[linux-elitists] SCO: IWeThey nears top; Linux Today article

Adam Kessel adam@bostoncoop.net
Wed Aug 6 20:24:40 PDT 2003

Apparently, our efforts have paid off.  Google "sco" now yields
http://sco.iwethey.org third, after two caldera.com links.  Hopefully
this is a result of rebuilding the index and not the fluctuations between

Also, a good article from Linux Today.  Carey mentions a "potential
securities fraud action."  I've been thinking about possible claims an
SCO shareholder might make... It would be, of course, a little difficult
to show damages in a derivative action (given the stock price increase),
but there might be some claim around disclosure a shareholder could make
in a direct action... Do you know anyone who has owned a substantial
amount of SCOX stock for a while? There's also a shareholder right to
inspect a company's books and records "for a proper purpose" that might
be useful.  



Thomas C. Carey, a partner at of the Boston IP and business law firm
Bromberg & Sunstein and chairman of the firm's Business Practice Group,
thinks Red Hat has a very good case. "Assuming for the moment that SCO is
off-base in its allegations, this complaint is enough to rock SCO to its
foundations." Still, "A lot will depend upon the vigor with which the
matter is pursued. My presumption is that the suit is serious and will be
pursued with full force."

But Carey warns, "SCO is in some danger even if its allegations are
correct, simply because SCO has put everyone in an impossible position.
What can they (a Linux distributor or end-user) do if they don't know
which code is infringing? If, to that unfairness, you add a conclusion
that SCO has its facts wrong, then SCO's liability to Red Hat and others
could be very substantial. And if SCO knows (or should know) that its
facts are wrong, then you can kiss the company good-bye."

Last, but far from least, Carey thinks that there's "a potential
securities fraud action is buried within the pleadings. Red Hat speaks of
Canopy Group (SCO's primary owner) having raked in millions in cash since
the start of this affair. Red Hat notes that its own stock price has
declined 20% in a month. This is the stuff of securities lawsuits. Red
Hat could amend its claims to include a securities law claim, or another
law firm could bring a class action lawsuit against SCO on behalf of
selling Red Hat shareholders who have been harmed by the low price they
get. Finally, it is conceivable that the SEC or the Justice Department
could take an interest in this, viewing it as market manipulation." 


Adam Kessel
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