Judge believes Greenlight Capital has a strong case against Apple
Earlier this month, David Einhorn of hedge fund Greenlight Capital and Apple shareholders brought a lawsuit against Apple seeking to force the company to share more of its massive cash reserves with shareholders, and claiming that it had violated SEC rules in a proposed amendent to its corporate charter. Yesterday in New York, US District Judge Richard Sullivan, who's hearing the case, said that the "likelihood of success is in favor for Greenlight on the merits," according to a report by Fortune.
Einhorn is seeking to block a vote on the proposition that Apple intends to conduct during its next shareholder meeting on February 27. Judge Sullivan stated that he wasn't entirely convinced that Greenlight would suffer "irreparable harm" if the vote goes through, and is inclined to let it happen since the results could be undone if he later finds that Apple violated SEC rules. Einhorn actually supports two of the three items in the proposition, but strongly opposes the third, which would let Apple issue preferred shares without a shareholder vote.
Judge Sullivan said that he will issue a ruling on Einhorn's request to block the shareholders from voting before they gather next Wednesday. It's seeming likely that Sullivan -- who called the situation "a mess" -- will simply wait to see what the shareholders decide before taking further action. For his part, Apple CEO Tim Cook is calling the hole thing a "silly sideshow."
