Judge speeds up Apple vs Einhorn case
A judge has approved Apple's request to speed up the schedule in a lawsuit filed by star hedge fund manager David Einhorn's Greenlight Capital, part of an effort to get the company to share its huge cash reserves with investors.
US District Judge Richard Sullivan of the Southern District of New York on Monday brought forward the legal schedule by a few days at Apple's request, which argued that the issue would have a big impact on the upcoming shareholder meeting on February 27.
Apple told the judge that the request to modify the schedule had the support of Einhorn's counsel.
Einhorn, a well-known short-seller and Apple gadget fan, shocked Wall Street last week by suing Apple to stop the iPhone maker from eliminating from its charter the ability to issue preferred stock without shareholder approval.
He wants Apple to return a bigger piece of its US$137 billion (NZ$163 billion) cash pile to investors, through the issuance of perpetual preferred shares that pay dividends to existing shareholders.
Einhorn is objecting to how the proposed charter change is bundled together with two other corporate governance-related proposals in the proxy document for the annual meeting.
The lawsuit contends Apple violated Securities and Exchange Commission rules that prohibit companies from "bundling" unrelated matters into a single proposal for a shareholder vote.
Apple says removing the board's ability to issue preferred stock at its discretion heightens governance, because future issuances would then require shareholder approval.
The company will file its response to the lawsuit by the end of Wednesday while Greenlight will file its own response papers by Friday. The judge ordered both parties to appear for oral arguments on February 19.
Apple has said that the proposal in its proxy had the support of many shareholders, and striking such a "blank check" provision from its charter would not preclude preferred share issuances in future.
The law firm of O'Melveny & Myers LLP is representing Apple in the case, with San Francisco-based partner George Riley arguing for Apple.