Upsets and Underdogs Top the News: Rulings on File-Sharing, Acquittals, and Regulatory Battles

Strategic Insights -

The past week saw significant upsets and surprises in the realms of technology, business, and finance, with the US Supreme Court ruling on file-sharing, a high-profile acquittal, and regulatory battles between industry giants. The Supreme Court's decision may have far-reaching implications for the Internet, while a surprise acquittal has left many questioning the evidence presented. Meanwhile, the tech industry is witnessing a significant shift in power, with Intel facing a lawsuit from Advanced Micro Devices.

Key Takeaways:

  • The US Supreme Court ruled unanimously that file-sharing services can be held responsible for copyright infringement, rejecting the argument that they should not be liable for their customers' actions.
  • Chief Justice David H. Souter stated that there was compelling evidence of widespread theft of copyrighted material, with 2.6 billion digital files swapped each month, and that both file-sharing companies "took active steps to encourage infringement."
  • Richard M. Scrushy, the former CEO of HealthSouth, was acquitted on 36 federal criminal counts, including conspiracy, securities fraud, and mail fraud, despite the testimony of six former executives who implicated him in a $2.7 billion accounting scheme.
  • Scrushy's acquittal leaves him facing numerous civil lawsuits, including those filed by the Securities and Exchange Commission and shareholders seeking to force him to turn over his personal assets.
  • Bernard J. Ebbers, the former WorldCom CEO, has offered to give up most of his personal assets to settle lawsuits filed by investors, potentially raising $25-40 million to be pooled with funds from banks, former directors, and Arthur Andersen.
  • Bank of America offered $35 billion in stock and cash to buy MBNA, a big credit card issuer, in a deal that could accelerate consolidation in the credit card industry.
  • Advanced Micro Devices (A.M.D.) sued Intel, accusing the chip maker of using discriminatory rebates and subsidies to threaten customers who buy A.M.D.'s chips.
  • William H. Donaldson ended his tenure as chairman of the Securities and Exchange Commission by presiding over a testy vote affirming a rule requiring greater independence on mutual fund boards.

Statistics:

  • 2.6 billion: The number of digital files swapped each month, according to music and movie companies.
  • 36: The number of federal criminal counts acquitted on by Richard M. Scrushy, including conspiracy, securities fraud, and mail fraud.
  • $2.7 billion: The amount of accounting fraud perpetrated during Scrushy's tenure as CEO of HealthSouth.
  • $200 million: The amount Scrushy allegedly amassed from the accounting scheme.
  • $25-40 million: The potential amount raised by Bernard J. Ebbers's offer to settle lawsuits filed by investors.
  • $35 billion: The amount Bank of America offered to buy MBNA, a big credit card issuer.
  • 5: The number of former finance chiefs who testified against Scrushy, alleging he orchestrated the accounting scheme.

Sources:

  • "TAMING THE WEB" - The New York Times, May 19, 2005
  • "SURPRISE ACQUITTAL" - The New York Times, May 19, 2005
  • "SPEAKING OF LAWSUITS" - The New York Times, May 19, 2005
  • "PLASTIC? FANTASTIC!" - The New York Times, May 19, 2005
  • "THE MOUSE THAT SUED" - The New York Times, May 19, 2005
  • "TUMULTUOUS FAREWELL" - The New York Times, May 19, 2005