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IBM Businesses China The Almighty Buck The Courts

Investor Lawsuit Blames NSA For $12B Loss In IBM Value 204

Posted by timothy
from the anyone-can-file-a-lawsuit dept.
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.
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Investor Lawsuit Blames NSA For $12B Loss In IBM Value

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  • I was wondering (Score:5, Interesting)

    by ganjadude (952775) on Saturday December 14, 2013 @03:29PM (#45690377) Homepage
    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
    • Re:I was wondering (Score:5, Interesting)

      by DavidClarkeHR (2769805) <david...clarke@@@hrgeneralist...ca> on Saturday December 14, 2013 @03:50PM (#45690553)

      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

      Well, they'll settle out of court if discovery is an option, and ... IBM isn't just someone. They're looking for ways to mitigate their (other) problems.

      No, this is distinctly different than, say ... Facebook going after them. Or Microsoft. Or Apple. Or Samsung.When a company that is already 'losing ground' looks to blame others for their problems, that's a different scenario than a company that isn't threatened pursuing the same lawsuit. The outcome may be the same, which may be all that matters (to some, in theory), but the reasons are completely different. You wouldn't say that a police officer breaking a window to enter a home is the same as a criminal breaking a window to enter your home ... one is looking to profit, the other is looking to protect (again, in theory).

    • Re:I was wondering (Score:4, Insightful)

      by ColdWetDog (752185) on Saturday December 14, 2013 @04:15PM (#45690723) Homepage

      The bigger question I have is what else will be found during discovery

      REDACTED

    • by erroneus (253617)

      Yes, I predicted as much when the Snowden stories of tech company collaboration started coming out.

      This is where money meets government head-to-head.

      I know directly that companies like Wells Fargo are going to Linux in order to avoid the obvious vulnerabilities and compromised states of Windows. And I know they aren't the only ones. Moving away from [US Government] compromised technology is exactly what every security concerned business should be doing right now. The shareholders, obviously, demand it.

    • by hairyfeet (841228)
      The sad part is like Capone this may very well be the ONLY way to really do shit about the NSA. After all even the US gov doesn't have unlimited pocketbooks and if it has to constantly shell out billions in payouts, payouts which could have gone to senator fatass' district or paid for congressman piggie's pet project, which his family would have gotten crazy kickbacks on? Well you'd be surprised how quickly them congress critters are suddenly for "the privacy of the American citizen".
    • Maybe they can hire Snowden to help them with discovery. Could be something useful to the litigants in the unreleased documents. Although I guess it could be tough to get NSA to authenticate them so they'd be admissible evidence.

  • Oh, the irony (Score:5, Insightful)

    by swamp boy (151038) on Saturday December 14, 2013 @03:34PM (#45690427)

    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...

    • I am just guessing here, but the number of EFF/ACLU/EPIC supporters who are helping fight back is probably way higher than the number of people who saw a difference in valuation of their pension as a result of this market blip.

      Your derision is therefore both ill-conceived and clearly unconsidered.

      Completely unrelated subjects here. Louisiana Sheriffs' Pension & Relief Fund is a very small entity in the scheme of business, representing a single state's retirees for a single occupation. "We" in that ca

  • by Foxhoundz (2015516) on Saturday December 14, 2013 @03:42PM (#45690481)
    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?
    • by Nyder (754090)

      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?

      The 1%ers

    • by AHuxley (892839)
      The NSA like the GCHQ works for the current gov and any future gov - i.e. the flow of data and junk global encryption is always the ongoing 'game'.
      Funding and legality is part of the dance with every generation of political leaders and the US/UK press.
      Usually political leaders are so addicted to predictive 'insider' files, news and trading that they are totally locked into the system.
      The press traditionally needed access so stories could be blocked or changed before publication.
      Book publishers could als
  • by hackus (159037) on Saturday December 14, 2013 @03:48PM (#45690533) Homepage

    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

    • by couchslug (175151)

      What method of encryption would make such a storage business reasonably safe?

      For example, could you offer encrypted storage of senstive items and not hold the keys yourself? If the customer loses theirs they'd be locked out of their stuff, but no one else could get to it either.

      Find a model where you can't help the pigs, and even if you suddenly wanted to, no problem.

    • by Subm (79417) on Saturday December 14, 2013 @04:56PM (#45690943)

      About 40 people I was going to hire to start this business won't see the light of day.

      Where do you keep these candidates and why not let them have some sunlight even if you don't hire them?

    • by Paradise Pete (33184) on Saturday December 14, 2013 @07:06PM (#45691587) Journal

      About 40 people I was going to hire to start this business won't see the light of day.

      Vampire-based businesses traditionally don't do well anyway. Employee retention is difficult because when you tell them you're going to give them a stake in the "business" they misunderstand and flee.

  • 6.4 percent (Score:5, Insightful)

    by edibobb (113989) on Saturday December 14, 2013 @03:49PM (#45690535) Homepage
    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.
    • Re:6.4 percent (Score:5, Informative)

      by edibobb (113989) on Saturday December 14, 2013 @03:51PM (#45690555) Homepage
      In addition, IBM shares recovered almost all their 6.4 percent loss within a month!
      • Re:6.4 percent (Score:4, Insightful)

        by drnb (2434720) on Saturday December 14, 2013 @04:16PM (#45690731)

        In addition, IBM shares recovered almost all their 6.4 percent loss within a month!

        You don't understand. That recovery should have been an additional increase from the pre-decline price. These investors should not be even, they should be up 6.4%. Don't you understand that if stocks go down someone did something wrong and needs to be sued?

        • by edibobb (113989)
          I understand that stocks drop temporarily on bad news. Class action lawyers solicit clients who happened to sell when the price was down, incurring a loss. So much the better if this happened to be a institution. If an award or settlement eventually occurs, years down the road, the clients may recover part of their losses, which is likely to be much less than 6.4% of their investments, while the law firm will make hundreds of millions of dollars.
          • by TubeSteak (669689)

            I understand that stocks drop temporarily on bad news. Class action lawyers solicit clients who happened to sell when the price was down, incurring a loss.

            The class action lawyers are going to say that IBM's dealings with the NSA + lobbying to disclose Chinese information is material information that should have been disclosed to investors.

            The lost money is going to be a second issue to be dealt with in the case.

      • by whoever57 (658626)

        In addition, IBM shares recovered almost all their 6.4 percent loss within a month!

        IANAL.

        Some people sold their stock during the dip. If the dip was due to a risk that the management had an obligation to disclose earlier, then, those people who sold during the dip may be entitled to compensation.

        • by edibobb (113989)
          Yes, this is the party line of the class action lawyer. "May be entitled to compensation" and "let the courts decide" are terms commonly used in East Texas.
    • by Nivag064 (904744)

      "only 6.4 percent"

      That is significant, more so as this is a start of a long term downward trend!

    • This is the first lawsuit I've heard where investors are suing companies over NSA spying. I hope it's not the last.
    • As an investor in publically traded companies, you are supposed to have accurate information on which to base your decision to invest. If a company is knowingly misrepresenting the facts, they absolutely should be sued.
  • Fatcat Pensioners. (Score:4, Insightful)

    by Anonymous Coward on Saturday December 14, 2013 @03:50PM (#45690549)

    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.

  • by drnb (2434720) on Saturday December 14, 2013 @04:11PM (#45690685)
    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.
  • by Anonymous Coward on Saturday December 14, 2013 @08:55PM (#45692141)

    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...

    • yup. However, that management is moving IP offshore and it is being stolen. Sad.

      Back in the 90's, I worked for watson and watched the company come back from the grave. This time, it will die.
  • 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.
  • 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 fir

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