade on the platform, and US customers
were trading with customers in sanctioned countries like Ara. So the defense was really trying to narrow in on the fact that this was just a banking violation, for the prosecution was urging the judge to look at those serious circumstances that.
Were attached to it.
Did the prosecution prove in any way that CZ knew about what was happening on the platform.
No, the prosecution didn't say that cind personally knew that there were the proceeds of crime moving across finance, and the defense really highlighted that as well, saying, look, there is no evidence here that cz personally, as the SEEO of the company knew that illicit funds were moving across finance, and so that needed to be taken into account.
How long did his statement to the judge last and what part of it stood out to you.
CZ's statement to the judge only lasted a few minutes. He started by saying that he was remorseful and he was sorry and he had made mistakes. He spoke about how difficult it was for him to step down as CEO of Finance, a company that he founded in China several years ago. He spoke about how he struggled to accept that that was essentially the only course of action here.
But he spoke about how he still wants to make a difference in the world, and he's really focused on philanthropy now that he's not leading finance.
And what was the judge's reasoning for handing down the four months sentence.
The judge agreed with the defense that the prosecutions suggested and that Cz should be sentenced to thirty six months in prison was far too high. He said that he had taken a lot of time to reap through more than one hundred and sixty letters admitted from CZ's friends and family and co workers that painted this man in a very favorable light, describing him as a family man,
a humble person, and just a hard working entrepreneur. He said that yes, while this is a Bank Secrecy Act violation and other cases involving that charge had resulted in probation, there were some egregious factors here, like the fact that Hamas and cyber criminals and dark web transactions were able to take place on the platform.
Because of it.
I think he just couldn't get past the Hamas al Kader dark web element of this. I will say that it's unusual for BSA cases to result in prison time, so the judge was really sort of putting his neck out here by handing down a sentence that did involve prison time. It'll be interesting thing to see if this sets a precedent for other BSA cases in white collar prosecutions in the future.
What always seems striking to me about this case is that the UAE has no extradition treaty with the US, yet he flew here and turned himself in and then prosecutors stopped him from returning home pending sentence. And as for a sentencing of twice the guidelines, that scenario is not going to encourage others to turn themselves in.
Yes, the defense actually did make a point out of that, saying cz has done all the right things here. He's come back from Dubai, turned himself in, pleaded guilty to the charge, agreed to pay personally a fifty million dollar fine to the government. He has ticked all the boxes. But the fact that the prosecution was then arguing for a prison sentence that was well above the federal sentencing guidelines might actually deter people from doing that in the future.
And from the side to travel from a non extradition country to the US to face the charges.
What happens now, Do I understand that he's not eligible to go to a minimum security prison?
Yes, CZ, because he's not a US citizen, is then eligible for a minimum security prison, and that's usually where white collar defendants end up. So he has made a request for the judge to be designated to a facility called FDC C tach here in Seattle. We don't know when he needs start that prison sentence that dates still to be decided, and but his lawyer did say that he's eager to just get it over and done with and finally be able to return to Dubai to reunite with his family.
This is the second high profile sentencing in the crypto industry recently. Was Sam Magman Freed mentioned at all?
Sam Magman Freed did get a mention. Actually, when the prosecutor was referring to the arguments that CZ's lawyers had submitted to the court, he said, look, we're not alleging that case is a Sambang mcfred. We're not saying that he's a monster, and we're not trying to kill the crypto industry. That we are saying that this is a serious crime because he didn't have an AMO program and that allowed some of the ilicid actives and terrorists to gain access to buy it.
Thanks Seva, that's Bloomberg Leigal reporter Ava Benny Morrison. Joo's wealth has ballooned to more than thirty eight billion dollars, giving him the dubious distinction of being the richest person
ever to do time in a federal prison. Let's turn out to another billionaire in the legal news, Elon Musk has been trying to get rid of his Twitter sitter for years, even though he agreed to have a lawyer pre approve his tesla posts as part of a settlement with the SEC in twenty eighteen, although it's unclear exactly who's watching over his tweets and how much watching they're
actually doing. In an interview with sixty Minutes at the time, Musk didn't seem too concerned about getting that soon provision.
The only tweets that would have to be say, reviewed, would be if a tweet had a probability of causing im movement in the stock and that's it.
Yeah, I mean, otherwise, it's hello.
First Amendment like premium speech is fundamental.
Freedom of speech is a fundamental constitutional right. But that argument didn't convince the lower courts to throw out his Twitter sitter agreement, and this week the Supreme Court refused to hear Musk's appeal without comment. Joining me is business law professor Eric Talley of Columbia Law School. Elon Musk has battled the sec over his social media posts since he tweeted in August twenty eighteen he had funding secured to take Tesla private.
Well, this was yet another example of mister Musk's pensiant for firing things up onto Twitter or acts, you know, sort of at the spur of the moment. Back in twenty eighteen, mister Musk dropped a tweet basically said funding secured for you know, buying out Twitter at four hundred and twenty dollars share and you know that number of the four to twenty name is a very popular one for mister Musk.
Case.
Well, people took seriously this idea that funding was secured, and if you looked into the backstory, the funding sources were not nearly as secure as he signaled that they were at the time. So that ended up eliciting two different legal actions won by the SEC, and then there was also a class action lawsuit. He won the class action lawsuit, but the SEC moved first and said that was misleading. You didn't have the funding secured. We are
going to push our own regulatory action against you. And the matter quickly settled, and it probably settled in part because the SEC has a lot of heft when it comes to sanctioned They can basically force someone not to be an officer and director of a company for many, many years if they chose to do so. So, the terms of the settlement that mister Musk reached with the SEC included monetary fines that he had to pay, which was, you know, tens of millions of dollars but kind of
pocket change for him. And in addition, he had to step down as chairman of the board to keep his board position and CEO position. But then the final thing is that he needed a Twitter babysitter. He needed to consult with a lawyer before he put things up on Twitter, so the lawyer could sort of sound the alarm bells if what he was about to do had a bearing on things like, oh, I don't know securities for us, and so that's effectively what he had agreed to do
in this settlement. And you know, he is a guy that tends not to like being, you know, overseen by lawyers or anyone else. And within a couple of years grew quite tired of the fact that he couldn't just post whenever he wanted, and at some point decided he was going to try to get out of the settlement.
So he had petitioned lower courts to let him out of this, you know, Twitter babysitter settlement provision, saying that it by related his First Amendment rights, there was a prior restraint on what he was allowed to stay in the public forum. The courts that heard it below they were having nothing to do with it. They said, look, this is a settlement that you entered into. This is in fact a restriction that every other executive at TESLA has. They can't post anything they want. They have to have
it cleared with in house counsel. And that's the same thing with you right now. So no, you made your bed and you're going to sleep it. And he tried to take it to the Supreme Court and it was rejected by the Supreme Court. You know it clearly did not command enough attention of fitting justice for them to want to get involved in this determination.
He can't win all his legal fights. Thanks so much, Eric. That's Professor Eric Tally of Columbia Law School, and that's it for this edition of the Bloomberg Law Podcast. Remember you've can always get the latest legal news by subscribing and listening to the show on Apple Podcasts, Spotify, and at Bloomberg dot com, slash podcast, slash Law. I'm June Grosso and this is Bloomberg