Hedge fund honcho David Einhorn wants to force Apple Inc to
share some of its huge cash reserves with investors, but his lawsuit rests on a
U.S. securities rule that has little legal precedent.
Einhorn's Greenlight Capital sued the iPad and iPhone maker
in U.S. District Court in Manhattan on Thursday to try to prevent Apple from
eliminating preferred stock from its charter. The suit is part of Einhorn's bid
to pressure Apple to use some of its $137 billion in cash to issue perpetual
preferred shares that pay dividends to existing shareholders.
The suit contends Apple violated Securities and Exchange
Commission rules that prohibit companies from "bundling" unrelated
matters into a single proposal for a shareholder vote. Establishing that Apple violated the rules
could be tricky. Little to no case law exists on the question and the SEC's own
rule is relatively general with little guidance, legal experts said….
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