Fund Manager David Einhorn Wins Ruling Against Apple

By: Zain Nabi  |   February 25th, 2013   |   Business, News

Apple has been barred from moving a proposal in its annual shareholder meeting about issuing preferred stock after a U.S. judge granted a ruling in favour of fund manager David Einhorn, who had filed a case against the company earlier this month, according to Reuters.

 

Einhorn had asked Apple to dole out more cash for investors and also questioned Apple’s idea of bringing a proposal in its shareholder meeting for vote. The proposal that prompted the fund manager to pull Apple to the court was aimed at empowering the shareholders with respect to issuing preferred stock. As per the proposal, Apple cannot issue the preferred stock unless it receives vote from its shareholders.

 

Einhorn had argued that Apple had proposed a few measures, but he maintained that the company had also mixed them with the proposition regarding issuance of preferred stock. He supported other measures but did not agree to the one related to the preferred stock.

 

Both Apple and Einhorn’s Greenlight Capital had agreed to speed up the proceedings of the case given the annual shareholder meeting was due shortly. The meeting will take place on February 27. Apple did not come out with any statement soon after the ruling was given against it.

 

When the case was filed earlier this month Einhorn blamed Apple of adopting a conservative approach by not doling out more cash for investors. Einhorn wants Apple to issue preferred stock with a perpetual four per cent dividend. The court said in conclusion of the case:

 

“Apple is HEREBY ENJOINED from (1) certifying or accepting proxy votes cast in connection with Proposal No. 2, (2)  amending its Articles based on such votes, or (3) proceeding with its shareholder meeting in violation of SEC rules concerning Proposal  No. 2.”

 

Meanwhile, Forbes quoted a Greenlight spokesperson as saying:

 

“This is a significant win for all Apple shareholders and for good corporate governance.  We are pleased the Court has recognized that Apple’s proxy is not compliant with the SEC’s rules because it bundles different matters in Proposal 2. We look forward to Apple’s evaluation of our iPref idea and we encourage fellow shareholders to urge Apple to unlock the significant value residing on its balance sheet.”

 

Photo: Forbes