3M, Synopsys, Capital One & Other Catalysts

name's Eliot Stein. I'm a senior litigation analyst covering litigation in the financial sector, and I'll be your host for today March first, twenty twenty four. If you have any questions about any of the matters that we'll be talking about on this episode, please don't hesitate to reach out to us at your convenience with your questions. So we'll

be discussing a hand and full of sectors and issues today. First, our anti trust analyst Jen Ree will discuss the anti trust challenges likely to face a pair of recently announced deals, the first being the thirty thirty five billion dollars Synopsis Ancest deal and the second being the Capital One Discover deal.

Will then bring in Nathan Dean, our financials policy analyst in Washington, DC, who will also talk a little bit about the Capital One discovered deal, but from a bank regulator perspective, and he'll also talk about the SEC's climate disclosure rule, which looks like it'll be finalized in the

coming week. Sticking with DC will then bring in our health care policy analyst Dwane Wright to discuss health insurer earnings and the potential impact of the twenty twenty four elections on the drug pricing provisions of the Inflation Reduction Act. After that, Justin Terteresi, who covers consumer and industrialiityation and policy, we'll talk about two major proposed rules expected in March by the EPA addressing pfast substances, or forever chemicals as

they're commonly known. After that, Matt Schettenhelm, our TMT litigation and policy analysts, will discuss a March first hearing in Meta's lawsuit challenging the FTC's plan to tough in terms of the social media giant's five billion dollar settlement from twenty twenty concerning privacy violations. Last, but not least, I'll discuss upcoming appeal oral arguments. On March thirteenth, in a terror finance case by US service members against three banks

Donska Bank, Deutsche Bank and Standard Chartered. All of this research, of course, is available on the Bloomberg terminal at big and just a quick word about Bloomberg Intelligence for those who are unfamiliar. We are the investment research platform on the Bloomberg terminal, providing in depth research on industries, companies, and markets and over and key data from bi analysts in their given industries. All right, So with all that

out of the way, let's get started with the content. Jen, Let's bring you in and talk about anticipated antitrust scrutiny of a pair of thirty five billion dollar deals. The first is the Synopsis app Ancest deal in the semiconductor design software space, and the second is Capital One Discover. So on Synopsis and the answers, you've said the deal may be subject to an in depth antitrust investigation this month in March, but you aren't sure entirely about the timing.

Do you want to come in and tell us where that stands?

But at this point I think they probably have filed even if that January twenty ninth date slipped, And once they do file, then the FTC has thirty days which is probably expired or is about to expire, and that would be when the in depth investigation gets launched. And we think this will be the Federal Trade Commission because it is in the semiconductor area, and that's an area where the FTC has some expertise and experience.

the semiconductor makers use to design the chips themselves. So the customers here are really big companies like Intel and Taiwan Semiconductor, and Synopsis has really only two main competitors, which are Siemens and Cadence. Now antsis competes in a little bit of a different space. I should say. It does overlap very very slightly on the tool side of the design side, but not very much. Its main product is software for evaluating the larger electronic systems where the

chips are going to end up. So it's basically simulation software that the companies, the chip makers can use to

evaluate how the chips are going to perform under different environments. So, as you can understand here, they have a lot of the same customers and so ansis just sort of sits a bit downstream in the supply chain in a manner of speaking from where Synopsis is, and so they relate to each other in that sense, even though they're not They really only compete slightly on the more upstream piece, in the design piece, And I think that that's an

intricate relationship. And whenever there's an intricate relationship like that, the FTC is going to want to look into it, because what they're going to worry about here is the fact that this is a highly technical market, a highly technical industry in which there has always been open standards because these technologies have to work together. The chip makers need the design tool and the simulation tool that work together,

and the industry has always worked that way. But once Synopsis owns answers, the question would be, will it now have the incentive to try to block out other competitors in both areas because they could make more money that way, obviously, and they could do it by tying the products together either contractually or even and technically so that the chip customers can't really mix and match anymore. It's a vertical

issue essentially of foreclosure. And I think that the FTC is going to want to dig into this to understand this technology to begin with, and then understand what how Synopsis incentives may change once they own this further downstream entity.

that helps. And we also view the buyers as the customers as power buyers, and that means they have some ability to supplin any efforts to limit them. They can threaten to switch to other companies, they can threaten to take the work in house, which some of them actually have the capability to do that. And I think the really big thing here is that innovation is really needed in the chip area to support the AI trend. That's a big deal, and chips have to be more sophisticated

to support it. And these companies say together they'll be able to conduct the research and innovate in a manner that'll support these more sophisticated chips in a way that neither one of them could do on their own. And that's pretty pro competitive. So I do think this deal

will make it through one way or another. They would have to sue to try to block the companies from closing, and that would hit in about a year from now and probably take about five months before there was some sort of an outcome.

this industry. But here we think China is actually lacking an infrastructure in this kind of software that's needed for the design of chips, and they need these companies more than these companies need China, And in that case, it's much more likely that the regulator there would clear the deal with some behavioral concessions that are good for Chinese companies rather than blocking it out right now. The UK is just really a wildcard, and they were really tough

on Microsoft Activision. They didn't mind standing out from the rest of the global regulators that cleared it all except for the US, and also aren't very happy about the idea of a behavioral remedy, which obviously is something that could work here because the companies could just promise to maintain open standards. So I think that the UK is a while card, and if they have to review, which is unclear yet, that would be the one area where I would worry a little bit.

have a deal in front of them. So basically there's an anti consolidation sentiment in financial markets and banking, and particularly by the Department of Justice. I know Nathan will talk about the banking regulators. So you have a deal that sits right in that in that juncture, and you'd think knee jerk reaction would be that they're just going to want to block it. They're going to want to

stop the consolidation of two huge credit card issuers. But it also has massive pro competitive efficiencies potentially, And that's an interesting situation because there has been unhappiness in the antitrust world with the Visa, MasterCard, credit card Network doopoly for many, many, many many years. I mean as long as I can remember, those two companies have either face litigations or allegations at least that they violate the antitrust laws,

and not very much can be done about it. So the regulator here I should say enforcer, because the DOJ is not a regulator. It's an enforcer. But we'll have the last say, Nathan will talk about the banking regulators that will also have to approve this deal. There are many levels of approval it's going to need. But even if the banking regulators approve, the Department of Justice can

still sue to block it. And I think it's really going to come down to how they look at the credit card issuing markets and how they weigh the pro competitive aspects of the deal against potential for harm. And I think where the deal could run into trouble is if the Department of Justice defines very narrow markets and

credit card issuing. Rather than looking at all the credit card issuers out there that exist, which is a pretty competitive market, they could look at a smaller segment and they could say, look Capital One and discover tend to issue more credit to underserved populations, new credit card owners, subprime customers, and those that keep a revolving balance, and those are the customers that'll be harmed because they'll have fewer options, and with fewer options come increase costs, and

if they look at the market that way, it may be hard to argue that the prove pro competitive benefits outweigh that harm. So I think this is going to get in depth review. It's going to take again, probably about a year. And the other wrench that you have to throw in there is that by the time a decision is made, we could have an entirely different administration and we could have different decision makers at the DOJ, and obviously that can have an impact here too.

to be twenty twenty five at the earliest. But the way that we're looking at this is that the OCC in particular has five reasons why they should be looking at bank mergers under the Bank Merger Act, and that's the impact of the community, systemic risk concerns, competition and competitive concerns, Can this new antity combat anti money laundering?

And what are the managerial resources of this combined entity. Now, if you look at all those five factors, the last two the AML and the managerial resources, I think you can set those aside. So let's focus on the community,

the systemic risk, and the competition. Now, when it comes to systemic risk, the OCC will even see in their principles, and we have additional research out on the terminal about this that the occ will even say that if you are known as a globally systemic Important Bank ADJESIP, so you are a Bank of America at JP Morgan or a city group, they are not going to approve a merger unless it's an emergency situation like we saw at

the beginning of twenty twenty three. So in this case, though, if you take the assets of Capital One and you combine it with the assets of Discover, you get around six hundred and sixty billion, which puts it on par with US Bank and just up just north of PNC Financial. But you certainly aren't approaching that threshold of seven hundred and fifty billion dollars where the regulators would begin to

get a little concern. So I don't think the systemic risk concern is all that valid, and so we can take that factor and put it into the column of being cautiously optimistic. Let's talk about competition. Jen mentioned how these are two credit card issuers coming together and it's

going to increase competition against the Visa and MasterCard. For example, Senator Durbin has a bill out there called the Credit Card Competition Act, in which he is trying to increase competition for Visa MasterCard with the idea that it would lower fees. Now if Capital One were to utilize discovers network, and as of right now, we think based off of their plans and statements, they'll utilize Discover's network for debit cards.

Their credit cards will probably remain on a Visa and MasterCard network for now, but over the long term, if that Discovered network has utilized more, theoretically Visa and MasterCard could see more competition. But also remember the OCC is a bank regulator, They're not really focused on credit card competition per se. So again I think cautiously optimistic the competitive nature could be put in the factor of the approval.

And finally, it comes down to community impact and this has probably been the number one, if not number two, factor that the OCC and FED have been looking at over the last few years when it comes to bank mergers is what's the impact on the community. And specifically here they're looking at things called Camel's ratings. They're looking at Community Reinvestment Act ratings. These are all ratings that

are behind closed doors. We never see these in the public arena, but you know, the OCC will in particular be looking at Capital One and saying, Okay, we see that you want to do this. What does this mean for individuals on the South side of Chicago? What does this mean for individuals in California? And they will go sometimes they go neighborhood by neighborhood and they say, what does this mean for those individuals here? Will they be

harmed by this merger? And so you know, I have to give Capital One the benefit of the doubt here. The Capital One when they were announcing this has done a lot of that due diligence. So that, in a nutshell, is why we are very conscious, are cautiously optimistic that this approval will go forward. In twenty twenty five.

In United Airlines, they're drawn into this because they have said that if this bill were to go forward, mileage programs with the credit cards would essentially cease to exist. And so Senator durban is saying, come to the hill and tell me that in person. But we have always had a thirty to forty percent chance that this bill would succeed, despite the fact it does have some bipartisan support.

But ultimately you're pitting the financial services industry versus the credit card industry, versus the consumer advocates versus the airlines. And there are just so many different bits and pieces here. And I think that the threat that those credit card airline programs could get cut is enough that will keep enough policy makers on the sidelines for the rest of the year. But certainly it's going to bring a lot more attention to it.

emissions data for your supply chain and your customers. So if you're a bank and you have customers that you're financing, you would have to get their emissions data to go along with this. You know, we've heard anecdotally some conglomerates saying, look, I have fifteen thousand suppliers. Are you telling me that I have to get all the emissions data for that?

And under Scope three the answer would be yes. So, however, the SEC is going to finalize sm March sixth, and according to the Bloomberg Law and some of the news reports, we've seen Scope three has been pulled out. This was actually challenge for Chairman Genzler to get approved because on one hand, and I think Elliott's going to talk about this after this, whatever they decide, there's going to be

a court reaction to this. Somebody potentially could sue on this, and so you have to create a rule that potentially could be somewhat more advisable to the industry and advisable to the courts. But on the other hand, you have Senator Elizabeth Warren and some of the progressives on Capitol

Hill concerned that this rule won't go far enough. All you have to do is look at the SEC meeting log from this week and there have been individuals from Senator Warren, Senator Van Hollands, Senator Tina Smith, I mean Maxine Waters from the House of Representatives. They've all been over at the SEC, probably concerned that the Scope three measure is going to be cut. Now, other provisions that we've heard that potentially could be on the chopping block

is the mandatory reporting for Scope one at Scope two. Now, look, you already have to report if your climate change risk is material, but if this becomes more of a disclosure rule.

We had originally anticipate or estimated eighteen point four billion dollars in costs over six years, if that is the key scope three comes out, this mandatory reporting comes out, and so forth, the rule is going to be substantially weaker than what it was proposed, and those cost estimates will certainly come down as well.

might we see challenging the rule? And I think, you know, there was a recent lawsuit filed in California challenging California's climate Disclose your laws, and you know, I think that lawsuit gives us a bit of a preview of some of the arguments that we would see challenging an SEC rule as well. One argument is the First Amendment challenge arguing you know, it would be that arguing that the SEC can't compel speech that goes beyond non controversial factual

disclosures that are material to investors. A second argument would likely be that the rule is really a pretext for regulating climate change, which is really more in the in the EPA's purview and goes beyond the SEC's authority, which would make it a violation of the Administrative Procedures Act. I'd also expect to see arguments at the costs of complying with the rule at weigh the benefits. But you know, a lot, of course depends on what the final rule

actually says. But given the composition of many of the federal appeals courts currently, like the Fifth Circuit and the Eighth Circuit, and of course the Supreme Court, you know, I'd expect that certainly some if not many, of these arguments will be received favorably by the conservative judges on those courts. But stay tuned. Will of course have to reassess once the rule is finalized, and we'll have to

reassess again once lawsuits are filed. So you know, we'll circle back on those things after the rule comes out. All right, Dwayne, why don't we bring you in. We'll stick with DC policy talk, but we'll move to the healthcare sector. I know you followed health insurance earnings pretty closely do you want to come in and give us your takeaways, including you know what red flags stood out to you and also what positives came out of learnings.

those cost pressures could be alleviated. This is on top of some of the regulatory changes the Biden administration has imposed starting this year, where they're taking out some codes that could lead to potential upcoding and over billing in the Medicare Advantage program. So all of this has the impact of putting some downward pressure on earnings earnings outlook for twenty twenty four, and it makes the annual update

for MA plans that much more important now. Granted, enrollment and the Medicare Advantage program continues to rise, albeit at the mid single digits versus the high single digits, but there is some more pressure on some of these plans due to lower rate environment as well as some regulatory changes. So a couple weeks ago, the administration proposed a cut in m A payment rates of zero point one point

six percent. That may not seem like a lot, but when you factor in some of the issues I mentioned before, it does have an impact on plans. Now, granted, this proposal was based off of some out of dates information that didn't include your end higher utilization. So a positive update is likely and we'll see that by April first. But the big question is whether it will be enough to cover the increasing costs. So what might this mean

for plans and ultimately patients. So for the companies they are going to put in an effort to maintain or grow margins. We could see some higher premiums. It's worth noting that close to seventy percent MAA beneficiaries are in

zero premium plans, so that could change. We could see some higher cost sharing, some reduced benefits, and this could lead to a bit of an October surprise where seniors have see their options for Medicare advantage for twenty twenty five and maybe they see those higher premiums, some benefits removed, and they're not too happy, so it bears watching to see what this rates. Final rates announcement by April first means for plans moving forward, which we'll know for sure

by around October. But it wasn't all doom and gloom. There were some positives. Now there is a Medicaid retermination process that started in April at the end of the public health emergency. This is where plans started to disenroll people who were no longer eligible because they couldn't do so during the pandemic. While the top line numbers of who's being or how many people are being dis enrolled is quite high, you got to keep in mind that

a lot of the plans anticipated this. So, for example, Sentem projected a one point nine million million member dip and enrollment, and that is large because they saw their membership roles, especially in the Medicaid program grow. Based on the earnings calls from the last quarter, their projection seemed to be holding firm. So while that number seems like a lot, it was projected. The entire process seems to be going fairly well for insures, so no surprises there.

What's helping here is that the af Portable Care Act or Obamacare enrollment is filling in the gaps. We saw enrollment search to twenty one million, sentien at least the way given their footprint in almost thirty states. Now this is all helped by and again the Medicaid redeterminations, with some of those members going into an ACA plan. They're also helped by the enhanced premiums that were included in

the ACA. Now, the challenge and the risk for some of these companies, as much as they talk about the tailwind from the ACA, is that the enhanced subsidies which are driving enrollments could disappear by year end twenty twenty five. In these subsidies provide no low cost premens for people below a certain income of about fifty six thousand a year, but also caps spending at eight point five percent of income. So this could set up a huge cliff for health

insurance if they're not renewed. Now, for contexts, they were scored at roughly twenty billion per year a couple of years ago. It's probably higher now given the higher enrollment. So the election outcome could determine what happens to these subsidies. A second Biden term will likely mean some extension and maybe even making them permanent, though there will be a

cost aspect to it. A Trump administration might mean they go away because he does not like the ACA or Obamacare, and as he would say it, and he wants to repeal it. I would keep an eye on what happens with the fight over the tax cuts or the expiring tax cuts. This is probably where we see this address. So some early positives for insures, but there's a potential cliff coming up over the coming year. I'll turn it back to you, Elliott.

He also put in motion an effort to import drugs from Canada, which we're now seeing play out through the Biden administration. So with that said, again, it's not like he's that friendly to industry, but the IRA does have some mechanisms that are pretty much automatic in terms of drugs, the number of drugs that have to be selected for price cuts, and the bare minimum in terms of price

cuts for those drugs. So could a President Trump then say he's a master negotiator, He'll pursue deep discounts below the bare minimum, or will he just do the bare minimum? Biden is probably just going to be the status quo in terms of how that's implemented. Now, there are some flexibilities that we could see play out under a Trump administration. In one area is on a generic competition and how

drugs are either included in the negotiating scheme or removed. Specifically, around what constitutes a generic, what is significant or sufficient generic marketing and competition, the BUYD administration has created a pretty high threshold for what is generic competition and manufacturers and generic manufacturer would say it's too high and not

even in statute in terms of their interpretation. So we could see the Trump administration reverse set which would make it easier for some of the higher cost brand drugs to not make it onto the list, or to create a pathway where it's easier to get off the list

and for generics to be considered competition. So I think absent repeal, which I don't think is likely, largely because I don't think the votes will be there, and there's the provisions are actually popular, I think we'll likely see at least under Trumpe administration some regulatory flexibility for branded generic manufacturers playing out great.

as they are known, in the coming months. The first, I think, would designate certain p fasts as hazardous under the federal super Fund loss CIRCLA, and the second I think would place maximum contaminant levels of certain p fas chemicals that are allowable in the nation's drinking water. You want to come in tell us more about these rules and whether you think there will be litigation challenging them.

progression to finalization. The first rule involving maximum contaminant levels or MCLs and drinking water, it's being promulgated under the Safe Drinking Water Act, And what the EPA is proposing right now is reduction all the way down to four parts per trillion for two specific p fat chemicals and drinking water. There's six total in the rule itself, but for the two that are most studied at this particular point in time, they're proposing this four parts per trillion

maximum level and drinking water. This is a dramatic decline from the seventy parts pertrillion that's allowed up to seventy parts petrillion that's allowed currently for these particular chemicals. So what's going to happen here is if this becomes a final rule, public water authorities or water authorities in general, are really going to have to reduce the levels of these p fasts in their drinking water to the proposed

standards or the finalized standards. They're also going to have to monitor for these fast chemicals, and importantly to possible litigation down the road, they're going to have to notify the public of levels of of p fasts that are in drinking water if they exceed those that are in the rule. If you can imagine the rules really not without controversy. There's a lot of folks out there who are expressing their concern over the costs that are going

to be involved with complying with this rule. So we're seeing the main opposition right now coming from drinking water associations like the American water Works Association and local government associations that own these kinds of water providers, mainly the National Association of Counties, the US Conference of Mayors, those kind of small local government groups that have their voices

on the ground in Washington. But the EPA is saying that the rules total analyze costs from their perspective, is going to be about seven hundred and seventy million to

one point two billion dollars a year. But the A double the American water Works Association commissioned to study, and they're saying that the proposed standards could exceed two and a half to three point two billion dollars a year, with a total of forty billion dollars in capital costs just to get infrastructure where it needs to be to

comply with these regulations. There's some funding that we're seeing coming down the road as a result of settlements with three m DuPont Comores and others with water authorities, but that funding's capped at about fourteen billion dollars, assuming that those settlements are finally approved and folks participate. The bipart is an infrastructure law, allotted about ten billion dollars more for these kind of water system upgrades that are going

to be necessary to meet the drinking water standards. But you know, assuming that that forty billion and capital cost number is correct, or you know what we haven't even tested for yet. Those sources of funding really aren't going to be enough to cover the true cost of what's involved with the rule here. And I think a lot of that has to do with the delay that's involved. There's been one hundred and twenty two thousand comments made

on the proposed rules. The EPA has to sift through all of those before it comes out with its final determination. I think it's really just demonstrative of the amount of interest that's involved here. And you know, as far as the actual implementation timeline, what's been proposed is three years from finalization for these water providers to get up to date and to comply with the MCLs as they're proposed.

Whether or not that changes, or perhaps we see that stretched out a little bit in a final rule based on comments. You know, maybe the point the four parts per trillion level is phased in a bit more than we're seeing in the proposed rule. We're not really sure, but the delay has been pretty extensive here. There have been certain points where the EPA said these would be finalized by the end of twenty twenty three, then the end of February of this year. We're now into March,

so we're really thinking this is probably imminate. The administration is going to want time to defend these rules, assuming they'll be challenged. But that's what's happening on the drinking waterfront with the CIRCLA rule or the federal Superfund law. What's happening there is that again, these these two p fast chemicals, the two that are most widely studied, they're being proposed to be added to the super fun rule.

So what that means is that, you know, for private, private property owners who might own a contaminated site, they're going to have to take steps to remediate those sites and take those p fast chemicals away from from the soil or wherever whatever else might be contaminated there. So this is estimated to cost about twenty two billion dollars by the US Chamber of Commerce, or seven hundred to

eight hundred million dollars annually. So you know, again big price tech year, and we're not really sure if that if that's going to account for all the contamination that's out there. Again, so much testing hasn't happened yet, so it's a big question mark as to what these rules will actually cost in the end, and the kind of sites we're talking about could be factory sites where contamination happened, where p fast was used in manufacturing utilities that you know,

as we previously mentioned water providers. The list kind of goes on and on about, you know, the types of places that could be facing these possible p FAST contaminations. So that's that's what's happening there. You know, well, you know, manufacturers like three M du Pontic Camors, they're not going to be automatically liable for cleaning things up under a CIRCLAW.

You know, they've provided these there's this exception for useful goods which p FAST would likely be considered as they were provided to these manufacturers at different factory sites by by the folks who made p fast. But that's not to say that the private property owners involved here they might not they might try to sue three M DuPont Camors and their peers for contribution related to the cleanup costs that are involved. So big questions here with both

CIRCLA and with the drinking water proposals. Not really certain where the final rules are going to end up. But what we are certain of is that there will be a big price tag involved. And I think related to your question too, I think litigation is almost certain around this given the you know, the price tags we're mentioning, you know, I think a challenge is possible under the major Questions doctrine, which has been more fashionable lately with

challenge eng agency rules. But really I think, you know, similar to what you had mentioned earlier with the SEC litigation that might be coming up, you know, I think what we're going to see here is a challenge based around the cost to the rules themselves and do the cost outweigh the benefits of the rule, and has the EPA properly taken costs into a cap before putting out a final rule.

issue really is. Right, And the reason why I say that is that what's been introduced in the House again this year after passing previously in twenty two twenty one with a democratically controlled houses, the p FAS Action Act, So somewhat bipartisan bills introduced by ad Wi Dangle in Michigan and Brian Fitzpatrick from Pennsylvania, growing pot sponsorship, definitely getting a little bit of traction, but likely not going anywhere this year given the makeup of Congress at the moment.

But what this legislation would do is really, I think, in many ways, not only codify the rules that we've just discussed that have been proposed, but also I think does a lot to increase public awareness of these issues by instituting a p fast free labeling program for certain consumer products. It also extends the issues of p FAS contamination to air pollution. So really some avenues we haven't

really seen yet. And what's also important to mention here is that states are really taking the lead with a legislative effort. We're seeing p fas and food packaging banned now in some states, states like Minnesota where a lot of manufacturing has taken place, have really started banning p fas from not only a lot of consumer goods, but just you know, they've also been situted some drinking water

caps as well. So really, I think what we're seeing is a movement to a point where if Congress doesn't act, the states are kind of doing the legislative job for them, And does the federal government ultimately want to be involved in what this landscape looks like moving forward.

twenty after the Cambridge Analytica matter. As part of that settlement, there were some conditions attached to it that the FDC adopted in a consent decree that basically required Meta to go through privacy assessments periodically and the FTC says that after the first round of those assessments, META isn't in compliance, and so instead of going to bring an enforcement action against META, the FTC found this provision in the statutory law that gives it power to modify its own orders.

And so the FTC is moving ahead to change the order that adopted the consent decree and to impose new conditions on META as part to, you know, in order to resolve that. And now META is suing the FDC to try to stay it from doing that, and it has actions in two courts right now saying one, look, only a court can do that, the court that blessed

the consent degree can do this. And two, FTC, you are unconstitutional and you're acting in an unconstitutional way and for that reason, you shouldn't be able to do that. So metas trying to stop this process before it can start right now, and.

on its privacy program. Another one is that it effectively bans META from monetizing data of teenagers those from age thirteen to seventeen. This is something Congress has worked on. The FDC just is adopting it unilaterally and adding it to this to the consent degree, or at least proposing to do so at this stage. So pretty substantial changes from a business perspective that the FDC is proposing to add here.

while this challenge to the FTC proceeds. And so I expect the court, either in the hearing today or in the next two weeks, will will give us some guidance on that he may rule right away. There's also a Court of Appeals challenge on this that that's pending at the same time. I think in the next two weeks you're likely to see decisions from at least one of those courts, or if not, at least some some movement about when that decision is going to come, maybe a

nudge to the FDC. Let's delay things for a month and and then we'll have a decision coming from there. But it's going to be very near term where we see we see a decision whether the FTC can move ahead with this during the litigation.

to be much stronger is after the fact. If the FDC moves ahead with this, then META is still going to have the right to challenge it in court, and then I think a judge is going to be very suspicious that the FDC can do this sort of thing using its power to modify its orders, and so I

like Meta's chances over the longer term. I expect most likely that it will be a bumpy road in the near term, over the next two weeks, maybe over the next month or two, as courts rule on this, and probably let the FDC move ahead.

In this particular case, families of American service members that were killed or wounded during the war in Afghanistan sued the banks, alleging that they aided and embedded terrorist groups in Afghanistan like al Qaeda, by allowing their financiers to secretly move money and evade detection. The trial court in

this case dismissed the claims for two reasons. First, the lawsuit didn't sufficiently allege that the banks knew they were facilitating terror attacks, and second, the lawsuit didn't sufficiently allege that the banks substantially assisted the terror attacks. So the case is now on appeal in the Second Circuit and the parties will be in court arguing their case on

March thirteenth. And again, I expect the defendant banks will prevail on appeal, as they did in the lower court, based on a ruling by the same court the Second Circuit in a similar case last year, where the court affirmed dismissal because the defendant banks conduct was just too

far removed from the actual terror attacks in question. And then on top of that, you have a Supreme Court case last year involving Twitter's alleged role in terror attacks, and the High Court there interpreted terror finance laws in a way that would reject liability for banks unless there was some sort of direct relationship between the bank and

the terrorists. Planning the attacks. So you know, in this case, at most, the plaintiffs of alleged that the banks should have been unnoticed that some of their non terrorist customers were aiding terrorists, and the banks should have stopped providing services to those customers. But I don't think that's enough under either Second Circuit law or the Supreme Court precedent to allowed this case to proceed. What's at stake in

the case. You know, alleged damages in these cases are never specified, but you know, if you assume multimillion dollar payouts per plaintiff across several hundred, if not thousands of plaintiffs, the figure could easily run into the billions of dollars. But that's only in the unlikely event that the case has revived and allowed to proceed. So again, the next key date is oral argument on March thirteenth, and I

expected ruling by the end of twenty twenty four. All right, So with that, I think we'll wrap up this episode of votes and verdicts as you can see, a lot

of interesting things to watch in March and beyond. As always, thank you for listening, and as a reminder, you can find all of our research on the Bloomberg terminal at Big and we encourage you to reach out to us with any questions that you may have, and we also encourage you to listen to other episodes of Votes and Verdicts or whatever platform like to get your favorite podcasts. Thank you and have a great day. H