Beta
×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Did HP Bilk Its Shareholders?

Soulskill posted more than 3 years ago | from the all-about-the-benjamins dept.

Businesses 144

jfruhlinger writes "About a month ago, HP announced that it was getting out of the PC, tablet, and mobile phone business to focus on software services, at which point, rather predictably, HP's stock plunged. Obviously, HP's leadership had been working on this plan for some time before it was announced, which leads to the question: did they deliberately mislead their stockholders by not being more transparent? That's what a shareholder lawsuit against the company alleges. How the courts treat the suit could have interesting implications for how transparent public corporations need to be about future strategy."

Sorry! There are no comments related to the filter you selected.

Insider trading (2)

Dyinobal (1427207) | more than 3 years ago | (#37423018)

I thought getting information about such things from an insider and then acting upon it was considered insider trading? Has something changed in the last decade and we now operate under the assumption that such knowledge is okay and even required?

Re:Insider trading (0)

Anonymous Coward | more than 3 years ago | (#37423054)

My understanding from my HP Rep is the guy was speaking off the cuff, and the plan was more of an idea.

Re:Insider trading (1, Informative)

h4rr4r (612664) | more than 3 years ago | (#37423060)

It's only insider trading if only you know about it and you are not supposed to. If HP says to the world "We are kicking some ideas around the office about get out of the commodity PC space.", then this would be a perfectly legal thing to use to evaluate their stock.

Re:Insider trading (4, Informative)

bws111 (1216812) | more than 3 years ago | (#37423272)

It's not if you knew about it and weren't supposed to, it's if you knew about and took action on that information, prior to the information being made public. Insiders obviously knew about the plan, but if they didn't use that information to buy or sell stock prior to the release of the information it is not insider trading.

Re:Insider trading (1)

h4rr4r (612664) | more than 3 years ago | (#37423316)

So if the HP exec making this decision, new it was stupid and he shorted HP just before the announcement that would be illegal?

Re:Insider trading (1)

bws111 (1216812) | more than 3 years ago | (#37423382)

Yes

Re:Insider trading (1)

lgarner (694957) | more than 3 years ago | (#37423546)

Absolutely. Whether it's stupid (which is still unknown) or not. Trading based on knowledge that is not public is "insider trading". And it doesn't need to be an executive [theregister.co.uk] .

Of course, remember that "publicly available" may not mean what you think it means. They don't have to advertise it, or put disclaimers on their TV commercials. Including a statement with their SEC or other financial filings is probably sufficient.

Re:Insider trading (1)

Anonymous Coward | more than 3 years ago | (#37423396)

It's interesting to note that canceling, nor not-canceling, a previously-scheduled future stock trade is not considered an "action" by the SEC. So you just schedule quarterly sales and quarterly purchases all the time, then cancel them most of the time, until suddenly you don't. (I'll just add this now to my own statement: [citation needed])

Re:Insider trading (1, Insightful)

funkatron (912521) | more than 3 years ago | (#37423064)

Where have you been for the last 5 years?? Anything that helps banks to make money is a fantastic idea!!! The banks must always be profitable!!

Re:Insider trading (0)

Anonymous Coward | more than 3 years ago | (#37423104)

They open sourced the corporations in the cloud.

Re:Insider trading (1)

Anonymous Coward | more than 3 years ago | (#37423160)

I think it is a classic case of the left hand not knowing what the right is doing. It takes a massive amount of money to design a new product, produce it, build inventory, distribute it, and launch it. The Pre3 was on the market in Europe for all of 24 hours before it was discontinued with all other HP webOS hardware. If that doesn't demonstrate that management was in their own little bubble, I don't know what does.

Re:Insider trading (5, Interesting)

alexander_686 (957440) | more than 3 years ago | (#37423492)

This lawsuit is not about insider trading. Insider Trading is a criminal case and this is not.

This is a civil lawsuit. I want to say SEC Reg FD (Fair Disclosure), but after reading the article I am not so sure. But it's going to be in that universe. Basically, what the lawsuits says is that company announcements must be fair and tuneful – and that HP’s announcements that their PC and mobile divisions were doing fine (in the sense that they were going to be a ongoing division of the comapny) were a lie. After all you don’t want to buy a pig in a poke.

I am not so sure how seriously I would take this. Back in the 1980’s a lot of companies were sued every time there stock dipped. Lawyers of the ambulance chaser type were always able to find some press release that could provide a fig leaf and then shake down the company. This kind of suit rarely gets far. (vast generalization– your mileage may very)

Re:Insider trading (1)

wisnoskij (1206448) | more than 3 years ago | (#37423750)

Yes I believe that article seems to be implying that HP should of secretly warned their shareholders of this impending decision in the hope/knowledge that many of them would sell (which is insider trading).

Short Answer? (1)

mfh (56) | more than 3 years ago | (#37423036)

Yes.

Re:Short Answer? (2)

Threni (635302) | more than 3 years ago | (#37423090)

Lol!Yes, they should have made the announcement before they made the announcement.

Re:Short Answer? (-1)

Anonymous Coward | more than 3 years ago | (#37423308)

moron alert.

Re:Short Answer? (4, Insightful)

NoNonAlphaCharsHere (2201864) | more than 3 years ago | (#37423112)

Shorter answer: No. Should corporations (really management/boards) have to disclose when they're going to release a new product that's going to be the next iPhone (on the good extreme) or the next Matrix Revolutions (at the other extreme). And what time-horizon are people to use for this crystal-ball gazing? Wouldn't IBM's management have been equally culpable for their decision to leave the PC market? Or how about bet-the-company gambles? I think we probably already have enough "you should have....." lawsuits already.

No Short Answer (2)

artor3 (1344997) | more than 3 years ago | (#37423290)

Both "short answers" are wrong. It's not that clear cut.

If HP's execs decided that they'd bail out of the hardware markets in January, but told their shareholders otherwise during the quarterly meetings in an attempt to keep up their stock price while they sold their own shares, then the shareholders have a case against them. If, however, leaving the hardware markets was merely one of many strategies being considered, and they didn't reach their final decision until recently (perhaps after the bombing of their tablet) then I'd say they acted in good faith.

That's what we have trials for. The lawyers will pour through HP's emails and memos and figure out whether or not important info was intentionally withheld. While it may be a bit of a pain in the ass for HP, and expensive to boot, it's a necessary evil if we want to find the truth of the matter.

Re:No Short Answer (1)

NoNonAlphaCharsHere (2201864) | more than 3 years ago | (#37423426)

If HP's execs decided that they'd bail out of the hardware markets in January, but told their shareholders otherwise during the quarterly meetings in an attempt to keep up their stock price while they sold their own shares, then the shareholders have a case against them.

Of course. And so does the SEC. But there's a huge difference between criminal behavior and Monday-morning quarterbacking, which is more like what this civil action looks like.

Re:No Short Answer (1)

artor3 (1344997) | more than 3 years ago | (#37423480)

A random Slashdotter's gut feeling about a case doesn't carry quite the same authority as a trial. I'll trust in the justice system to square this away, rather than trial by random underinformed disinterested strangers.

By the way, why did you highlight "civil"? Do you have something against civil trials? Are you aware that the SEC also uses civil trials?

Re:No Short Answer (0)

Anonymous Coward | more than 3 years ago | (#37423560)

If that is the case, then why are you here, random Slashdotter, posting you opinions about the possible trial? Do you think what you post carries any more weight than any other? Why would you come to a site like Slashdot just to post you don't care what Slashdot says?

Re:No Short Answer (1)

artor3 (1344997) | more than 3 years ago | (#37423960)

I'm not saying opinions are bad. I'm saying that I trust the results of a trial more than I trust some strangers opinion. You can read and respond to my opinions, but if I told you that that numbness in your arm probably isn't a heart attack, I'd hope you'd be smart enough not to take my word for it.

Re:No Short Answer (2)

NoNonAlphaCharsHere (2201864) | more than 3 years ago | (#37423706)

I highlighted "civil" because insider trading is a criminal offense, while having deep pockets and making yourself a target for fee-seeking, class-action lawyers is a civil offense.

Look, I'm not a fan of HP's management or board, haven't been since Lou Platt. I'm just saying that if the board did something criminal, then they should be prosecuted as such. However, allowing a raft of class-action lawsuits because a stock price went down (temporarily?) isn't a smart way to run society, or a business. Many many many of our ills today are because corporations act in the interest of short-short term profits, often to the long-term detriment of the companies that make them, and society at large. Insisting that profits and stock prices go up every quarter (and suing if they don't) just inflates bubbles and sends (more) jobs overseas.

Re:No Short Answer (1)

artor3 (1344997) | more than 3 years ago | (#37423988)

having deep pockets and making yourself a target for fee-seeking, class-action lawyers is a civil offense.

So the answer to my question is yes, you do have a problem with civil trials. God willing you'll never find yourself in a position where you need to be a plaintiff.

If HP's directors intentionally lied to their shareholders in order to get more money for themselves at their shareholders expense, how can you possibly be okay with that?

Re:No Short Answer (1)

darth dickinson (169021) | more than 3 years ago | (#37424228)

I'll trust in the justice system to square this away, rather than trial by random underinformed disinterested strangers.

Isn't that what the "justice" system is - "trial by random underinformed disinterested strangers"?

Re:No Short Answer (0)

Anonymous Coward | more than 3 years ago | (#37423508)

Pore through, not pour through.

Re:No Short Answer (1)

NeutronCowboy (896098) | more than 3 years ago | (#37423790)

Pore over, not pore through. But that's a battle lost.

Re:No Short Answer (1)

artor3 (1344997) | more than 3 years ago | (#37424000)

Heh, I actually spelled it "pore" at first, and thought "no, that doesn't look right" before changing it to "pour". Guess I oughta check a dictionary next time.

Re:Short Answer? (1)

bws111 (1216812) | more than 3 years ago | (#37423544)

How so? I bet not one investor is involved in any of these suits. Real investors are interested in the success of the company. Whether or not these actions are good for the company are yet to be seen. These suits are no doubt brought by gamblers (oops, I mean speculators) who are pissed that their horse stumbled on the way into the gate and they didn't have time to change their bets.

Re:Short Answer? (1)

mfh (56) | more than 3 years ago | (#37423974)

The board bilked shareholders by not living up to their fiduciary responsibilities. As managers of a company they needed to better plan the aftermath of their poor results.

First of all, nobody invests in HP because of anything HP does that is not related to the PC market. Moving out of that market was a direct screw-up by HP executives. Failing to go after iPad properly was also a screw up.

HP drove its own stock down so that certain people could pick up stock at a low price. There is no other explanation for it.

HP will announce something new that will boost the company's stock again and we'll love them again. And someone is going to get rich for it.

Re:Short Answer? (1)

bws111 (1216812) | more than 3 years ago | (#37424254)

Not living up to fiduciary responsibilities? How so? Their responsibility is to maximize their profits. How much has their profit suffered because of this announcement? Since it hasn't even happened yet you have no way to know, so any claim of not meeting their responsibilities is pure speculation.

The PC market is a crappy market to be in. It is a low margin, commodity market with pretty much zero chance of profit growth. Companies regularly exit businesses (even ones they were dominant in) that are no longer viable.

HP did not drive it's stock price down, panic-stricken speculators did.

Now we go really far off into la-la land. They intentionally drove their stock price down by (according to you) getting out of the only businesses they could possibly make money in, so that someone could buy cheap stock in a dying company???

Alternative (2)

egranlund (1827406) | more than 3 years ago | (#37423046)

And the alternative to what they did would be "We're exiting the PC, Tablet and Mobile Phone business but we have no plan to make this happen yet, check back later".

Which do you think is worse for the stock price?

Re:Alternative (3, Insightful)

Attila Dimedici (1036002) | more than 3 years ago | (#37423158)

The question becomes how far in advance of making the announcement had the decision been made and, more importantly, did any executives involved in delaying the announcement receive elevated bonuses because the stock had not yet taken the hit from the announcement (even though the decision was already made). If the decision was delayed for the purpose of ensuring that certain executives would receive a larger bonus than they would have if it was announced sooner, those suing have a case. Of course they would still have to prove that this actually was the reason for the delay.

Re:Alternative (2)

dave562 (969951) | more than 3 years ago | (#37423216)

Of course they would still have to prove that this actually was the reason for the delay.

Enter electronic discovery. Expect HP to be giving up all of their emails involving any communication with the board for at least the last fiscal year.

Re:Alternative (1)

rsborg (111459) | more than 3 years ago | (#37424190)

Enter electronic discovery. Expect HP to be giving up all of their emails involving any communication with the board for at least the last fiscal year.

I have done ediscovery and with all sorts of attorney-client and work product privilege and redaction of non-relevant details, you can expect that at most 10% of the total emails get released. A good ediscovery consultant can get upwards of 95% content reduction for discovery purposes.

Re:Alternative (1)

swanzilla (1458281) | more than 3 years ago | (#37423270)

Bingo. The issue is with timing / vs / incentive. The decision makers themselves would have been 'blacked out' regarding their stock holdings, so the legal issue would be with the announcement's timing, not with the decision itself. That said...HP's legal team was, without doubt, well involved. Good luck proving anything nefarious went down in court.

Re:Alternative (1)

Martin Blank (154261) | more than 3 years ago | (#37423774)

Anecdotal evidence I've heard is that Leo is even less-liked than Carly was, especially with this announcement. That dislike may extend well into the upper reaches, as since the announcement, various senior managers and vice presidents have said some very scattered things about the future of the division and what will happen with webOS. Either there is very poor communication at the top, there is no real strategy and HP's executive board is winging it, or someone is actively working to undermine someone else. Any of those is individually a bad thing, but given HP's management issues over the last few years it would not surprise me to find more than one of those to be true, and possibly true multiple times over.

Re:Alternative (1)

TubeSteak (669689) | more than 3 years ago | (#37424138)

The question becomes how far in advance of making the announcement had the decision been made and, more importantly, did any executives involved in delaying the announcement receive elevated bonuses because the stock had not yet taken the hit from the announcement (even though the decision was already made).

This has nothing to do with the lawsuit.
HP Executives were making material statements about the direction of their company.
If they *knew* there was going to be a change in direction, but did not include that in their discussion of the company's future,
that will more than likely qualify as materially false and misleading statements.

Step 1. Plan to sell off WebOS
Step 2. Tell shareholders that WebOS is the future of HP's strategy
Step 3. Announce you're selling WebOS
Step 4. Get sued for making materially false statements.

Re:Alternative (1)

azadrozny (576352) | more than 3 years ago | (#37423194)

I agree. Company managers should have some ability to work out their strategy before making it public. It would have been worse if they made their intent known without revealing their whole plan. In general investors like predictability, waffling should be left to the politicians.

Re:Alternative (1)

wjousts (1529427) | more than 3 years ago | (#37423214)

Exactly this, should all half-assed and not yet fully formed ideas immediately be made public? If the CEO is taking a piss and happens to say "man, this PC business ain't worth shit", do the stockholders need to know? I'm sure the management at HP discuss all kinds of ideas and plans that never go anywhere. They don't need to be announced until they are official agree upon and become the strategy.

At some point they'd have to make the announcement and the stock would tank as soon as they did. So it's better that they investigate the idea and come up with a solid plan first then announce it.

Re:Alternative (0)

Anonymous Coward | more than 3 years ago | (#37424286)

Which do you think is worse for the stock price?

The stock price is somewhat disconnected from the day-to-day business of running a company. You can argue that for a company that's profitable or has enough financial reserves that they don't need to raise money, the short-term stock price shouldn't be a primary concern for executives. What should have been a major concern for executives is consumer perception of their products which affects actually making money. If they'd announced they were exiting the hardware business at some future date, it would have been reported and people would have been less likely to buy HP hardware.

Saying that HP should have put their investors ahead of actually making money is beyond crazy.

Happens all the time (1)

PPH (736903) | more than 3 years ago | (#37423058)

And the SEC watches (well, excepting Bernie Madoff). If any of HP's officers is found to have profited using inside knowledge, they will have to give up their profits. And maybe pay a fine as well.

Transparency isn't an issue. Companies plan strategies without informing their shareholders all the time.

Re:Happens all the time (0)

Anonymous Coward | more than 3 years ago | (#37423236)

If any of HP's officers

Angry share holders isn't evidence of insider trading. It isn't illegal for stock prices to go down. Involving the courts in this sort of thing is a giant fail. All this litigious nonsense does is feed lawyers, exaggerate the importance of courts relative to all else and chase more capital into Asia.

Re:Happens all the time (0)

Anonymous Coward | more than 3 years ago | (#37423318)

The SEC does nothing, even when it has documented evidence from insiders spilling the beans on shenanigans. The SEC hasn't prosecuted anyone in over a decade.

Martha Stewart (0)

Anonymous Coward | more than 3 years ago | (#37423444)

She was put in jail just a few years ago.

Re:Martha Stewart (1)

PPH (736903) | more than 3 years ago | (#37423540)

Yep. Technically for lying to the feds. If she had just said, "Sorry, I did it. Here's the money back", she would have stayed out of the Big House.

Re:Happens all the time (1)

roman_mir (125474) | more than 3 years ago | (#37424014)

SEC was specifically notified about Jonathan Lebed's new pump and dump scam involving his company 'NIA', SEC is doing nothing about it. They've known about it since at least 23rd of May of this year.

NIA is pumping and dumping Agria Corp (GRO) and Mega Precious Metals (MGP:CN) stock
http://www.youtube.com/watch?v=e8M7Q9T4NfI [youtube.com]
http://politicalmetals.com/2011/05/23/the-nia-friend-or-foe-the-schiff-vs-nia-debate/ [politicalmetals.com]
http://www.youtube.com/watch?v=nZItpZ0TWXk [youtube.com]
http://www.youtube.com/watch?v=XYOclEsKHtc [youtube.com]
http://www.youtube.com/watch?v=UeqD_NRCeTs [youtube.com]
http://www.youtube.com/watch?v=bQWSBobEbcA [youtube.com]
http://fetch.noxsolutions.com/schiff/audio/pa_20110902_low.mp3 [noxsolutions.com] - at 1:10 of the show.

SEC does nothing to protect anybody, it's all BS for show.

eyeroll (1)

larry bagina (561269) | more than 3 years ago | (#37423076)

I somehow doubt he would be suing if the stock price went up.

Re:eyeroll (1)

BBTaeKwonDo (1540945) | more than 3 years ago | (#37423564)

The lead plaintiff would change, but the lawyer behind this would still be suing on behalf of all those aggrieved parties who sold their stock before the announcement and therefore lost money when the stock rose later. If only they had known how spinning off the PC business would unlock shareholder value, they could have gotten what was rightfully theirs! Or something.

These shareholder lawsuits are little more than a shakedown. The lawyers (both sides) make out like bandits, the lead plaintiff gets a little taste, the company (or their insurer) gets screwed, and everybody else gets close to nothing.

Yay lawsuits... (1)

NeutronCowboy (896098) | more than 3 years ago | (#37423098)

... where the only winners are the lawyers.

Seriously, if the executive team would have announced it too early, and they changed their mind, there would be a lawsuit. Instead, they announce the new strategy when they're sure they want to do it, and now they get sued because they should have announced it earlier. Besides, how much earlier were they supposed to announce that they were going to ditch WebOS? The day after the acquisition? This just smells like sour grapes from some investors who didn't expect this hit to their short term profit schedule.

Quite frankly, most shareholders should just shut up when it comes to corporate governance. They are generally the main reason that corporations are so focused on the quarterly bottom line anyway. There are some investors who take the long view, but I'm also pretty sure that they are not the ones who sue because the company wasn't forthcoming with major strategic decisions, and the stock price takes a bit of a dive over a few days.

Re:Yay lawsuits... (1)

Daniel_Staal (609844) | more than 3 years ago | (#37423182)

I doubt any actual investors involved in this lawsuit at this point. It sounds like it's being filed 'on behalf of' a class, and the only person actually involved at the moment is the lawyer.

Re:Yay lawsuits... (1)

NewWorldDan (899800) | more than 3 years ago | (#37423728)

The lawyer still needs one actual plaintiff to start the process. That said, I'm still left to wonder what excactly the point of a shareholder lawsuit is. Who are they suing? Themselves? Any monetary damages woudl be self defeating, and if they wanted to oust the board of directors, there's already a process for that. Maybe someone can explain what I'm missing here.

Re:Yay lawsuits... (1)

farble1670 (803356) | more than 3 years ago | (#37423190)

Quite frankly, most shareholders should just shut up when it comes to corporate governance.

agreed. i'm glad all the enron shareholders just kept quiet and didn't interfere. this allowed enron to focus on long term strategy. oh wait ...

Re:Yay lawsuits... (1)

NeutronCowboy (896098) | more than 3 years ago | (#37423748)

See the qualifier in that sentence? It starts with an m. It means that I'm aware that some shareholders do pay attention and do file valid lawsuits. This isn't one of them, and the majority of them aren't either.

Re:Yay lawsuits... (1)

farble1670 (803356) | more than 3 years ago | (#37424028)

hi there,

you can't stop people from filing invalid lawsuits, because you don't know they are invalid until they get in front of a judge and the evidence is presented. or would you apply some sort of magically future-scope where you can tell the outcome before you even allow the suit to be filed?

Re:Yay lawsuits... (1)

NeutronCowboy (896098) | more than 3 years ago | (#37424132)

Do I know that the lawsuit is frivolous to the degree required by law to result in an acquittal? No. Do I know that the lawsuit is frivolous based on a variety of heuristics, bullshit meters and slippery slope possibilities? Yes.

In other news, we make lots of decisions based on information that wouldn't stand up in court, because otherwise, we'd make almost no decisions whatsoever (see for example how you pick out socks to buy - there are some fun clinical cases about how people are incapable of going shopping because they are unable to make decisions based on gut feelings).

And that doesn't even touch on the fact that I can stop the suit from being filed, or whether I would do it if I could. But until further evidence presents itself, the people considering a lawsuit over this are basic, back-alley shysters who I wouldn't trust with my laundry.

Re:Yay lawsuits... (1)

farble1670 (803356) | more than 3 years ago | (#37424354)

Do I know that the lawsuit is frivolous based on a variety of heuristics, bullshit meters and slippery slope possibilities? Yes.

you my friend are the reason we have the legal system we do. people that think they are somehow smart enough to decide all manner of issues based on anecdotal evidence of hearsay.

limited liability and CEO pay (5, Interesting)

roman_mir (125474) | more than 3 years ago | (#37423198)

HP doesn't care about its investors for the same reason CEOs get pay that is too high [slashdot.org] and HFT continues [slashdot.org] . Of-course other reasons for not caring about investors is limited liability that the top management of corporations enjoy because government created this moral hazard in the first place. There shouldn't be such a thing as government provided limited liability to corporations.

But the reality is that in the market that is promoted with all this inflation and destruction of investment and savings, there are no investors, the market is turned into a casino, everybody is gambling on price of stock, not investing into a business for long term.

There should not be any government protections to people, who are investors except that contract law needs to be upheld by courts, that's all there is to it, but with all the government destruction of economy, there is so little competition and so little choice of where to invest, that people are stuck with the current casino, seagull management and gambling.

Can investors sue the Federal reserve for DESTROYING their US dollar denominated savings and investments? After all, the US federal reserve is causing money destruction that is causing the federal reserve notes to lose over 10% of value per year.

Re:limited liability and CEO pay (-1)

Anonymous Coward | more than 3 years ago | (#37423376)

Off topic just a tad, eh screw ball?

Re:limited liability and CEO pay (0)

Anonymous Coward | more than 3 years ago | (#37423388)

are you a Perry voter?

Re:limited liability and CEO pay (1)

f16c (13581) | more than 3 years ago | (#37424380)

Must be. The tinyurl link is broken but this is likely another extreme wing-nut.

Re:limited liability and CEO pay (0)

Anonymous Coward | more than 3 years ago | (#37423534)

Heh
CEO's get paid what they do because the owners of the companies allow them to get paid that much.
- I say that as a shareholder of several companies that paid its CEO (and president) several million. They give me a good ROI, I'll pay them whatever they want.

HFT is a non issue, it ONLY affects those who are playing that game. Simple tactics such as using limit orders when you put your orders out protect you just fine.
I own stock in several large companies, HFT didn't make me buy stock, or make me sell stock, or even change the value of the company I own stock in. I really don't understand what the issue is.

Your value destruction argument is interesting. If you don't like what the Fed is doing, why don't you translate your currency into something other than US dollars?

Re:limited liability and CEO pay (1)

roman_mir (125474) | more than 3 years ago | (#37423582)

I explained why CEOs are paid [slashdot.org] too much (and they are).

They give me a good ROI, I'll pay them whatever they want.

- well, if you are getting dividends and you are happy with the way company is ran, then it's not what I am talking about. Most people don't get dividends for the stocks they are holding.

HFT is a non issue, it ONLY affects those who are playing that game.

- I am not saying HFT is an issue, I am pointing out that the reason it is happening is the same - the free money turned stock market into a casino, stock flipping, not investing into companies.

If you don't like what the Fed is doing, why don't you translate your currency into something other than US dollars?

- my point exactly and I don't have US denominated assets.

Re:limited liability and CEO pay (0)

Anonymous Coward | more than 3 years ago | (#37424146)

HFT is a non issue, it ONLY affects those who are playing that game. Simple tactics such as using limit orders when you put your orders out protect you just fine.

You're assuming the equilibrium point for the HFT game always averages out to be the value the shares would have without HFT taking place. In actuality, it's entirely possible that driving the share price to zero is an equilibrium point, which would very much affect you even if you're not playing that game.

Re:limited liability and CEO pay (1)

roman_mir (125474) | more than 3 years ago | (#37424226)

Basically HFT is a symptom of a sickness of the market, it's not a sickness in itself, it's just a more efficient way to gamble in the casino.

You are right, it affects more than just the stocks that are being played by HFT. It affects prices of those stocks, but it also affects the entire market. The flash crash [slashdot.org] that happened a while back was HFT side effect, certainly it affect the entire market in a bad way (either push it down to nothing or push it up to the maximum number that can be calculated with the hardware/software that is used for price calculations.) This can't possibly be healthy for the rest of the economy.

Re:limited liability and CEO pay (1)

schklerg (1130369) | more than 3 years ago | (#37423558)

I'd laugh if you weren't right. If only I had mod points...

Re:limited liability and CEO pay (0)

Anonymous Coward | more than 3 years ago | (#37423602)

If there was no assurance of Limited Liability, I can assure that half the companies you enjoy purchasing goods from never would have been conceived. If you look at the stretch of the law when engaging in regular partnerships its almost horrifying - expand that to the corporation level. Good Luck, Hoss.

Re:limited liability and CEO pay (2)

roman_mir (125474) | more than 3 years ago | (#37423644)

maybe the market would have been healthier and better off with private enterprise and fewer publicly held large monstrosities that pass for businesses, where people would actually have to be liable for decisions they made and they would actually get proper insurance for any liability coverage, maybe the cost of doing business would be more adequately reflected, maybe the oil spills would be few and between, as there would be more caution as to how the drilling is done?

This wouldn't stop all of the problems and there always would be scam artists out there, but at least they wouldn't have current levels of government protection. What about politicians, why are they protected against any real liability that their actions to (against) the public good are causing?

Re:limited liability and CEO pay (1)

Bob the Super Hamste (1152367) | more than 3 years ago | (#37423702)

After all, the US federal reserve is causing money destruction that is causing the federal reserve notes to lose over 10% of value per year.

So you mean to tell me that my junk 88 Ford Bronco II with 253,XXX miles on it is appreciating against the dollar instead of decreasing in value. Please wizzard of the finance tell me where I can invest my money so that I will get an inflation beating return since obviously if I owned any TIPS [treasurydirect.gov] I should be seeing an interest rate above 0.25% for a 3 month bond [treasurydirect.gov] , or a 1 year treasure bill with a rate above 0.102% [treasurydirect.gov]

Re:limited liability and CEO pay (1)

roman_mir (125474) | more than 3 years ago | (#37423780)

TIPS? OUCH! Did I forget to mention that government reported CPI numbers are cooked? They are reversed engineered to make it look like inflation is tiny. BTW., they are about to revise how they are cooking the CPI numbers to make it seem even smaller.

The real inflation is north of 10%, I count [slashdot.org] closer to 13%.

Here is what I think [slashdot.org] of the 3 month t-bills and inflation that is created to maintain them.

And if you want to know my advice on investment, all you have to do is look at years and years of my comments here, maybe a story [slashdot.org] that was submitted but never made it to the front page.

Re:limited liability and CEO pay (2)

timeOday (582209) | more than 3 years ago | (#37423850)

There shouldn't be such a thing as government provided limited liability to corporations.

Without limited liability, only people who were already incredibly rich could hold power in companies, because only they could pay for the consequences of bad decisions impacting thousands of people from their own pockets.

The only rational solution is that decision-makers are not fully personally liable for their decisions - but then, that has to go for the good decisions as well as the bad! in other words, just because you saved the company a billion dollars doesn't mean you, personally, deserve half. Currently we have a situation where the gamblers can pocket billions personally when they win, but when they lose, they just say "oops" and try again.

Re:limited liability and CEO pay (1)

roman_mir (125474) | more than 3 years ago | (#37423898)

Without limited liability, only people who were already incredibly rich could hold power in companies

- not true. Government takes the risk out of investment, but it does so by socializing the cost of that investment. A company can still operate by buying appropriate level of insurance, so BP for example, would have to buy enough insurance to cover for some levels of damage, but it also would have much stricter safety controls in place, to prevent levels of liability that would exceed the bought coverage (and nobody wants to ask their insurance to make payments, don't forget, your premiums go up if you actually use your insurance too much.)

Who Cares (1)

na1led (1030470) | more than 3 years ago | (#37423212)

At least I was able to get my hands on an HP Touchpad for $99, so all is good for me :>

telling & facing the truth long overdue (0)

Anonymous Coward | more than 3 years ago | (#37423222)

lonesome al gore & upstart jesse ventura both gave up lives of complete american dream comfort (& are paying dearly) to promote the truth. why should we care?

their current claim to fame; seeking & telling the truth. right or wrong, they fail to lie about anything. not very popular in recent history.

does it get any whackier? yes it does, even today on finding ourselves friday.

lonesome al's still touting conservation (which now includes avoiding; starving, drowning, burning up etc....); http://climaterealityproject.org/video/hour-24-new-york/

jesse: he's everywhere exposing uncle sam's fatal (to us) illnesses, which include neogod-like greed fear & egos, & fake religious mandates (buybull passages).

the hymenology council advises that there's more flappage contentions, causing the need for the neogods to attempt to re-write fake history, & science, yet again. the whore of babylon remains under the care of the council's counsel, as do the papers of challenge she carries.

can anyone guess the carbon footprint of just 8 simultaneous wars? you'd have to, because the mess we make is never included in the holycosters assessments of the glorious victories (for who?) always just within our grasp. see you on the other side of it?

disarm. read the teepeeleaks etchings, or watch the movie (unrepentant). be more careful of/for one another. for each of the creators' innocents harmed in any way....

always look for the real motives of the presenter, whomever it may be..... thanks again.

Re:telling & facing the truth long overdue (1)

Attila Dimedici (1036002) | more than 3 years ago | (#37423266)

lonesome al gore & upstart jesse ventura both gave up lives of complete american dream comfort (& are paying dearly) to promote the truth. why should we care?

Yeah, we should really feel for these suffering martyrs, who are making a fortune out of their "martyrdom". Al Gore has increased his welath over 10 fold out of his "environmental activism". I am not as familiar with Jesse Ventura's activities, but what I have seen suggests that he, also, is making a fortune out of spreading the word about "conspiracies".

even more fake innuendo math, character slamming (0)

Anonymous Coward | more than 3 years ago | (#37423588)

they've lost a lot, so far. money is a small (0) part of anyone's true worth. honesty & courage are these guys' 'payday' now.

thanks for the anticipated attempted character assassinations though. missing the point completely again. true to formfeeding.

some of us are clearly our own(ed) reward.

Absolute nonsense (3, Insightful)

Tridus (79566) | more than 3 years ago | (#37423228)

The company is changing strategy. This happens. Companies don't survive when they can't do this. They also don't survive when they have to broadcast to their competition in advance that they MIGHT do something before a decision has been made.

This is nothing short of lunacy. It shows not only how insanely lawsuit happy the US is, but also how paralyzing a public corporate structure has become. It's much better to be a private company these days. You've got far less onerous reporting requirements, far less overbearing regulation, and the freedom to actually do things as a company without facing constant lawsuits.

Re:Absolute nonsense (0)

LWATCDR (28044) | more than 3 years ago | (#37423554)

Did they do anything illegal? I agree with you that they did not. Did they do anything stupid? Wow are they ever. They bought Palm and then shipped the produces that Palm was working on at the time of the purchase late. Really? They are the biggest PC maker and they say that they may or may not be selling that part off or they may or may not spin it off.
If anything they are telling people too much too soon because they haven't really decided on anything yet.
The problem I see is that these big companies go outside of the company to get a CEO. Sometimes that can be a good thing because it brings new ideas but these days it seems like they try to make the company that hired them into the company that left.
Look at Nokia. The CEO worked at Microsoft and now Nokia is dumping their own OS for WP7 which frankly is not setting the world on fire and Mango looks to be only as good as what Apple and Google are shipping.

Re:Absolute nonsense (1)

tgd (2822) | more than 3 years ago | (#37424378)

Civil cases aren't about illegal -- they're about stupid (paraphrased, but it gets the point across).

Re:Absolute nonsense (1)

tgd (2822) | more than 3 years ago | (#37424364)

A public company exists for one reason -- to protect and increase the value of the company for its shareholders.

If HP's moves, for whatever reason, aren't in the best interest of the shareholders, then a lawsuit like this is perfectly valid.

Not necessarily (1)

dcavanaugh (248349) | more than 3 years ago | (#37423274)

Insider trading regulations are designed so that shareholders are treated fairly (relative to each other) as far as access to information is concerned. As long as the decision to exit the hardware market was kept confidential, no problem. If insiders (or people with access to insiders) traded HP stock with advance knowledge of the plan, that's a different story.

With enough degrees of deniability, it's possible that someone traded HP stock based on 3rd or 4th hand information, at which point they acted on speculation that 3rd or 4th hand information was accurate. Very little can be done about that, and it happens more often than you think.

As a Slashdotter, you may be thinking, "Who cares about HP? How can I profit from insider shenanigans without being an insider and risking the wrath of the SEC?"

1. Monitor the options trading activity for a limited number of stock symbols where you suspect insider trading.

2. Build a database that is continuously updated with both option and stock pricing and volume.

3. Watch for a condition in which options activity and volume moves out of sync with the underlying stock. This doesn't prove insider trading, but if insiders are going to cheat, this is the easiest way for them to make a quick buck.

4. Use the options activity as a leading indicator on the stock.

5. Profit!!!!

I am not a financial advisor. This is not financial advice. Your actual mileage may vary.

Re:Not necessarily (0)

Anonymous Coward | more than 3 years ago | (#37423536)

And if this was workable, I'm sure enough professionals would be doing it that they would move the market by their response, thus making the system non-workable.

Re:Not necessarily (1)

dcavanaugh (248349) | more than 3 years ago | (#37423630)

I agree with part of what you say. The market cannot consist entirely of day traders using the same system. Fortunately, this is not the case.

It all depends on which stock symbols you choose to track. Some stocks are lightly traded, and MANY stocks have lightly traded options. When a stock all of a sudden has option activity 100x normal volume, something is up even if (especially if) the underlying stock hasn't moved yet.

The more heavily traded the stock, the more you find hedge funds and other professionals who might be trading on factors other than insider knowledge. I think low volume stocks are more predictable by watching the options data, but not everyone agrees.

Not every stock lends itself to this kind of automated analysis, and not every big options transaction is the result of insider trading. But if you pick the right stocks to watch, there is a better than random chance that the stock will move in the direction indicated by the options data.

crazy to reveal all plans in advance (1)

alen (225700) | more than 3 years ago | (#37423312)

i read about lawsuits like this all the time, rarely do i read how they win a lot of money. there is no law that says a company has to reveal every single strategic idea they research

Re:crazy to reveal all plans in advance (1)

Toonol (1057698) | more than 3 years ago | (#37423648)

I could see it having a chance based on how HP previously reported on their PC business. If every quarterly projection was "pc's are selling fine, we project a healthy profit", then suddenly "we need to bail out of the PC business to save the company", there might be an argument that the company wasn't fully forthcoming,

Things like this, though, I'm happy enough letting the investigators investigate. This is difficult stuff to armchair quarterback.

More likely a leak than a formal communication (0)

Anonymous Coward | more than 3 years ago | (#37423690)

Given how awfully the decision was communicated, it seems to me there was a leak and that as HP realized it, they had to rush to tell the story their way before the leak got released.
If HP had come out and said: "we're spinning off, it's gonna take X months and the benefits are X, Y & Z", market reaction would have been a lot different. The same if they had announced a closed deal to sell the unit.
I think the plaintiff should sue HP's board for allowing such leaks

Re:More likely a leak than a formal communication (1)

linear a (584575) | more than 3 years ago | (#37424332)

True. Or maybe sue for making a bad decision (if it turns out to be bad). Or sue them for not doing it sooner (if it turns out to be good).

fiduciary duty (1)

DaveGod (703167) | more than 3 years ago | (#37423770)

A company listed on a stock exchange is duty-bound not to be misleading to shareholders, existing or potential. That includes both what is announced and what is omitted.

This is covered both by the management's fiduciary duties and specified rules (which really merely seek to clarify to an extent the over-riding fiduciary duties). So yes, if they knew with confidence a product was going to tank, they are obliged to report it. There are "class test" ratios which specifically trigger some announcements although really these are considered the upper limit, a public company listed on a main market is expected to be considerably more forthcoming than that.

As ever, commercial considerations can get in the way - announcing things can leave long term shareholders even worse off - but then if there's any notion that you're hiding things from shareholders then you're doing it wrong. It's THEIR company and they are the ultimate boss.

What's the difference? (1)

LBArrettAnderson (655246) | more than 3 years ago | (#37423804)

Had they made the announcement earlier, the same thing would have happened to whoever owned the stock then (mostly the same people). Stock prices take the future into account. Even if they had said "there's a possibility that we'll stop making PCs," it would have gone down nearly as much, and then the rest of the difference as soon as it was official.

That being said, if the decision makers were selling all of their stock while knowing this (and the public not knowing it), then that's a different story. I didn't see anything pointing to this in either of the articles that I briefly skimmed.

You must prove INTENT - very hard! (0)

Anonymous Coward | more than 3 years ago | (#37423902)

Where are all the lawyers explaining this? Just alleging someone did something is not enough. This suit must have definite proof of intent - phone calls, something in writing, an insider who will testify under oath, etc - that the actions were taken to defraud shareholders. Good luck with that, it almost never works.

Long term... (1)

rgviza (1303161) | more than 3 years ago | (#37423926)

Undoing the damage that Fiorina did is expensive. Why anyone would buy HP right now is beyond me. Once they cut all the crap and pare back down to what they do best (HP UX, printers, pcs, servers, networking, and related software) yea invest. Anything HP is doing beyond this is fat that needs to be trimmed to get the company back in shape.

Long term, they are doing their shareholders a favor. If you are day trading and just lost a bunch of cash, well, that's part of the game.

Shareholder lawsuit is SOP, unfortunately (0)

Anonymous Coward | more than 3 years ago | (#37424016)

Whenever a company takes a hit, there's always a shareholder suit. They're good for the lawyers, and maybe for the lead plaintiffs. They suck for all the other shareholders. Best case scenario you get a token ammount (like $100 for a $10,000 loss).

What the heck? This is idiotic! (1)

sampson7 (536545) | more than 3 years ago | (#37424074)

Wait a second - people are faulting HP from diagnosing a problem and then (god forbid) taking time to put together a business plan and roll out the anouncement of said business plan?!? God forfend! No, instead they should continue on their pre-annointed course, never deviating, regardless of market conditions. (Iceberg dead-ahead? Pshaw. That's not what we decided three weeks ago!) Any major company-shaping (or company-shaking) decision + short-term loss in stock value = Law suit. My reasonably large company takes many bold positions/reinventions as the industry changes. Companies like mine get sued all the time. They are all frivolous (just like this one). They all allege massive insider conspiracies (just like this one). They allege you-made-a-decision-a-certified-moron-wouldn't-make (just like this one). The only news here is who is doing publicity for the law firm - they are apparently good at their job and maybe should be hired in the future. Otherwise, what a joke - carry on.

Re:What the heck? This is idiotic! (1)

linear a (584575) | more than 3 years ago | (#37424320)

Those Bastards!

Don't care. (1)

AragornSonOfArathorn (454526) | more than 3 years ago | (#37424084)

I don't care. I got a Touchpad for $99!

whee ;-)

Nice use of the question mark (1)

Sloppy (14984) | more than 3 years ago | (#37424094)

Soulskill and jfruhlinger learn from the best [thedailyshow.com] .

investor "strategy" (0)

Anonymous Coward | more than 3 years ago | (#37424160)

In these economic times, it's a clever investor strategy.

"We have invested in your organization, and we intend to make a profit regardless of your decisions."

Transparency to the competition (2)

nurb432 (527695) | more than 3 years ago | (#37424300)

Is actually what is being discussed here. Executive should be able to act in the best interest of the company without having to reveal items that could negatively effect said plans.

Being forced to reveal everything you have *planned* to what is effectually the competition would pretty much destroy businesses that compete with each other.

Bad news has to come out for the first time (1)

linear a (584575) | more than 3 years ago | (#37424316)

If one has to announce something that's going to hammer down the stock, it stands to reason that one time must be the first announcement. Following just behind that like the second law of motion are the lawsuits due to same. HP probably took the usual precautions and made the usual decisions in how to announce it. Best done off hours and suddenly, rather than hinting at it.
Load More Comments
Slashdot Login

Need an Account?

Forgot your password?