Of the few retailers and one of the sectors Flagship Companies in cupcakes announces it is closing all of its stores. I will speak to the founder of one of their competitors. But first, lets get headlines from our radio cohost. Thank you very much. Alcoa is that with the earnings numbers, they reported secondquarter profit and revenue that beat analyst estimates. It was . 18 per share, beating the average estimates. They fared better in afterhours trading. His brother the brother of therajaratman was one of first accused of Insider Trading to escape conviction. Capital one is changing the terms of the Credit Agreement to allow the retailer to pay the firm line capital. The changes would allow american the loan inepay full, for bid in by the current terms. And that is look at the top headlines at this hour. President obama today requested nearly 4 billion in emergency funding from the u. S. Conference, to help deal with the surge of unaccompanied child immigrants, coming one day before the governor the president is meeting with Texas Governor rick perry. Former Homeland Security director tom ridge, who joins us from washington. Thank you for being with me. Maybe you can start off with describing security at the u. S. Airports for a moment because of potential new threats having to do with smart phone devices. Tell us what you know. I think the fact that the department of Homeland Security went public about this new threat is very sniffing it because it takes quite some time to accumulate the information necessary for a Broader Group of people to say that we need to alert the Broader Community about it. The challenge for us is to recognize that dealing with terrorism, were dealing with a group of individuals who will respond to it ever anecdotes that we put out to deal with terrorism. Right now there are concerns about nondetectable explosives potentially embedded, either surgically into an individuals anatomy, a different problem than we have associated with in the past. The alert is out and i would expect that the Technology Companies are working on it. The department of Homeland Security with our friends in europe and elsewhere will ramp up security at the airports. I think that this is a temporary concern of the department and i think that this is a new threat. With al qaeda and the yemen peninsula, the Al Qaeda Group in syria, that is the threat stream and it is rooted towards a traditional threat stream, commercial aviation, not turning an airline airliner into a missile, but a primary target for terrorists. The u. S. Corporations, as someone who became the Homeland Security secretary after the attacks of 9 11, talk about the challenges that corporations face when it comes to these challenges. The greatest threat to any enterprise, it is embedded in what we call the digital forevermore. You have organized crime that would likely get access if you have Social Security information, you had nationstates that would like to steal trade secrets and defense secrets, you have competitors that would like to understand your Pricing Strategy and your and all of strategy, a sudden there is a new frontier it is not a technology problem. It is a Business Risk. I think in time the Corporate Community is going to realize the dollars they expand the build a Risk Management environment around this new Business Risk will be a very, very good investment. Troublet they have convincing the cfo this is in an insurance policy. We need to do it, and we need to do it now. You are the former governor of pennsylvania. And the threats that individual states face from the climate that comes from their neighbor. The cannot necessarily control that based on state boundaries. Tell me about Climate Change and your perception of what is going on. Quick somebody could characterize it as a security problem in an entirely different as opposed to security posed by the threat of a nationstate or terrorism. We know that our Economic Security and our National Security are interlinked. If you think for a moment that the disruption of about a third of americas population, which lives along our coasts, you can think of an Economic Zone out into the sea. It probably generates a trillion allars worth contributes trillion dollars or more to our gdp on an annual basis. Suddenly, if you have rising sea youls, more hurricanes, should anticipate without even getting into the debate in terms of causation that Climate Change that effects that affects the and creates greater instability in the atmosphere is something we ought to have. We may work on an antidote. I do nothing necessarily putting millions of tons of Carbon Dioxide in the atmosphere is necessarily a good thing. But let the scientists argue about that. I think the eventuality of rising sea levels or more intense storms says we ought to be thinking about this as a risk to our Economic Security. That has national implications. Focus your attention on our southern border right now. I am going to put you in the unenviable position of telling us, how do you solve the issues that are plaguing our southern border with mexico . Layingt of all, you quit political football. This has been going on for well over a decade. President bush tried unsuccessfully. At least i think he was engaged. I think there is enough culpability at both ends of pennsylvania avenue, and i think the American Public are fed up with it. There are two parts of the equation in terms of government. You want for office in order to win, but you seek office and victory in order to govern. Both parties, instead of seeing it as a National Problem, are looking at it as a political lever and leverage during the campaigns. The fact of the matter is, there are solutions. They involve enforcing the border. Toinvolves a rigorous system monitor people going back and forth across the border. You accept the reality you are not going to send 12 billion people back. You can legitimize their presence. Whether you make them citizens or not should be secondary. The ditto mice their presence. Create a structure. You could have biometric identification associated with it. Just deal with the problem. Compromise is not a bad thing, and right now neither end of the political spectrum and pennsylvania avenue was to deal with it as a National Problem deserving of a solution. Both sides are using it as a political lever. Kindly, i think the American Public is disappointed and somewhat disgusted with the whole proposition. If asked to serve put together a commission to craft a bipartisan response . Obviously, the president meeting with governor rick perry of texas tomorrow. In a heartbeat. Just a humanitarian problem. It has social applications, but the rest of the world takes a look at this, which we have seen for years to be a dynamic democracy. The democracy and system of governance that is based on the principle. Even the constitution is a compromise. You set up points of view. At the end of the day, in order to solve a problem, you need to sit down and find common ground. Neither side will initially get what they seek. I do believe there is an answer. Matter of coming up with an answer. It is about a will. If both sides are going to use it for political leverage rather than addressing the problem in a meaningful way, perhaps even incrementally, we will continue to have the debate for the next 10 years. It is an enormous disappointment, because i think it is not a matter of being able to come up with a solution. It is the will of being able to forget about the politics and get it done. Gets tom ridge able to help it done, may be the political arena . I think anybody who served as governor thinks about it once in a while. I do not think you will be seeing me out there. Time to time, i have thought about it. I know one thing for sure. I am governor centered. At 2016, i would like to see a couple of governors, former or existing governors on the republican tickets. They are problem solvers. You have a great range of people. Have worked within the bush family for a long time. I think jeb bush would be a very attractive candidate. I think Suzanne Martinez as a governor in new mexico it is a dark loose state has done a remarkable job. Let us go with the governors. Former governor of pennsylvania. You are the former Homeland Security secretary. Current chief executive of rage global. Coming up, we are going to tell you why the brother of Raj Rajaratnam was found not guilty today. Details next. This is taking stock. In the world of finance, germanys secondlargest lender is said to be the next thing to resolve alleged u. S. Sanctions violations, according to one person familiar with the matter. Rajaratnam wasn cleared of conspiracy. He becomes the first to escape in the u. S. Crackdown on Insider Trading. Great to have you both here. I do not know where to start. These are the stories that keep on giving. Let us start by talking about the bank. They are going to be hit by a fine like bnp paribas . 500 million. Bnp paribas last week eight almost 9 billion for a similar sanctions violation. This is going to be the 22nd bank over the last few years paying fines. Some have pleaded guilty. Some have signed deferred prosecution agreements. Settled, paying relatively large fines to clear up violations of u. S. Sanctions. Any idea how much they are going to get . About half 1 billion. Significantly smaller than bnp paribas. What were they guilty of . The same kind of thing . Cuba, iran, sudan. Those are usually the main issues. The u. S. Government has a lot of foreign banks, since they passed the patriot act in 2002. European banks that have any u. S. Dollars clearing for operations in the u. S. Are really vulnerable to this if they are violating the sanctions, which is why we have seen close to two dozen of these sanctions in the last few years. You touch u. S. Dollars, you have to Pay Attention to u. S. Law. Do not violate sanctions. Seems like a good plan to follow. ,his trial, Rengan Rajaratnam brother of Raj Rajaratnam, former head of gallium. What is he charged with . Conspiracy to commit securities fraud. This was the incredible shrinking case. The government charged him on seven counts of engaging in securities fraud and conspiracy charges over the recent months. The judge made it clear she did not think very highly of some of the government evidence. The case just got whittled down. Just last week, she dealt another blow to the prosecutors and throughout two of the security charges. Alternately this morning, a jury started deliberating over one conspiracy charge, the weakest charge, the maximum penalty of a fiveyear prison charge, although no one expected he would have gotten that much. The jury came back in a few hours, a short time. Almost, you wasted our time with this trial. They acquitted him. Loss for the u. S. Attorneys office in manhattan, which has had this perfect run of convictions and guilty pleas. Judge mentioned the taking a position on some of the charges previous to todays acquittal, right . Case, why the wouldnt the prosecutors just drop the case, or negotiate the case . Was that not even on the table . Never really an important case in terms of the amount of money involved. The trade that ultimately was charged was a money losing to insiders possible trade in lose money, especially in 2008. It is really sad when that happens. In 2008, the market was very crazy, if you recall. It is the financial crisis. Even people placing sure bets on Company Earnings were losing money, because the market was behaving unpredictably. Is this a case where the Law Enforcement people said, Roche Roger Rotman has a brother. He must be implicated. We are going to go after him. That is what his lawyers argued. I think this case was symbolically important for the government. He was Roche Roger Rotmans brother. He was the big fish, serving this 11 year prison sentence. People involved in this investigation the fbi, the fcc have been looking at rengan since 2006. They did believe he was up to no good. They brought this case. They felt it was important. It did not work out. People are shocked that it did not end in a conviction. Sheila mentioned the big fish. Is there another big fish in the banking world to be mindful of . All of the u. S. Banks Credit Suisse who is left . Bank of america and citibank are facing civil claims. They could be close to 4 billion to 10 billion for citigroup. 7 billion dollars for bank of america, based on fraud issues. They do have a lot to write about this summer. Every single bank right now, we could consider a big fish. Thank you very much. Kerry ander sheila. The billionaire Donald Sterling is expected to take the stand as he battles his estranged wife over the sale of the la clippers basketball team. The latest, next. High drama expected in a California Court line just minutes from now. Billionaire dollars Donald Sterling is expected to take the stand. Word is that he is wearing sunglasses and in the courtroom. A plan to sell the los angeles clippers. He was supposed to testify yesterday but never showed up. We are joined by a California Attorney who specializes in planning preamp oh snap to a postnuptual agreements. This is turned into a Theatrical Event as much as a legal proceeding. What is going on in california . Fate of the clippers lies in the hands of the Probate Court to figure out whether Donald Sterling has capacity or shelley sterling removed him as a trustee in the family trust and went behind his back and sold the clippers for 2 billion to the ceo of microsoft. How does shelley sterling get around the rules and regulations of the trust . The trust is a revocable trust. It is reported that if a trustee or the creator of the trust believes the other trustee is incapacitated, she can have independent doctors examined him and determine whether he has capacity to function as a trustee. Doctor that examined Donald Sterling yesterday was testifying, and said that after the examination she went to the polo lounge in Beverly Hills and had dinner with shelley sterling. That raises eyebrows as to the independent doctor examining Donald Sterling, claiming he has alzheimers. Quickly dr. One of the two dark others that interviewed Donald Sterling and determine he had dinnerers, then with shelley sterling . Yes. They walked to have dinner. She did mention that Donald Sterling joined them later on, but that shelley sterling discouraged him from joining them at their table. What do you make of this . How do you think this is going to end up . To be honest with you, i think the doctors that were select it on shelley and donalds side i do not think they are independent. There is a financial stake for both parties. I think the best choice for the probate port would be to select their own independent dark earth to examine donald and to see if he really does have capacity. Thanks for giving us the details. An attorney from los angeles. Coming up, crumbs cupcakes crumbles. It is closing all its stores. Sprinkles cupcakes tell us how they avoid the same fate. This is taking stock. Radio go right to my cohost, carol massar. Hasidesharing service uber reached an agreement with the new York Attorney general, capping fares during emergencies and national disasters. Before Washington State legalized Recreational Cannabis marijuana has been legal since 1998. Despite being legal in 23 states across the country, federal restrictions have limited scientific testing on the regulation for medical marijuana. Some people in the state of washington may be craving some cupcakes after the sale of marijuana for Recreational Purposes started today. Colorado is the second state after colorado to allow people to buy marijuana without a prescription. Ethical marijuana has been legal in washington since 1998. I am joined by the cofounder of a Company Working with the fda to billups standardized develop, standardize, and properly regulate medical marijuana. Take a moment and explain that your company is a testing company. You are not making cannabis. You are not growing or selling cannabis. Arehat we are doing is, we a research and development company. We have been focused on this the last five years. I am not a scientist. My background is not in science. My background is in design, film. That is why i have this chief visionary officer title. I have a cousin who died of a brain tumor, who is a cancer researcher. I had suggested he use cannabis and he did not want to do it because he did not believe cannabis was tested and it had enough support. There was also a stigma behind it. He ultimately understood this is something that was going to take a long time. I got together with my business partner, and he had pharmaceutical experience and background. I explained to him what i saw in california, this new industry that was boiling up. And being an entrepreneur, we said, let us go to this marketplace. Dean said, we need to standardize. We need to take it pharmaceutical approach. That is what we did. Is that because it has been a freeforall, with supplies from a variety of places . Nobody knows. There is no way to regularize the chemicals necessary. Isleast at this point, it going to be retail. Inmaureen dowd wrote a piece the times where she took a whole candy bar and had a psychedelic episode. There was no dosage regulation on it. We are talking about testing, dosage. Everything we do is pharmaceuticalbased. We have a great r d team. Does that mean ultimately you want a labor like on bottles of wine that says, do not open heavy machinery . There are 85 known cannabinoids. And i and went after a u. S. Government packed patent. The 507 patents. It is getting traction in the news. On is,ng that we focused obviously, fda drug development. Includes encephalopathy, a brain disease suffered by football players, soccer players. We are trying to do a lot of things that involve the brain. How do you do that . You do that with standardized approaches. We were very involved in new york state. We worked with regulators. Governor cuomo just signed a bill to legalize it, i think 18 months away. I want to bring into the conversation a gentleman that is dealing with some changes in the law in Washington State. One of the lucky few who has a store called top shelf cannabis. He was able to secure a license in washington, north of seattle. I wonder if you can just described, what was your day like today so far . Last night, i did not sleep at all. Up to a line around the corner of the building, which is about 100 feet by 80 feet. And about eight news people. They wanted to see the truck come in with all the products. It was crazy. What about the idea that you have to standardize or regulate the actual contents, just as you would do for any kind of food or drink . Is that something you would like to see . I like what they have done. Over 21sically anybody can get the product. Regulatehey should what the man on your station said about edibles. You make sure what is in them. There have been issues with that, so i think there should be some regulation. How do you make sure the supplies you get are what you think you are purchasing . They all have to be marked. They all go into central testing agencies. They have to be sealed in containers and then shipped. What kind of crowd you have now . Can you give us some idea of how business has been going today . Probably close to 500 or 600 people. And it is 2 00, i guess. I am not even sure what time it is right now. How did you come to be the coowner . How did you get the license . I am the owner. I have financial backers that help me get started. Onasically did this one day a whim and they said you could file a license. I walked in and said, let me try this. Two months later, i got drawn in the lottery. I said, what do you think about this . Tom is counting on state officials to provide the roduct, so to speak. Is that an area you would be working in . In a would be working really scrutinized area of testing. There are other elements in cannabis, other compounds, called turpin points. There are all these tur penoids. There are all these chemicals we want to analyze. If somebody said, do what you do. What would happen . We would have to understand the regulations of each state. If tom says he would like you to verify that whatever the marijuana or the cannabis he is purchasing is of a certain statutory will making washington would probably be able to do that in about a month. Is that expensive to do . Is, as a startup cost. It is going to be built into the price of different products. What new york state is doing is great. Governor cuomo has interesting concerns. Bill is going to improve, the regulation is going to improve, but it is one of the bills. T if sales continue at this pace, are you going to open another store . We would be in the market for talking with other people and getting their business up and going. Best to you. Cofounder ofthe canalife sciences. Human senses to new heights as a less expensive appenabled listening device hits the market. Just dont call it a hearing aid. Details ahead. Plus, we will talk to the cofounder of sprinkles cupcakes on how he plans to avoid the same fate as crohns as crumbs. This is taking stock. Chain that bakery rose to prominence in the last decade, announced it is closing all of its locations. Losses of 20 million in the last few fiscal years. I am joined by the sprinkles cupcakes president and cofounder, charles nelson. He opens sprinkles cupcakes in 2005 and has since expanded to take steam bakeries around the country. Tell us a little bit about the cupcake wars. What do you do write that crumbs could not get together . It is hard for me to speak about other businesses, individual situations. The key for sprinkles we have always tried to be innovators. 2005, we opened the first cupcakeonly bakery. A couple of years ago, we opened. He first cupcake atm along with cupcakes and cookies and ice cream, there are lots of things we do. We are trying to continue to freshte and offer products to our customers. Is that the key to success . You cannot stay with one kind of product . We just opened our 20th location in new york. We have six ice cream shops that sell cookies, and six atms. We want to be a premium dessert brand. We are continuing to see growth in our portfolio, in stores and across product lines. For us, it is natural brand extensions. Franchise about activity you have embarked on in the middle east. All of our stores in the United States are companyowned, and we do have a franchise in a large group in the middle east. We have stores that have opened into weight in kuwait. Wellknown brands such as shake chang,pfa pf everything from Starbucks Coffee to victorias secret over there. It is a great start. Tell us your wife candace participates in your success on a regular basis. We love bloomberg. My wife and i are former investment bankers. We spend a lot of time on bloomberg terminals. Founder, and the the one who came up with all the recipes. She is the one with the pastry school. She does the p. R. She knows about cupcake wars. I run the operations side. We now have over 600 employees. We are coasttocoast and excited about where we are right now. Katie, oprah winfrey, blake celebrities a few that love your cupcakes. Also barbra streisand. Got to get celebrities interested in your product. We were fortunate early on to have some great celebrity endorsers. We wereot something seeking. Being in the los angeles area, it was something that happened. I think the way you grow any business is by word of mouth, people telling their friends, their family, their associates what they are doing and why they need to do it. Have anortunate to incredible amount of sprinkles ambassadors out there, who spread the word for us and tell people, bring our cupcakes, ice cream, or cookies to their event. We have a tenyear anniversary coming up in april. We wish you a preemptive happy birthday, and congratulations. The sprinkles cupcakes president and cofounder. To the world of audio. It was only a matter of time before Technology Helped usour senses. A Company Called sound hog is leading the way, when it comes to hearing. Hawk may be sound giving the hearing aid a run for its money. I am joined by the chief executive and president. Tell people why your product is not a hearing aid. Thank you for having me on the show today. Ahearing aid is really medical device that is intended for a person who has persistent and severe hearing impairment. That is not what soundhawk is. Is focused on helping everyone here better in challenging situations every day, whether it is a noisy restaurant, or spending time with our children. We are the first product focused on enhancing everyones hearing, versus trying to address a physical impairment. Let us start in the living room. Perhaps people have the situation where the volume of the television itself is sometimes not audible. Remote, the other thing people fight for controlling in the living room is the volume of the tv. Each of us have different preferences. We like it at different volume levels. Gives people the ability to listen to it at the level most comfortable for them, without chasing people into other rooms because it is too loud for them. How are you able to do this, using an application that runs on your tablet or smartphone . The application is just part of what we call a smart listening system. A bunch of Hardware Components come with that. A device called the scoop is worn on your ear. This group has microphones that capture sound. With thessor, algorithms, will enhance specific frequencies that you really want to hear, which is most often speech. Where the app becomes important is that each of us hears differently. Biologically, we hear differently. We may come up with different listening preferences. With the app, which is free to download, you can basically personalize the device itself to your unique listening preferences, about 810 seconds. This is the first product that has been able to do that. Foxconn are making this. Million a 5. 5 investment already in the company. When do we get to see the product . We Just Announced the product two weeks ago. You can see videos and photos and learn all about the product. We just started taking preorders at the website. We expect to begin shipping to customers by late summer. Dr. Rodney perkins, tell people who he is. Stocked or perkins is this fascinating individual, 77 years old now. He is still starting companies. He has been building businesses since the mid1970s, and we are his 12th start out start up. Who hasfantastic guy incredible domain expertise, specifically around hearing science. Prior to being an entrepreneur, he was a surgeon and physician. Original idea, because he had never seen a product built for everyone that could enhance their sense of hearing. He was the one who i think had the original vision, the idea, the medical and scientific knowledge. I was brought in and assembled a team around rodney that knows how to take that science and build it into an actual product. How much is that product going to cost . It is 299. The chief executive and president of soundhawk. Looking to stand out and maybe have style in the office this summer . Something that makes the most colorful, lightweight shoes available. This is taking stock. Cole hahn has been making shoes 1928, and they have always defied the standard shoe. Crowdtick out in the because of their colorful places and intricate designs. They have neon colored souls. Now cole hahn wants to lose some weight. There is a new shoe called the zero brand, and it weighs less than 1. 5 ounces. It makes its debut. I am joined by dave maddox. Thanks for being here. Let us start off with a lighter weight shoe. Where did this idea come from . If you look at what young guys are wearing, even with suits or on weekends, people do not want to be bogged down by weight. Our lives are a lot more at it. Everything that happens we are moving around more. It makes sense to innovate a product that reduced weight. How did you go about doing this . We challenged our Innovation Team around three things. Lighter weight, greater cushioning, and increased ability. Theddress the needs of modern young guy as he moves about the city. What does it cost the modern young guy if they would like to own lightweight brogues . 258 to 270. Om who came up with the idea of perforating the holes in the shoe to make it nice to wear in the summertime . Shoe cametions in the from farmers, way back when, a couple hundred years ago, in scottish peat bogs. Perforations used to have a function, which was to let water flow in and out of shoes. We decided to let air flow in and out instead. You have a background in turning around converse. Cole hahn is part of a private equity firm. You get more freedom to do this . They are terrific earners. We partnered with them on the acquisition of the company from nike. They have been nothing but supportive in how we have wanted to go about, amplify have you got a favorite color . I would say great for me. Gray for me. But we have a beautiful blazer blue eyewear as well. s chief marketing officer. Haans chief marketing officer. Live from pier three in san francisco, this is bloomberg west. We cover innovation, technology and the future of business. Lets check some of your top tech headlines. Uber has reached an agreement to cap theres during emergencies and natural disasters. The company has agreed to limit pricing during abnormal disruptions of the market and will implement similar policies across the u. S. As much been charging as eight times its base rate during storms in your last winter