Friday, April 29, 2011

Jurors in the Galleon Trial are Asked to Question the Definition of Public Information

NEW YORK, NY - MARCH 23:  Billionaire Galleon ...Image by Getty Images via @daylife“If it’s public you must acquit.”

According to NY Times DealBook, those were the words of Raj Rajaratnam’s lead defense attorney, John Dowd, in his closing arguments to the jury last week, conjuring up memories of the O.J. Simpson murder trial in 1995, where defense attorney Johnnie Cochran famously coined the phrase, “If it doesn’t fit, you must acquit.”

While it may not be completely fair to compare an insider trading trial to a murder trial, I do find some amazing similarities between the two cases:

Both defendants are powerful public figures. While Simpson made his name as a star running back on the football field, Rajartanam made his name in the finance world; Forbes listed Rajaratnam the 236th richest American, with an estimated net worth of $1.8 billion in 2009.

And both defendants seem to believe they are invincible, untouchable, and perhaps even above the law.

To quickly bring you up to speed
: Raj Rajaratnam is awaiting sentencing in his trial for insider trading while he led the Galleon Group. Many cooperating witnesses have pled guilty. Some are already serving jail sentences. Rajaratnam is considered to be the leader of what is being called the largest insider trading scheme, ever. Numerous tapes of telephone conversations between Rajaratnam and those he was allegedly soliciting information from, have been played for the jury.

The most amazing similarity between the O.J. Simpson trial and the Rajaratnam trial is the defense strategy. In each case, the defense focused on one simple argument to cast doubt. In the Simpson murder trial, it was the glove. In the Galleon case, it is the question of what is public information.

There is no doubt in my mind that what occurred in this case is exactly what the insider trading laws are intended to protect; The law dictates that the buying or selling of a security, while in possession of material, nonpublic information about the security, is illegal.

The defense did not argue that Rajaratnam didn’t do it.

There is no doubt that Rajaratnam did indeed discuss company information with people in key corporate positions, and he did indeed rely on others to bring him that information. We heard the tapes and read the transcripts of the calls. There is also no doubt that he traded (and profited) on that information. To argue that he didn’t do it would have been an exercise in futility.

Instead, defense attorneys argued that it wasn’t illegal, by focusing on the one item in the law that could be questioned:

What is public information?

In today’s world of 140-character messages, on demand, and easy sharing, when does information become public? Is a press conference or a press release required to make company results public? If someone asks a question and they receive an answer, is the information then public? Having little else to go on, the defense strategy may turn out to be nothing short of brilliant.

Regardless of the outcome of this trial, I think the question of when information becomes public will be one that we will be debating for some time. What do you think?

Friday, April 22, 2011

The Flip Video Camera – Cisco’s Decision to Abandon a Market

For Christmas 2008, Santa surprised me with a Flip Video camera. I hadn’t asked for it, and didn’t know I needed it, but I was delighted with the gift. There was a lot to like about this video camera:

It was small and sleek and weighed less than a pound. I could put it in a pocket or a handbag.

Flip UltraHD Video Camera - Black, 8 GB, 2 Hours (3rd Generation) NEWEST MODELIt was simple and intuitive. Push the red button to start recording, push the red button to stop recording. Flip out the USB to connect it to my computer to download videos. Instantly share videos on facebook or send them to friends. There was no need to become a master photographer, and no need to even read the instructions.

I loved everything about it.

According to the New York Times’ David Pogue, the Flip has a 35 percent share of the camcorder market and it’s the top selling camcorder on Amazon.

Just who abandons a market when they have a top-rated product and top market share?

Cisco does. Cisco bought the company that made the Flip just two years ago, and last week they announced that they are abandoning the product line, laying off 550 workers.

Some might say the market for a hand-held video camera was dying off as our smartphones can now shoot video. But no smartphone I have seen can hold a candle to the Flip. The Flip did one thing, but it did it extremely well. Which once again raises the question of dedicated versus multi-purpose devices. I like that my smartphone can take video, but I don’t expect to see the same kind of high quality HD video from my smartphone as I can get on my Flip – not for a very long time.

I’m hanging onto mine. It will be a collector’s item some day.

Friday, April 15, 2011

Characters Inspired by the Galleon Trial

NEW YORK, NY - MARCH 08:  Billionaire Galleon ...Image by Getty Images via @daylifeThere are no dead bodies. There was no sexual assault. There are no psychopaths or serial killers involved (as best we can tell). Yet, the Galleon trial, now in its sixth week, continues to fascinate me as the defense attempts to refute the mounds of taped evidence that the prosecution presented, along with a string of cooperating witnesses who testified that they broke the law by providing Raj Rajaratnam with insider information.

As Andrew Ross Sorkin noted in his NY Times Dealbook column, the Galleon trial is “a suspenseful, complex financial version of Law & Order”.

As the defense lawyers argue that Rajaratnam was just doing his job, what I find most fascinating are the characters in this story. If I were to write the Law and Order episode (fictional, of course) here’s how I would profile the leading characters:

There’s the femme fatale, inspired by Danielle Chiesi, who fools herself into thinking that she’s made a career using her brains. It’s really her talent at seeking out highly successful male executives and using her super-powers to get them to spill their company’s confidential secrets that gets her ahead. I would cast Sharon Stone in this role.

Next we have the cooperating witnesses. Most of them are still wearing two-thousand-dollar suits, but they are tired and worn down and wondering how they could have possibly gotten themselves in this mess after working so hard to make it to the positions they’ve now been fired from. These characters could be played by Bill Paxton and Chris Noth, among others.

Finally, the lead male character would have to be inspired by Raj Rajaratnam. This character is a self-made billionaire, who truly believes that all he was doing was chasing after the American Dream. He also believes he is above it all, and that his financial status will shield him. Despite his extreme arrogance, he has an uncanny ability to self-destruct. I am having difficulty casting the actor for this role. Perhaps Mel Gibson? Or maybe we need to go with an unknown actor.

Unlike the real-life story, in my fictional story, the Rajaratnam character would have to take the stand, believing that if he could just speak to the jury he could convince them that he is innocent.

As the real-life trial draws to a close, will there be a cliffhanger ending as Sorkin suggests? What do you think?

Friday, April 8, 2011

The Way We Used to Read Books

Anyone over the age of forty has probably found themselves having a discussion with someone under the age of twenty describing how we used to make phone calls. The story goes something like this:

“When I was a child, the only phones we had were connected by a cord to the telephone line in a wall. You know those telephone poles you see outside? Conversations travelled across those wires from one phone to the next. My grandmother even had a little telephone table that she sat at while she made her phone calls.

“The telephone itself had a rotary dial, and later we had push button dialing. But we couldn’t walk around the house with the phone – the length of the telephone cord limited us. In the 1980’s cordless phones became popular, but the reception was poor, and you couldn’t travel too far from the base…”

I find myself imagining the conversations we will be having within the next couple of decades about how we used to read books. The story will go something like this:

“When I was a child a book was something that was printed on paper. It had a cover and hundreds of pages. We kept the books we owned on a large wooden bookshelf in the living room – each book taking up about an inch of space.

“When we wanted to borrow books we went to the library – that was a place where all the books were available to the public, for free. We could borrow them for two weeks and then we had to return them. Sometimes we had to wait for the book we wanted to read to become available.

“We could buy books at a bookstore. Yes, I do mean, but I’m really referring to stores like you find at the mall or shopping plaza. Bookstores were places where you could go to browse the newest books and purchase your own copy to read, lend to a friend, or give as a gift. At some of these bookstores you could have a cup of coffee while checking out the latest books.

“If you were lucky enough to meet the author you could even have a book signed – those books were treasures.

“We turned pages with our fingers, being careful not to bend them as we did so. The idea of swiping a screen to turn a page was inconceivable. The only screens we had were on our TVs, and later our computers. But we didn’t touch the screens – that would leave annoying fingerprints that had to be cleaned…”

Is this what we’ll be saying in the future? I predict that we’ll be having these conversations within the next ten years. What do you think?

Friday, April 1, 2011

Publishing: Dead, or Alive?

Behold the iPad in All Its Glory.Image via WikipediaThere certainly have been predictions of the death of the publishing industry.

The Borders bookseller’s declaration of bankruptcy certainly would support this view. Fewer books are being traditionally published each year. Everywhere we look magazines are struggling, and newspapers are going out of business.

On the other hand…

More and more writers are making their work available on blogs – arguably the simplest form of self-publishing. Every day more than 50 thousand new blogs are created, adding to the over 157 million already being published every day, according to BlogPulse.

iPad recently launched a daily newspaper at a subscription price of $0.99 a week – significantly less than the rarely-read newspaper that gets to delivered to my door.

By mid-year, 2010, Amazon reported that it was selling more e-books than hardcover books. Indie writers (and by that I mean those that choose to self-publish) are taking advantage of that trend, with more and more writers who have never had an agent or a traditional publisher hitting bestseller lists.

There are disruptive forces at play, the most important to this discussion being the emergence of mobile computing and electronic book readers.

While traditional publishing is no longer the only game in town, the publishing industry is very much alive.

The new publishing industry is still in its infancy, but like most new-borns, there is a lot of discussion, a lot of growing pains, and a lot of opportunity. The trick is to create some new rules and grab that opportunity!
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