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SEC Investigating SCO?

Zonk posted more than 9 years ago | from the that-would-surprise-me dept.

The Courts 281

Udo Schmitz writes "As Groklaw reports, the SCO Group stated in a SEC filing from yesterday: 'In addition, regulators or others in the Linux market and some foreign regulators have initiated or in the future may initiate legal actions against us, all of which may negatively impact our operations and future operating performance.' Does this mean the SEC finally started to pull some stops? SCOs and Canopys financial dealings (Vultus acquisition anyone?) long ago lead to speculations in the Linux community about the legality of their business practices, or the whole lawsuit just being a stock scam."

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And the world wept (5, Insightful)

Darkmoor (259836) | more than 9 years ago | (#12579087)

I mean, seriously, at this point, who (other than investors) is going to be the least bit sympathetic?

Re:And the world wept (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12579160)

There's a guy currently flooding Slashdot with randomly generated crap messages with the intent of disrupting normal discussion. Click on one of the links below to see what I mean. If you have mod points left and aren't sure what to use them for, plase mod him down so we can get his network banned.

Comment #1 [slashdot.org]
Comment #2 [slashdot.org]
Comment #3 [slashdot.org]
Comment #4 [slashdot.org]
Comment #5 [slashdot.org]

Comment #6 [slashdot.org]
Comment #7 [slashdot.org]

Your help would be very much appreciated. Thanks!

Re:And the world wept (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12579240)

Nobody thinks you're anybody but the same guy linking to his own posts. Shut the fuck up. Seriously, I hope your network gets banned too.

Re:And the world wept (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12579263)

Actually, it's more likely that you are the guy trying to prevent getting modded down, as one of your networks was already banned earlier today.

Re:And the world wept (5, Insightful)

J Barnes (838165) | more than 9 years ago | (#12579303)

In all cases of law, society should aspire not to sympathy in the legal system, but to impartiality. Slight, but substantial difference.

Trollocks arrives (-1, Troll)

trollocks (885133) | more than 9 years ago | (#12579091)

Hello, my name is Trollocks - a combination of Troll and Bollocks. I guess you could call me the Bollocks Troll, because everything I say is a load of bollocks. This is my first Slashdot post, but be prepared for more.

I like Asian chicks. Asian grrls are teh s3xy! Mostly Japanese, Chinese and Vietnamese, but Korean or Thai can be nice, too. I like Asian chicks so much I got engaged to a Vietnamese girl. Not only is she h0t, but she is t3h l33t as well. j00 don't know how cool it is to be able to scream out, "w00t! h0n3y you are t3h h07713! i'/|/| g0nn4 fuXX0r y0ur l337 pu55y h4rd!!!!111!" in the throes of passionate lovemaking.

Despite being engaged, I am still a good troll. I check out pr0n sites like this [asiafirstclass.com] while I'm at work, so that my l33t p3n1s is rock hard when I get home, and I can fuXX0r my l0v3r straight away, even if her pu55y is dry.

I like pr0n search engines [pornolizer.org] , too, because they help me find d1ck-hardening content faster. But c0uld the fu|<|<3r who marks galleries as showing Asian chicks, when they're obviously just white blonde bimbos stop it! It makes it harder to find h0t stuff! When I choose Asian females in the sidebar, I want Asian females! It was interesting and educational the first time I looked at a close-up ph0to of a white pu55y (and a black one, and a latina one, etc.), because I've never seen one up close in real life. But now it's just infuriating!

Re:Trollocks arrives (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12579439)

You're not a good troll. You're way too longwinded. By the way, trollocks are quite stupid creatures in Wheel of Time.

Its about time.... (0, Offtopic)

guyfromindia (812078) | more than 9 years ago | (#12579095)

Somebody puts a stop to this madness...

Re:Its about time.... (0)

Anonymous Coward | more than 9 years ago | (#12579293)

I dont see why moderators are marking this as a troll :(

I hope diabetes is never cured (0, Troll)

queef_latina (847562) | more than 9 years ago | (#12579098)

Diabetes: the overweight's HIV.

MOD UP!!! BRILLIANT! (1)

queef_latina (847562) | more than 9 years ago | (#12579283)

seriously.

the cookie at the end of the page... (4, Funny)

Doomie (696580) | more than 9 years ago | (#12579099)

"The party adjourned to a hot tub, yes. Fully clothed, I might add. -- IBM employee, testifying in California State Supreme Court"

Relevant? I say yes :)

Re:the cookie at the end of the page... (1)

inode_buddha (576844) | more than 9 years ago | (#12579682)

Recent headline at theonion.com

"Ethics panel slides back to reveal hot tub!"

Re:the cookie at the end of the page... (3, Funny)

endx7 (706884) | more than 9 years ago | (#12579706)

"Never eat anything bigger than your head."

I'm not sure how yet, but I think that's relevant too.

I hear quite abit about SCO (0, Troll)

Ecko7889 (882690) | more than 9 years ago | (#12579106)

I'm sorry if I sound arrogant, but will someone please inform me exactly what SCO is/does...I hear alot about them on /. but just cock my head like a dog at them.

They make tasty brownies (-1, Troll)

Anonymous Coward | more than 9 years ago | (#12579159)

with pictures of penguins on them

Re:I hear quite abit about SCO (3, Informative)

eln (21727) | more than 9 years ago | (#12579183)

They hold licenses to software. They don't actually develop anything. At one time, the original SCO wrote software, but the current SCO is nothing more than a software licensing house. Litigation is a major part of their business plan.

Re:I hear quite abit about SCO (1)

MightyMartian (840721) | more than 9 years ago | (#12579239)

> Litigation is a major part of their business plan.

Major part? It looks like, over the last year or so, that it's the only business plan they've got. How much did they get in licensing fees?

Re:I hear quite abit about SCO (1, Informative)

AviLazar (741826) | more than 9 years ago | (#12579230)

SCO is a software firm out in CA. The old, Santa Clara Operations. They, a while ago, bought some Unix stuff, if I am not mistaken. They are now sueing any company that uses the Linux and its kernal saying that code in there came from code that they had purchased years ago.


Normally this would be fine (if you stole my code, and started selling it, why shouldn't i sue you) except they have not been able to pony up any rock hard evidence. As such they are sueing just to threaten people. There have been companies who decided to pay instead of going into a legal battle (understandable from a bottom line perspective)...other companies, such as IBM have been giving SCO the big FU and went to court.

In general, assuming you are new to /., call SCO evil and immoral and say nasty things about them and you are safe...defend them...well I won't be held responsible for the blood bath as the piranah's (aka /. posters) ravage you in many unholy ways.


P.s. if some of my data is a bit wrong, be gentle with your anal probes of death.

Re:I hear quite abit about SCO (4, Informative)

pg110404 (836120) | more than 9 years ago | (#12579288)

Santa Clara Operations.

I believe that's Santa Cruz Operations.

Re:I hear quite abit about SCO (1)

Gruuk (18480) | more than 9 years ago | (#12579713)

I could have sworn it was Santa Claus Optimism. Just saying you believe doen't make it true.

Re:I hear quite abit about SCO (5, Funny)

thparker (717240) | more than 9 years ago | (#12579322)

except they have not been able to pony up any rock hard evidence

I'd suggest that they really haven't even shown any flaccid, squishy evidence.

Re:I hear quite abit about SCO (2, Informative)

eln (21727) | more than 9 years ago | (#12579456)

Like an earlier post mentioned, it's Santa Cruz operation.

Also, it's important to note that the current SCO is not the same company as the SCO out of California. The current SCO is a group out of Utah that purchased the old SCO along with all of its IP.

The current SCO is purely an IP company. They have never developed software on their own, and should not be confused with the (much less evil) SCO of old.

Re:I hear quite abit about SCO (1, Informative)

Anonymous Coward | more than 9 years ago | (#12579582)

The current SCO is a group out of Utah that purchased the old SCO along with all of its IP.

They purchased PART of Old SCO. The rest of Old SCO is now Tarantella, I believe.

Re:I hear quite abit about SCO (1)

Ian Wolf (171633) | more than 9 years ago | (#12579774)

To be even more specific, the "new" SCO is the dim-witted offspring from the marriage of the "old" SCO and Caldera. Its more Caldera than "old" SCO, but even that is a little unfair as I believe almost none of the leadership did any real work for either parent.

Re:I hear quite abit about SCO (1)

metallicagoaltender (187235) | more than 9 years ago | (#12579481)

SCO is based in Lindon, Utah, not California.

Re:I hear quite abit about SCO (5, Informative)

snorklewacker (836663) | more than 9 years ago | (#12579778)

Set anal probes to stun:

This is the second time I heard them called "Santa Clara Operations". It's "The Santa Cruz Operation". They were a joint venture with Microsoft to write a port of Unix System V to the 8086 and 8088. They called this port Xenix. Microsoft was supposed to pay SCO licensing for Xenix, but since they never used it, they figured they didn't have to pay SCO. SCO demanded rights to Xenix back, and got it.

For a while, SCO Unix sort of held its own on cost. The damn thing didn't even come with TCP/IP (you had to buy it from Excelan or another vendor) but once you got it up, you could run backoffice apps like order printing on the cheap, and it was reliable enough as long as you had a competent admin. They later grew into a bloated corporate entity with an increasingly shoddy product, but they had a moment in the sun. Later, the same company went on to produce products like Reflection (a rather good terminal emulator package, later sold off to WRQ and becoming Reflection X), and Tarantella, which was like VNC well before VNC. Tarantella was the most successful SCO product ever, and eventually SCO changed its name to match the product.

Tarantella sold off the name SCO to Caldera, a company whose history I know less of, except that they appear to be the working retirement package for Novell executives. Since Novell was going nowhere with their shiny new trophy -- the Unix name -- they sold it off to Caldera. Additionally, they bought the SCO name from Tarantella, who appeared more than happy to be rid of it. They started a not-terribly-well-received commercial Linux distribution, but also poured quite a lot of resources into free software development including KDE and various network utilities.

All was pretty happy for a while until a major shareholder, The Canopy Group then led by Ralph Yarro III, decided that this Linux thing wasn't really all that hot after all, and decided to kick Ransom Love out and replace him with Darl McBride -- another former Novell exec. McBride apparently agreed with Yarro that the demise of Project Monterey, a joint venture with IBM that scuttled SCO's prospects (that is, Caldera SCO, not Tarantella SCO) when it went away, meant that IBM had to pay, and pay hard, and that since they went with Linux, Linux had to pay too.

The rest you can read on Groklaw. I have to get back to work :) Just remember, the company bearing the name SCO is Caldera, a former puppet of the Canopy group, now running on McBride's and Yarro's egos alone. The original SCO is now soon to be a division of Sun, though it's not as if anyone even working there is from "the old SCO" either.

PEOPLE WITH MOD POINTS: CALL FOR HELP (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12579236)

There's a guy currently flooding Slashdot with randomly generated crap messages with the intent of disrupting normal discussion. Click on one of the links below to see what I mean. If you have mod points left and aren't sure what to use them for, plase mod him down so we can get his network banned.

Comment #1 [slashdot.org]
Comment #2 [slashdot.org]
Comment #3 [slashdot.org]
Comment #4 [slashdot.org]
Comment #5 [slashdot.org]

Comment #6 [slashdot.org]
Comment #7 [slashdot.org]

Your help would be very much appreciated. Thanks!

If you actually HAVE a different use for your mod points, just use them elsewhere and don't reply. But keep in mind that crapflooding WILL come to one of your discussions sooner or later. [slashdot.org]

Re:PEOPLE WITH MOD POINTS: CALL FOR HELP (0, Offtopic)

pg110404 (836120) | more than 9 years ago | (#12579382)

Who modded this funny? Insightful, yes, Informative yes, but funny? I don't think there's anything funny about it.

Through the use of cookies and ip addresses, I think /. should also limit AC posts to one every 10 or 30 minutes.

If you want to be an AC, then exposure should be limited.

Re:PEOPLE WITH MOD POINTS: CALL FOR HELP (-1, Troll)

Anonymous Coward | more than 9 years ago | (#12579630)

pg110404 (836120), yuo are a #buttes failure....

for more info check out
http://mercatur.org/ [mercatur.org]

Re:PEOPLE WITH MOD POINTS: CALL FOR HELP (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12579545)

Oh no, a crapflood on the TROLLTALK article? How horrible! That's never happened before!

Re:PEOPLE WITH MOD POINTS: CALL FOR HELP (0, Offtopic)

RealityMogul (663835) | more than 9 years ago | (#12579587)

Ok, I give up. Is/was "trolltalk" a real article as some point? Why/how does it link to goatse.cx?

Re:I hear quite abit about SCO (1)

muszek (882567) | more than 9 years ago | (#12579313)

In short:

In early nineties, SCO bought a "license" to UNIX from Novel. Ever since Linux got big, they started demanding money from companies that had anything to do with Linux (AFAIR at least one huge hosting company settled to pay couple million dollars).

In general, everybody but MS (trouble for linux = they're happy) thinks it's a bunch of crap. Novel even states that SCO doesn't own UNIX copyrights...

Take a look at http://www.dvorak.org/scotimeline [dvorak.org]

Re:I hear quite abit about SCO (1)

Invalidator (444283) | more than 9 years ago | (#12579811)

Apparently SCO thinks they bought a lot more than a license. From the SEC filing: "We own the UNIX operating system and are a provider of UNIX-based products and services."

really? (0, Troll)

alexandreracine (859693) | more than 9 years ago | (#12579107)

Really?
Santa Claus Operation and speculations goes together?

More info (5, Informative)

Udo Schmitz (738216) | more than 9 years ago | (#12579110)

There is another link I should've added to the submission: This site [threenorth.com] assembles some very interesting information from the Yahoo SCOX Financial Board [yahoo.com] .

Re:More info (0)

Anonymous Coward | more than 9 years ago | (#12579377)

To answer your question -- no, this is routine boilerplate language for an SEC filing and does not in any way suggest that an investigation is underway.

Hmmmm (2, Informative)

Udo Schmitz (738216) | more than 9 years ago | (#12579726)

"[...] this is routine boilerplate language for an SEC filing [...]"

There is only one other company who's financial situation I followed the last years: AAPL. I just checked some of their SEC filings for similar sentences and: Nope, couldn't find anything like this.

About time (1, Troll)

bonch (38532) | more than 9 years ago | (#12579114)

I've mostly forgotten about SCO these days, as they were all bark and no bite. My question is, what took so long? I remember people constantly writing to the feds and calling for investigations into this company last year. What was the freakin' holdup? Even non-tech people can see the writing on the wall.

Good chance of it being a scam (4, Interesting)

ProfaneBaby (821276) | more than 9 years ago | (#12579128)

In any event, the business was failing, so scam or not, it's a desperate game to try to stay alive and relevant for another few years.

The corporation's responsibility is working in the best interest of their shareholders - everything short of breaking the law in order to turn a profit for those who own stock. If that means suing a company just to stay relevant, so be it.

That's how public corporations work. It may not be morally correct (for some definition of morality), but they are responsible for protecting their shareholders... In the end [yahoo.com] , the trick may work the way they wanted - extending the life of a failing company for another few years so that shareholders have time to sell and salaried employees can collect a few more dollars.

Re:Good chance of it being a scam (3, Insightful)

inode_buddha (576844) | more than 9 years ago | (#12579189)

Protecting the interests of shareholders, indeed. And guess what happens when all the major shareholders are either insiders or institutionals?

Re:Good chance of it being a scam (2, Funny)

Anonymous Coward | more than 9 years ago | (#12579747)

And guess what happens when all the major shareholders are either insiders or institutionals?

We put the insiders inside an institution?

Re:Good chance of it being a scam (Troll?) (0, Offtopic)

smooth wombat (796938) | more than 9 years ago | (#12579204)

Who is the mod who was stupid enough to classify these comments as Troll? These are dead-on ontopic and informative/insightful.

I wish I had points. You deserve better.

Re:Good chance of it being a scam (1)

MindStalker (22827) | more than 9 years ago | (#12579206)

Yes, but their shareholders are selling to other shareholders, so the new shareholders whos stocks tumbled could sue for loss due to them inflating the stock. Of course any intelligent stock holder buying stocks in the last year should have known what was going on and the risk. That doesn't mean they were.

Re:Good chance of it being a scam (4, Insightful)

conteXXt (249905) | more than 9 years ago | (#12579218)

Quick question?

"extending the life of a failing company for another few years so that shareholders have time to sell..."

Don't shareholders sell their shares to other shareholders by definition?

It's not like they are selling them back to Canopy Group.

Someone (a shareholder) is going to get hurt eventually.

Hence SCAM.

Bogus (5, Insightful)

Anonymous Coward | more than 9 years ago | (#12579515)

You're right about profitability but completely wrong about share price. Shares are initially issued to raise capital. After that it's a secondary market and they fight among themselves for how much the shares are worth. Profit not share price should be the determining factor for the corporation.

It used to be that the two were related, profit divided as dividends was the the primary motivation for determining share price - or the potential to control the company via the votes accrued. Now that it's all speculative - stockholders have hijacked the original purpose of the corporation which was a *business* to make money. This has led to SCO, HP, Nortel, Time Warner/AOL etc where short term decisions to help the stock price have resulted in long term harm to the corporation's viability and profitability.

I'm not saying that this is wrong either - but it really isn't very good for the economy overall when otherwise productive businesses are gutted to be made more appealing to the sucker buyer. The worst excesses (SCO, ENRON) should probably be punished. But there's not much that can be done about it as long as there are fools that want to get in on the sinking ship...

Re:Good chance of it being a scam (4, Insightful)

Vellmont (569020) | more than 9 years ago | (#12579702)


The corporation's responsibility is working in the best interest of their shareholders - everything short of breaking the law in order to turn a profit for those who own stock. If that means suing a company just to stay relevant, so be it.


Are you actually embracing the moraless practice that corporations have these days? I understand the motivation to do this. I also understand the motivation of bank robbers to rob banks. "I as a bank robber have a responsibility to give my family the best living conditions and education possible. I swear I'm only looking out for my family!"

Yes I understand that's "how public corporations work", but that doesn't make it OK. Why is that in any way a defense? Enron has done much the same thing, and I don't hear too many people trying to defend them on a "corps do what corps do" basis.

Re:Good chance of it being a scam (1, Informative)

Anonymous Coward | more than 9 years ago | (#12579744)

If that means suing a company just to stay relevant, so be it.

No, it means they perform due diligence. If due diligence says "hey these people are infringing our patent, lets sue them", then so be it. No real due diligence effort will say "Hey, we're dying so lets sue IBM for patent infringement, wait a few weeks, change the lawsuit to copyright infringement, wait a few weeks, then change the lawsuit to breach of contract, then claim in court that IBM worked on 64 bit processors without us ever knowing about it only to have some girl running some stupid website pull up some moldy old bit of PR we issued years ago discussing SCO and IBMs collaboration on 64 bit processor architectures, then make more unproven accusations to cover up the fact that we got nothing"

extending the life of a failing company for another few years so that shareholders have time to sell

As someone else said, attempting to make a dead company look good so you can sell your stock is EXACTLY the kind of scam the SEC frowns upon.

Re:Good chance of it being a scam (2, Insightful)

khallow (566160) | more than 9 years ago | (#12579815)

That's how public corporations work. It may not be morally correct (for some definition of morality), but they are responsible for protecting their shareholders... In the end, the trick may work the way they wanted - extending the life of a failing company for another few years so that shareholders have time to sell and salaried employees can collect a few more dollars.

To be honest, I think shareholders would have been better served by the closure of the company and selling of its assets. I don't know who bought into SCO after the lawsuits, but they no doubt are receiving an expensive education. Keeping the company doors open a few more years doesn't always make business sense, and I think this certainly is the case with SCO.

hmmm... (0, Troll)

muszek (882567) | more than 9 years ago | (#12579139)

negatively impact our operations and future operating performance

who'd be happy to piss on their grave? raise your hand.

Re:hmmm... (0)

Anonymous Coward | more than 9 years ago | (#12579610)

No, raise your glass.
It's an important first step.

Re:hmmm... (0)

Anonymous Coward | more than 9 years ago | (#12579631)

You mean "raise your dick", don't you?

It means nothing. (2, Insightful)

blair1q (305137) | more than 9 years ago | (#12579147)

Every corporation has malcontents among the shareholders.

It's the cost of raising capital through common stock.

No more bribe money (2, Funny)

Anonymous Coward | more than 9 years ago | (#12579148)

They must have run out of money to buy off the key Congress critters. The rest belongs to Darth Darl.

Re:No more bribe money (0)

Anonymous Coward | more than 9 years ago | (#12579312)

I assume you mean Jar Jar Darl?

Re:No more bribe money (1)

nizo (81281) | more than 9 years ago | (#12579521)

I keep reading SCO articles hoping to find out when the firesale starts. Every now and then I look on the "History of the SCO group" page on their website and skim past all the lawsuit entires but there is still no "Going out of business firesale" entry yet.

awww waaaaa (4, Funny)

AviLazar (741826) | more than 9 years ago | (#12579153)

have initiated or in the future may initiate legal actions against us, all of which may negatively impact our operations and future operating performance

Yea so what? Like you haven't cost other companies millions of dollars, hundreds if not thousands of man-hours, and that is not even to mention all the lost work hours from us /. posters.

I hope you get sued into the ground.

Re:awww waaaaa (0)

Anonymous Coward | more than 9 years ago | (#12579781)

It reminds me of Liar Liar.

Your honour, I move that the case be dismissed.

Why would that be exactly?

It's DEVASTATING TO MY BUSINESS!

And their stock is UP on the news (1, Interesting)

Anonymous Coward | more than 9 years ago | (#12579182)

What a wierd company.

stock scams (4, Insightful)

blunte (183182) | more than 9 years ago | (#12579195)

Many corporate actions are just games designed to artificially increase stock price.

SCO just happened to have the balls (or the incredibly stupid idea) to sue the 2nd largest software company in the world for an astronomical figure.

Consider this perspective. Even if IBM had rolled over and paid SCO some big number in a settlement, that wouldn't impact the company's value nearly as much as the potential of winning the huge case. So basically, the threat of the huge payoff, magnified by stock market gambling, would (and did) push the stock price up far more.

Everyone with inside information then cashes out (inside meaning executives, primary funding investors, and Martha Stewart-type friends) while the stupid general "investing" public buys more stock after reading the daily press releases.

Fuck the SEC (0)

Anonymous Coward | more than 9 years ago | (#12579216)

Now it should be the FBI. They've moved well beyond a simple stock manipulation scheme and have enetered the realm of criminal interstate stalking.

Someone needs to go to jail, and not some white-collar posh Martha Stewart prison. They need to go where the other predatory criminals (stalkers, rapists, etc) go.

If the SEC eviscerates the company and that's all that happens, they got off easy.

You FAiL 1t. (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12579229)

Lead to '37eaner

Canopy Group? (4, Funny)

chinard (555270) | more than 9 years ago | (#12579232)

How come every time I hear about Canopy group in this case I cant help but thinking about the Umbrella Corporation? O.o;

standard template language (2, Informative)

Anonymous Coward | more than 9 years ago | (#12579234)

while it's tempting to read more into it than is there, the fact is every corporation warns against a worst-case scenario in its financial filings to avoid shareholder suits down the road. LNUX and RHAT filings also contain similar template language, but no one anticipates they will go under in the next quarter.

This is absolutely no indication that there's a SEC investigation on the horizon and shows how really ignorant of standard business practices the Groklaw and anti-SCO folks really are. SCO is nicely imploding on its own; no reason to start a lot of false rumors (and speculating falsely about something that can effect stock prices is prosecutable, by the way; Ms. Jones should know that) when there's simply no need.

10-K (3, Informative)

odin53 (207172) | more than 9 years ago | (#12579250)

This exact language was in their 10-K filed last month. There have no other filings recently that would normally have a "Risk Factors" section, so that's why you wouldn't have seen this sort of language elsewhere. I don't think this is really news.

Standard CYA (5, Insightful)

cmcguffin (156798) | more than 9 years ago | (#12579255)

It is standard operating procedure to include in SEC filings discussion of any factors that will or reasonably may negatively impact business.

This CYA language is meant to prevent both SEC probing and shareholder lawsuits should something go wrong. This language is often copied verbatim in later filings, so it often is written to be as broad as possible.

Mere inclusion of such language does not mean that these factors have happened or will happen, only that the company thinks there is some non-zero chance of it happening.

Not surprisingly, SCO's language is pretty mushy here, but the wording, "have initiated or in the future may initiate" makes me believe that they're simply being prudent.

Of course, the fact that they feel the need to mention regulator investigation says a great deal about the company, regardless.

Giggling (5, Funny)

kristopher (723047) | more than 9 years ago | (#12579267)

You know I didn't think anything would make me giggle like a little girl. I was wrong.

My favorite quote from the article: (5, Funny)

AnObfuscator (812343) | more than 9 years ago | (#12579282)

"Our stock price could decline further because of the activities of short sellers. Our stock has attracted the interest of short sellers. We believe the activities of short sellers have in the past and could in the future further reduce the price of our stock or inhibit increases in our stock price. " ha ha ha. Next on the Nature channel: How the activities of vultures and buzzards inhibit and reduce the activities an otherwise perfectly healthy wildebeest.

Re:My favorite quote from the article: (1)

conteXXt (249905) | more than 9 years ago | (#12579691)

I smell a death spiral [investopedia.com]

Re:My favorite quote from the article: (1)

0xABADC0DA (867955) | more than 9 years ago | (#12579770)

Followed by:

"Delisting: when short-sellers attack".

SCENE: May 19th, 2007 (0)

eno2001 (527078) | more than 9 years ago | (#12579300)

Walking down a street in Salt Lake City and you happen upon a homeless guy. He looks up and with stunned shock you say, "Hey! Didn't you used to be Darl McBride"? ;P

Bwahahahahaha!!! I kill myself!!!

Re:SCENE: May 19th, 2007 (1)

oirtemed (849229) | more than 9 years ago | (#12579460)

More like all the little people who will be crushed by this prolonged scam. Darl will be rich regardless.

Re:SCENE: May 19th, 2007 (0)

Anonymous Coward | more than 9 years ago | (#12579469)

Bwahahahahaha!!! I kill myself!!!

Promises, promises.

Re:SCENE: May 19th, 2007 (1)

eno2001 (527078) | more than 9 years ago | (#12579500)

Again I say in the voice of the Great Cornholio: "are you threatening me"?!!

Re:SCENE: May 19th, 2007 (2, Funny)

Tenebrious1 (530949) | more than 9 years ago | (#12579672)

He looks up and with stunned shock you say, "Hey! Didn't you used to be Darl McBride"? ;P

And then you start beating him with your laptop screaming "damn you and all those SCO stories on /. I had to metamoderate!!!"

Hear that? (3, Funny)

cyclist1200 (513080) | more than 9 years ago | (#12579333)

It's the sound of the world's tiniest violin, playing just for SCO.

This is perfectly normal. (2, Informative)

Jerky McNaughty (1391) | more than 9 years ago | (#12579337)

Check out the prospectus of any publically traded company. It's completely normal to list just about every possible thing that could happen to the company negatively which would affect shareholder value. Think of it as "cover your ass" material.

Seriously, read the prospectus of a company you know and understand very well, such as a traditional retailer like Wal-Mart, Target, Borders, or Barnes and Noble. They'll list things like potential litigation, seasonal variances, competitors, natural disasters, affect of the institution of internet taxation on their business, etc., etc.

So, this is SCO's way of trying to prevent a class action suit by shareholders in the event that they are sued by companies/persons in the Linux community.

Re:This is perfectly normal. (1)

AndroidCat (229562) | more than 9 years ago | (#12579560)

There is always a certain amount of due diligence stuff in any filing or prospectus, but the amount of CYA is increasing and getting gloomier. Normally you don't put that "some Linux companies may sue us" or "the regulators may take action" unless you had been all but served with the papers.

Normally this stuff is buried behind the good news or even the invented news, but SCO can't even manage that. Hahahahaha!

Re:This is perfectly normal. (0)

Anonymous Coward | more than 9 years ago | (#12579656)

Normally you don't put that "some Linux companies may sue us" or "the regulators may take action" unless you had been all but served with the papers.

No. If you HAVE been served with papers you need to disclose that. You must also disclose in these forms if there has been specific contact from the SEC.

The ignorance of the basics here is quite overwhelming.

They got in over their heads (5, Interesting)

Anonymous Coward | more than 9 years ago | (#12579345)

Canopy sued Microsoft and made a bundle without actually having to go to court. SCO was a Canopy company and both had Ralph Yarro as part of the organization.

It was reasonable to assume that if they sued IBM over its use of UNIX, that IBM would also cave in and give them a bundle of cash. Given what the lawyers have cost so far, it would have been cheaper. Oops, IBM didn't cave.

There are very serious issues involved in the SCO vs. IBM case which could have made many businesses worry about adopting Linux. IBM had bet the farm on Linux. IBM had no choice to fight.

Not only did SCO not have a leg to stand on but it seriously looked like they were perpetrating a fraud. Their only chance to stay out of jail is to make it look like they really believed their claims about IBM. SCO, therefore, had no choice but to fight to the bitter end.

What have we gotten out of this whole mess? Linux is unencumbered by anybody's copyrights. All doubt has been removed. The extra publicity may actually have promoted the uptake of Linux. We have gotten a wonderful legal education on Groklaw. We have been activated. A lot of people realize the importance of the next big fight (patents) and have started writing their congresscritters.

So, thank you SCO. Good luck staying out of jail.

We've been what? (3, Funny)

spun (1352) | more than 9 years ago | (#12579725)

We have been activated.

Wonder geek powers, activate! Form of: an 800lb. gorrilla! Form of: a tidal wave of litigation!

2 thoughts spring to mind.... (1)

AsimovBesterClarke (701529) | more than 9 years ago | (#12579830)

> It was reasonable to assume

1) must be some definition of reasonable I'm unfamiliar with.

2) what every phys. ed. says with respect to the word assume.

Re:They got in over their heads (0)

Anonymous Coward | more than 9 years ago | (#12579831)

Linux is unencumbered by anybody's copyrights.

Please don't talk nonsense. Linux is encumbered by a great many people's copyrights, including Caldera/SCO. Everybody who is even remotely knowledgable on the subject agrees.

We have gotten a wonderful legal education on Groklaw.

Obviously not that wonderful.

I hope the SEC is investigating (3, Informative)

richg74 (650636) | more than 9 years ago | (#12579370)

I have thought this whole lawsuit was a crock since very shortly after it was filed, and that it was all about manipulating the stock price so that the insiders could sell.

SCO's management claimed that the stock sales (which you can find on their Form 4 filings with the SEC [sec.gov] ) were part of a pre-arranged sale plan that had absolutely nothing to do with the litigation. The sale plan was filed two months before the lawsuit was filed. That sure seems plausible to me.

I really hope someone nails these slimeballs.

(P.S. I've posted several notes on /. about this; here's one from back in June 2003 [slashdot.org] .)

Timeline (1)

Udo Schmitz (738216) | more than 9 years ago | (#12579597)

"The sale plan was filed two months before the lawsuit was filed. That sure seems plausible to me."

This is one of those moments I wish there were sarcasm tags on /. Not sure if you meant waht you wrote, so anyway, here comes my answer :)

Look at this thread [slashdot.org] starting with a post by Quatermass of Groklaw fame. There he writes:

"In January 2003, O'Gara published an article about SCO's plans to monetize their IP allegedly in Linux. This was two months before SCO sued IBM. This was six months before SCO announced their Linux IP licensing program. This was long before SCO had made any public statements about their plans for licensing Linux, or alleged infringements in Linux."

And an AC replies with the insightful "Securities laws prohibit purchases and sales of securities on the basis of material non-public information."

Finally (1)

Mensa Babe (675349) | more than 9 years ago | (#12579401)

It is not what have been said but rather whom have it been said by that is really important here. We as a community of programmers, coders, hackers, engineers and otherwise intelligent people knew it from the beginning. We had no doubt. We avoided those pathetic scam artists like fire, we abandoned their products, we laughed at their employees (I even stopped visiting Santa Cruz every year for that matter) but let's face it: the uneducated masses kept happily buying their stock like there had been no yesterday. This time, however, we finally have got someone to refer our CEO to while talking about SCO, and who could possibly serve that purpose better than SEC? This is a very important step on our way to victory of the Freedom of Software. Kudos to everyone who kept fighting against those immoral bastards. Kudos to SEC, kudos to fellow Slashdotters, kudos to the Groklaw team, and especially kudos to Pamela Jones without whom the already inflated SCO stock would probably be worth twice as much today. Thanks Pamela!

SEC Investigating SCO? (1)

jhines (82154) | more than 9 years ago | (#12579422)

Battle of the acronyms, film at 11.

No SEC investigation (3, Insightful)

Alioth (221270) | more than 9 years ago | (#12579428)

No, I don't think this means there is an SEC investigation or anything like it. Let's examine the (rather badly and unclearly written) statement:
In addition, regulators or others in the Linux market and some foreign regulators have initiated or in the future may initiate legal actions against us, all of which may negatively impact our operations and future operating performance

I parse this to mean the statement is true if one or more of the conditions are true now or in the future. We know that 'others in the Linux market' are already suing (RHAT, NOVL). However, the statement as it stands doesn't say that SCO are being prosecuted NOW by regulators, but they may in future be prosecuted by regulators.

Therefore, I think the statement refers to the fact they are currently being sued by RHAT and NOVL, and might be prosecuted later by regulators (although this is not yet certain).

Re:No SEC investigation (1)

inode_buddha (576844) | more than 9 years ago | (#12579482)

One thing I notice, however, is that this language did not appear until *after* the Canopy/SCO settlement (WRT Noorda family trust vs Yarro). Now it seems that Yarro is left holding his own bag.

This doesn't mean anything (3, Interesting)

DeathB (10047) | more than 9 years ago | (#12579473)

If there's any group out there who is claiming that they are doing something that the SEC is going to have to investigate, they need to disclose the risk to make a shareholder lawsuit less likely.

If there is some risk that a company doesn't disclose, where there was some way for them to know that it was a posibility, they can be sued by shareholders if the stock goes down as a result of it comes true.

You often find really silly risks listed in safe harbor statement like that. For example, Walmart lists as a risk that they may not be able to buy from certain vendors if political instability takes place in their country. They also disclose that they won't do as well if they can't hire good employees.

Also, if they know about a SEC investigation or lawsuit against them, a company would usually give more information than that in a 10k (lest the SEC investigate them for the way they disclose their risks in their 10k).

Re:This doesn't mean anything (5, Interesting)

DeathB (10047) | more than 9 years ago | (#12579646)

They also have more amusing risk factors than that one. (All text from SCO's current 10k [sec.gov] )
  • We do not have a history of profitable operations.
  • We may not prevail in our SCO Litigation, which may adversely affect our business.
  • Our failure to timely file this Form 10-K, and our quarterly report on Form 10-Q for the quarter ended January 31, 2005 (as previously defined, the "Form 10-Q"), could result in the delisting of our common stock on The Nasdaq SmallCap Market.
  • Our Engagement Agreement with the Law Firms will require us to spend a significant amount of cash during fiscal year 2005 and could harm our liquidity position.
  • Our future SCOsource licensing revenue is uncertain.
  • We may lose the support of industry partners leading to an accelerated decline in our UNIX products and services revenue.
  • Our claims relating to our UNIX intellectual property may subject us to additional legal proceedings.
  • Fluctuations in our operating results or the failure of our operating results to meet the expectations of public market analysts and investors may negatively impact our stock price.
  • We operate in a highly competitive market and face significant competition from a variety of current and potential sources; many of our current and potential competitors have greater financial and technical resources than we do; thus, we may fail to compete effectively.
  • If the market for UNIX continues to contract, our business will be harmed.
  • We rely on our indirect sales channel for distribution of our products, and any disruption of our channel at any level could adversely affect the sales of our products.
  • Our Engagement Agreement with the Law Firms representing us to enforce our intellectual property rights may reduce our ability to raise additional financing.
  • Our foreign-based operations and sales create special problems, including the imposition of governmental controls and taxes and fluctuations in currency exchange rates that could hurt our results.
  • If we are unable to retain key personnel in an intensely competitive environment, our operations could be adversely affected.
  • We have issued shares and options under our Equity Compensation Plans that were not exempt from registration or qualification under federal and state securities laws, and, as a result, we may incur liability to repurchase such shares and options and may face additional potential claims under federal and state securities laws.
  • Our stock price is volatile.
  • There are risks associated with the potential exercise of our outstanding options.
  • The resale of common shares by BayStar may have an adverse impact on the market value of our stock and the existing holders of our common stock.
  • Our stock price could decline further because of the activities of short sellers.
  • The right of our board of directors to authorize additional shares of preferred stock could adversely impact the rights of holders of our common stock.
  • Our Stockholder Rights Plan could make it more difficult for a hostile bid for the Company or a change of control transaction to succeed at current market prices for our stock.


FYI, the full text of the risk that Groklaw is quoting from:

Our claims relating to our UNIX intellectual property may subject us to additional legal proceedings.

In August 2003, Red Hat brought a lawsuit against us asserting that the Linux operating system does not infringe on our UNIX intellectual property rights and seeking a declaratory judgment for non-infringement of copyrights and no misappropriation of trade secrets. In addition, Red Hat claims we have engaged in false advertising in violation of the Lanham Act, deceptive trade practices, unfair competition, tortious interference with prospective business opportunities, and trade libel and disparagement. Although this case is currently stayed pending the resolution of our suit against IBM, we intend to vigorously defend this action. However, if Red Hat is successful in its claim against us, our business and results of operations could be materially harmed.

In addition, regulators or others in the Linux market and some foreign regulators have initiated or in the future may initiate legal actions against us, all of which may negatively impact our operations and future operating performance.

Re:This doesn't mean anything (1)

Udo Schmitz (738216) | more than 9 years ago | (#12579799)

"You often find really silly risks listed in safe harbor statement like that."

Yes, everyone who ever read in an SEC filing knows that. But it is not so usual to see investigations mentioned in those.

"Also, if they know about a SEC investigation or lawsuit against them, a company would usually give more information than that in a 10k"

Well, yeah, since when is SCOX known [infoworld.com] for complying to those rules? :)

See? (0, Troll)

GoodbyeBlueSky1 (176887) | more than 9 years ago | (#12579493)

This is what happens when corrupt corporations stop paying off the SEC.

KDE users beware of SERIOUS security holes! (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12579528)

Since this has become a KDE/Gnome thread, notice that KDE has SERIOUS security flaws in ALL current implementations!

http://www.techworld.com/security/news/index.cfm?N ewsID=3691 [techworld.com]

----------
Linux users still at risk from KDE flaw
Patch and patch again.

By Matthew Broersma, Techworld

Linux users who patched their systems for a serious security vulnerability in KDE last month will have to patch once again, due to errors in the original patch, according to the KDE project.

The vulnerability affects kdelibs, specifically an error in the kimgio component when processing PCX image files. Kimgio is used in KHTML-based Web browsers as well as KDE imaging applications such as kpresenter and ksnapshot, meaning that if an image crafted to exploit the flaw were viewed in any of these applications, they could allow an attacker to execute malicious code and take over a system. The flaw affects KDE versions 3.2 to 3.4, according to KDE.

The patches issued last month fixed most of the problems, but still allowed local users to exploit the bug by serving files from the /tmp directory, KDE said in an advisory. They also introduced a new bug, breaking kimgio's compatibility with .rgb images.

The problems will mean a fresh round of patching for Unix-derived systems using KDE, one of the two most popular desktop environments for Unix and Linux. KDE released a new patch fixing the problems with the original patch, and operating system vendors such as Red Hat and Suse have followed suit this week.

Software vendors are under pressure to deliver timely patches, but faulty updates are not unknown as a result, say security experts. Last week, for instance, Microsoft re-released a critical security update - - after it caused networking problems for many users.

Such problems can mean a major headache for system administrators, but they seem to be on the wane, according to Thomas Kristensen, CTO of Danish security firm Secunia. "Generally speaking I'd say that most vendors have improved significantly over the last two years when it comes to quality testing of their security fixes," he said.
----------------

Wow, I guess the 'K' really does stand for 'Krappie'!

(eat that)

fak3r

MOD PARENT UP! (0)

Anonymous Coward | more than 9 years ago | (#12579675)

This is a serious flaw, everyone should know about it. I can't believe it's not on the /. frontpage yet!!!!!

Common mistake (2, Informative)

Anonymous Coward | more than 9 years ago | (#12579578)

I think every single annual report I have ever read contains a very similar statement. The first time I saw it in my own company's report I freaked out, thinking that it referred to some specific, impending doom. A more senior business person clued me in that every company says that as protection (CYA, if you will), i.e. should they lose a lawsuit, they can claim that they already warned investors, stakeholders, et. al.

Naysayers (0)

Anonymous Coward | more than 9 years ago | (#12579639)

Anybody remember any editorials/posts by people who took the position that SCO had a legitimite gripe when they first announced that Linux stole their code? You know, the people who said "SCO is just protecting what is theirs, etc."?

dUjoll (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12579775)

AMERiCA) migh7 be

The Wheels of Justice Turn Slow (5, Interesting)

Greyfox (87712) | more than 9 years ago | (#12579787)

We've been speculating that the whole thing was a pump'n'dump since day 1. I personally found it a little too coincidental that a couple of days before the lawsuit was announced, a lot of people in high places at SCO were issued a heaping helping of SCO stock options for pennies on the dollar. Issuing options is a perfectly normal business operation, of course, but I personally thought the timing was a little too good.

Anyway, I don't foresee a serious SEC investigation until the lawsuit is settled. It would be a waste of resources to start an investigation when all that really needs to be done is to sift through the broken remants of a case. If a judge dismisses the case because SCO never had any more evidence than "It looks like UNIX so they must have copied it!" then I expect the SEC would crawl up SCO's ass with a microsope at that point.

Sell? (1)

rwven (663186) | more than 9 years ago | (#12579814)

Now would seem like the ideal time for anyone investing in SCO to sell everything they have in it because i fear it's probably not going to be going back up...
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