ansak's Journal: Letter to RBC re: SCO Group bond participation

I submit here, a letter I wrote to a functionary at RBC customer services after talking with several of those nice (but harried-sounding) folks at 1-800-ROYAL-40 (the individual's name is changed -- if you want to talk to him/her, get there yourself...)

To: [e-mail]
Subject: CRC -

Good day, Ms. Jones.

First of all thanks for your time this morning and for your commitment to try to forward this to the right people. I'll do my best here to stick to the facts, the substantive, the things that are in our common interest.

Ultimately, the thing that brings this back to the Royal Bank of Canada's interest are the comments being made by "geeks" on slashdot when it became clear that RBC was a major stake-holder (with Baystar Investments) of a bond issue from SCO Group (NASDAQ:SCOX).

The main report of the story begins here:

(slashdot url to "Is Microsoft Behind SCO's" story)
(that URL should be all on one line -- I recommend NOT reading any of the comments marked -1,Offtopic or -1,Troll. There are a lot of rude people posting to that site but the self-management of their excesses tends to manage things okay.)

This article referenced an article in eweek: http://www.eweek.com/article2/0,4149,1356718,00.asp which detailed RBC's involvement in the placement of a $50,000,000 bond issue with SCOX.

Plenty of angry comments can be found by looking for "Royal" or "RBC", but I offer a couple of samples (of several dozen such):

        "Thanks for the info eweek, I was about to open a bank account there."

        "I have been a RBC client for 27 years (my parents opened the account the year I was born). Recently, I have been thinking of switching to the TD bank (for the simple reason that TD is open on Saturdays). Now I will definitely switch."

The reasons for this wrath may be a little hard to grasp for those not technically inclined. It all turns on some minutiae, but for the not-so-faint-of-heart, I would recommend clicking on the "globe with a C imposed on it" icon and clicking "Next xx matches" until a story titled "SCO Group Lawsuit Q&A" shows up on the list. And then work your way back -- sorry, this story has been going on for the last eight months so there're quite a few of them. Close inspection of the -stories-, not necessarily all the comments (some of them are just plain noise), will make the whole scene much clearer.

A three-sentence precis of the case is this:

A company with a dying business model (SCO) is suing a company that's prospering through rolling with innovation (IBM) for an exorbitant amount of money (initially $1b now $3b) based on claims which they refuse to substantiate in public.

The claims revolve around IP and contracts and an Operating System largely written and maintained by volunteers (Linux) and if the judge who hears the case doesn't understand the issues could very well make those volunteers and their customers (they sell their services, not the software they write) liable to the plaintiff, as well.

The suit itself closely resembles the AT&T vs. BSD action which froze development of the Berkely dialects of Unix for several years and in which the plaintiff suffered serious loss because it came out that the plaintiff, not the defendent was the perpetrator of tortable actions.

An additional point that's also worth bringing up, since the Royal Bank's web servers are running AIX (public knowledge through examination of the strings your web-servers return to a text-based connection), and since SCO claims to have revoked IBM's license to sell AIX, investing in SCO in this fashion is betting against the legitimacy of the Royal Bank's own choices for e-commerce deployment, as someone on slashdot also pointed out:

        Has anyone told the Royal Bank what they've let themselves in for?

        The site www.royalbank.com is running IBM_HTTP_SERVER on AIX. [see http://uptime.netcraft.com/up/graph/?host=www.royalbank.com]

Why am I speaking up?

* I'm a customer -- if you do "stupid" and "immoral" things with your money, eventually it'll cause me problems, too. In this case, I expect the end result to be for SCO executives to be charged and found guilty with stock "pump-and-dump"-style fraud (like Enron, HealthSouth, MCI WorldCom, Tyco etc.). The Royal Bank's status as a "most spected corporation" is likely to suffer if associated even remotely with this lot.

* I don't know enough to keep my mouth shut but I want to say something clearly, politely and in ways that might make someone look at the thing on its merits, not on its hypes. And I probably understand the technical sides of some of these issues as much better than the economic ones as the economists who are making the call to do the investment understand the economic issues much better than the technical ones.

* There are moral issues here, but nearly such strong ones as the causes of world hunger or the use of mis-guided military means for honourable ends. Still a moral issue requires a moral response. It was one more way I "couldn't keep my mouth shut."

In any event, thanks for listening, thanks for your time, and whomever you may end up forwarding this to.

Sincerely,

Me + contact info
RBC customer since 1977