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- [00:01]
Hannah Fry
I'm Hannah Fry and I'm on a mission to find out about a mysterious day called Q Day, which experts think could be the moment our most precious encrypted data is suddenly at risk. Learn more later in the podcast.
- [00:15]
Michelle Leader
VRBO helps you swap gift wrap time for quality time.
- [00:18]
CVS Representative
Go to VRBO now and book a last minute week long stay and save over $390 this holiday season.
- [00:25]
Michelle Leader
Book your next vacation rental home on VRBox. Average savings $396. Select homes only.
- [00:34]
IBM Representative
So you're telling me that the AI that's meant to make everyone's job easier to manage just adds more to manage on top of the thousands of apps the IT department already manages? Funny how that works. Any business can add AI. IBM helps you scale and manage AI to change how you do business. Let's create Smile to Business. IB.
- [01:01]
Odoo Representative
Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all in one platform that replaces them all. CRM, accounting, inventory, E Commerce, hr. Fully integrated, easy to use, and built to grow with your business. Thousands have already made the switch. Why not you try Odoo for free@odoo.com that's odoo.com.
- [01:45]
Barry Ritholtz
Hey, what's going on with the rules for company disclosures? Are they changing? What's happening with crypto companies, mergers and acquisitions, even executive comp. It's now under a new regime at the SEC and some shareholder activists are crying foul. What's going on with the new deregulatory zeal? To help us unpack all of this and what it might mean for your portfolio, let's bring in Michelle Leader. She is an SEC filing specialist and founder of the research service footnoted, focusing on material information hidden in corporate SEC filings. She's also the author of the book Financial Uncovering a Company's True Value. So, Michelle, let's start out talking about the new regulatory stance, or I should, should I say deregulatory stance at the sec. It's a little easier. It's a little more corporate friendly. What's the state of regulations for public companies these days?
- [02:52]
Michelle Leader
Yeah, I mean, you know, obviously the basic rules haven't changed. I mean, you know, the 1933 act is still there. All of those rules are still there. It's, it's the enforcement that is, you know, a bit up in the air. You know, studies are showing that The SEC is doing a lot less enforcement these days, you know, and some of it is partly due to staffing issues. Right. Like the SEC, I think a lot, about 20% of the staff have left since the beginning, well, since January 20th, since, you know, Trump turned term two, you know, people left or they took the buyout or, you know, what have you. But, you know, enforcement, you know, either by number of cases or the size of the settlements, the SEC is just kind of sleeping. They're just not as active as they've been in the past. And that's been well documented by some academic studies and some other people who follow that part of the sec. You know, there's also been the dismissal of several big name cases. Right. You know, so it's overall a deregulatory environment, much more so than, you know, the first Trump administration.
- [03:56]
Barry Ritholtz
So, Michelle, you mentioned the reduction in headcount. The IRS has seen a large headcount reduction, and that legitimately shows up in both enforcement and collection actions. The Senate released a report last year. You can actually see for every dollar they spend on the irs, here's how much we generate in taxes collected. That reduction has been some attrition, some of it from Doge. It sounds like you're saying the SEC is seeing a very similar reduction. Did I hear you right? Did you say it's more than 20% of the staff? Is that enforcement staff or just across the board?
- [04:37]
Michelle Leader
I think it's across the board, so. And presumably it would include, you know, administrative folks. You know, I mean, it's, it's the numbers I've seen, it's about 20% across the board. And of course, the SEC has a lot of contractors, like outside people. So I think it also includes, includes contractors. You know, there's no definitive headcount that I've seen, but this has been reported, you know, by multiple outlets. That's around 20%.
- [05:01]
Barry Ritholtz
Hmm, really interesting. And there's a new sheriff in town. Paul Atkins is the head of the sec. Tell us a little bit about the philosophy and policies of the new SEC chairman.
- [05:13]
Michelle Leader
Well, you know, he's a former SEC commissioner, so, you know, this is not his first time, you know, at the sec, but it is the first time that, you know, he's chairman. He's known for being, you know, he's an attorney. You don't have to be an attorney to be an SEC chair, commissioner, but almost always it is an attorney who is doing it. And he's just known for being a big booster of crypto in between the time, like when he left the SEC last time and, you know, went to work, you know, in private practice, he was, you know, representing a number of crypto firms. And so he's, of course, taking that, you know, background with him to the sec. And so there's a lot of, like, you know, I, I joke around, like, you know, and I'm going to be dating myself here, but like, you know, that, you know, episode of the Brady Bunch where it was like, jan, Jan, Jan. Well, this is like crypto, crypto, crypto. And that's all it seems like the SEC is really focused on, you know, and, you know, there's normally. The other thing is that there's normally five SEC commissioners and there's only been four since Atkins came on board. It's typically the party in power. So the Republicans named three commissioners, and then the party out of power, the Democrats named two. But there hasn't been, I'm sorry, not the president has to name the SEC commissioners, so three from, you know, the. The. The majority party and two from the minority party. And so, needless to say, there hasn't been a Democratic commissioner that's been named. So they're operating with only four. And it's. So there's basically only one person who is kind of like, sounding the alarm on all this crypto stuff. Anytime there's, like, a new regulation or like, a change in regulations, you know, it's. It's kind of interesting to see, you know, what's said there, you know, about, you know, all of these changes that.
- [07:04]
Barry Ritholtz
Are going on beyond crypto. I've heard Atkins talk about the initial public offerings market, and he wants to jumpstart again. I kind of laughed at Make IPOs Great Again. What are your thoughts on the regulation that some people have said the burdensome reporting requirements are leading American companies to stay private longer. What are your thoughts there?
- [07:34]
Michelle Leader
Look, I think that, you know, there is, you know, some regulation that probably could be trimmed, but do you do it with, like, you know, a scalpel or do you do it with, like, a chainsaw? You know, I think with anything, there's things that can always be made better and improved. Right. But I think this wholesale approach to, like, all regulation is bad and it's costing people money is a little bit of an overkill. You know, I mean, you can make an argument, for example, they nixed the climate rules that they had been working on forever. You can probably make an argument that, you know, maybe the climate rules went a little bit too overboard. It was going to be cumbersome for companies to do, you know, but, you know, climate change is real and, you know, some companies are impacted by it more than others. And, you know, there should be disclosures because there is a risk to investors about that.
- [08:28]
Barry Ritholtz
So let's talk about what's probably the single biggest idea that's been floated by President Trump. Doing away with quarterly earnings reporting. You're an SEC geek. What does this sort of thing mean from your perspective and what does it mean for investors?
- [08:47]
Michelle Leader
Yeah, so I think that, you know, first of all, let's remember, you know, I think they say, like, oh, small companies, this is not like your corner store, you know, your little bodega in Manhattan, and they're suddenly having to, like, you know, put out a 10k or a 10q. These are publicly traded companies that have gone, you know, are asking me and thousands of other investors for our, for our money to grow their business and to, you know, build their businesses. Now this idea that, you know, you can go, you know, again, I think, like, you know, you can throw out, I guess, the baby with the bath water, so to speak. I hate to use that expression, but, you know, could there be a little bit less, you know, in the quarterly earnings? Yeah, maybe we don't have to do like the PowerPoint presentation and the detailed earnings call and like the big thing, but still report earnings, you know, and, you know, give people a taste of what's going on. I think going to every six months would be really, you know, bad for investors overall. I mean, maybe it'll benefit the largest, most sophisticated investors, but, you know, other people who are invested in stocks, I think it's just bad news because a lot can happen in six months.
- [10:02]
Barry Ritholtz
To say the very least, a lot happens in three months. So let's talk about executive compensation. I have a lot of questions to throw your way with this, and obviously we have to start with Elon Musk and the trillion dollar package that the board approved. I don't see any way how he ever gets anywhere near that amount of money. But still, it seems like just crazy sky's the limit amount of compensation. Are these giant stock grants a new trend? Is this something that's here to stay?
- [10:37]
Michelle Leader
Well, I mean, there's of course, always been stock grants. I mean, when you want to reward someone, I'm all about rewarding someone for doing a good job. Right. Like if a CFO manages to, or a CEO manages to turn around the company, you know, they should be rewarded. That's what, you know, that's what capitalism is about. Right. But I think that what we're seeing in the wake of the Elon vote, you know, where shareholders overwhelmingly approve the compensation. And I think, you know, Tesla is sort of a special situation, right, because it's like a cult of personality. I mean, you know, nobody. I can't think of many other CEOs, let's say, that have that kind of like, you know, platform, that kind of, you know, personal, you know, identification to, I mean, you know, obviously because of, you know, X and, and, you know, all of his followers on X. So, you know, and. And the fans of Tesla, you know, the cars and everything. So it's a bit of a unique situation. But we're seeing, in the wake of that situation, we're seeing a number of examples where executives are also being rewarded and what seems like outsized awards. And it's almost like, well, Tesla did it, so why can't we? It's almost like it's created like a green light for, you know, giving away, you know, additional equity. You know, I was just looking the other day, Zoom Info, which is, you know, a company that sells all our information to whoever, you know, the highest bidder, you know, gave its founder and its CEO. The guy had been there, has been there 18 years, and it gave him nearly 10 million shares to incentivize him. Does this guy really need 10 million shares to be incentivized? I mean, he's been at the company 18 years, you know, so where's the guy going? You know, I think also the stock is not doing so great, so why is he being rewarded? Again? I think it comes down to the stock is doing great. Sure. Reward the CEO, reward the C suite, you know, but if the stock isn't doing good and you're giving away 10 million shares to someone, you know, who's been there to incentivize them, you shouldn't need to be incentivized to, like, turn the stock price around or to do a good job.
- [12:45]
Barry Ritholtz
Makes a lot of sense to me. Let's talk about executive compensation clawbacks. How often do we see either the company or its shareholders or perhaps the SEC saying, hey, this compensation was. Was very undeserved, unearned, and we're going to try and claw some of this back. Tell us about that.
- [13:09]
Michelle Leader
Yeah, I mean, usually you're seeing that on the plaintiff lawyer side. Like, you know, of course, there's a very active plaintiffs bar here in the US where, you know, if a company says that they're going to earn 25 cents a share and suddenly they, you know, report 20 cents a share. There's, you know, a whole group of lawyers, law firms that, you know, will then sue the company and try to, you know, do clawbacks and that type of thing. You don't. You're not really seeing that on the SEC side so much. You know, a lot most companies, or I would say a majority of companies, do have clawback policies, but usually it's kind of rare that, you know, they claw back money. I mean, I can really only think of a couple of examples, you know, where there's been, you know, you know, a clawback of compensation. It's not something that happens all that regularly.
- [13:57]
Barry Ritholtz
So you mentioned crypto earlier. What is the regulatory framework look like for crypto? How, how have the rules changed? It seems like the SEC has fully embraced this.
- [14:10]
Michelle Leader
Yeah, I think there's just a general laissez faire approach to crypto at the sec, whereas, you know, which is very, very different, you know, than the prior, you know, SEC chairman Gary Gensler. You know, he was all about regulating crypto and trying to call it into account and, you know, making sure that, you know, it wasn't, you know, scamming people. And I would say that the current SEC is basically, you know, a 180 degree turn from that, you know, and in fact, you know, I mean, I feel like crypto, in terms of some of their rules and regulations, it seems to be the only thing that they care about. You know, they're talking about, you know, combining with, you know, doing, you know, regulatory combinations to kind of make it easier to do this. I think in general, different people have different views about crypto. I think that anything that makes it easier for people to get into crypto, especially less sophisticated investors, is, is problematic. For me, as someone who cares about, you know, I don't think like someone's.
- [15:16]
Barry Ritholtz
Grandma should be in crypto, to say the very least. So what about cybersecurity disclosures? That seems to be a new requirement. It seems to be really important in the financial industry. How important is cybersecurity to any publicly traded company? What are their obligations there?
- [15:36]
Michelle Leader
Well, you know, anytime there's a cybersecurity. A couple Years ago in 2022, the SEC put in new rules. Again, this was under Gary Gensler, that required a lot more disclosure about cybersecurity incidents. And they required companies to actually disclose this in an 8k using a section, a particular section, so that it could be found very easily, you know, instead of a cyber, you know, so that, you know, if you were looking for cybersecurity incidents you can find them pretty quickly. But, you know, companies are still disclosing this in haphazard ways, even though they're required to disclose this in a specific section of the 8K. Many companies are not doing that. And, you know, to be fair, the problem with a lot of these cybersecurity incidents is when companies first disclose them, they don't know if it's going to be like a, you know, a five, you know, thousand dollar, you know, fix or a $500 million fix. Right. You know, oftentimes, you know, it takes time to get in there, figure out what's really going on. But of course, you know, these hacks and these cybersecurity incidents have gotten a lot more, you know, sophisticated these days, I'm sure. Like, you know, I mean, I can't count the number of text messages I get, you know, that, you know, seem alert. I got a new one the other day. Someone put an event on my calendar and was waiting for me to accept it. And I'm like, how did you even, you know, find this on my calendar? You know, so there's a lot of scamming going out there. And you can imagine if you're like a big company with a lot more money than, you know, Michelle Leader has that, you know, the efforts are a lot more intense to try to figure out, poke holes.
- [17:10]
Barry Ritholtz
Huh?
- [17:10]
Michelle Leader
You know, it's, you know, it's just, it's, it's, you know, unfortunately, there's bad actors out there and cybersecurity, you know, is, is much more important. I mean, we do everything online these days. We pay our bills online, you know, and so, you know, there's a lot of, you know, I'm sure there's a lot of, a lot of incidents that are going on, some of which we probably don't even know about. Of course, if it's very big, I mean, you know, we kind of remember the ones like Home Depot had an incident a number of years ago. I mean, I feel like, you know, the number of times I've gotten an email from Kroll offering to like, you know, from some company offering to like, you know, secure my, you know, identity for a year, you know, has grown exponentially recently. Huh.
- [17:52]
Barry Ritholtz
Really, really interesting. So to wrap up, there's a new deregulatory regime in Washington, D.C. it's very crypto friendly. It's not particularly ESG or climate change friendly. And it's going to have an impact on what companies are obligated to disclose to their shareholders. We'll find out the impact of this over the next few years. I'm Barry Ritholtz. You've been listening to Bloomberg's at the Money.
- [18:37]
Hannah Fry
Right now bad actors are harvesting our data, hoping to decrypt it later using quantum computers on so called Q Day. I'm Hannah Fry, host of the Exponential Era, a series that explores the real world impact of future network technology. And I sat down with two experts today discuss how we protect our data from this quantum threat. Find out what I learned@Bloomberg.com Nokia take.
- [19:06]
Webroot Representative
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- [20:06]
Odoo Representative
Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other, one for sales, another for inventory, a separate one for accounting. Before you know it, you are drowning in software instead of growing your business. This is where Odoo comes in. Odoo is the only business software you'll ever need. It's an all in one fully integrated platform that handles everything CRM, accounting, inventory, E commerce, HR and more. No more app overload, no more juggling logins, just one seamless system that makes work easier. And the best part? Odoo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business whether you are just starting out or already scaling up. Plus it's easy to use, customizable and designed to streamline every process so you can focus on what really matters running your business. Thousands of businesses have made the switch, so why not you try Odoo for free@odoo.com that's o d o o.com.
- [21:09]
IBM Representative
So let me get this straight. Your company has data here, there and everywhere, but your AI can't use the data because it's here, there and everywhere? Seems like something's missing. Every business has unique data. IBM helps your AI access your data wherever it lives. To change how you do business, let's create smarter business. IBM.
- [21:38]
CVS Representative
At CVS it matters that we're not just in your community, but that we're part of it. It matters that we're here for you when you need us, day or night, and we want everyone to feel welco and rewarded. It matters that CVS is here to fill your prescriptions and here to fill your craving for a tasty and yeah, healthy snack. At cvs, we're proud to serve your community because we believe where you get your medicine matters. So Visit us@cvs.com or just come by our store. We can't wait to meet you. Store hours vary by location.
- [22:12]
Julian Edelman
With Venmo Stash a taco in one hand and ordering a ride in the other means you're stacking cash back.
- [22:20]
Michelle Leader
Nice.
- [22:20]
Julian Edelman
Get up to 5% cash back with Venmo Stash on your favorite brands when you pay with your Venmo debit card. From takeout to ride shares, entertainment and more, pick a bundle with your go tos and start earning cash back at those brands. Earn more cash when you do more with Stash. Venmo Stash terms and exclusions apply. Max $100 cash back per month. See terms at venmo me stashterms.
- [22:42]
Lifelock Representative
This time of year, most of us are checking off our holiday gift lists. But identity thieves have lists too, and your personal information might be on them. Protect your identity with Lifelock. Lifelock monitors millions of data points every second and alerts you to threats you could miss. If your identity is stolen, Lifelock will fix it, guaranteed or your money back. Make this season about joy, not identity theft. With Lifelock, save up to 40% your first year@lifelock.com iheart terms apply.
- [23:13]
Julian Edelman
This is Julian Edelman from Dudes on Dudes with Gronk and Jewels Sunday mornings. I've got my game day ritual coffee, lucky socks and now new morning Uncrustable sandwiches.
- [23:27]
Lifelock Representative
It's all about that 12 gram protein boost with the new Uncrustables Bright Eyed Berry or up and apple flavors.
- [23:36]
Julian Edelman
Bright Eye Berries got a feisty receiver.
- [23:40]
Lifelock Representative
Energy up an apple. Your classic do it all tight end.
- [23:45]
Julian Edelman
Soft pillowy packed with protein and easy enough for Gronk to grab from the freezer.
- [23:51]
Lifelock Representative
Whether you're on the couch, driving to the tailgate or heading to the locker room, new Morning Uncrustable Sandwiches are the MVP of snacks.
- [24:04]
Julian Edelman
Your new Sunday kickoff ritual starts here with New Morning Uncrustable sandwiches packed with 12 grams of protein.