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  • Judge Orders Apple to Respond to Greenlight Capital Lawsuit by Wednesday


    New York District Court Judge Richard Sullivan accelerated Apple’s case with Greenlight Capital, agreeing that the issue would be resolved as soon as possible given the affect an outcome could have on the company’s upcoming shareholder meeting.

    For those of you who don’t know, Apple is being sued by Greenlight Capital in a bid to have the company mete out a portion of its vast $137 billion cash hoard with investors. According to Apple, the request had the support of Greenlight’s legal counsel, reports Reuters. Behind the suit is Greenlight’s David Einhorn, one of Apple’s most prominent shareholders, who is suing to block a proxy proposal that could see the issuance of preferred stock eliminated from the company’s character.

    The Cupertino California company’s so-called “Proposal 2” argues that a higher level of governance can be achieved by stripping the board’s ability to issue preferred stock, instead leaving the matter to the purview of shareholders. Einhorn countered, saying that Apple should return more of its $137 billion in cash to investors in the form of perpetual preferred shares that carry attractive dividends. He asks Apple to task over how the proposal is bundled together with two others in the company’s proxy statement, which is headed for debate at the annual shareholder meeting on February 27.

    As far as its part, Apple said it is holding “active discussions” on what to do with the cash hoard and denies that the passage of Proposal 2 would hinder the issuance a preferred stock. Apple is scheduled to respond in the Greenlight suit by Wednesday, with Greenlight slated to file subsequent documents by Friday. Both parties have been called to appear in front of Judge Sullivan for arguments on February 19th. We’ll have to wait and see what happens.

    Source: Reuters
    This article was originally published in forum thread: Judge Orders Apple to Respond to Greenlight Capital Lawsuit by Wednesday started by Akshay Masand View original post
    Comments 8 Comments
    1. fanboyfanboy's Avatar
      fanboyfanboy -
      I'm confused as to what apple is doing that's illegal? Im no legal expert, but why are they being sued for not returning as much money to investors as they would like? Is this just a greedy investor who wants more money or is apple doing something illegal? If someone could fill me in here, it would be greatly appreciated as Im very confused
    1. frail1's Avatar
      frail1 -
      This is really disturbing to me that the government is stepping in to accelerate this nonsense. How dare anyone tell a company or person what they MUST do with their money?
    1. Lawdoctor's Avatar
      Lawdoctor -
      Quote Originally Posted by fanboyfanboy View Post
      I'm confused as to what apple is doing that's illegal? Im no legal expert, but why are they being sued for not returning as much money to investors as they would like? Is this just a greedy investor who wants more money or is apple doing something illegal? If someone could fill me in here, it would be greatly appreciated as Im very confused
      It's a derivative suit, in which, the real owners - shareholders - allege that the board has breached their fiduciary duty and loyalty to shareholders, and statutorily mandated based on jurisdiction are favorable to the corporation. It's complicated, and super boring. Apple will likely persuade the Court to dismiss on several basic yet effect motions. Key to remember the investors are the owners, and the board of directors is beholden, to an extent, that management maintain good faith dealing. I'm a lawyer, but last I dealt with a case in corporation were hypothetical in law school. Slight chance, I'm wrong, but I doubt it.

      Quote Originally Posted by frail1 View Post
      This is really disturbing to me that the government is stepping in to accelerate this nonsense. How dare anyone tell a company or person what they MUST do with their money?
      You want the government, in this situation. Without it, the economy would collapse without regulation - e.g. Enron. I'm not a fan of goverment interference, but here, it is necessary.
    1. fanboyfanboy's Avatar
      fanboyfanboy -
      Quote Originally Posted by Lawdoctor View Post
      It's a derivative suit, in which, the real owners - shareholders - allege that the board has breached their fiduciary duty and loyalty to shareholders, and statutorily mandated based on jurisdiction are favorable to the corporation. It's complicated, and super boring. Apple will likely persuade the Court to dismiss on several basic yet effect motions. Key to remember the investors are the owners, and the board of directors is beholden, to an extent, that management maintain good faith dealing. I'm a lawyer, but last I dealt with a case in corporation were hypothetical in law school. Slight chance, I'm wrong, but I doubt it.


      .
      Oh okay well thank you for explains that
    1. Lawdoctor's Avatar
      Lawdoctor -
      As I said, Corporate and businesses entities law are super boring. However, at least my grammatical mistakes had some humorous value.
    1. Villebilly's Avatar
      Villebilly -
      Just remember anytime someone has a lot of money others will do what they can to get a share of it. It's called greed.
    1. *T*'s Avatar
      *T* -
      *effect
    1. Lawdoctor's Avatar
      Lawdoctor -
      So, I looked into this a bit more. It's a proxy war - the shareholder are split, and so the opposing factions are soliciting proxies (votes) to gain decision making control. It's actually interesting. About greed, corporation exist for the sole purpose of generating profitability. If the BOD fails, shareholders vote them out. So yea, it is about greed, but not in such a negative manner that I think you imply. Adam Smith's invisble hand drives capitalism. Would you invest your money into something that did not return a benefit or gain? I hope not, risk exposure is to make money. I'm a mac, iEverything freak, but I'm also a shareholder, I expect a return on my investment - when sales are off the charts. Greed is good, to a point. Money is not important, it's about winning and power. Once you have both, the money follows. And I'm a liberal!