David Einhorn's Greenlight Capital hedge fund may succeed in Apple Inc case, judge says
Mitchell Hurley, a lawyer for Greenlight, said Apple had violated U.S. Securities and Exchange rules that prohibit shareholders from voting for a proposal where they support only some but not all of the item. Einhorn says he supports two of those amendments but not the preferred stock amendment.
"In other words, it will result in precisely the kind of harm the rules were designed to prevent," Hurley said. Apple contends Proposal No. 2 doesn't bundle material matters together or force shareholders into an unfair choice. "The SEC had no objection and no comment" on the proposal, said George Riley, a lawyer for Apple .
While Sullivan said Greenlight may have shown it would likely succeed on the merits of the case, the judge during the hearing questioned whether an injunction was appropriate. The proposal became public in late December, yet Einhorn didn't sue Apple until Feb. 7.
"I'm not sure that necessarily is going to get you over the hump for irreparable harm," Sullivan said.
A separate lawsuit against Apple heard at Tuesday's hearing was filed by a different investor, Brian Gralnick. The lawsuit seeks to block not just a vote on Proposal No. 2 but also an advisory "say-on-pay" vote on executives compensation.
Sullivan indicated Tuesday he would rule against Gralnick on his request for an injunction. Apple shares ended regular trading on Tuesday down 17 cents at $459.99.
The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.
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