🗞️SBF Pleas Not Guilty, TikTok Gets Blocked, & California and Washington Boost Labor Laws
🗞️SBF Pleas Not Guilty, TikTok Gets Blocked, & California and Washington Boost Labor Laws
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THIS WEEK: Sam Bankman-Fried pleas not guilty and throws his lawyers under the bus, TikTok gets blocked on government devices, and pay transparency becomes law. Plus, Big Law pay cuts keep coming, spyware at the DEA, and a law school rankings refresh.
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💱SBF Pleas To Stay Free
FTX had secured billions in funding the very day it signed its Chapter 11 bankruptcy back in November. Or, at least that's what Sam Bankman-Fried, the now-notorious founder of the crypto exchange and its sibling company Alameda Research, a private hedge fund, was set to say to Congress in testimony. "Starting on November 8th, I was put under extreme pressure to file for Chapter 11," Bankman-Fried writes in the prepared testimony acquired by Forbes. "Most of that pressure came from Ryne Miller, the General Counsel of FTX US and a former partner of Sullivan & Cromwell (S&C), and Sullivan and Cromwell itself." Bankman-Fried goes on to detail a series of events in which S&C allegedly pressured the former CEO to rescind his duties and nominate John Ray as the new CEO. Bankman-Fried even claims a "potential funding offer for billions of dollars" was received within 10 minutes of filing for bankruptcy.
Of the tactics S&C allegedly used to pressure Bankman-Fried to file for Chapter 11, "they range from adamant to mentally unbalanced," he writes in the testimony statement. "They also called many of my friends, coworkers, and family members, pressuring them to pressure me to file, some of whom were emotionally damaged by the pressure. Some of them came to me, crying."
Bankman-Fried never delivered these remarks as he was arrested in the Bahamas the day before he was set to testify before the US Congress.
Sullivan & Cromwell has not commented on the planned testimony, according to Law.com.
Not Guilty Plea
Bankman-Fried is expected to plead not guilty on Tuesday before U.S. District Judge Lewis Kaplan in Manhattan, reports Reuters. Yet, FTX co-founder Gary Wang, and Alameda Research CEO Caroline Ellison have both plead guilty and are expected to cooperate with federal officials in charging Bankman-Fried. So why is he pleading not guilty? “It’s clear that the government is not going to be using him to cooperate against them, so he’s clearly working on something else,” defense attorney Jeffrey Lichtman told The Guardian. “Why else would the government consent to a bail package for public enemy No 1?”
The Verdict
Just as SBF played victim during his media blitz in November (“this was all an honest mistake”; “I didn’t know any of this was happening either”), he seems to be using a similar legal strategy still: claiming his previous lawyers pressured him into bankruptcy, and that he remains not guilty.
📵 TikTok Gets the Block
The 4 million employees of the US government will no longer be allowed to download TikTok onto a device owned by a federal agency. The new rule is part of the 4100-plus page spending bill signed into law at the end of last month, reports NBC News. It’s a new salvo in the US’s fight against the Chinese social media platform, and a proxy for the broader US-China political tensions. But not everyone agrees that banning only TikTok is a logical step if data privacy and national security are the concern. "Unless we’re also [going to] ban Twitter and Facebook and YouTube and Uber and Grubhub, this is pointless," Evan Greer, director of Fight for the Future, told The Guardian. "Yes, it’s possibly a bit easier for the Chinese government to gain access to data through TikTok than other apps, but there’s just so many ways governments can get data from apps."
In a statement on the ban, TikTok said: “We’re disappointed that Congress has moved to ban TikTok on government devices — a political gesture that will do nothing to advance national security interests — rather than encouraging the Administration to conclude its national security review.”
The October Incident
Late last year, TikTok confirmed to Forbes that it had improperly tracked the locations of 3 of the publication's journalists in October. As a result, a ByteDance (TikTok's parent company) executive was fired and one resigned. The report "gives additional leverage to DOJ to say, ‘Look, the record is not positive,’” Megan Stifel, a former Department of Justice national security official turned security analyst, told NBC News.
The Verdict
As the power of social media apps in Silicon Valley wane, and a fractured global order intensifies, TikTok is a useful boogeyman for more than one group to point at and say "here is the cause of our problems." Will this ban lead to anything more? That is yet to see.
👀 California and Washington Go Transparent
Beginning New Year's Day, job postings in California and Washington are now required to include salary ranges in the ad. The move mirrors laws already in place in Colorado and New York City, which require such pay transparency. "More and more employers are looking for ways to ease their administrative burden, especially large employers where they also have PR-related concerns, optics-related concerns," Christopher T. Patrick, an employment attorney with Jackson Lewis PC, told Bloomberg Law. "Leaning into transparency can be good for business and reduce the burden related to compliance with a national strategy."
According to CalMatters, the law requires" employers with at least 15 workers will have to include pay ranges in job postings. Employees will also be able to ask for the pay range for their own position, and larger companies will have to provide more detailed pay data to California’s Civil Rights Department than previously required."
For employee rights' groups, the hope is that the sheer size of California's workforce and economy mean this law will affect employers nationwide.
The Labor Push
Washington and California's new laws dovetail a year full of unionization efforts and wage increases. As NPR writes, "only about 10% of U.S. workers belong to a union, but 68% of Americans approve of unions, according to Gallup. That's a level of support not seen since 1965." Yet, as the clouds of recession gather on the horizon, many wonder if the labor movement's hard-fought gains over the last year or two will be shed if not outright lost.
The Verdict
As workers push to make more gains, the headwinds of a possible recession along with the Fed's own actions may curtail the movement's growing strength.
📤 What Else We’re Forwarding
Compensation Cuts: Non-equity partners of counsel and associates at Nelson Mullins might be in for an unpleasant compensation surprise, says Above The Law. The Big Law firm is reportedly changing compensation figures "in light of current economic conditions, including increasing concerns about a recession next year."
Congressional Concern: Congress is concerned over the DEA's use of hacking tools made by Israeli spyware firm Paragon. The New York Times details that the tool, called Graphite, enables the agency to "penetrate the mobile phones of its targets and extract messages, videos, photos and other content."
Rankings Review: US News & World Report announced that it will revamp its law school rankings beginning this spring with the '23-'24 list following a boycott by major schools like Harvard and Stanford, says the Washington Post. The new system will take into account graduates who go into public service or pursue advanced degrees, and would rely less on surveys of reputation and student debt burdens, which has historically led schools to favor wealthier applicants.
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