Tag Archive | "supreme-court"

An Issue of National Securities

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The following post is by Dealbreaker reader and commenter Infinite Guest.

President Obama has nothing to gain by negotiating with Republicans in Congress in order to raise the debt ceiling. The Department of Treasury doesn’t need Congressional approval to issue more debt and it will be a long time before Treasury actually needs to exceed the debt ceiling.

The analyses I’ve read on the topic are nothing if not variable, but they all assume at some level an agreement by all parties on the basic necessity of raising the debt ceiling and the general wisdom of reducing the deficit. The President knows what needs to be done, the Congress knows and so does the electorate. Based on this shared understanding, it follows that those who act in the spirit of compromise will be rewarded and those who act to obstruct
progress will be punished.

Never mind the compelling absence of evidence that any such shared understanding exists; that’s just not how things work.

The President, and this President in particular, is not answerable to Congress. The President is answerable to history, to the voting public, to our allies, to business interests including bond markets and in relatively rare cases to a 2/3 majority in the Senate. When the executive branch and the legislative branch can’t work out their differences the Supreme Court acts as referree. If Congress failed to raise the debt ceiling, history would not be kind to a President who on their advice failed to honor our debts. The bond markets would not be kind, our allies would not be kind and consequentially neither would the voting public. But a President who stood up to a hostile, inexperienced Congress and continued to honor our debts would win support from all sides. There will have been sufficient turmoil and pain following Congressional failure to raise the debt ceiling that everyone on earth will understand who the heroes and villains are.

If Congress failed to raise the debt ceiling, the President could stand up to Congress on Constitutional grounds, in which case he could count on a fairly corporatist Supreme Court to eventually rule in his favor. He could stand up to Congress on National Security grounds, in which case he might even be able to secretly issue fresh debt. He could stand up to Congress on technical grounds for a very long time without provoking a Constitutional crisis or raising the debt ceiling simply by draining the Treasurys out of trust funds and replacing them with other assets. And if he had to break the law, as President, in order to stand up to Congress, then he could break the law on moral grounds, secure in the knowledge that if he is impeached, the Senate doesn’t have enough votes to convict.

What would the electorate think of a President who defies Congress on any or all of those grounds? The Democrats would rally behind him, the Republicans would still oppose him and the independents would admire him for acting independently.

Now alternatively he can compromise to avoid a direct conflict but what’s in it for him? He could give away everything his constituents like and it still wouldn’t be enough to balance the budget. By compromising he snatches defeat from the jaws of victory. Democrats will hate him. Republicans will (rightly) say that they won. Without any drama to overcome through courageous and decisive action, independents will conclude that he’s a weak leader who stands for nothing.

Politics is not about forethought, compromise and the public good. Politics is about personalities and political narratives and the balance of power. This narrative has yet to be written, but in the politics of the debt ceiling, President Obama has all the power and his opponents in Congress have none.

Article courtesy of Dealbreaker

TiVo Soars, Dish Sags: Large Settlement Coming?

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TiVo (TIVO) shares are up $2.86, or 34%, at $11.23, after the U.S. Court of Appeals for the Federal Circuit in Washington ruled Dish Network (DISH) was in contempt of a court order last year to shut down the DVR service it provides to subscribers, after a long-running patent infringement suit brought by TiVo.

The court also, however, rejected a ruling that Dish’s software “workaround” was insufficient to avoid infringement.

So who wins in this case?

TiVo said it looked forward to a permanent injunction against Dish, and that the ruling, “paves the way for TiVo to receive substantial damages and contempt sanctions regarding the DVRs that EchoStar and Dish Network failed to disable.”

Dish, whose stock is down 35 cents, or 1.5%, at $23.52, said in a statement it will take its case for continuing its DVR service to the Supreme Court, and said it was pleased its software workaround will get another hearing.

Given that the fight between TiVo and Dish has been going on for years now, with ups and downs for both parties, Sanford Bernstein’s Craig Moffett this afternoon wonders if this is the end of the matter.

Moffett thinks TiVo wins decisively, because the real issue here was not damages from infringement, but rather the prospect Dish would be forced to shut down 4 million to 8 million subscriber boxes. He expects that the potential cost of $3 billion to Dish to do that means that, “The only alternative, it would seem, is settlement to sidestep this disablement requirement. And that settlement would presumably be on TiVo’s terms.”

For TiVo, with a $1.35 billion market cap, anything remotely like $3 billion would be huge. With roughly $10.5 billion in market cap for Dish, a settlement of that kind would be “highly material,” writes Moffett. “Some of this, however, is presumably already in the stock. Still, we see the potential for further downside from a settlement.”

Moffett reiterated a Market Perform rating on Dish shares and a $22 price target.

Article courtesy of Tech Trader Daily

Carl Icahn Likens Judge Saying He Owes Bill Ackman $8 Million To Being Wrongfully Accused Of Murder, Sent To Death Row

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Five weeks ago, Carl Icahn announced he’d be closing the hedge fund he opened in 2004. Was this a sign retirement was next to come, some wondered? Hell no, Icahn recently told a reporter who checked in with the activist investor. “What else would I do? Play shuffleboard somewhere?” Mr. Icahn said from his vacation home in Florida. Carl’s got no time for anything so patently ridiculous, and is in fact busier than ever. What’s he been up to?

* The usual, mostly.

Mr. Icahn has been particularly active in recent years. Since 2004, he has begun 91 activist campaigns involving 79 American companies, according to FactSet SharkRepellent, a firm that tracks corporate takeover defenses and investor activism…Often, all Mr. Icahn has to do is make his interest known to send a stock price rising. Last November, for instance, regulatory filings showed that he had taken stakes in the toy maker Mattel and the building products company Masco. Mattel’s shares jumped to a 52-week high. Masco’s are up about 17 percent since he bought the stake.

* As well as focusing his efforts on beating his son at chess.

Brett Icahn today sits on the boards of several companies in which his father has invested, including the video game maker Take-Two Interactive, American Railcar Industries and the food company Hain Celestial Group. He also runs a hedge fund that returned 50 percent last year…The two often play chess, wagering thousands of dollars a game. Brett plays better. “I can’t figure out how he does it,” his father says, adding that a chess pro was coming over to coach him later that day. “Don’t tell Brett. I don’t want him to know.”

* Calling people on their bull shit.

Mr. Icahn has made more than a few enemies and frenemies in his time. He tangled with Donald Trump last year over three casinos in Atlantic City, a battle of big money and bigger egos. Mr. Icahn eventually lost in court…Mr. Icahn says he likes Mr. Trump — no hard feelings. Then he adds, “I don’t even think he invited me to his daughter’s wedding — so how close can we be?”

* And fighting Bill Ackman to the death.

For the last seven years, Mr. Ackman has contended that Mr. Icahn owes him more than $8 million stemming from an investment in a Dallas real estate company, Hallwood Realty. The New York Supreme Court ruled in favor of Mr. Ackman in August 2005, as did an appellate court in October 2006. A final appeal is pending. But Mr. Icahn vows he will go all the way to the United States Supreme Court. “How many times have judges been wrong? How many people have gone to the death chamber because they’re wrong?” he asked. “Ackman is dead wrong.” Mr. Ackman says he is confident he will prevail. In the meantime, Mr. Icahn must pay him hefty interest while the payment is delayed. “It grows at about 9 percent a year,” Mr. Ackman said.

The Raider In Winter: Carl Icahn at 75 [NYT]

Article courtesy of Dealbreaker

Federal Reserve Takes A Page From Goldman Sachs’ Playabook

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If you’re a person who’s living in the past, you were probably very excited to hear that the Federal Reserve would today be releasing secret loan documents detailing who was in some trouble several years ago and who was in some big trouble, in case you were unable to hazard a guess. The Fed originally wasn’t going to share any information, having denied Bloomberg’s request for the details almost three years ago, but was forced to do so under court order. They really didn’t want to but after the Supreme Court said last month they must, everyone came around and said you know what? Sure thing. Happy to do it. You want documents? You’re gonna get ‘em. EVERY SINGLE ONE.

Liking the move Goldman pulled when it sent the Financial Crisis Inquiry Commission thousands upon thousands of documents last year to wade through, some of it germane to the situation, some of it CFO David Vinair sending links to himself from Bon Appetit‘s website for butter pecan ice cream recipes so he wouldn’t forget, the Fed sent Bloomberg and various other news organizations two CD-ROMS containing 894 PDF files and over 25,000 pages of information. Happy hunting.

Article courtesy of Dealbreaker

Fed To Release Names Of Banks That Got Emergency Loans During 2008 Crisis

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For those of you living in the past, this should prove exciting!

The Federal Reserve must disclose details of emergency loans it made to banks in 2008, after the U.S. Supreme Court rejected an industry appeal that aimed to shield the records from public view. The justices today left intact a court order that gives the Fed five days to release the records, sought by Bloomberg News’s parent company, Bloomberg LP. The Clearing House Association LLC, a group of the nation’s largest commercial banks, had asked the Supreme Court to intervene.

The order marks the first time a court has forced the Fed to reveal the names of banks that borrowed from its oldest lending program, the 98-year-old discount window. The disclosures, together with details of six bailout programs released by the central bank in December under a congressional mandate, would give taxpayers insight into the Fed’s unprecedented $3.5 trillion effort to stem the 2008 financial panic.

Fed Must Release Loan Data [Bloomberg]

Article courtesy of Dealbreaker

Brady Dougan Don’t Want To Pay No Stinkin’ Interest To His Ex-Wife

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So he was late on some payments, so what? So his lawyer even admits to feeling awkward arguing this case, so what? That woman is not seeing another dime!

Credit Suisse Group AG chief executive Brady Dougan should not have to pay his ex-wife more than $750,000 in interest for being 12 days late with a $7.5 million divorce-related payment, his lawyer told the Connecticut Supreme Court on Tuesday. But justices appeared skeptical of Dougan’s claims and asked his lawyer why Dougan was challenging a clause in his June 2005 divorce settlement. The high court didn’t immediately rule Tuesday.

Dougan, of Greenwich, agreed to pay his ex-wife, Tomoko Hamada Dougan, $15.3 million in two installments under the divorce settlement. He paid the $7.5 million second installment 12 days late in June 2006 and gave her an extra $25,000, representing interest for the 12 days at the 10 percent annual rate set by the settlement. But Tomoko Dougan’s attorney, Gaetano Ferro, said the divorce settlement called for interest to be paid back to the date of the settlement, not to the second payment’s due date. Ferro said he was shocked that case was before the Supreme Court, and said Brady Dougan was reneging on the deal he signed. “You can’t go to court and tell the judge it’s fair and equitable, then turn around a year later and say, ‘Only kidding,’” Ferro told the court. In addition to the $15.3 million, Tomoko Dougan also received one of the couple’s homes that was worth $9.6 million, accounts totaling about $143,000 and a 2000 BMW X5, documents show.

Justice Dennis Eveleigh on Tuesday asked Brady Dougan’s lawyer, Gary Cohen, whether he had a problem arguing against the divorce deal’s late payment interest clause after having agreed to it. Cohen responded that it didn’t occur to him when the settlement was approved that the interest clause would be invalid. “It never occurred to me that there would be a breach,” Cohen said. “Hindsight is always 20/20. I think it’s my obligation to my client to advance appropriate arguments on his behalf.”

Court Hears Credit Suisse Divorce Case [AP]

Article courtesy of Dealbreaker

Microsoft: Will The Supreme Court Dig Into XML?

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The Supreme Court has agreed to hear the appeal of Microsoft (MSFT) and several firms supporting it, in its attempt to reverse a December, 2009 circuit court ruling in favor of i4i, Inc., a Toronto-based document management company that sued Microsoft for patent infringement.
Privately held i4i was awarded $290 million [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Opening Bell: 08.20.10

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Wild Trading In Metals Puts Fund Manager In Cross-Hairs (WSJ)
Christopher Pia was the quintessential hedge-fund success story: a hard-charger from a working-class New York City neighborhood whose trading prowess earned him a top job at fund giant Moore Capital Management. He bought a sprawling house in Armonk, N.Y., and tooled around town in an orange Lamborghini. Mr. Pia liked to tell colleagues about his modest upbringing, and that he is a devout Catholic. He complained about hedge-fund managers he considered elitist. On the trading floor, he often twirled a string of rosary beads. Callers to his cellphone heard the Batman theme song.

How To Tell When Your Boss Is Lying (The Economist)
Deceptive bosses, it transpires, tend to make more references to general knowledge (“as you know…”), and refer less to shareholder value (perhaps to minimise the risk of a lawsuit, the authors hypothesise). They also use fewer “non-extreme positive emotion words”. That is, instead of describing something as “good”, they call it “fantastic”. The aim is to “sound more persuasive” while talking horsefeathers. When they are lying, bosses avoid the word “I”, opting instead for the third person. They use fewer “hesitation words”, such as “um” and “er”, suggesting that they may have been coached in their deception. As with Mr Skilling’s “asshole”, more frequent use of swear words indicates deception.

Fund Manager Finds Plenty Of Virtue In Sin Stocks (WaPo)
Vice is the only fund explicitly focusing on sin stocks. Its portfolio of about 30 stocks is divided almost equally among cigarettes, alcohol, gaming and casinos, and defense – industries that typically hold up well in tough times. Although such a small portfolio can lead to volatility, the Vice Fund offsets that risk by emphasizing steady dividend-paying stocks.

Shrinking Quant Funds Struggle To Revive Boom (CNBC)
The combined assets of quantitative funds specializing in United States stocks have plunged to $467 billion, from $1.2 trillion in 2007, a 61 percent decline, according to eVestment Alliance, a research firm. That drop reflects both bad investments and withdrawals by clients.

Toilet-Paper Scandal in India ‘Shames’ Commonwealth Games Host (Bloomberg)
Allegations of corruption and mismanagement are overtaking a tournament that Prime Minister Manmohan Singh said would “signal to the world that India is rapidly marching ahead with confidence.” The Economic Times newspaper, citing internal documents, said organizers bought $80 rolls of toilet paper, $61 soap dispensers and $125 first-aid kits.

Ackman’s StuyTown bid on hold (NYP)
A New York state Supreme Court judge has set a Sept. 2 hearing between an Ackman-led real-estate venture and lenders who hold a $3 billion first mortgage on the property, represented by special servicer CW Capital. Pershing Square and Winthrop Realty Trust, his par , his partner in the real estate venture, had planned to gain control of the property by foreclosing on an entity that is responsible for the first mortgage on Aug. 25. Lenders sued to stop him on Wednesday, demanding that they be paid $3.66 billion, including interest, owed them before Ackman be allowed to follow through on his plan.

New Front Opens In Vendor Wars (WSJ)
Rule No. 1 in the rough-and-tumble business of gourmet-food trucks is to avoid parking on the same block as your brethren. Violate the unwritten code and things could get ugly. That’s what happened Tuesday in Midtown, when the Rickshaw Dumpling Truck saddled up for business near the Frites ‘N’ Meats truck. Vadim Ponorovsky, the owner of Frites ‘N’ Meats, expected that the dumpling truck would leave. After all, the highly coveted block on 48th Street between Sixth and Seventh avenues is his regular spot Tuesdays. He called Kenny Lao, owner of the dumpling truck. But Mr. Lao’s truck never left. What happened next is contested. The New York Police Department was summoned (by whom remains unclear). And both trucks were kicked out of the space. Then the Twitter and blog wars began. “Getting kicked out of spot due to Rickshaw Dumpling Truck deciding to park also. Not sure if well be back here. Boycott Rickshaw Dumpling!” someone from Frites ‘N’ Meats wrote on its Twitter account moments after the incident. “Its not a war. But if it were, asking whod win, is like asking whod win in a Mike Tyson (us) vs. snot nosed 3rd grader (Rickshaw).”

Article courtesy of Dealbreaker

Want To Sue Goldman Sachs? Take A Number

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Sorry, the firm’s calendar is all booked up right now with other lawsuits. Come back later or go sue someone else.

A New York judge put two shareholder lawsuits against executives and directors of Goldman Sachs Group Inc on hold until progress is made on 16 other lawsuits related to a controversial debt transaction involving the Wall Street bank. The lawsuits, brought in state Supreme Court by Robert Rosinek and Morton Spiegel, accuse Goldman officials, including Chief Executive Lloyd Blankfein, of breaching their fiduciary duties by letting the bank enter transactions involving risky collateralized debt obligations tied to subprime mortgages. [ABC]

Article courtesy of Dealbreaker

Microsoft: Supreme Court Rejects Appeal In Alcatel Patent Case

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The Supreme Court has turned down Microsoft’s (MSFT) appeal of a jury verdict that found the company violates an Alcatel-Lucent (ALU) patent covering a method of entering information into fields on a computer screen without using a keyboard.
The U.S. Court of Appeals for the Federal Circuit previously ordered the [...]

Article courtesy of BARRONS.com: Tech Trader Daily