Peter Thiel-Backed Startup Offers To Finance Weinstein Lawsuits

If the fate of Gawker is any indication, the multiplying sex crime probes involving Harvey Weinstein are just the beginning of the disgraced studio head’s legal problems.

As the number of Weinstein accusers – women who are alleging Weinstein harassed them, groped them or sexually assaulted them – has swelled to more than 50, Legalist – a startup backed by Peter Thiel, the PayPal co-founder and possibly the world’s best-known gay conservative (sorry, Milo) – has offered a $100,000 bounty to any victim with a “valid sexual harassment claim” against the disgraced movie mogul, according to the New York Post.

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Harvey Weinstein

Legalist – which bills itself as “the first AI-powered litigation finance firm” — has made similar offers in the past, including last month when it announced it would pay for legal filing fees related to the massive Equifax data breach. The credit-monitoring bureau has been hit with no fewer than 30 federal lawsuits, 23 of which are class actions, after disclosing that its negligence allowed hackers to infiltrate its systems and abscond with the sensitive financial information of 143 million Americans. Criminal action has also been threatened against several of Equifax’s senior executives who cashed out of options before the company announced the hack, raising questions about whether they knew and improperly traded on the information.

Thiel, a Silicon Valley billionaire, famously funded Terry “Hulk Hogan” Bollea’s defamation lawsuit against Gawker, a suit that led to a $140 million penalty, ultimately forcing the company to sell itself to Univision.

Peter Thiel

Deadline Hollywood pointed out that the latest Thiel-Weinstein news comes on the heels of Charles Harder’s exit as Harvey Weinstein’s attorney. Harder had represented Thiel in the Gawker case.

While Legalist’s history of capitalizing on national tragedies raises the suspicion of cynicism, Eva Shang, one of Legalist’s founders, says the company’s motive is a genuine interest in the case, not opportunism. She said the company has made some offers in other previous cases that were higher than $100,000. As the Weinstein saga has unfolded, she said, it revealed real needs on the part of those pursuing complaints. “Especially as a female founder,” she told Deadline, “as I read these reports of eight cases of settlements being paid to women, for very modest amounts and without a single case being filed, it seemed like a situation where we could help women get the justice they deserve.”
 

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The ‘Politics of Division’ Is ‘Who We Are as a Country’

Former presidents Barack Obama and George W. Bush gave a pair of unrelated but thematically linked speeches yesterday that were widely understood to be rebukes of Trumpism. Unfortunately, the speeches also trotted out some tired clichés about division in American politics, with Bush calling out Russia for taking advantage of those divisions.

“America is experiencing the sustained attempt by a hostile power to feed and exploit our country’s divisions,” Bush said at a Bush Institute summit in New York City. “According to our intelligence services, the Russian government has made a project of turning Americans against each other.”

Let’s be clear: Americans are already and always turned against each other. In a democratic society we can be divided because we have agency. (There’s a lot of political unity in places like Russia.) Free speech is messy by design, and what keeps our divisive politics from being destructive is the limits we’ve placed on government. The more powerful the government, the more dangerous those divisions actually become.

Obama played some of the same notes. “What we can’t have is the same old politics of division that we have seen so many times before that dates back centuries,” Obama said at a campaign rally for Phil Murphy, the former Goldman Sachs executive running for governor in New Jersey. “Some of the politics we see now, we thought we put that to bed. That has folks looking 50 years back. It’s the 21st century, not the 19th century. Come on!”

At least Obama did not describe a mythical American past when politics was more cordial, as some advocates of less divisiveness in U.S. politics do.

Bush went further, deploring how American discourse had been “degraded by casual cruelty.”

“It can seem like the forces pulling us apart are stronger than the forces binding us together. Argument turns too easily into animosity,” Bush said. “Disagreement escalates into dehumanization. Too often, we judge other groups by their worst examples while judging ourselves by our best intentions.”

This is true, but it’s also unabashedly American. And while we can call on each other to do better, there are 320 million people in the United States; it’s absurd to expect them to agree on much of anything, and it would be destructive to try to paper over all their differences.

It wasn’t Russians who demanded Obama’s birth certificate and it wasn’t Russians who compared Bush to a chimpanzee. It wasn’t Russians who said you were either with us or against us, nor was it Russians who compared Congressional Republicans to terrorists or warned black people Republicans would put them back in chains. “We” did that on our own.

The obsession with Russia’s influence on American politics and the divisions in it could be a lot more damaging to our democratic norms than any Facebook ads some Russians might purchase.

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“Rigged To Perfection” – Markets Charge But “The Nation As A Whole Is Getting F**ked Sideways”

Authored by James Howard Kunstler via Kunstler.com,

It amuses me that the nation is so caught up in the sexual mischief of a single Hollywood producer when the nation as a whole is getting fucked sideways and upside down by its own political caretakers.

Behind all the smoke, mirrors, Trump bluster, Schumer fog, and media mystification about the vaudeville act known as The Budget and The Tax Cut, both political parties are fighting for their lives and the Deep State knows that it is being thrown overboard to drown in red ink. There’s really no way out of the financial conundrum that dogs the republic and something’s got to give.

Many of us have been waiting for these tensions to express themselves by blowing up the artificially levitated stock markets. For about a year, absolutely nothing has thwarted their supernatural ascent, including the threat of World War Three, leading some observers to believe that they have been rigged to perfection.

Well, the algo-bots might be pretty fine-tuned, and the central bank inputs of fresh “liquidity” pretty much assured, but for all that, these markets are still human artifacts and Murphy’s Law still lurks out there in the gloaming with its cohorts, the diminishing returns of technology (a.k.a. “Blowback”), and the demon of unintended consequences.

Many, including yours truly, have expected the distortions and perversions on the money side of life to express themselves in money itself: the dollar. So far, it has only wobbled down about ten percent. This is due perhaps to the calibrated disinformation known as “forward guidance” issued by this country’s central bank, the Federal Reserve, which has been threatening — pretty idly so far — to raise interest rates and shrink down its vault of hoarded securities — a lot of it janky paper left over from the misadventures of 2007-2009.

I guess the lesson is that when you have a pervasively false and corrupt financial system, it is always subject to a little additional accounting fraud – until it’s not. And the next thing you know, you’re sitting in the rubble of what used to be your civilization.

The ever more immiserated schnooks who make up the former middle-class know that their lives are crumbling, and may feel that they’re subject to the utterly overwhelming forces of a cruel destiny generated by a leviathan state that hates and despises them.

And of course that is exactly why they turned to the Golden Golem of Greatness for salvation.

Alas, Mr. Trump has not constructed a coherent strategy for defeating the colossus of fakery that drives the nation ever-deeper toward the cold and dark. He has a talent for distraction and disruption, though, and so far that gave cover to a whole lot of other people in power who have been able to stand around with their hands in their pockets doing nothing about the sinking state of the nation.

Now, the vaudeville act is coming to a spectacular conclusion as the trappings of Halloween go back in the closet and the pulsating, LED-studded Santas go up on the rooftops. Every ceremony of American life seems drained of meaning now, including the machinations of government over the budget and taxes. The revolution to come out of this frozen swamp of irresponsibility will be the messiest and most incoherent in world history. Nobody will have any idea what is going on outside the geo-storm of failure.

About the only thing one can say for sure is that the American life which emerges from this maelstrom will not look a whole lot like what we’re living in today. I remain serenely convinced that when it finally passes, the air will be fresh again and the sun will shine, and a lot more people will know what is real and what is not.

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Federal Court Ponders Constitutionality of Prostitution Ban

A federal court heard arguments yesterday challenging California’s criminalization of prostitution, in a case that could have implications for sex work laws across the nation.

Brought by the Erotic Service Providers Legal, Education, and Research Project (ESPLERP), the constitutional challenge claims that California’s prostitution laws violate residents’ right to privacy, free speech, and free association.

“Our hope is to see this bad law struck down,” said ESPLERP President Maxine Doogan, “so that consenting adults who choose to be involved in prostitution are simply treated as private citizens again, and are afforded all the privacy and constitutional rights thereof.”

During oral arguments before Ninth Circuit Court of Appeals judges Thursday, ESPLERP attorney Louis Sirkin stressed that the case “is not about sex trafficking, it’s not about the abuse of women, and it’s not about the abuse of minors. It is about consenting adults that voluntary want to work in the sex for hire industry.”

Dozens of civil rights, public health, and LGBTQ groups have filed briefs in support of ESPLERP’s challenge, including the American Civil Liberties Union of Southern and Northern California, the California Women’s Law Center, the anti–sex trafficking group Children of the Night, the First Amendment Lawyers Association, the National Center for Transgender Equality, the San Francisco AIDS Foundation, the Woodhull Freedom Foundation, and Lambda Legal.

“Lambda Legal’s landmark Supreme Court victory in Lawrence v. Texas, the case that struck down laws that criminalized sex between same-sex partners, underscored that our right to liberty protects our decisions about adult, consensual sexual intimacy,” says Kara Ingelhart, a Lambda Legal law fellow. “It is merely logical that Lawrence extend to the adult, consensual sexual intimacy that occurs between sex workers and their clients; the fact that money is exchanged shouldn’t matter.”

The Ninth Circuit judges seemed at least somewhat sympathetic to that view. “Why should it be illegal to sell something that you can give away for free?” Judge Consuelo Callahan asked the state’s attorney, Sharon O’Grady. She replied that it should be illegal because the legislature declared it so.

Judge Carlos Bea suggested that the state’s arguments for why it could ban prostitution also would allow California to ban one-night stands.

But overall, it might be “a tough panel for petitioners,” notes lawyer Amanda Goad, who livetweeted the oral arguments yesterday. Callahan and the other two judges are conservative appointees of George W. Bush and Ronald Reagan.

Much of the court’s focus Thursday was on whether a ban on prostitution implicates adults’ sexual liberty and privacy or their right to form intimate relationships as they see fit. The U.S. District Court that heard ESPLERP’s challenge last year contended that only “intimate personal relationships,” not purely sexual ones, were protected from state interference per the Supreme Court’s 2003 ruling in Lawrence.

Sirkin pointed out Thursday that, in fact, the men who had been arrested in Lawrence were not in an ongoing relationship. He said that the fundamental right implicated here, as in Lawrence, concerns sexual privacy.

Judge Callahan agreed that a ruling for the right to engage in prostitution seemed like “a natural extension of Supreme Court precedent.”

At one point, the discussion veered into whether sex workers and their customers could be friends, with the state contending that friends don’t pay each other for sex. But judges suggested that a relationship that started off as purely transactional and sexual could develop into true friendship and affection.

Ultimately, much of the case will come down to whether the lower court was right to apply a rational basis standard in judging California’s prostitution law. Under the rational basis standard, a law is constitutional so long as it is “rationally related” to a “legitimate government interest.” ESPLERP and its supporters argue that the court was wrong to apply this standard and should have applied the heightened scrutiny standard used in Lawrence.

Judge Bea suggested that the case might need remanded to the district court for another judicial review or even a trial in which the state would have to prove a compelling need for its prostitution ban.

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The First Amendment is Under Serious Assault in Order to Stifle Anti-Israel Boycotts

Assaults on freedom speech can be found in many areas of American life these days, but one specific area that isn’t getting the attention it deserves relates to boycotts against Israel. Increasingly, we’re seeing various regional governments requiring citizens agree to what essentially amounts to a loyalty pledge to a foreign government in order to participate in or receive government services.

I’m going to highlight two troubling examples of this, both reported on by Israeli paper Haaretz. The first relates to Kansas.

From the article, In America, the Right to Boycott Israel Is Under Threat:

The First Amendment squarely protects the right to boycott. Lately, though, a legislative assault on that right has been spreading through the United States –  designed to stamp out constitutionally protected boycotts of Israel.

continue reading

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A Transgender Woman Assaulted a Child in a Restroom; New Laws Wouldn’t Have Stopped It, and None Were Needed to Lock Her Up

MartinezAn apparently transgender woman in Wyoming has been convicted of molesting a 10-year-old girl in a bathroom. Casper resident Michelle Martinez—whose legal name is still Miguel Alberto Martinez, so she went on trial under that name—was convicted of two charges of sexual abuse of a child and faces up to 70 years in prison.

According to the Casper Star Tribune, Martinez knew the victim and lured her into a bathroom to assault her. Nurses examined the girl after the assault and found medical evidence of the attack. Martinez and her family maintain her innocence and plan to appeal.

So now we have an actual case of a transgender woman assaulting a little girl in a bathroom. So does that mean the right-wing culture warriors were right to worry about the trans infiltration of American ladies’ rooms? Not if you look at the particulars of the case.

First of all, this wasn’t a stranger lurking in a public bathroom looking to prey on a random child. As is often the case when children are molested, the victim knew her attacker, and the restroom in question was in somebody’s home. This crime, as serious and awful it is, sharply diverges from the bathroom-panic narrative of the stalker in a restroom laying in wait for prey. No law gender-policing bathroom use would have meant anything in this case.

Second, existing law on the abuse of children is clearly adequate to tackle this sort of situation. If Martinez gets the maximum penalty, she’s clearly not going to be in a position ever to attack another child. What would an additional law restricting restroom access have accomplished here?

Think of the demands for more gun control that frequently come in the wake of a high-profile shooting. When gun foes propose new restrictions that would not have done anything to prevent the crime in question, people who actually understand firearms and the laws that regulate them are quick to point out (accurately!) that such laws would not have stopped the shooting, and to list the consequences a poorly-thought-out gun law would have for law-abiding citizens.

The same logical consideration applies here. There’s no evidence that yet another law would have prevented this assault from happening. There’s no evidence that existing law is unable to deal with the extremely rare cases when a transgender sexual assault of children does happen. No changes in the law are necessary.

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…And “Horrible, Unacceptable” GE Goes Green

Having tumbled 10% in the pre-open after massively missing earnings expectations and slashing guidance, panic-dip-buyers have stepped in and (thanks in large part to passive index buyers flooding into The Dow), General Electric is now green…

"Kitchen sink" is the new no-brainer… as CEO call sit "horrible and unacceptable"

 

Dow-buyers helping out (and it looks like some Dow vs GE pairs hit at the open)…

 

It seems Dow at 1000x the price of GE remains solid resistance…

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Institutions Are Selling To Retail Investors At An Unprecedented Pace

According to the latest EPFR fund flow data compiled by BofA’s Michael Hartnett, the great “institutional to equity” stockholding rotation is accelerating, with another $8.8bn allocated to equities, more than all of it from retail investors, and another $5.8bn going into bonds, offset by a $0.4bn outflows from gold.

Ironically, the one place where active investors are still putting back at least a token fight against the robots is in bonds, where $3.6bn went into active bond funds this week vs “only” $2.2bn into passive bond ETFs. And, as Hartnett writes, active AUM is fighting back, if only in bondland, where there have been $1.04tn in active bond inflows past 10 yrs vs. $0.93tn into passives…

…. a very different trend from what has taken place in stocks in the past decade (Chart 2) where institutions are delighted to dump to “low-cost” passive alternatives.


Of course, this particular “great rotation” is no surprise: earlier this week we were surprised to report that on its conference call, Morgan Stanley reported that the cash levels in its clients (retail) accounts, is the lowest it has ever been:

… we’ve been talking about our deposit deployment strategy for quite sometime, and we’ve been investing excess liquidity into our loan product over the last several years. In the beginning of the year, we told you that, that trend would come to an end. We did see that this year. It happened a bit sooner than we anticipated as we saw more cash go into the markets, particularly the equity markets, as those markets rose around the world. And we’ve seen cash in our clients’ accounts at its lowest level.

Meanwhile we also showed that institutions continue to sell at a torrid pace, and as BofA reported, in the last week when the S&P hit new all time highs, its clients were net sellers of US equities for the fourth consecutive week. Large net sales of single stocks offset small net buys of ETFs, leading to overall net sales of $1.7bn. Net sales were led by institutional clients, who have sold US equities for the last eight weeks; hedge funds were also (small) net sellers for the sixth straight week.

The best way to visualize the institutional selling? This chart from BofA:

 

Who bought? Why retail’s favorite investment product of course, ETFs: “Private clients were net buyers, which has been the case in four of the last five weeks, but with buying almost entirely via ETFs. Clients sold stocks across all three size segments last week.”

* * *

Going back to the latest fund flows report, BofA reports that for all the talk about an imminent surge in interest rates, yields are still winning: $6.3bn inflows to IG+HY+EM bonds this week; investors continue to discount low-rate environment. This happens as the 5s30s yield curve (88bps) is the flattest since GFC, a fact Mike Hartnett finds “remarkable given the Philly Fed Employment outlook hit a 50-year high today.” Just as surprisng: bond funds have now seen 31 straight weeks of inflows, as investors continue to overwhelmingly pick yield over capital appreciation.

Across the globe, Japan is losing (for a change), with a record $4.4bn outflows from Japan equities (86% ETF redemptions, possibly via BoJ); which is odd considering the Nikkei hasn’t had a down day in the past 14 days: the longest stretch of gains on record! It likely won’t last however, with BofA predicting that after Sunday’s election “we expect Japan TOPIX to revert to tracking US bond yields (Chart 4).“

In the US, where the S&P just hit all time highs, there was a solid week of $7.5bn US in equity inflows.

Some more bad news for professional investors:  while there have been inflows in 17 of past 19 weeks, all of this continues to go into passive funds, with $11.1bn flowing into ETFs offset by another $2.2bn outflow from mutual funds.

As a result, Hartnett concludes that robots continue to win, especially since this week’s launch of the 1st ETF in which stocks will be selected by robots (AIEQ) comes as tech funds see biggest inflows in 38 weeks; AIEQ outperforming SPX thus far.

As for the retail equity euphoria, nowehere is it more obvious than in BofA’s high net worth client tracking where YTD flows show a decisive cyclical shift by private clients, who are buying bank loans, financials, EAFE ETFs, while shunning quality, utilities, large caps & dividends (Chart 6). And as the next chart shows, equity allocations among BofA private clients are just shy of all time highs, and well above where they were during the last market peak.

BofA’s takeaways:

  • Alpha in bonds; inflows to active funds continue to outstrip passive
  • AIpha in stocks: first ETF where stocks selected by robots launches amidst biggest Tech inflows in 38 weeks
     
  • Tick-tock: risk-on equity & bond flows push B&B indicator up to 7.6

To which we can only add: the rush by institutions to dump their equity holdings to retail investors – courtesy of “low-cost” ETFs – has never been greater. The only question now is when does the Fed pull the trapdoor, as it always does just when the market peaks…

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Can Trump Drive A Wedge Between Saudi-Russian Alliance?

Authored by Zainab Calcuttawala via OilPrice.com,

Together, Russia and Saudi Arabia produce a fourth of the world’s oil. The laws of competitive international commodity trading have pit the two petrostates on opposite poles of the U.S.-Russia geopolitical rivalry. But a new era of American oil exports and ailing national budgets is pulling Moscow and Riyadh together in trying financial times.

President Barack Obama’s administration maintained a cold distance from Saudi Arabia in its final years. As the United States and its European allies began a war against the Islamic State in 2014, Saudi Arabia focused its military might on Yemen—a country on the Arabian Peninsula facing the brutal consequences of an extended Arab Spring. Iranian arms and funding reached the pockets of the Shiite Houthi rebels, who hoped to build a new regime in Yemen, to the chagrin of Wahabbi Saudi Arabia. 

President Donald Trump’s White House has extended an olive branch towards Riyadh as the new State Department lays out its foreign policy agenda.

But this new diplomatic program runs contrary to the KSA’s economic goals. American oil exports, reinstated back in December 2015, counter the effects of OPEC’s landmark agreement to lower bloc-wide output by 1.2 million barrels per day in an effort to alleviate an international supply glut.

As a major oil exporter, Russia was invited to participate in the agreement when it was being discussed back in 2016. American exports were still limited to specific destinations back then, and U.S.-based companies had only just begun to secure supply contracts in Asian and European markets. Any threat to the success of the deal from the other side of the Atlantic seemed far-fetched just a year ago. 

But the tables have turned.

Washington doesn’t rely on oil profits to run its nation. Moscow and Riyadh do—and heavily so. A boost in active rigs in the Permian basin, as well as other areas in the north of the country, has put shale oil and gas in the center of Russo-American geopolitics. As Moscow approves an extension of its 300,000-bpd output drop commitment with OPEC, the U.S. department of energy eyes new markets for American fossil fuels. Energy Secretary Rick Perry made his rounds to Japan in May to open the world’s largest liquified natural gas (LNG) consumer’s doors to U.S.-drilled supplies. The carbon-light fuel is considered a gateway energy source for developed countries as grid systems shift to renewable and alternative power options.

In Europe, American infringement of Russian dominance in gas markets is even clearer. The European Union has faced off against Moscow regarding the Crimea annexation and the Syrian revolution in recent years, but Russian control over Europe’s energy supplies undermined the continent’s geopolitical leverage. 

This new landscape puts Saudi Arabian interests in line with those of Russia. Both mega producers need to contain the growth of the outbound American fossil fuel industry, but the Iran issue remains a key point of contention between Riyadh and Moscow. The KSA is neck-deep in a showdown against Qatar for its involvement with Tehran on the South Pars gas field. New Crown Prince Mohammad bin Salman’s assertive stance locks the country in an irreconcilable rivalry with Iran. In contrast, Moscow stood by Iran through the latter’s experience as an international global pariah.

So far, President Trump has announced Iran’s official decertification from the nuclear deal, which doesn’t dismantle the deal completely, but provides the Republican Congress a route to sanctions it didn’t have before. The White House also approved new sanctions against the country’s Revolutionary Guard last week. These new developments are bound to bring back the Tehran and Moscow alliance in full force, potentially alienating the KSA in its anti-Iran stride.

The exact dynamics of the Moscow-Riyadh axis are still being forged in OPEC meetings around the world. Time will tell whether Saudi wants this new ally badly enough to reduce its belligerence against Iran, if that’s what the future of the relationship comes to.

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After Stalling for Two Years, CBP Returns Truck It Stole at the Border

Yesterday Gerardo Serrano was reunited with his 2014 Ford F-250 pickup truck, which was arrested by Customs and Border Protection officers two years ago in connection with international arms smuggling. The smuggling involved five handgun rounds that Serrano forgot to remove from the truck’s center console before embarking on a trip to visit his cousin in Mexico. The truck was never formally charged with a crime, and neither was Serrano, as is typical in civil forfeiture cases. After the Institute for Justice filed a class action lawsuit on behalf of Serrano and other similarly situated vehicle owners last month, I.J. says in a press release, CBP lawyers suddenly told him “he could pick up his truck whenever he wanted.”

CBP’s capitulation is yet another example of how standing up to asset-seizing bullies can pay off, especially if you have the Institute for Justice in your corner. But I.J. is not done with CBP. “The government cannot illegally seize and keep someone’s property for two years, and then give it back and pretend like no harm was done,” says I.J. attorney Robert Everett Johnson. “We will continue to fight to see that Gerardo is made whole, and to make sure this never happens again.”

Serrano still has not been compensated for the costs imposed by the seizure of his truck. He continued to make monthly $672 car payments even though he could no longer use the truck, paid $700 a year to insure it and $1,000 to keep it registered in his home state of Kentucky, and spent thousands of dollars on rental cars. Then there is the matter of the $3,805 bond (10 percent of the truck’s value) that he had to pay so he could challenge the seizure in court. Serrano never got his day in court, but the government still has his money. If I.J. had not represented him pro bono, Serrano probably also would have had to pay a lawyer thousands of dollars.

The I.J. lawsuit focuses on the lack of due process for property owners like Serrano, who lose the use of their vehicles for extended periods of time while their forfeiture cases stall. In Serrano’s case, CBP never even got around to filing a forfeiture complaint. In the Western District of Texas, I.J. says, the average time between a CBP vehicle seizure and the filing of a forfeiture complant is 150 days.

“No judge would have approved the seizure of Gerardo’s truck,” says I.J. attorney Anya Bidwell. “And that’s precisely why Customs and Border Protection is giving it back. We’re just saying the agency should have to explain themselves to a judge promptly after it first takes the property.”

Serrano is happy about the semi-victory but wants to see more evidence that CBP has seen the error of its car-stealing ways. “I’m thrilled to have my truck back,” Serrano says. “But I’d like somebody to apologize for taking it in the first place.”

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