Judge Leans Towards Greenlight In Apple Battle

Feb 20 2013 | 12:33pm ET

A federal judge yesterday said he was inclined to side with hedge fund Greenlight Capital in its skirmish with Apple Inc.

U.S. District Judge Richard Sullivan said he was inclined to agree with Greenlight that Apple's proxy violates Securities and Exchange Commission rules against bundling unrelated matter. The hedge fund objects to Apple's linkage of a proposal to block itself from issuing preferred shares without shareholder approval with two other corporate-governance matters that Greenlight supports.

"I think success on the merits lies with Greenlight," Sullivan said after a nearly two-hour hearing.

But Sullivan did not immediately issue a ruling, despite the fact that Apple shareholders have only another week to vote on the proxy, and he expressed some skepticism about Greenlight's tactics, wondering why it took the hedge fund a month to file its lawsuit and questioning whether he really needed to take immediate action.

Greenlight opposes the "blank-check" preferred shares proposal because it would like Apple it issue preferred shares as a way to return some of its enormous $137 billion cash horde to investors.

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