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Mark Zuckerberg Signed the Wrong Document

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Re: Mark Zuckerberg Signed the Wrong Document

#61

Post by thaumasiotes »

downandout wrote: post #57

The "investors" suing are just working with/for attorneys that extort massive legal fees and damages from public companies for a living. This case has nothing to do with the underlying conduct, which was merely a clerical error. These attorneys are one of the big reasons that unicorns are staying private. The most famous of these bottom-feeding attorneys, Bill Lerach, built an estimated net worth of $700 million [1]…

There's a great footnote to the article making a very similar point:

> I should say, nothing in the actual court opinion here has anything to do with public markets: It's a decision of Delaware corporate law, applicable to public and private companies alike. But! The thing is, if Facebook was still private and controlled by its founder and a handful of venture capital firms, no one would have sued. It is not the law that is a feature of being a public company; it's the litigious shareholders.

Re: Mark Zuckerberg Signed the Wrong Document

#62

Post by LoSboccacc »

jegutman wrote: post #45
sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

The structure of the company gives you the right to future dividends at the same rate as other classes of stock. So as long as they think they're creating something of value and the marketplace does you own an equal equity share of that entity. Google finally paid a dividend (although a one-time dividend) and also announced a stock buyback so these companies may start returning capital. As of right now facebook think…

Isn't there also a difference between voting stock, non voting and privileged? Just asking since it might be different than my country and seems you rolled them all togheter.

Re: Mark Zuckerberg Signed the Wrong Document

#63

Post by Animats »

nostrademons wrote: post #56
choppaface wrote: post #26

An interesting issue here is if the 2-voting-class design is sustainable for new companies. The bottom of the article notes the issue with the legal docs "took place in 2013." I wish the author would have spent more time grappling with 2-class voting (which TBH the major focus of the article) rather than Zuck's clerical error. The problem with 2-class voting is that it dilutes the inherent value of non-voting shares…

Dual-class voting structures have been around forever. Ford and Berkshire Hathaway are two prominent examples. Historically, they've been relatively rare, and the non-voting shares don't trade at much of a discount. It's rare that individual shareholders get to exercise their voting rights anyway. The interesting trend now is that so many tech companies have dual-class supervoting shares. It sends the message that a…

The New York Stock Exchange, back when it had a Board of Governors, did not allow companies with more than one class of stock to trade on the NYSE.[1] That rule was in effect from 1928 to 1988. The NYSE gave it up because companies were listing on the NASDAQ instead, which allowed multiple classes of stock.

Ford was grandfathered in. Berkshire Hathaway only created a second class of stock in 1996, and that was just because Buffett refused to split the stock, and the current price of $215,000 per share (up from $290 in 1980) was inconvenient for small investors.

The Google and Facebook founder-for-life arrangements are unusual, and they're going to lead to trouble for companies whose stock drops and whose management can't be replaced.

[1] http://articles.latimes.com/1986-07-04/business/fi-648_1_vot...

Re: Mark Zuckerberg Signed the Wrong Document

#64

Post by cjg »

jandrese wrote: post #50
sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

I would assume some people are holding them for purely speculative reasons--planning to sell when the price goes up.

But why would the price go up if they have no intrinsic value? The original question was where does that intrinsic value come from.

Re: Mark Zuckerberg Signed the Wrong Document

#66

Post by ascorbic »

jliptzin wrote: post #16
meeper16 wrote: post #8

Earlier quoted context omitted.

1. facebook did not "invent" anything, especially compared to Google, they copied text entry boxes and messaging, which anybody could easily duplicate from myspace and reworked the design. Google invented something.

Google's products make you more efficient. Facebook's products make you less efficient.

I don't know about you, but I find Facebook an extremely efficient way of keeping up to date with my family and organising events with them. Certainly beats long email threads trying to work out Christmas plans or group trips. Facebook is a social network, and that's what it's good at, if only for the reason that everyone is on it so there's none of the friction involved in getting people to use some other tool.

Re: Mark Zuckerberg Signed the Wrong Document

#67

Post by MrJagil »

downandout wrote: post #57

The "investors" suing are just working with/for attorneys that extort massive legal fees and damages from public companies for a living. This case has nothing to do with the underlying conduct, which was merely a clerical error. These attorneys are one of the big reasons that unicorns are staying private. The most famous of these bottom-feeding attorneys, Bill Lerach, built an estimated net worth of $700 million [1]…

It's interesting, reading your comment I was of the impression that Lerach must be universally disliked for his slimy methods, exploitation of the system and oppressiveness in the free market (unicorns scared to go public). Reading the first comment on the linked youtube video(i know) reminded me once again to be sceptical of everything i read though:

"Bill Lerach, the former #1 enemy of corrupted corporations. He may not have acted out of personal values but at least for a while corporations had the fear in the back of their minds that if they were going to act unethically it might cost them millions of dollars in security class actions and corporate derivative suits. Where as now they are able to act in a fraudulent manner without fear of consequences. Larach is the most sincere lawyer I have ever seen. He also seems like a really likable guy."

I'm unsure what to believe now, though I don't feel signing the wrong paper by accident is evidence of a "corrupted corporation". Of course, could also be the youtube commment was very sarcastic.

Re: Mark Zuckerberg Signed the Wrong Document

#68

Post by spacecowboy_lon »

choppaface wrote: post #26

An interesting issue here is if the 2-voting-class design is sustainable for new companies. The bottom of the article notes the issue with the legal docs "took place in 2013." I wish the author would have spent more time grappling with 2-class voting (which TBH the major focus of the article) rather than Zuck's clerical error. The problem with 2-class voting is that it dilutes the inherent value of non-voting shares…

Actually on the FTSE these dual class shares are disliked one even got kicked out of its index (the daily mail)

I think the SEC should be much harder on this gaming of the system its undemocratic and is not in the publics best interest.

Re: Mark Zuckerberg Signed the Wrong Document

#69

Post by spacecowboy_lon »

thaumasiotes wrote: post #61
downandout wrote: post #57

The "investors" suing are just working with/for attorneys that extort massive legal fees and damages from public companies for a living. This case has nothing to do with the underlying conduct, which was merely a clerical error. These attorneys are one of the big reasons that unicorns are staying private. The most famous of these bottom-feeding attorneys, Bill Lerach, built an estimated net worth of $700 million [1]…

There's a great footnote to the article making a very similar point: > I should say, nothing in the actual court opinion here has anything to do with public markets: It's a decision of Delaware corporate law, applicable to public and private companies alike. But! The thing is, if Facebook was still private and controlled by its founder and a handful of venture capital firms, no one would have sued . It is not the law…

Enough with the scare quotes Sometimes in order to enforce your rights you have to go to law

Re: Mark Zuckerberg Signed the Wrong Document

#70

Post by [deleted] »

thaumasiotes wrote: post #61
downandout wrote: post #57

The "investors" suing are just working with/for attorneys that extort massive legal fees and damages from public companies for a living. This case has nothing to do with the underlying conduct, which was merely a clerical error. These attorneys are one of the big reasons that unicorns are staying private. The most famous of these bottom-feeding attorneys, Bill Lerach, built an estimated net worth of $700 million [1]…

There's a great footnote to the article making a very similar point: > I should say, nothing in the actual court opinion here has anything to do with public markets: It's a decision of Delaware corporate law, applicable to public and private companies alike. But! The thing is, if Facebook was still private and controlled by its founder and a handful of venture capital firms, no one would have sued . It is not the law…

[deleted]
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