Re: Wish

From: Joe Dunning (joe_at_blahblah.invalid)
Date: 10/08/03 

Date: Wed, 08 Oct 2003 02:29:39 GMT

On 7 Oct 2003 14:53:33 -0700, J. L. Schilling <jlselsewhere@my-deja.com> wrote:
>joe@blahblah.invalid (Joe Dunning) wrote in message news:<d%Bgb.57997$%h1.42825@sccrnsc02>...
>> On 7 Oct 2003 08:30:14 -0700, J. L. Schilling <jlselsewhere@my-deja.com> wrote:
>> >
>> >The rise in SCO's stock price is due to the actions of capitalism in the
>> >marketplace. If investors believed that SCO's case was only FUD and without
>> >merit (and they've certainly heard enough opinions to this effect),
>> >the stock wouldn't have stayed up.
>>
>> If SCO's statements turn out to be without merit then that is likely not
>> capitalism at work but fraud!
>
>No, fraud in this context would be something like a knowing
>misrepresentation of earnings.

That's one example of fraud.

Filing a lawsuit that later loses
>in court would not be fraud -- by definition, any lawsuit has the
>distinct possibility of losing.

Yes, but if the company (in public statements outside the courtroom)
deliberately mis-represents the facts that are the basis of the case, then
that will certainly put the execs and company in legal jeopardy. It may be
fraud, or perhaps other laws that apply (IANAL).

> Investors are free to judge for
>themselves whether or not the suit has merit.

Yes, but if they rely on public statements to make their decisions,
and those statements were untrue, then the company must take some
responsibility for that.

>
>> >And no matter what the reason for the rise, you can't blame SCO employees
>> >for it. Do you blame Linux or people in the Linux world for the fact that
>> >Red Hat and VA Linux once had astronomical prices and valuations?
>>
>> Their stock price rises are not comparable, because they were not a result of
>> attacks on other people's intellectual property.
>
>I wasn't saying they were comparable in that sense. I'm just saying that
>employees of a company aren't responsible for irrational behavior on the
>part of the market (which is not to say that the SCO rise is or isn't
>rational :-).

The behavior is not irrational if it is based on statements that the
investors did not realize were false. One could argue that the rise of
RHAT and other linux companies' stock was irrational, but the rise of
SCO's stock is not irrational, since it is based on SCO's public
statements.

The employees are responsible if the behavior was based
on false information from the employees given in the form of public
statements. That is not to say that all employees are responsible.

Let's discuss another comparison: a gang robs a bank. They drop the money
trying to escape and you pick it up: are you completely clean?
This comparison would be valid if:
1. The company knowingly made false statements that pumped up the stock
and
2. The employee knew those statements were false (or had good reason
to believe the statements were false) and
3. The employee sold stock at the inflated prices.

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