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Credit Suisse First Boston Fined $100 Million

Posted by ryuzaki0 on from the all-fun-and-games-until-someone-gets-an-eye-put-out dept.

A couple of people wrote in to note that Credit Suisse First Boston, which was the underwriter for VA Linux ? ' IPO, has been fined $100 million for actions they took in that and other high-tech IPO's during the stock market boom. CSFB allocated shares of certain IPO's to customers who made kickbacks to CSFB. Here's their side of the story. There's also an additional statement by the regulators and CSFB's settlement agreement (PDF).

61 of 178 comments (clear)

  1. GASP! by ekrout · · Score: 5, Funny

    GASP! Now they're only worth $20 trillion.

    --

    If you celebrate Xmas, befriend me (538
  2. What, no disclaimer? by Anonymous Coward · · Score: 2, Interesting

    You're not publicizing that VA/Leenucks owns j00?

  3. Cry me a River by hugecyberpenis · · Score: 2, Interesting

    This is article was a little bit more informative than the previos one on Reuters (1/19). However, it still begs an important question: How can wealth "evaporate"? Wealth isn't a liquid (Like water or mecury at high temperatures) so what process does it uundergo to "evaporate"? As a former Bank manager in Austin, I was constantly asked this question by employees and my answer was always: "I don't know." That was never enough. Sometimes I would have to say it loudly: "I don't KNOW!" That often worked.

    --

    This sig intentionally Left Bank.

    1. Re:Cry me a River by mccalli · · Score: 4, Insightful
      However, it still begs an important question: How can wealth "evaporate"? b

      Wealth measured in stock is purely a matter of belief and confidence. If everyone believes your stocks are worth something, then they will be willing to pay a price for them.

      If circumstances change and confidence goes, then people no longer believe your stocks are worth anything and so no-one will pay any more. The upshot? Your wealth has evaporated.

      Of course, a counter argument would be that, with stocks, you never had any wealth in the first place. You merely had the potential to try and convert paper figures into reality.

      Cheers,
      Ian

    2. Re:Cry me a River by Tattva · · Score: 3, Informative
      In economics, wealth "evaporation" means a change in the multipliers of a measure of money. In a liquid economy, money gets multiplied because it is leant out to other people who use it and whoever receives it lends another portion of it out. I am using "lend" in the loosest possible sense of the word, for example, when you put money in a bank, you are "lending" it to whoever gets a loan from that bank.

      When confidence dries up in enterprises that borrow money, risk is perceived to increase and people that hold assets are less likely to lend it out, decreasing liquidity. Less liquidity means less money available for investment, which is the primary negative effect on the economy as a whole when things like Enron and this IPO thingy happen.

      A government can try to increase liquidity through a number of means, reducing risk by buying off bad loans so troubled banks will be more likely to lend money, issuing more currency, and buying back government bonds are a few of the tools available to governments. Many people think Japan's only way out of its current recession is to bail out its banks, many of which have a bunch of bad loans on the books and are very adverse to new loans, thus preventing GDP growth since new businesses and business expansion is driven through bank loans (as well as stock.)

      --
      personal attacks hurt, especially when deserved
    3. Re:Cry me a River by JordoCrouse · · Score: 3, Informative

      As a former Bank manager in Austin.

      If you were a former bank manager in Austin, and you didn't know how these things worked, then either you worked at a blood bank, or I should move my money somewhere else.

      It all has to do with the fact that we, as a society, are willing to assign wealth to unrealized assets (unsold stocks, options, bonds, etc..). And when the value of the unrealized assets drops, we perceive a decrease in the wealth of the individual that holds them.

      For example, I would guess that our good friend Bill Gates probably has somewhere in the 20 - 30 million dollar range of true assets (this would include his houses, trust funds, cars, wife's jewelry, greenbacks in his wallet, gigantic money vault in which he swims, etc..) However, we peg him at $74.645400 billion because he holds somewhere in the area of 141 million shares of Microsoft (plus holdings in other areas). So when the stock price of Microsoft tanks tommorrow morning on news of the AOL suit (from $66 down to about $60), then we would say that Gatesy-boy had "wealth evaporation" of $846 million dollars. However, he still has his houses, cars and wife's jewelry - so his assets have not changed, just his potential.

      --
      Do you have Linux and a DotPal? Click here now!
    4. Re:Cry me a River by King+of+the+World · · Score: 2, Informative
      Where does money come from? Its a chicken/egg situation once you realized the entire world currency is not backed by gold.
      Strip it back to the basics and then watch it evolve. It's irrelevant that it's not backed by precious metals - they have no inate worth more than paper.

      An agreement between two people requires a promisary note - very common years ago. When a pig rangler wanted to get milk from the cow herder he would exchange a promisary note - "This note is good for one pig [signed]".

      The cow herder could keep the note and get a pig when he saw fit. Or he could trade the note for other goods/services.

      Perhaps a man of status wouldn't trade stock, he would commit 3 squads for 3 weeks to another. The notes could be traded. In time notes were signed by the King to be worth a certain ammount. Those who didn't see value in the pieces of paper didn't involve themselves with it. Those who did see value desired the notes.

      Eventually it makes sense to put numbers to your notes. Trying to exchange a note for 15 head of cattle is difficult. But 15 dollars can be broken up into it's parts.

      Then Kings produced more notes. The corrupt Kings knew they couldn't cash in the value - but, back in the real world, they didn't have to. They promised more to more people and the value of a note dropped. They stopped handing out duplicate notes and the price rose. They made laws so that they were the ones who controlled this.

      Simply said, money is an evolution of promisary notes. Nothing much more, nothing much less.

      And believe me, I know.

      --
      --Giving to trolls for the benefit of us all
    5. Re:Cry me a River by autocracy · · Score: 3, Informative
      Wow, I never thought I'd give a lecture on economics...

      The wealth DOESN'T evaporate. Stock is a medium between cash and physical assets. When you start a sole proprietorship, you invest in the business by buying things like desks and chairs and employee salaries out of your own pocket. Your return on investment (revenue-expenses=profit > /dev/pocket) is analogous to dividends. Now, move up to a partnership. Same thing basically, but multiple investors and therefore votes on how that investment is spent (ideally anyway). Next, jump to a corporation: EXACT same thing as a partnership with these mere differences: you're only limited to what you explicitly invest, you can't actually sell off what you invested in (only the holding on it, the stock - unless you get a majority of voting shares to agree), and it's possible to not have a controlling interest. That's what stock is, and yes - you needed to know it to understand what follows.

      Here's where people get confused: Stocks are an asset like anything else. My computer is an easy example. I may consider it to be worth $5k, but Bob might only be willing to stick $3k for it. People, expecting a return on their investment, will be willing to pay just so much for something. Stock prices are basically the price of what people are willing to pay to buy the all the stock, just as my Linksys router is as high a price as the manufacturer can get away with. Somebody might be willing to sell me one for only $50, or I may decide to hoard as many as I can and people seeing an opportunity in this will offer it for $200, which I might be willing to pay for it. Now, what if tommorow a major unfixable bug was discovered in all the linky's that the manufacturer couldn't fix and wouldn't replace? Now nobody is willing to pay for them. I'm basically out what I spent. Now this is what almost nobody understands - I DIDN'T LOSE THAT MONEY, I spent it like I would on anything else. Whoever sold me that stock (the linky) got $X dollars. I've already lost it. It didn't evaporate, it just changed hands. Look above to understand how the supposed "value" of a stock fluctuates, but it's really nothing more than what other people value it at.

      So, why do people become "broke" if they've already parted with their money? Imagine taking out a loan on your car. Because your car is an asset, you can have equity on it. No more than what other people value it at (Blue Book being the definitive guide here), but it's there. People use equity on their stocks just like they do on their car. But if you crash the car... you know what happens. Equity in a stock is just the same thing - only it's not on what you own, it's on what the business owns. Just like if I opened a convenience store and took a mortgage on the building.

      --
      SIG: HUP
    6. Re:Cry me a River by M@T · · Score: 2

      Wealth measured in stock is purely a matter of belief and confidence.

      Wealth measured in "anything" is purely a matter of belief and confidence. The only difference is that individual stocks are typically more unstable, though stocks in general are not.

      --
      'sapientia potestas est'
  4. Re:Why? by geekoid · · Score: 4, Interesting

    this is why people form corporations.
    remove corporate "status" people would go to jail.
    Why do you think corporations exist, to help consumers? hahaha

    --
    The Kruger Dunning explains most post on /. http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
  5. The chickens are coming home to roost. by mrsam · · Score: 5, Interesting

    I wouldn't be surprised if a few other brokerages will get nailed pretty soon, for similar kinds of shennanigans. Disclaimer: I have no direct knowledge of any regulatory investigation of ETrade, but we all know that they pretty much played the same games with RHAT.

    At least with CSFB did in fact give a handful of shares to everyone who applied for the friends-in-family deal - AFAIK - while ETrade tried to come up with every excuse in the book to kick out as many people as they could in their friends-and-family program. Although some of us did eventually get our pound of flesh (see my website: E*Trouble to revisit those exciting times) it would be icing on the cake to see EGRP whacked on the balls, again.

    1. Re:The chickens are coming home to roost. by Zen+Mastuh · · Score: 2, Insightful
      However, I am faithful that just like the industrial revolution, these companies will triumph over the people who were willing to overlook the law just to make a profit

      Triumph? I think capitalism is no different from the pirate drama played out on the high seas centuries ago. These companies will all come and go, none triumphant. As long as their is money, there will be dishonesty. Not all will be caught.

      --
      "What is the sound of one belly slapping?"
  6. Not Funny... by gayrod · · Score: 2, Interesting

    Actually I don't think this is any laughing matter. Being a lawyer, I can say from first hand experience that legal troubles, especially financial ones, are nothing to be laughing about. Especially when they involve the shady financing of businesses like VA Linux, which, if you're like me, you have your retirement savings invested in.

    In short, this is a pretty grave manner and I can only hope that the companies who were involved with this one are not tainted or hurt by their under-the-table doings. It could be a fatal blow to an already hurting technology industry.

    - Dave Brennins

    --

    http://www.davebrenninslaw.org
    dave@davebrenninslaw.org
    1. Re:Not Funny... by Anonymous Coward · · Score: 5, Funny

      VA Linux, which, if you're like me, you have your retirement savings invested in

      I have this strange urge to laugh and cry at the same time...

    2. Re:Not Funny... by Bilestoad · · Score: 2

      Go on, tell us what you paid per share.

  7. Re:Why? by Tattva · · Score: 2, Interesting
    The more boring the crime, the less the publicly elected police, DA's, and other enforcement agents are interested in it. If you want to commit crime for profit, pick the most pervasive, boring abuse you can think of.

    It reminds me of those guys who spent like $20,000 to set up a bunch of fake ATM's to grab ATM cards and PIN's. They actually lost money on their investment because the crime was so original and got so much media attention that the FBI devoted a legion of Agents to track every lead.

    --
    personal attacks hurt, especially when deserved
  8. Re:That's because... by Anonymous Coward · · Score: 2, Funny

    Those who believe that wealth is real will be the sad ones when it all disappears. Anybody who understands that it is merely a hallucination will see the true richness and abundance of God's wonderful planet and be filled with joy.

    Until then, the believers will have it good and the non-believers will bitch and moan from the confines of their '63 Volkswagen Beetle.

  9. But then again by Goonie · · Score: 3
    Say you exchange your stock certificates for some physical greenbacks. You've exchanged one collection of bits of paper for another, and, again, your "wealth" is based on the assumption that you'll be able to exchange those bits of paper for something else you want. Now, with greenbacks, that's a pretty reliable assumption, but it's not always the case with currency.

    Let's go a step further and say you use your greenbacks to buy some property. Now, that property might be yours, but its worth depends entirely on what people are prepared to give you in exchange for it.

    In my view, the wealth you can accumulate in the stock market is no more real or illusory than any other type of wealth. It's just *much* more volatile (and as such is risky to borrow against - margin calls and all that).

    --

    Any sufficiently advanced technology is indistinguishable from a rigged demo
    --Andy Finkel (J. Klass?)
    1. Re:But then again by LatJoor · · Score: 2

      True, but some wealth has a great deal more inherent value than other wealth. For example, food will always retain at least some value, because people always need it. Plus, you can always use it yourself if nobody else wants it. The same is not true for stocks.

    2. Re:But then again by jafac · · Score: 3, Interesting

      Food is a bad example.

      In fact, there's really no good example of a commodity or security that's really a bullet-proof shelter.
      for example, US farmers got raped back in the 80's as food prices failed to keep up with inflation, and the income they were counting on to pay off 10-year loans on $100,000 tractors - wasn't reliable, and they lost their farms. Granted, it was a stupid decision to take risks like that, but when you look at the pattern of the large numbers of farmers who were getting foreclosed on, it looks like something fishy was going on with the loan underwriting. That's really beside the point.

      Food prices fall when there's an oversupply, which can be caused by poor planning, good weather, or unintended side effects of tax laws or changing political climates (with regard to economic sanctions, etc).

      What are more reliable commodities? Precious metals are generally good. Oil used to be good, but that's because the prices were propped up by a monopolistic cartel. The Russians are fucking their asses right now. Yay Russia!
      Land is almost ALWAYS a good deal - but there are factors that can sneak up on you and screw you. The value will drop out of land if there's a recession and people suddenly can't afford to pay $1 million for an 800 sq ft house anymore (San Jose, CA).

      The thing that absolutely SHITS me, is - I'm relatively on the side of "free markets" and such. But when you deregulate some crucial infrastructure commodity like energy, and for whatever reason, the value of a commodity like natural gas spikes, then it's a happy good time for the commodity traders who can take advantage of it. It's a SHITTY BAD time for the poor consumers, who one month, were paying $30 to run their lights and TV, and the next month, are being billed $100, and they're suffering rolling blackouts. For some reason, I don't think it's a good idea to let the invisible hand jerk us off ALL the time. For me, it was a simple matter of realigning some of my bills for the extra cash I needed for my electric bill. For a low-income family, it meant choosing between electricity or food. What really sucks is the thousands of office buildings that were running air conditioning full blast, leaving computers and lights on at night, and the poor low-income families couldn't afford to power their refrigerator to keep their food from spoiling. These arguments seem to miss the ears of the "free market" champions.

      --

      These are my friends, See how they glisten. See this one shine, how he smiles in the light.
    3. Re:But then again by nzhavok · · Score: 2

      What you are saying is that no matter where you put your money you can never be sure it won't devaluate. This is true of course, nothing is guarenteed 100% even if it proposes it is. However when investing in stocks realise that there are two ways of investing, you can invest purely by looking at the trends in stock price ignoring what the ompany is, or you can look closely at the company; how it's structured where the cash flow comes from, fundemental elements of the business, etc. By making a sensible investment in the second way you can help to armour yourself against losses in the stockmarket (often) at the sacrifice of large and quick gains.

      --

      He who defends everything, defends nothing. -- Fredrick The Great
  10. How about the clients that made the money? by Great_Geek · · Score: 4, Insightful

    Okay, so they (finally) nailed CSFB. How about the other side of that transaction? All those clients that made all those millions - they just live happily after? From the news releases, CSFB was stupid enough to keep records in nice spreadsheets, so it should be easy to identify and fine the clients too.

    The cynical view says it won't happen - the brokers like to keep the clients happy.

  11. The funny thing is ... by cweber · · Score: 2, Insightful

    that according to their own article CSFB does not admit any wrongdoing in their letters of acceptance to the SEC and NASD (as is usual in such settlements). Further down in their own article, however, they state that they have fired, fined, suspended, redeployed or otherwise disciplined employees involved in this IPO thingy. If that is not an admission of guilt, then what is???

    Corporations have such wierd ways of doing things...

    1. Re:The funny thing is ... by Peyna · · Score: 2

      Not exactly an admission of guilt. More of a "nolo contendo" or whatever.

      When I get a traffic ticket, I can sign 1 of 3 spots on the back, either admitting guilt and paying the fine, pleading no content, and paying the fine (thus, paying the fine, but not admittin guilt.) or pleading innocence.

      I see what they have done there along the same lines.

      --
      What?
    2. Re:The funny thing is ... by ErikTheRed · · Score: 3, Insightful

      Yeah, but when you pay the fine on a ticket, it's a couple bucks and they jack your insurance some. We're talking US$100,000,000 here.

      I can't exactly see a bunch of suits smoking fat cigars in the boardroom going "Yeah, yeah, it's only a hundred mil. Sign the back of the motherfucker and send it in."

      --

      Help save the critically endangered Blue Iguana
    3. Re:The funny thing is ... by SuiteSisterMary · · Score: 2

      Sure, why not? Just jack the fees to the clients a little bit, and you'll recoup it in no time.

      --
      Vintage computer games and RPG books available. Email me if you're interested.
    4. Re:The funny thing is ... by Alsee · · Score: 2

      Just jack the fees to the clients a little bit, and you'll recoup it in no time.

      Heay! I just had an amazing idea!

      Don't commit a crime, don't get fined, but still jack the fees to the clients! You'll make a FORTUNE!

      -

      --
      - - You can't take something off the Internet! That's like trying to take pee out of a swimming pool.
  12. Re:Why? by PsiPsiStar · · Score: 3, Informative

    Not that I agree with this argument, but I've heard it posited that if a person isn't a danger to society, his crime should ideally be punished with fines rather than jail time since putting someone in Jail who could be creating wealth creates waste.

    Of course, if these people had to take responsibility for their lilly white asses and spend their time in a real max security jail cell this shit wouldn't happen. Either that, or you'd have prison reform really quick.

    --

    ___
    It's the end of my comment as I know it and I feel fine.
  13. It's a civil matter, not criminal by mr_death · · Score: 4, Informative
    Why do the rich just get fined?

    Because the "charge" involved a violation of SEC and NASD regulations, not a criminal charge (e.g., Murder.) The $100m is a combination of "disgorged profits" (you have to love the legalese) and a fine.

    This has nothing to do with "the Swiss" -- CSFB is a multinational.

    --
    It's Linux, damnit! Pay no attention to renaming attempts by self-aggrandizing blowhards.
  14. Wall Street Shenanigans by solman · · Score: 5, Informative

    The extraordinary thing about this is how lightly CSFB (and the street as a whole) is getting off. The profits from inappropriate IPO allocations alone substantially exceeded the penalties.

    No penalties will ever be assessed against the hundreds of analysts who hyped internet stocks in exchange for those companies giving their firms a slice of the investment banking business.

    Ask any analyst from any wall street firm, sell side or buy side, and they will tell you that everybody does this. Compare the SEC's treatment of big firms doing outwardly crooked things to their treatment of the little guy.

    It looks like they're too busy busting 15-year olds to attack the real stock manipulators.

  15. Re:Why? by Rasta+Prefect · · Score: 2


    Corporate status only sheilds you from civil liabilities. An individual in this situation would end up paying fines, the same as a corporation would. If you commit fraud as part of a corporation and you still go to jail just as easily as Bill Gates would if he hired Uncle Vinnie to go whack Larry Ellison on behalf of the Microsoft corporation. Besides, the penalty for breaking SEC regulations is almost never jail time, regardless of who you are, unless you actually commit Fraud.

    --
    Why?
  16. Well, at least someone made money on the .com boom by autopr0n · · Score: 2

    Heh, of course all those people that CSFB gave easy shares to probably lost a ton of money (although one could argue that someone so well connected in the financial world would know to get out while the gettin's good. But a lot of people on wallstreet were pretty stupid about that kind of thing)

    I wonder how long the investigation into this has been going on anyway? It seems a lot of irregularities are cropping up now that a lot of these companies are defunked (I.E. Enron). I guess when you have a lot of fake money in the form of overvalued stocks you can afford to cover things like this up, but when that dries up your fucked.

    But then again, it seems people ought to be more pissed off if the stocks actually turned out to be, you know, worth something

    --
    autopr0n is like, down and stuff.
  17. More shredded documents? by LM741N · · Score: 2, Funny

    And in related news Acme Mobile Shredding stock has quadrupled in the last year. Says CEO Mike Flimflamigan, "...I hate to make so much money off of other peoples' misery, but its the American Way TM"

  18. Dot com by BluedemonX · · Score: 4, Interesting

    Ever heard the expression "Boston Wad" or "Pigeon Drop?" It's a con game where you get a roll of dollars, then add a fifty to the top. Wrap with elastic band.

    Then you find your mark, and agree to go drinking. Show him the huge wad of "fifties". Drop it (with him in tow) in a locker or safety deposit box and keep the key.

    Later on in the evening, get a phone call/page or something telling you to get out of town or whatever. (This works really well if both of you are dopers/criminal element) Suggest to your new friend that you need to boot out of town and could he grab you $400 from the ATM for bus fare, etc? He's totally entitled to keep the $1000 in the locker - you haven't time to get it and get out of town and are willing to eat the loss in order to save your neck.

    You get the $400 and split. Your "friend" finds out his wad was worth $75 or so.

    Dotcoms were pigeon drops. Legal ones. "Oh, uh, yeah, this stock's going to be the next Microsoft. Want mine for $100 a share? I made enough money on it having bought in at $3 a share!"

    --

    --- Jump!! Fire!! Bullet time!! - Lego version of the Matrix
  19. On that note, when will ESR step up and write... by Anonymous Coward · · Score: 4, Interesting
    ..."Even More Surprised By Poverty", his sequel to the much-ballyhooed "Surprised by Wealth"- an account of his candid feelings on being worth $36 million-ish after the VA Linux IPO?

    A back-of-the-napkin calculation shows that $36M to now be $350K. Of course, to be fair, that still ain't exactly hurting. But yeesh, hindsight makes "Surprised By Wealth" one seriously painful read...

    And even richer a read, given CSFB's plight, is the ZDNet article on the subject of ESR's fortune, which, with unintended irony, observes:
    "Some open-source developers are envious of those whose work has brought them wealth. Some who could have made money from the recent VA Linux IPO weren't able to because they didn't have enough money or connections to get onboard the VA Linux IPO bandwagon.

    The age-old question of the open-source community has been: "How do we make money at this?" That question, at least for some developers, has now been answered..."
    Yeah. It's been answered alright.
  20. CSFB has a LONG history of blunders... by JohnA · · Score: 2, Interesting

    CSFB has a LONG history of blunders, the least of which is their sub-standard analysis department.

    Check out their calls... they even rated Enron a "Strong Buy" when the stock was near its all time high.

    While all of the Wall Street houses seem to have skeletons in their closet, CSFB seems to be unable to hide theirs well...

    1. Re:CSFB has a LONG history of blunders... by Jeffrey+Baker · · Score: 2

      These analysts are called in the business "the sell side". They are not analyzing stocks, they are selling them. Their job is to make every stock appear at least somewhat attractive, so their firm can make a load off people buying and selling it. A neutral rating of "hold" from the sell side really means "this company is worth 1.6 bags of dog shit." A rating of "sell" is extremely rare for most of the bigger houses. To get a rating of "sell", you are usually indicted in some criminal conspiracy, or your stock is already at record lows.

  21. Not really needed by autopr0n · · Score: 3, Insightful

    I think most people know that VALinux (or is it VAsoftware now?) owns Slashdot. And for those who don't know I don't really think it's that relevant in this case. This has to do with CSFB's underhandedness with VA stock, not something VA did itself.

    --
    autopr0n is like, down and stuff.
    1. Re:Not really needed by sql*kitten · · Score: 2

      I think most people know that VALinux (or is it VAsoftware now?) owns Slashdot. And for those who don't know I don't really think it's that relevant in this case. This has to do with CSFB's underhandedness with VA stock, not something VA did itself

      Even so. On CNN, for example, every time they report on anything that's owned by AOL/TW, they make sure they say, XYZ Corp is owned by AOL/TW, parent company of CNN. You have to whiter than white in cases like this, to be completely safe, if you do anything that might affect the stock price. I'd like to think this was just an oversight on /.'s part, but it's a little odd to be reporting on a market irregularity and not conform perfectly yourself.

  22. "disciplined" by jafac · · Score: 2

    "Yes, we sent him a strongly-worded email reminding him that it was against company policy, and that further transgressions may impact his next quarterly bonus."

    --

    These are my friends, See how they glisten. See this one shine, how he smiles in the light.
  23. Because it didn't exist in the first place by autopr0n · · Score: 2

    Most of those dot.bombs (I hate typing it that way, what are you supposed to say "dot dot bombs"?) had pretty ridiculous business models, and a lot of those that had sound ones behaved pretty stupidly, thinking that this was the vaunted 'new economy' and all that.

    So in other words, people believed that the service that they were providing was valuable, but it turns out no one wanted it. The wealth they thought they had, well, they didn't.

    --
    autopr0n is like, down and stuff.
  24. Thats Close To the Capitilization by quakeaddict · · Score: 3, Funny

    Thats Close To the Capitilization of LNUX.

    http://finance.yahoo.com/q?s=lnux&d=t

    But thats right, there are no real viable Linux based companies anymore, and their really never were.

    --
    I'm still working on a clever footer.
    1. Re:Thats Close To the Capitilization by GigsVT · · Score: 2

      Red Hat's Market Cap is 1.259B at the end of business today. That is not huge.

      It is, considering their revenues.

      As for the "tons of cash they have to sit on", it can best be described as: $68M. If they continue to burn -15M per quarter (which is generous, considering the previous three quarters they lost -55M, -27M, and -34M)

      You keep referring to the amortization of goodwill as a loss. It isn't. Goodwill is a worthless asset on the balance sheet. The one time charges that RHAT is taking are not of dubious nature like the Cisco inventory write-down, RHAT's one times are "money" that was spent a long time ago (It wasn't really money, only in the opportunity cost sense).

      Returning 0.01 per share isn't much of an achievement is it? On an investment of $1000 (~100 shares right now) you'd get $1 per quarter ($4 a year). After paying capital gains you and the wife might be able to split a diet coke at the local soda fountain.

      Do you even understand how the stock market works?

      Oh, I see by your later paragraphs. You are a microsoftie. I guess that allows you to totally disregard the way accounting and the stock market works.

      --
      I've had enough abrasive sigs. Kittens are cute and fuzzy.
    2. Re:Thats Close To the Capitilization by GigsVT · · Score: 2

      First off, you talk about dividends, and yet MSFT has NEVER ONCE paid a dividend.

      You implied earlier that somehow earnings were automatically distributed as dividends, this shows a clear ignorance of the stock market, or if that isn't the case, then a twisting of the facts to confuse those less familiar with the stock market that might fall for your ruse.

      Second, I never said RHAT was "great stock" per se. I was only originally responding to the original post that said there were "no viable Linux companies".

      I'm not promoting anything. I'm just pointing out some facts.

      A lot of your numbers are just wrong. RHAT has 63 cents per share in cash, with about 169 million shares outstanding. This is about 106 million dollars in cash.

      This is all irrelevant though. RHAT is putting itself in a position where they will be rolling in the money. They aren't in direct competition with MSFT at all, the are more in competition with Sun, and other Unix vendors.

      RHAT concentrates on legacy UNIX->Linux conversions. MS can continue to push their toy products for home DSL users to use, and it won't affect the people that need real servers, and it won't matter to RHAT either.

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    3. Re:Thats Close To the Capitilization by GigsVT · · Score: 2

      IBM wants to work with RHAT, not against them.

      Oh, and name the declaration date of a single MSFT dividend, if my statement is so patently false.

      A real cash dividend, not a stock split (which is not a disbursement of any sort).

      Maybe this will help you.

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  25. Re:Why? by jafac · · Score: 2, Insightful

    If the person's fraudulent activities cause a very large company to collapse, putting thousands of people out of work, and depressing the stock market, and generally turning a national recession into a depression, and people end up starving to death over it, then they're a fucking danger to society, indirectly guilty of murder, and should be strung up by their genitals.

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  26. From personal experience by Anonymous Coward · · Score: 2, Interesting

    I can say that my impression of the dot com boom was that it was of dubious legality. Having worked for a start-up web development/marketing/we-can-do-anything-and-every thing firm, I saw blatant manipulation of stock prices via public stock trading message boards and outright lies regarding profits by the CEO (he said there were some when in fact the company was bleeding red ink.)

    The company I worked for had some strange affiliations, from the seemingly normal to the questionable to the downright shady (a Las Vegas land development company whose name I thankfully forget :) ).

    I saw quite a bit there...the VP dumping his options just days before the stock crashed, unqualified people getting paid a lot of money to do nothing (myself included), and of course massive document shredding in the accounting office.

    Of course, my views on this might be slightly skewed, this all occuring in the stock market scam capital of the Western world...

    AC for obvious reasons.

  27. Re:RHAT by GigsVT · · Score: 2

    One thing that would be interesting is to see how the RHAT case gets settled. The RHAT case was different because RHAT itself was named as the defendant in the suits, not their brokerages. It never made any sense to me to sue a company over what their brokerages did, and apparently it didn't to Red Hat either, they responded to the suit publicly by saying that they had retained the world's leading brokerages, and had no knowledge of anything illegal going on. Sounds like a pretty solid defense to me.

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  28. This wouldn't have happened... by acoustix · · Score: 3, Insightful

    if EVERYBODY were allowed to participate with an IPO.

    For some reason only "privilidged" people are allowed to buy the stock before it starts. So why do we allow the rich to get richer? Everybody should be able to buy those stocks before trading starts.

    No exceptions.

    --
    "A plan fiendishly clever in its intricacies"- Homer Simpson
    1. Re:This wouldn't have happened... by rhavyn · · Score: 2

      Everyone is. The day of the IPO, the stock opens on the market at that price. There have been IPO's where the stock went down on the first day. The fact that someone doesn't manage to buy the stock at that price goes up is just too bad. That's how the stock market works. If everyone got to preorder IPO shares at that price, then the price would never move on the stock, thus defeating the purpose of the stock market.

    2. Re:This wouldn't have happened... by tswinzig · · Score: 2

      For some reason only "privilidged" people are allowed to buy the stock before it starts. So why do we allow the rich to get richer? Everybody should be able to buy those stocks before trading starts.

      No exceptions.

      Believe me, the companies would love it if everybody could get in on the IPO at the same time, before the bell starts. Because what would really happen is everyone with a broker would place their bets before the stock 'prices.' Then the firms would raise their opening amount to what they think everyone would be willing to pay. The more people bidding, the more it goes up. Then those companies would actually profit from the huge upward swings that have accompanied these IPO's, instead of the initial buyers profiting from them.

      IPO's are handled the way they are, because most of the stock being bought is held by large organizations that will NOT sell them on the open market for a while. The investment firms set this up so that they can keep the stock price stable. But there's always those that get in on the IPO and flip the stock anyway, and that's why the opening days can be crazy for the price.

      --

      "And like that ... he's gone."
  29. Re:And who is surprised? by GigsVT · · Score: 2

    If the "poor" were day trading IPOs then they deserved it.

    Your idea of poor and my idea of poor are obviously very very different.

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  30. LNUX got screwed too. by jmorse · · Score: 2

    Actually, the company got screwed too. When you have an IPO, only the proceeds from the *initial* sale of shares goes the the company going public. When an IPO skyrockets on its first day of trading, it leaves money on the table. VA went public at $30 and closed at $299 the first day. That means that it probably could have gone public for $250 per share or so and gotten roughly 14 times the amount of capital they got. Since VA sold 4,400,000 shares in its IPO, that's $968,000,000 that went to CSFB's big institutional account holders instead of the company.


    I think slashdot could survive a while on $1Bn cash, don't you?


    To sum up: the company got screwed because it was denied a fair and rational IPO price.

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  31. Comment removed by account_deleted · · Score: 2

    Comment removed based on user account deletion

  32. Comment removed by account_deleted · · Score: 2

    Comment removed based on user account deletion

  33. Re:Why? by PsiPsiStar · · Score: 2

    Well, fraud is definitly a crime and I don't think the bastards were punished enough for having committed it. Firing people or depressing the stock market is probably not a crime. Not yet anyways.

    As for genitals, I doubt they have any, though if that's the case I'm not sure how they managed to screw so many of their employees. Probably hired accountants to do it.

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  34. Re:It's UNREALIZED gain/loss by autocracy · · Score: 2

    Yup, that's true. I'm sure I fudged my explanation a bit (late at night and typing a small essay), but you're correct. However, I find that most people don't get that. When you getting into anything of that magnitude people just look at you and go "huh?" So I avoided saying that directly.

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    SIG: HUP
  35. Re:please do not moderate this up by PhilHibbs · · Score: 2

    Serves you all right for listening to someone with a /.id > 5000.

  36. Fines to the offender by arete · · Score: 2

    If the principle PEOPLE all got PERSONALLY fined, I still think this would happen a lot less.

    Jail time vs fines and corporate vs personal punishments for wrongdoing are not really the same issue.

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  37. Comment removed by account_deleted · · Score: 2

    Comment removed based on user account deletion

  38. Thursday's Frontline is all about this by Sloppy · · Score: 2

    Watch some TV.

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