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Investor Lawsuit Blames NSA For $12B Loss In IBM Value
Jah-Wren Ryel writes "IBM Corp has been sued by the Louisiana Sheriffs' Pension & Relief Fund which accused it of concealing how its ties to what became a major U.S. spying scandal reduced business in China and ultimately caused its market value to plunge more than $12 billion." While anyone can file a lawsuit, being sued by an institutional investor is a little different than being sued by John Q. Disgruntled.
This could get very interesting, if it proceeds, after IBM's lawyers start the investigation and discovery phase.
when this would happen. You just had to know that someone would go after them for this. I wonder how it will hold up in court. The bigger question I have is what else will be found during discovery
have you seen my sig? there are many others like it but none that are the same
It does not seem like the normal democratic process through the legislature is making any real progress when it comes to protecting citizens' rights from invasion by the likes of the NSA, but perhaps the sheer force of capitalism will convince some corporations to think twice if such lawsuits were to succeed?
Let me get this straight ... the sheriff's pension fund is suing IBM for not disclosing its associations with a clandestine operation being executed by the federal government? Is this the same type of local law enforcement agency that will prosecute an individual or company that exposes a clandestine operation being executed by law enforcement?
I guess money is money, and lawsuits are one of capitalism's tits. Too bad no one told this pension fund that the feds can (and will) pass a law retroactively absolving IBM of any wrongdoing (just like telecommunications companies got).
Subject/citizen, you should not be concerned about your rights when it comes to security and law enforcement. But, we need legal remedy for business decisions that impact our nice retirement funds. Yeah...
Good luck with that.
i dont think you understand the underlying problem. American companies CANT say no to the government, because they get shutdown. dont you remember lavabit? he did say no to the NSA, and then they started prosecuting him for not giving them the information they wanted. it isnt really a matter of capitalism. as long as there is no oversight on things like the NSA, there will always be abuse. as long as there is no oversight on the NSA, companies cant really ever deny them access.
I feel like the NSA and the rest of the intelligence apparatuses have gotten to a point where the security of this nation trumps any man made law. If this nation is of and for the people, who the hell is the NSA working for?
I'm willing to bank on your judgement. I would like to subscribe to your newsletter
if you see me, smile and say hello.
Kidnapped from an American company, on American soil, with coworkers paid off to not tell you that you had been scopolamined?
Good luck telling that one to law enforcement, trust me they won't call you back, even if you know the dates and locations and kidnappers.
I can't see how anyone is surprised here.
Would you purchase anything made by USA companies now if you want your data secure and safe?
I gave up starting a cloud storage busines for companies hosting apps/storage because there is no way to claim you have a secure and safe storage system when the goon squad can come in with grenades and machine guns and blow the place up looking for any sort of activity they feel is not "legal".
Secondly, the whole idea that companies outsource I.T. operations to reduce cost can't be made any more with any western institution. The result?
About 40 people I was going to hire to start this business won't see the light of day.
This is not just me either. In the investment circles I follow lots of people are leaving or simply shelving plans for any sort of real I.T. services expansion in the USA.
Those companies that are left and do hosting, Amazon, Google, Microsoft are doing so only because they already share all of their clients data with the NSA/CIA and are permitted to exist as a result.
The whoel thing is fascist and there is no competition under those sorts of conditions.
-Hack
Got Geometrodynamics? Awe, too hard to figure out? Too bad.
IBM stock price (and market cap) dropped only 6.4 percent. This is just one more stupid shareholder lawsuit, some lawyers trying to make money when a company's stop price drops. It's nice that /. can contribute to the hype.
1: Pot calling Kettle Black; The Sheriffs actively participated in illegal wiretaps and clandestine domestic operations and were even trained by the federal agencies on how to handle protests and riots. See: Katrina. They knew damn well who IBM was in bed with.
2: Predatory Societies always grow until they run out of livestock, then they turn on each other. A predator knows no other skill, and their skill can't make bread. They know what they are doing is immoral and they're doing it anyway because it's the only thing they know how to do.
3: We're about to find if NSA Gag letters are permissible in court, and indemnify executive management from failing to disclose them on 8-k and 10-k filings...
4: A rotten corrupt government doesn't produce pension funds for police; it STEALS your pension irregardless of who you are or who you work for then they try to pump and dump, crash and buy, cajole, mind-fuck and carrot and stick an ever greater percentage of the economy and people's lives under their control for whatever demented reason all while dangling numbers on a piece of paper in-front of your face. Now that you're riled up, as elected officials ya'll should start putting banksters and financial wizards in jail and properly protecting the productive side of the economy who pays your paycheck from the unproductive, self-destructive side. Your pension is gone, ya might as well ruin the lives of the people who stole it and have some dignity when you're a 70 year old mall cop.
5: IBM is now a mostly Indian company that produces services and products nobody wants; the only companies that stick with them are their institutional partners and even THEY are leaving them behind due to financial necessity. You can only sell so many computers and services with 50-150% markup because "there's magic inside we can't describe". Their days of coasting along on reputation are nearing a very abrupt end.
They don't always shut down the company.
Sometimes they just arrest the COB/CEO. You don't really imagine there was zero connection between Joe Nacchio of Qwest refusing to give NSA customer records without a court order (this back in 2001) and his being arrested and jailed for insider trading, do you?
(He may have engaged in some questionable trades but nothing that other corporate execs have done without getting hit with such severe penalties.)
-- Alastair
rampant pension mismanagement in neoconservative louisiana proves the free market is the cause of, and solution to, all of lifes problems if your jackboots march to the drum of Ayn Rand.
Good people go to bed earlier.
Dude, you are smoking some strange stuff... I guess you are a moon landing denier and Obama Birther too?
What in the actual fuck are you going on about? Did you post this in the wrong article?
There is no real business opportunity for US or European companies in China. If your business is major infrastructure or major industry you will experience a decline in business once sufficient experience and technology has been transferred to Chinese partners. Ex GE moves some jet engine manufacturing to China to sell to Chinese airlines while the Chinese government is simultaneously releasing its 10 year plan to replace foreign designed aviation components with domestically "designed" components.
The NSA is a convenient public excuse for China doing what it had planned to do all along.
Umm... it is?
NSA has been acting as the boot forever stomping on the human face. This kind of behavior can be stopped by Obama (he's further up the NSA's chain of command, but still in the chain of command) but he hasn't done so. I can only guess that he's a force behind illegal NSA activity to which he'll still claim he "didn't know" about, just as he's claimed ignorance on the ACA website, or NSA surveillance on European allies. He's still culpable for the NSA's illegal activity, will he claim he didn't know that he has broken his oath to uphold and defend the US Constitution?
I don't think the problem here is that IBM worked with the NSA. Problem is that as a shareholder IBM should have said something more about it and keep shareholders informed about the risks towards the share price. At minimum IBM should have stated it is working closely with US government organisations in electronic surveillance programs, which may cause loss of business if political environment changes.
This is the first lawsuit I've heard where investors are suing companies over NSA spying. I hope it's not the last.
sysadmins and parents of newborns get the same amount of sleep.
Lavabit was a mom and pop store. Your paranoia does not extend to established business, which have the option to fight back but choose not to.
IBM would have survived saying no. They would have had an enormous expense in doing so.
"While anyone can file a lawsuit, being sued by an institutional investor is a little different than being sued by John Q. Disgruntled. "
Not in this case. Men in black will make the case disappear or be dismissed for trumped up reasons.
Good luck with that.
i dont think you understand the underlying problem. American companies CANT say no to the government, because they get shutdown. dont you remember lavabit? he did say no to the NSA, and then they started prosecuting him for not giving them the information they wanted. it isnt really a matter of capitalism. as long as there is no oversight on things like the NSA, there will always be abuse. as long as there is no oversight on the NSA, companies cant really ever deny them access.
All of the details in your comment are false, actually. Citation:
http://en.wikipedia.org/wiki/Lavabit
If people want to blame the NSA spying scandal on anyone, it should be Obama. He knew and approved of their actions. He should be held accountable.
i dont think you understand the underlying problem. American companies CANT say no to the government, because they get shutdown. dont you remember lavabit? he did say no to the NSA, and then they started prosecuting him for not giving them the information they wanted.
You've kind of scrambled the history there.
Companies do say no to the government all the time unless the government has the actual right or power to make a demand. In Lavabit's case, Lavabit was defying a court order that only became necessary when they didn't meet a much more limited request from the FBI, which the FBI has the power to make. And it was Lavabit's choice to do that - both the defiance, and the shutdown. Lavabit's owner had a bad business model predicated on making promises he couldn't legally keep and stay out of jail or in business. That was a failure waiting to happen.
In a way I find it ironic that so many people here defend Lavabit given the large number of complaints you see on Slashdot about corporations breaking the law, owning the government, etc. At the end of the day, Lavabit was just another corporation that wasn't willing to obey the law.
You can make a reasonable argument that the government has too much power in this regard, but that is a different discussion.
as long as there is no oversight on things like the NSA, there will always be abuse. as long as there is no oversight on the NSA, companies cant really ever deny them access.
You must have missed some discussions. The NSA has oversight, and lacks the power to issue warrants or court orders itself. Even when it obtains a warrant or court order those warrants and court orders can be challenged in court.
much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell
Except that I'm fairly certain (as a group of sheriffs should know) that when a government agency makes you do something especially in an ongoing basis, public disclosure isn't an option. Imagine if every wire tap was published to anyone that owned a share of the local teleco... I suspect that suddenly a few shares might be sold to those who don't report their income to the IRS.
American companies CANT say no to the government, because they get shutdown. dont you remember lavabit?
Yeah, right. The US government would totally have shut down IBM (or Google, Microsoft, Apple... etc, etc, etc) for not co-operating with a law that probably wouldn't even stand up in court.
I'm afraid you're mistaken. They have a legal duty to inform owners (stockholders) and potential owners about any significant risks. Suppose I'm selling you some stock in my tiny software company. Suppose Microsoft has threatened to sue my company out of existence. Should I tell you about the impending lawsuit before you invest your savings in a business that is at risk? Of course I should, and the law requires that I do so.
The three questions are:
A) Did IBM executives know this posed a risk to IBM's business in China and elsewhere?
B) Did the executives inform the stockholders of the risk?
C) Does the law specifically grant an exception for this type of risk, allowing the company to keep it secret?
A and B are probably true, so IBM's lawyers will need to find something in the law that helps them argue C. To the extent it involves NSLs (national security letters), C probably applies because it would have been illegal for IBM to reveal significant information.
As usual, Time Magazine's person of the year is chosen to avoid the uncomfortable truth. Yes, Snodown's kicked off the biggest institutional reform since the invention of the telephone. Slashdotters have wondered how the general public can be educated about domestic spying. It turns out, pissing off billionaires and lawyers with dollar signs in their eyes is the way to get some sense of balance back.
Your paranoia does not extend to established business, which have the option to fight back but choose not to.
Oh how I pine for the day when I believed that shit. We were such a more innocent populace, weren't we? Go look up MKULTRA to start, and follow the Wikipedia links from there for a few hours. CEOs of companies, deans of universities, directors of hospitals, they were all in on it and that was the 1950s.
You think that sort of thing isn't going on now? The "option to fight back," oh good heavens, someone catch me before I pass out from laughter.
Thanks to the War on Drugs, it's easier to buy meth than it is to buy cold medicine!
Funny you should make that claim in the context of an article about the losses to stockholders caused by NSA. The "upper class" is the people who have a lot invested in these companies - the people who lost part of their savings. The upper class is the executives getting sued for complying with court orders. It's the "upper class" who are MATERIALLY harmed by the NSA's actions. The rest of us are merely offended by the violation of our rights, but not really materially harmed.
The NSA serves two masters, neither of which is the upper class. Mainly they serve the government politicians, of course. Secondly, though recognizing this fact doesn't support our righteous indignation, they serve the safety of the American people, at the cost of those same citizens' rights, and most of those citizens don't seem to mind. Spying has been going on for thousands of years because SPYING WORKS. Historically, spying on high value targets has done alot of good for the country. What's new is the technical ability to spy on EVERYONE, not just carefully selected targets. That brings up privacy questions that need to be answered by the public and our leaders, not by the people whose job is to collect as much useful information as possible.
They have a legal duty to inform owners (stockholders) and potential owners about any significant risks
Right up until they receive some sort of "National Security Letter" which supersedes any other legal duty they might have, and precludes them from telling anyone that they've even been served with such a thing. Your point "C" isn't, in my own opinion, some sort of blanket excuse.
Thanks to the War on Drugs, it's easier to buy meth than it is to buy cold medicine!
He sounds like the crazy person who two years ago claimed that the government is tracking all of our emails and phone calls. He probably also believes Vince Foster didn't shoot himself in the back of the head and then drive to that park. That's what's so aggravating about this NSA stuff - it shows that sometimes crazy conspiracy theories are true.
When IBM tanked it was when it was revealed Amazon cloud was getting the big fat DC contracts that used to go to IBM without much challenge...China had nothing to do with it. Desperate attempt by some losers. Hell, I have IBM stock but I don't care since it still pays the same dividend, in fact the dividend has been going up. Who gives a fuck about the share price on bluechip buy n' hold dividend stocks...
Even that wouldn't have allowed to be mentioned, as it'd then have invited more questions that they couldn't answer.,
Waiting for an amusing sig.
When did he fail to defend the Constitution?
while(1) attack(People.Sandy);
That's the question that will be before the judge and jury - did court orders, NSLs, etc. prohibit IBM from revealing more than they did about ALL of the risky cooperation? It may be that a vague disclosure as suggested by TFA would have hurt the business, and therefore stockholders. It may be that some of the data sharing wasn't covered by gag orders, or maybe all of it was. We don't have the necessary facts to know. You and I haven't seen the gag orders (yet). Maybe the executive's hands were tied , maybe not. We don't yet have sufficient facts to know for sure.
oh sure, they cant give court orders or warrants themselves... they just ask a 'secret court' to do it... we actually have no idea if this 'secret court' even exists. for all we know, the NSA has made it all up and decided to issue warrants on their own. just because the NSA isnt abusing its lack of oversight doesnt mean specific other parts that work with the NSA are not doing so.
you clearly dont read the monthly posts from google telling everyone how many requests theyve been asked for and how many theyve given. in ALL instances, where there was a warrant issued (by a secret court with no oversight), google gave up information on people.
we should all have a right to disobey court orders and warrants issued from a secret court with no requirements to follow the constitution.
The members of the FISA court are public record, they are judges from other courts that rotate through the FISA court. The function of the FISA court is documented. You seem disinterested in the facts of the matter.
THE FOREIGN INTELLIGENCE SURVEILLANCE COURT - 2012 Membership
Foreign Intelligence Surveillance Court
much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell
I suggest you root your compliance or noncompliance with the law in reality. I also suggest you speak to an attorney before not complying with a court order or warrant.
much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell
You've kind of scrambled the history there.
-- cold fjord in 45690965
Thanks to the War on Drugs, it's easier to buy meth than it is to buy cold medicine!
Wait-- John Quincy Disgruntled of the Shreveport Disgruntleds? I happen to know John and he's been a major stockholder in IBM for years.
You know, all that plausible deniability that companies and governments get for hawking out the process to a private concern so they can put "Private in Commercial Confidence" on all documents and avoid FOIA requests because they are companies, not governmental parties.
Could be a bitch on payback...
45690965
45690965? .... That just doesn't sing. Try this instead.
much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell
If the investor can pull resources to threaten financial livelihood of individual the National members of the Democratic (Marxist) Committee and shutdown overall cash flow into NDC, then there is potential traction and risk to Obama.
every day of his worthless life?
Yes they are claiming that cooperating/contracting to the US government is a reportable risk, even when such reporting would break a court order. They also seem to be claiming that dealing with the US government has obviously "tarnished its reputation".
I can't see how those claims will not be laughed out of a US court, the simple fact is that if you subtract $12B from the revenue IBM has made from the US government, the shareholder has received a consistent and healthy profit from the relationship for at least the past six decades.
Seems to me this is a political law suit, their intention is to make a point, they already know they will lose and have written the whole thing off as "advertising"..
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
we have a duty as american citizens to not follow any laws that are unconstitutional. in the case where the government deems laws constitutional that are not constitutional, we have a duty as americans to revolt and fight back against government oppression.
Did NSA start with Obama?
When did any president order NSA anything, and not the other way around?
I can assure you the loss in value has nothing to do with the NSA and everything to do with horrible management. For years their plan to increase profits is to cut American jobs for cheap new hires in emerging countries. At some point we'll actually need to make something to sell when there is no one left to fire...
Are you saying that the " CEOs of companies, deans of universities, directors of hospitals, they were all in on it" - but now they are the subjects of mind control? Or that somehow once a result becomes desirable, that the behavior of the C-suite and board of executives are being mind controlled to produce that desired result? I can't think of one reason for you mentioning it that isn't absolutely raving shit-eating lunacy.
I was probably reading about that before you were born. Oh yes, since well before the eternal September. That and many other things just exactly like it. My knowledge pre-dated my post, and I stand by it. Do you have another counter argument lined up, or just more unrelated references?
And it doesn't change my opinion, even knowing that these things are not just some nutjob's fantasy, but have actually been declassified and largely match any but the craziest reports.
But, you won't be convinced using logic since you have already decided what the truth is. Are you sure your mind isn't being controlled?
Don't you have a Klan rally to attend?
I assume you are responding to the part about "a law that probably wouldn't even stand up in court."
The court that issues these decisions (FISC) is not the court that decides what is Constitutional, FISC could very well be rubber-stamping warrants with little or none or the requirements for a proper warrant.
Fighting the decision to turn over data that law enforcement considers essential is not good business sense. The only lawsuits I am aware of are filed by individuals, EPIC, and ACLU.
Google could very well have said "this is not a legal decision and we refuse to comply with an illegal order". And it would have been very expensive, because anything that could be used as evidence would most likely be disallowed. Finding enough information to support the case would be time consuming.
The strategy is, in effect, to publicise the lawsuit, and the fact that evidence was not allowed, and they lost because of it. Lose the first battle, but go on record as having fought back. And, the various decisions made will likely unravel given additional lawsuits. In the same way that no one had standing to object to the information dragnet on everyone, because no one could prove they were affected. Eventually, that fell apart.
Because it was a court order does not mean it was a valid order.
+1 Informative.
This could get very interesting
I will be TRULY INTERESTING when institutional investors not only sue IBM, but also sue Cisco, Microsoft, Google and all other companies associated with NSA.
We the people, as individuals, have no power over that arrogant NSA - and those corporations, especially Cisco and Microsoft which had been in extra-ordinary friendly term with NSA, must face the same music IBM is facing, for what they have done.
Muchas Gracias, Señor Edward Snowden !
Choose wisely as to what that issue will be, and how you will conduct your protest or revolt. You could end up in the history books as an example of wisdon, courage and character, or foolishness and fail.
much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell
that its the pension fund for law enforcement personnel that has filed the suit.. given that its investors' departments have likely benefited from the three-letter's illegal surveillance activities.
Yawn. "Louisiana Sheriffs' Pension & Relief Fund" is barely a institutional investor even if it is one. Most of the work would be farmed out.
Besides, this is a class action lawsuit by lawyers hoping to hit the lawsuit lottery. What they need is a unrelated party to be the lead plaintiff. Preferable someone sympathetic to pull the juror’s heartstrings. Windows and orphans do well. If you can't get one of them but a “aw shucks we are a simple pension fund helping good people that was taken by the big bad Wall Street types” person works just as well.
Don't you have your mother to fuck?
And IBM will continue to outsource to China and India while ignoring the fact that both nations are stealing their IP, and will no longer buy their trash.
Basically, companies like IBM, HP, and MS are going the same way as DEC, AOL, Novell, etc.
I prefer the "u" in honour as it seems to be missing these days.
Sophistry, Keith.
History, Jack.
"The court that issues these decisions (FISC) is not the court that decides what is Constitutional..."
Yes, but since "The court's judges are appointed solely by the Supreme Court Chief Justice without confirmation or oversight by the U.S. Congress."(*), the court that *does* determine constitutionality isn't exactly unbiased towards FISC.
I don't know of another circumstance in which a court's judges are appointed by a single judge of the only court that could review the appointees' decisions. As well as those appointments being made with no oversight whatever.
* http://en.wikipedia.org/wiki/United_States_Foreign_Intelligence_Surveillance_Court
Basically, China pulled a Huawei on IBM, just like the USA basically chased Huawei out of the USA. Correlation and Causation being mixed up again. This has nothing to do with IBM lobbying and cooperating with the NSA, but everything with Huawei getting chased out of the USA. It's pure and simple retaliation for that, the Chinese knew that the NSA was fist deep in IBM and MicroSoft and all those companies all along. Sorry sherrifs, no pension for you, you could have seen this coming the moment Huawei was first being accused of backdooring equipment.
I was promised a flying car. Where is my flying car?
Government tends to exempt itself from such lawsuits. Meaning you can't sue them.
There is some merit for the ability to shield the government from some things like that... but its obviously abused.
Its one of the reasons why its a really really stupid idea to concentrate too much power in the government because when they screw up... no one is held accountable.
If you want no one held accountable when bad things are done... then keep putting more power in the hands of politicians.
What could possibly go wrong.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
there is no oversight on appointing supreme court justices either. the president is allowed to appoint whoever he wants.
The President's appointment of the CJ of USSC is, like his other appointments to the USSC, subject to confirmation by the Senate.
I'm pretty sure the FISC judges are unique in their appointments being subject to no oversight whatever.
Please, those companies are "to big to fail" anyone that thinks a company like google, ibm, or Microsoft would get shut down for denying information requests is unable to think.
It's easier to just comply and move on, now that word got out everyone is on damage control, making alliances against nsa or similar.
to be honest, I don't even care; they are not looking for me. Let's all be honest if your a scumbag trying to prey on others I hope they get your sent and descend on you like a pack of vultures on a corpse.
but there has never been a case where the senate actually said no. they just rubber stamp the appointments all the time.
The Senate has refused nominees before, and some were only confirmed after a serious fight (e.g., Clarence Thomas).
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
Except for that bit that the nsa is spying on foreign companies to give western companies an edge. What about that bit! That should go over well in emerging markets.