
IBM faces shareholder lawsuit over cooperation with NSA - fraqed
http://news.cnet.com/8301-1001_3-57615663-92/ibm-faces-shareholder-lawsuit-over-cooperation-with-nsa/?part=rss&subj=news&tag=title
======
DougN7
Whether this case has merit or not, I hope it makes it's way to the evening
news. Americans may not care about privacy, but they care about their jobs and
a prosperous economy.

~~~
waps
It probably does not. It is perfectly legal to damage anyone if you do not
violate any laws. Given that IBM can probably show a court order, if necessary
a retroactive one from the NSA.

In order to get a conviction, shareholders would have to prove : 1) that such
cooperation existed 2) that it violated existing laws 3) that they personally
suffered losses as a result.

3 looks to me hard to prove by itself, but the real problem is of course
condition 2. An action that was the result of directly following a court order
is not illegal, not even if it violates laws (that's the whole point of court
orders, after all).

I would be interested in what would happen if they did get a conviction. This
would be a weird situation. Shareholders own IBM, after all. So any damages
paid would effectively be a transfer from one part of their ownership to
another, effectively a zero-worth transaction.

~~~
dean
Shareholder litigation is typically brought under federal securities laws. In
this case IBM misled the market by failing to disclose material adverse
information which caused the stock price to fall. To prove you suffered losses
you only have to show that you bought stock during the time period affected,
and lost money as a result of the information coming to light.

This is interesting. Investors have a right to all material information about
a company, and public companies are obligated to provide that information, and
SEC regulations require that they do so. But, in this case, that information
was classified, so IBM would be breaking the law by revealing it. Conflicting
laws.

If the shareholders win, who knows, we may see more lawsuits like this. Maybe
that would compel these companies to stand up to the government.

~~~
waps
> Conflicting laws

All modern law systems have methods to resolve conflicts between differing law
interpretations. Every law falls somewhere on a priority list. At the top (in
the US) is the constitution and it's amendments (with the amendments higher
than the constitution). Then federal laws. Then federal executive orders. Then
... This is a very complex topic with dozens of exceptions and weird cases
(for example court orders have higher precedence than federal laws, except if
...).

But the end result is very simple : if 2 laws conflict one is more important
than the other, and you get to ignore one of them. To further qualify this
principle you have to build in perspective : it only matters what you see
personally, not "the truth", only how the situation appeared to you.

------
salient
Too bad it hasn't happened to AT&T (and other carriers), too. AT&T especially
has been pretty dismissive to shareholders caring about its relationship with
the NSA:

[http://www.techdirt.com/articles/20131208/00473825498/att-
te...](http://www.techdirt.com/articles/20131208/00473825498/att-tells-
shareholders-to-mind-their-own-business-concerning-its-relationship-with-
nsa.shtml)

~~~
YokoZar
Does AT&T have international business? It seems like a key point of the suit
is that the Chinese government cancelled IBM contracts due to these worries,
which translates to actual shareholder damages. I don't see any indication
AT&T has lost business as a result.

------
espeed
And IBM just lost a $600M CIA deal to Amazon
([http://news.cnet.com/8301-1001_3-57610011-92/ibm-bows-out-
of...](http://news.cnet.com/8301-1001_3-57610011-92/ibm-bows-out-of-fight-
with-amazon-for-$600m-cia-deal/)).

------
Istof
Could a company avoid NSA's do-not-discolse agreements by making all customers
employees or part-owners in the terms of service?

~~~
lambda
Why would it be expected that do-not-disclose agreements cover all employees
or owners? Most top secret information is handled on a need-to-know basis; it
is only given to people who are deemed to need to know it. Even within IBM (or
any other large company that was involved in PRISM or other NSA programs),
most people in the company wouldn't know about it. In general, there are only
a few people within the company, who have a secret or top secret clearance,
who get to know about what's going on.

Furthermore, owners don't know everything about a company either; shareholders
in a public company have no greater insight into the company than the general
public.

~~~
Istof
It's not the fact that they don't know everything, but is it illegal for them
to know everything relating to their company?

