New SCO 8-K filing [LWN.net]

The SCO Group has filed a new 8-K form with the SEC. It seems that BayStar and the Royal Bank of Canada (the investors which have pumped $50 million into the company) got a little nervous and have demanded a new clause in their agreement: the investors now have veto power over any SCO action which could trigger the 20% contingency payment to SCO's lawyers.

Also filed is a letter from Boies, Schiller & Flexner describing the arrangement between the companies. It reveals some discomfort with the involvement of Kevin McBride, Darl's brother, and requires an explicit confirmation that SCO's board has agreed to this involvement. A separate letter from SCO describes what Boies et al. will be doing, including "pursuing our potential claims against third parties arising out of the USL/BSDI settlement."

OT: groklaw

Posted Dec 9, 2003 16:04 UTC (Tue) by cdamian (subscriber, #1271) [Link] (1 responses)

Not directly related to this news item, but I think groklaw should have a link on the lwn.net frontpage. A lot of the current SCO coverage is from groklaw and its a lot more interesting than for example slashdot.

And its bloody good too.

christof

OT: groklaw

Posted Dec 9, 2003 17:07 UTC (Tue) by TimCunningham (guest, #10316) [Link]

Someone could always buy them a rotation in the Sponsored Link section :)

Beginning, meet end

Posted Dec 9, 2003 16:16 UTC (Tue) by csigler (subscriber, #1224) [Link]

This certainly seems to me like the beginning of the end. When your supporters (investors and lawyers who, of course, have a vested interest in your legal/business success) start backing away.... The question now seems to be, what is the end game and how long will it take?

Clemmitt

New SCO 8-K filing

Posted Dec 9, 2003 16:17 UTC (Tue) by jre (guest, #2807) [Link] (1 responses)

I find it interesting that Schedule A was "Deleted by agreement among the parties hereto."

Anyone care to guess which kinds of legal representation Boies, Schiller & Flexner have refused to provide to SCO?

New SCO 8-K filing

Posted Dec 9, 2003 17:34 UTC (Tue) by kingdon (guest, #4526) [Link]

I would guess that the excluded items are ones that could cause a conflict of interest. And that they are not disclosed because they would impinge on attorney-client privilege (i.e. they are work that Boies is doing for non-SCO clients).

Someone who knows law firms better than I would be able to say whether my guess is a plausible one, and/or whether there are other likely explanations.

New SCO 8-K filing

Posted Dec 9, 2003 16:23 UTC (Tue) by penguinroar (guest, #14460) [Link] (1 responses)

What i find intriguing is to know who is behind BS and RBoC? I have a hard time imagine them finding SCOX a good stock on its own merit. As a company they have none, no products, no revenue and no product development in the pipe. The only possible source of income is from litigation and the litigation in quiestion is on very shaky ground.

As far as i can tell someone is behind piping money into SCOX to keep the FUD slinging going. If the stock was to fall the board of SCO would most likely be put infront of an angry mob of investors questioning the litigation approach to making business.

The 20% contingency payment to the lawyers makes you wonder if SCO should change their name to suit their business, maybe to SCO, Boies,Schiller & Flexner?

New SCO 8-K filing

Posted Dec 10, 2003 12:35 UTC (Wed) by Wol (subscriber, #4433) [Link]

According to Groklaw, there very definitely IS someone behind RBC. It will be interesting to find out who.

There's some very interesting stuff in the analysis of these filings there. I wonder what will happen if IBM does a "follow the money" behind the RBC/BayStar investment.

Interesting that both BayStar and Blake Stowell share their initials with Mr Bull Shit :-)

Cheers,
Wol

Raised Rates

Posted Dec 9, 2003 18:04 UTC (Tue) by ncm (guest, #165) [Link] (2 responses)

What I found interesting was that the Feb. 26 letter had BS charging SCO at a 1/3 discount for all but paralegal work and supplies, while the later letter has BS charging full price. That's a 50% increase, for the innumerate among you (for all the good the figure will do you :-).

Is this evidence of pique over McBride having misled BS about the validity of the evidence they would be able to bring to court? It must be hard for Boies to go to his club and be smirked at.

Raised Rates

Posted Dec 9, 2003 18:30 UTC (Tue) by ccchips (subscriber, #3222) [Link]

"It must be hard for Boies to go to his club and be smirked at."

It wouldn't be hard for *me*. I don't have that kind of money, so I don't have a club.

But since this whole SCO thing started, I have often thought about getting one, then rejected the idea because I'm more civilized than they are.

Raised Rates

Posted Dec 9, 2003 18:43 UTC (Tue) by alphajim (guest, #9856) [Link]

Not exactly. What they said was that the defense of the RH suit and IBM countersuit was full rate, whereas the original suit was billed at a discount and Bois et all were to be comp'ed via stock and other agreements. The interesting date is March first. Thats when Bois' firm gets the 400k shares. If the stock dives before they can dump it, I see a rapidly declining interest on their part to persue the case.

Look for the FUD and PR to really ramp at the end of Febuary

What kind of crazy investor is on board with SCO?

Posted Dec 9, 2003 19:05 UTC (Tue) by pyellman (guest, #4997) [Link] (3 responses)

On the day that SCO was ordered by the judge to produce evidence of its claims, SCO's stock dropped signficantly. Think about that: IT IS IN EFFECT RECOGNIZED (BY THE MARKET) THAT HAVING TO PRODUCE EVIDENCE OF THEIR CLAIMS IS HARMFUL TO SCO'S CASE! Doing so was widely reported as a legal "victory" for IBM!

What a bizzare topsy-turvy tale this is.

I have an inexplicable desire to meet or know who are the individual idiots who are buying SCO stock given the above. Although I guess I'll end up supporting any such investors who bring suit against SCO for fraud, or any related criminal cases, it will be grudgingly, since that kind of greed induced stupidity is certainly hard to forgive. The institutional investors are probably at least partly protected by secret provisions or external financing, so hopefully they will be roasted along with SCO.

Peter Yellman

What kind of crazy investor is on board with SCO?

Posted Dec 9, 2003 19:19 UTC (Tue) by jamienk (guest, #1144) [Link] (2 responses)

>>IT IS IN EFFECT RECOGNIZED (BY THE MARKET) THAT HAVING TO PRODUCE EVIDENCE OF THEIR CLAIMS IS HARMFUL TO SCO'S CASE!

But investors could have been betting that something happens short-term to boost the stock price: money pumped into SCO from Linux/IBM enemies, IBM/other company purchasing SCO, ignorant buyers or speculators buying the stock, etc.

Sometimes it pays to go along with the mob, even when you know the mob is wrong (witness the dot-com boom).

What kind of crazy investor is on board with SCO?

Posted Dec 9, 2003 20:21 UTC (Tue) by pyellman (guest, #4997) [Link] (1 responses)

Yes, you can look at it as a short term play. Nevertheless, it is an unusual type of short term play that is taken (apparently) in the context of open recognition that someone (investors) will, sooner or later, be left "holding the bag". In that sense, I think it differs from your standard short term plays, even those categorized as very risky. Playing the stock market is often compared to a form of gambling, but this is taking on the particular characteristics of something like a round of Russian Roulette, or perhaps a Ponzi Scheme.

Peter Yellman

What kind of crazy investor is on board with SCO?

Posted Dec 11, 2003 9:47 UTC (Thu) by ekj (guest, #1524) [Link]

There is a lot of short interest in the stock too. By that I mean, not short-term interest, but interest in shorting the stock. Around 25% of the float last time I looked, and I'm sure it's grown since then. And then there's the puts.

For those unfamiliar with stock-options. A "put" is a contract giving you the rigth to sell a given stock for a given price at any date before a certain end-date. For example, you could buy a contract giving you the rigth to sell SCO stock for $15 a piece until say june 04. If by that date the stock is worth less, you'll profit, because if in the start of june the stock is cheaper, you can go buy it for say $2, and then use your contract to sell it at $15.

A "short" is essentially to borrow a stock from someone, and then sell it. Later you have to give the stock back to the lender, but you're betting that you'll be able to do so cheaper. For example, let's say you borrow 100 SCOX stocks from some sucker today, and sell them for $15 a piece. In half a year, he wants his stocks back: no problem, you buy them back at $2 a piece and return them to him. (Ofcourse this strategy, unlike the one above, blows up in your face if SCOX costs $30 in june, unlikely though that may be..)

Anyways, a *lot* of people, (in the interest of full disclosure: me included) have bet money that SCOX will fall like a rock in the next 6 - 12 months. Personally I think the biggest risk is that it's hard to predice exactly how quickly they'll fall, and there's also still a nonzero chanse that they'll be bougth out by someone. YMMV.

aw...

Posted Dec 10, 2003 1:43 UTC (Wed) by lyda (subscriber, #7429) [Link]

all is not happy in sco-land? the minions are nipping at each others' heels? aw, so sad. i wonder if they'll implode in internal lawsuits?

i suspect that after they're done trying to claw each other's eyes out they'll be stunned to open the front door to find ibm, redhat and some very annoyed investors waiting there for them.

New SCO 8-K filing

Posted Dec 10, 2003 4:23 UTC (Wed) by piman (guest, #8957) [Link]

> Also filed is a letter from Boies, Schiller & Flexner describing the arrangement between the companies. It reveals some discomfort with the involvement of Kevin McBride, Darl's brother, and requires an explicit confirmation that SCO's board has agreed to this involvement.

Are you referring to the fourth paragraphy? I don't see any "discomfort" there, but merely a request to acknowledge that a relation works there (this may even be required by law, I don't know). Especially given that this letter seems to have been sent on Feb. 23rd, I'm guessing it's totally unrelated to anything that just happened.