Shareholder sues IBM for spying on China, wiping $12.9B off its market cap


#1

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#2

As a European who was worried that our IT industry had fallen so far behind, I would like to thank the NSA for more help than I ever thought possible.


#3

Hang on…the headline and synopsis doesn’t quite capture the true nature of the lawsuit. We’re lead to believe that this pension fund got a case of conscience when they found out about the spying. Nothing could be further from the truth.

The shareholders are not suing IBM because they helped the NSA spy on China; they’re suing because China found out about it and stopped buying IBM products - leading to a massive fall off in business and subsequent drop in shareprice.

It seems to me this pension fund would be quite happy for IBM to continue their previous extralegal data gathering activities if if meant keeping their profits up.


#4

See? They are the good guys after all!


#5

Yeah, this isn’t the shareholders saying “Don’t spy!”, it’s the shareholders saying “Be better at lying about spying!”


#6

Of course, but it still means that participating in illegal or unethical spying has a significant downside. IBM campaigned for the right to destroy their own share value by allowing spying. Presumably they thought there was no downside - only happy government pals and more money somehow. Now they have discovered the downside, that there is a consequence for betraying their own customers, especially abroad.

This changes the decision making process for corporations that are asked or told to participate in NSA or other spying programs. If their shareholders can sue them for participating and a subsequent loss of share value, then maybe they won’t.

The only thing more valuable than share value in our current society is, well, nothing. Put the fate of 1000 babies on one side of a decision, and the fate of the Dow Jones on the other, and those babies are toast.

These guys have now discovered that helping the NSA affects share value. This is HUGE.


#7

Exactly. They will see the need for change when they feel an acute pain in their wallets.


#8

In some ways it won’t even matter much if the lawsuit wins. It changes the game when their share value might be impacted by helping the NSA. They are legally obligated to maximize share value at the expense of all other considerations - witness the destruction of the climate and any number of other tragedies rooted in the focus on profit and share value.


#9

To us otherwise rational human beings it seems logical that poor business decisions would result in negative consequences to the bottom line but let’s not pretend that this pension fund is operating under some kind of moral conscience or expecting IBM to hold to an ethical code of conduct because they were caught with their hands in the cookie jar.

They would be very content had this information never been revealed and the company’s profits continued to expand as the analysts predicted. I’m also willing to bet that they would not have objected even if they had somehow known about the NSA surveillance program in advance as long as they were guaranteed an expected return on investment.

I’d be very pleased if this lawsuit results in BODs all over the country reigning in their cooperation with the surveillance state due to fear of shareholder lawsuits but it’s disingenuous to expect them to voluntarily refuse to participate in spying programs when the NSA has such tremendous sway in whether or not their products can be licensed and sold abroad.

To say that all these tech companies are being forced into participation would be an understatement. Let’s not be naive in thinking that IBM had any choice in the matter.


#10

I think they have to prevail in the suit, otherwise, it will be business as usual, with a precedent set.


#11

They certainly do have a choice when it comes to what side of issues they push when they lobby Congress, and if I’m reading the article correctly that is the foundation of the class action lawsuit…


#12

Aren’t they also compensated by the government for these deeds?


#13

To sue someone (a corporation) for taking a known risk in the stock market, is laughable. Most likely, IBM buries them with stalling litigations.

Has the pension fund done Flushed it stack hold ? If not, after they successfully sue IBM , the court reward may be eroded by IBM stock value after the discession


#14

Bonds are only safe if you assume long-term stability of the currency. Given the recent 8 decades, that is not a safe assumption. Bonds are as much a gamble as equities, and at present I would argue that buying long-term bonds is equivalent to burying your money in the back yard. In fact it is worse, because you can always dig up the money, while the bonds could easily face a default.


#15

Right, sorry, I appended as you responded. It’s all risk, but how much is the name of the game. Hell, money isn’t real we all just agree it has a certain Value.


#16

Until Snowden did his leaks the various tech corporations could aid the NSA in spying on their customers in the blithe assumption that there would never be a downside to participation. That assumption is dead on the ground. The world does not trust US products - hardware and software.

There is now an incentive to resist such blatant and egregious spying. There is also a business case for competitors - probably outside the US - to make products that are spy-proof.

Some of the companies will continue enabling the NSA and its like. Others will not. This is a new business environment, and a shareholder lawsuit is only a small part of a dramatically changing picture.

It’s one thing for a corporation to sell out its customers without consequence. it is another thing altogether to lose profits and share value. We have already, as a society, demonstrated quite thoroughly that we will happily let millions die to protect share value, I am sure that we will also resist government overreach to do the same.


#17

I think the takeaway is more that they’ve discovered that whistleblowers affect share value. Don’t expect them to not spy because of this. Expect them to make it harder for whistleblowers to do what they do.


#18

The whistleblower was government (more or less). This is corporations we are talking about.

Now a CEO that receives a request/demand from the NSA will have to consider the possible downside to co-operating, as well as whatever upside they might perceive.


#19

Y’know, the fact that people are focused on market cap is a good symptom of what’s wrong with the stock market these days. People aren’t investing, they’re gambling … and they’re demanding that companies be managed to support their gambling games.


#20

Money is the ultimate consensual hallucination.