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Is SCO Using the Linux Lawsuit to Pump Stock for Executive Gain?

SCO is a company that's been troubled for years now. With their first announcement about suing IBM, their stock went up, driven by speculators taking the risk that SCO may win or get bought out as a result.

With each subsequent outrageous announcement their stock bumps up further. Impressive stock performance for a company with little future that has been heading downhill for years, and impressive when you consider that even if they were to win one of these cases, the money won't flow in for years.

SCO recently announced the purchase of Vultus which is interesting because they haven't got much cash. Instead they used their pumped up stock as currency. Even more interesting is some of the details: SCO and Vultus are in the same building. The Canopy Group is the largest holder of SCO stock. The Canopy Group controls Vultus. The "purchase" really did nothing more than take money out of SCO stock and transfer it to the owners of Vultus.

And then there's the fact that SCO execs have been dumping stock since June, and then the tidbit in this report that these same execs received large options just prior to the IBM announcement [confirmed in the SEC filings].

These actions are reminiscent of the 2000 stock bubble, and certainly look like the criminal fleecing of investors that went on during that period. Doubtful that the SEC will be investigating. They're still busy protecting Ken Lay.

Addendum: a good collection of SEC filing links at Groklaw.

Posted by Mark Friday, August 01, 2003 12:01:00 AM | permalink |