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SEC Investigating SCO?
Udo Schmitz writes "As Groklaw reports, the SCO Group stated in a SEC filing from yesterday: 'In addition, regulators or others in the Linux market and some foreign regulators have initiated or in the future may initiate legal actions against us, all of which may negatively impact our operations and future operating performance.' Does this mean the SEC finally started to pull some stops? SCOs and Canopys financial dealings (Vultus acquisition anyone?) long ago lead to speculations in the Linux community about the legality of their business practices, or the whole lawsuit just being a stock scam."
I mean, seriously, at this point, who (other than investors) is going to be the least bit sympathetic?
Protecting the interests of shareholders, indeed. And guess what happens when all the major shareholders are either insiders or institutionals?
C|N>K
Many corporate actions are just games designed to artificially increase stock price.
SCO just happened to have the balls (or the incredibly stupid idea) to sue the 2nd largest software company in the world for an astronomical figure.
Consider this perspective. Even if IBM had rolled over and paid SCO some big number in a settlement, that wouldn't impact the company's value nearly as much as the potential of winning the huge case. So basically, the threat of the huge payoff, magnified by stock market gambling, would (and did) push the stock price up far more.
Everyone with inside information then cashes out (inside meaning executives, primary funding investors, and Martha Stewart-type friends) while the stupid general "investing" public buys more stock after reading the daily press releases.
.sigs are for post^Hers.
Quick question?
"extending the life of a failing company for another few years so that shareholders have time to sell..."
Don't shareholders sell their shares to other shareholders by definition?
It's not like they are selling them back to Canopy Group.
Someone (a shareholder) is going to get hurt eventually.
Hence SCAM.
The truth about Led Zep should never be told on
It is standard operating procedure to include in SEC filings discussion of any factors that will or reasonably may negatively impact business.
This CYA language is meant to prevent both SEC probing and shareholder lawsuits should something go wrong. This language is often copied verbatim in later filings, so it often is written to be as broad as possible.
Mere inclusion of such language does not mean that these factors have happened or will happen, only that the company thinks there is some non-zero chance of it happening.
Not surprisingly, SCO's language is pretty mushy here, but the wording, "have initiated or in the future may initiate" makes me believe that they're simply being prudent.
Of course, the fact that they feel the need to mention regulator investigation says a great deal about the company, regardless.
I parse this to mean the statement is true if one or more of the conditions are true now or in the future. We know that 'others in the Linux market' are already suing (RHAT, NOVL). However, the statement as it stands doesn't say that SCO are being prosecuted NOW by regulators, but they may in future be prosecuted by regulators.
Therefore, I think the statement refers to the fact they are currently being sued by RHAT and NOVL, and might be prosecuted later by regulators (although this is not yet certain).
Oolite: Elite-like game. For Mac, Linux and Windows
You're right about profitability but completely wrong about share price. Shares are initially issued to raise capital. After that it's a secondary market and they fight among themselves for how much the shares are worth. Profit not share price should be the determining factor for the corporation.
It used to be that the two were related, profit divided as dividends was the the primary motivation for determining share price - or the potential to control the company via the votes accrued. Now that it's all speculative - stockholders have hijacked the original purpose of the corporation which was a *business* to make money. This has led to SCO, HP, Nortel, Time Warner/AOL etc where short term decisions to help the stock price have resulted in long term harm to the corporation's viability and profitability.
I'm not saying that this is wrong either - but it really isn't very good for the economy overall when otherwise productive businesses are gutted to be made more appealing to the sucker buyer. The worst excesses (SCO, ENRON) should probably be punished. But there's not much that can be done about it as long as there are fools that want to get in on the sinking ship...
The corporation's responsibility is working in the best interest of their shareholders - everything short of breaking the law in order to turn a profit for those who own stock. If that means suing a company just to stay relevant, so be it.
Are you actually embracing the moraless practice that corporations have these days? I understand the motivation to do this. I also understand the motivation of bank robbers to rob banks. "I as a bank robber have a responsibility to give my family the best living conditions and education possible. I swear I'm only looking out for my family!"
Yes I understand that's "how public corporations work", but that doesn't make it OK. Why is that in any way a defense? Enron has done much the same thing, and I don't hear too many people trying to defend them on a "corps do what corps do" basis.
AccountKiller
Someone (a shareholder) is going to get hurt eventually.
Hence SCAM.
If someone getting hurt eventually was the only criteria for a stock scam, companies could not do anything - by its very nature, someone will get hurt with the stock market, pretty much no matter what. Buy low, sell high. It's up to the individual investors or their financial group/investors to judge the merit of the companies and the relative worth of their stock. Caviat emptor and all that. People who bought Enron stock got scammed. People that bought $BIOTECH that had promise but never delivered and went under made a poor choice. But both parties got hurt financially.
As grandparent said, there's prolly nothing illegal about SCO suing IBM et al. They claim that a contract was violated, hire a very respectable lawyer, and attempted to protect what they believed was theirs. Various of their statements have been rediculous and inflamatory, but there's no law against being stupid or making poor judgement. There's also no law against well timed press releases - all big companies do it all the time.
What *could* be illegal is if the powers that be can show that they purjured themselves, that they violated SEC rules, or that they engaged in insider trading. All of which can be difficult to prove.
Close, but to really understand it, you would have to drive down the road staring at the part just in front of the car instead of ranging in and out to 100 meters or so up the road like you are supposed to. It's a really really good way to get in an accident, so I don't actually recommend that you try it. Nevertheless, I think it's a very accurate comparison to running a company that is shareholder-driven.
GreyPoopon
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