Is this a legal way to make money or buy an entire company? A hypothetical very wealthy investor (which could be a large public traded company) feels that the XYZ stock is undervalued. The investor buys about 4% of the company. He then offers to buy the whole company for a 25% premium. He would be happy to buy the company at that price. The management of XYZ would like a higher price but the investor is not offering a higher price so the XYZ company attempts to find another buyer for the company at a higher price. If they succeed, the investor is happy because he made a nice short term profit. If they fail, he gets the company at a price he wants. Is there any legal issues using this approach?
This is very likely to be legal. The devil is in the details (there are lots of forms that are expensive to have lawyers prepare that you have to file with the Securities and Exchange Commission to carry out this plan and the transaction may need to pass anti-trust review and media ownership consolidation requirements to pass muster, for example). But this is pretty much the standard arrangement in a hostile takeover of a publicly held company (except that usually the offer is limited to a majority of the shares outstanding, or whatever percentage is necessary to secure control, rather than all of the outstanding shares of the company, and usually the control premium is a little larger than 26%). In practical reality, the Board will often have put in place a variety of legal measures, sometimes called &quot;poison pills&quot; to allow it to discourage tender offers (which is what these are called) when faced with bidders that management doesn't like, which can be waived for bidders that management does like, and this frequently results in litigation under an expansive and involved body of state corporate like in the Delaware Chancery Court in most cases. But those steps are more often speed bumps than deal killers in these kinds of transactions. The way this plays out in a privately held company, where there is frequently a shareholder's agreement restricting transfers, would be quite different. But the question appears to contemplate a publicly held company scenario/. Also, in practice, even an extremely wealthy investor couldn't afford to make a purchase like that without financial institution support (often in the form of corporate bonds in what is called a &quot;leverage buy out&quot;), or a &quot;committee&quot; of wealthy investors working together. But again, the source of financing doesn't seem to be the main point of this question.
Yes The directors of a company have a fiduciary duty to act within the law for the benefit of their shareholders - not to their customers, not to the government, not to the environment and not to the public. A lawsuit against the company will incur financial loss irrespective of if it is won or lost. It is difficult to see how it is in the shareholder's interest for the company to be enabling the funding of a lawsuit against it.
No If the price advertised is not honoured by the business and you are asked to pay a higher price, you do not have an automatic right to buy the item at the special offer or sale price. As long as the shop or business tells you before you pay that the higher price applies, you have the option to either buy it at the higher price or decide not to. However, the shop or business may be in breach of consumer law in relation to misleading advertising. The prosecution (or not) of the misleading advertising is the government’s task, not yours. This is a common formulation across Common Law jurisdictions as it a codification of the historic common law position. An advertised price is not an offer capable of acceptance, it is an invitation to treat. That is, it is an invitation for you to make them an offer and the price that is likely to be accepted. It is overlaid with later developments in consumer protection surrounding false advertising and misleading and deceptive conduct.
I think you're working off some false premises here. Whatever FMV is in the context of a meeting with Warren Buffet purchased by investors, it's probably different in the context of the U.S. Ambassador to the United Nations. Buffett has little to gain from a meeting with people whose job he's been doing more successfully for half a century. He has more to gain from meeting with high-ranking government officials; this is why political donors frequently drop thousands of dollars to attend a dinner where such officials are speaking, even when there's only an off chance of so much as a handshake. Assuming that a campaign-finance calculation of fair market value is roughly equivalent to that in the tax context, FMV for a lunch with Warren Buffett probably isn't $650,000. Because the Buffet lunch was purchased at a charitable auction, tax law would generally recognize that the price paid was not necessarily an accurate reflection of FMV. Instead, it would acknowledge that some portion of the price -- the amount in excess of FMV -- was actually a charitable gift. That of course still leaves the question of what FMV actually is for a lunch with Warren Buffet.
If three people inherited a house in equal shares, then a new deed should have been prepared and filed with the appropriate governmental authority (the county in most US states) before probate is closed. When that is done the authority of the executors over the house as executors has ended. However, if I understand you correctly, the two former executors are also two of the three heirs to the house. Thus they own a 2/3rds interest in the house. At least they can sell their interests without your consent, leaving you a minority owner with the purchaser owner a majority. In some jurisdictions they may be able to force a sale, paying you your share of the purchase price. But this would be because of their majority ownership, not because of their former status as executors. Addition: In some states co-owners who are joint tenants may not sell their interests without the consent of the other co-owners, but this is jnot true in North Carolina According to the site of the Hutchens Law office: ownership as tenants in common provides each party with the right to sell, gift, devise, or otherwise convey their interest in the property without the permission of the other owners. This means that the ownership interest is freely alienable or transferable. As a result, an owner may sell or give their interest in the property to anyone they want, or they may willingly or by judgment use their interest in the property to secure or satisfy a debt with a creditor. Therefore, parties entering into an agreement to purchase property as tenants in common should be aware that they may ultimately end up owning the property with a stranger. If this were to happen, there is a way out, but it may be costly. At any time, if the parties can't agree, any owner may petition the court for a partition of the property. The court could require one owner to buy another out or force the sale of the property. The court will decide the ultimate outcome based on equity. ... [I]f the intent of co-owners holding interest as joint tenants is to automatically transfer their interest at death to the survivor, the language must be on the conveying instrument as right of survivorship is not automatic with joint tenancy in North Carolina and if the language in not included, the decedent's interest will pass to his heirs. ... However, any owner has the right to convey their ownership interest during their life; and if they do, the survivorship agreement ends, and owners simply become joint tenants by operation of law. In North Carolina there seems to be little practical difference between co-owners who are tenants in common, and those who are joint tenants without a right of survivorship. But whichever form of co-ownership is chosen: tenants in common, joint tenants without a right of survivorship, or joint tenants with a right of survivorship, each of the co-owners has a right during his or her lifetime to sell, give away, or use as collateral on a loan his or her share of the property, without consulting the other co-owners. They cannot force the other co-owner(s) to sell, except by starting an action of partition in a court, when a judge would decide. An unrelated buyer might be unwilling to purchase only a 1/3 or 2/3rds interest, because the remaining co-owner(s) would still have full rights to use and occupy the house, can could sell to a different buyer. All co-owners are responsible for their proportionate shares of all expenses, including mortgage payments, repairs, and taxes.
They are still in business because they went to the agencies that regulate them and sought exemptions and waivers from the requirements that they not have criminal convictions. Certain highly regulated industries, like the banking and securities (stocks, bonds, etc.) industries require the companies, their executives, and individual people be licensed. Usually, individuals and companies with a history of "bad behavior", are denied licensure. Each industries regulations and laws define what that bad behavior is, but a felony conviction for a financial related crime certainly meets that definition. However, being denied a license or booted from the industry is not automatic. The agencies that enforce these regulations, have the ability to continue to license someone who has a felony conviction. I know I am speaking in general terms, but let us look at the securities industry for a specific example. Under the Investment Company Act of 1940, companies that manage investments/mutual funds, like J.P. Morgan &amp; Chase, Co. must be licensed by the Securities and Exchange Commission. To paraphrase, Section 9(a) of the 1940 Act, it says that individuals cannot control or manage an investment company if they had a felony conviction on the past 10 years. It goes on to state that those same requirements apply to companies meaning they are denied a license. But, section 9(c) allows “people” (which includes companies) that are prohibited from being licensed to get an exemption from these rules through the SEC's administrative process. Here, JP Morgan and the other companies mentioned in the press release are big players in the securities industry. All of them manage mutual funds and buy/sell securities for clients. Therefore, they each applied and received this exemption at the same time or right before they pleaded guilty so it wouldn’t disrupt their business. Here are the administrative orders from the SEC’s website dealing with this exact issue. J.P. Morgan Chase &amp; Co., et al. - Notice of Application and Temporary Order Release No. IC 31613; File No. 812-14466 The permanent order: SEC Release No. IC - 31674 If you’re interested in the law that applies, these orders are a good place to start. Also, here is a less detailed article on this issue in the NY Times.
No, but ... The CEO is an officer of the company (as are the directors and any others with the ability to substantially exercise control over the company) and as such, owes fiduciary duties to the company - not to the shareholders or any subset of them. For example, if it is in the best interests of the company to enter a trading halt but not in the best interests of the current shareholders then the duty on an officer is to do what’s best for the company. As another example, for a crime many limited by guarantee rather than by shares it’s rarely in the owner’s interest to have that guarantee called but it might be in the company’s interest.
This doesn't sound like fraud (against you, at least), but it does sound like an unfair or deceptive trade practice, which is outlawed by Section 5 of the Federal Trade Commission Act and perhaps the Pennsylvania Unfair Trade Practices and Consumer Protection Law, both of which prohibit unfair and deceptive trade practices. I don't know about Pennsylvania, but the FTC has on many occasions taken action against companies for engaging in just this kind of behavior. To find out whether you would be able to take action against the other company, you'd want to find a good competition lawyer in Pennsylvania. For some more basic background on the FTC's rules, check out this primer.