Category Archives: Legal

Elon Musk Is Mad At The SEC Again

Elon Musk, Legal

The Securities and Exchange Commission is preparing “numerous counts” against Elon Musk, according to a letter from his lawyer that Musk posted to X. It has also “reopened an investigation into Neuralink” The Verge reported.

The letter is short on specifics — such as what the charges may be, and how many Musk companies are affected. Instead, Musk’s lawyer, Alex Spiro, complains that “the Commission Staff issued a settlement demand that required Mr. Musk agree within 48 hours to either accept a monetary payment or face charges on numerous accounts.”

Even this is somewhat unclear; presumably, Spiro means that Musk would pay a penalty rather than accept money from the SEC.

Musk has a long and storied history with the SEC, which he has said he does not respect. In 2018, Musk briefly pretended he’d take Tesla private before admitting two weeks later Tesla would stay public. The SEC then sued him over a tweet saying he had “funding secured” to take Tesla private.

Reuters reported The U.S. Securities and Exchange Commission has given Elon Musk until Monday to respond to an offer to resolve a probe into the billionaire’s $44-billion takeover of Twitter in 2022, a source familiar with the matter told Reuters.

The development, which signals the investigation may be nearing a conclusion, is the latest salvo in a year-long public feud between the top U.S. markets regulator and the world’s richest man.

Musk on Thursday posted on X a copy of a letter sent by his lawyer to the SEC Chair Gary Gensler saying the agency had given Musk 48 hours to agree to pay a penalty to settle the probe or face civil charges, and demanding to know whether Gensler was personally behind the settlement.

CNBC reported The U.S. Security and Exchange Commission has issued a “settlement demand” to Elon Musk, the tech billionaire disclosed in a social media post on Thursday.

The post included a copy of a letter sent by Musk’s attorney, Quinn Emanuel Partner Alex Spiro, to SEC Chair Gary Gensler. The letter said the federal agency had pressured Musk to agree to a settlement including a fine within 48 hours, or “face charges on numerous counts” regarding “Certain Purchases, Sales and Disclosure of Twitter Shares.”

The SEC has been investigating whether Musk, or anyone else working with him, committed securities fraud in 2022 as the Tesla CEO sold shares in his car company Tesla and shored up a stake in Twitter ahead of his leveraged buyout of the social network that is now known as X.

In my opinion, I don’t understand why billionaire Elon Musk is so angry about the SEC requiring a “settlement demand.” Why would one of the richest man in the world choose not to pay what he owed?

Google Says The DOJ Would Hurt US Consumers

google, Legal

Kent Walker, President, Global Affairs & Chief Legal Officer, Google & Alphabet, posted: “DOJ’s staggering proposal would hurt consumers and American’s global technology leadership”

As part of its lawsuit over how we distribute Search, the U.S. Department of Justice (DOJ) tonight filed a staggering proposal that seeks dramatic changes to Google services.

DOJ had a chance to propose remedies related to the issue in this case: search distribution agreements with Apple, Mozilla, smartphone OEMs, and wireless carriers.

Instead, DOJ chose to push a radical interventionist agenda that would harm Americans and America’s global technology leadership. DOJ’s widely overbroad proposal goes miles beyond the Court’s decision. It would break a range of Google products — even beyond Search — that people live and find helpful in their everyday lives.

This extreme proposal would:

Endanger the security and privacy of millions of Americans, and undermine the quality of products people love, by forcing he sale of Chrome and potentially Android.

Require disclosure to unknown foreign and domestic companies of not just Google’s innovations and results, but even more troubling, Americans’ personal search queries.

Chill our investment in artificial intelligence, perhaps the most important innovation of our time, where Google plays a leading role.

Hurt innovative services, like Mozilla’s Firefox, whose businesses depend on charging Google for Search placement.

Deliberately hobble people’s ability to access Google Search.

Mandate government micromanagement of Google Search and other technologies by appointing a “Technical Committee” with enormous power of your online experience.

Endanger the security and privacy of millions of Americans, and undermine the quality of products people love, by forcing he sale of Chrome and potentially Android.

Require disclosure to unknown foreign and domestic companies of not just Google’s innovations and results, but even more troubling, Americans’ personal search queries.

Chill our investment in artificial intelligence, perhaps the most important innovation of our time, where Google plays a leading role.

Hurt innovative services, like Mozilla’s Firefox, whose businesses depend on charging Google for Search placement.

Deliberately hobble people’s ability to access Google Search.

Mandate government micromanagement of Google Search and other technologies by appointing a “Technical Committee” with enormous power of your online experience.

The Guardian reported: The US Department of Justice has proposed a far-reaching overhaul of Google’s structure and business practices, including the sale of its Crome browser, in a bid to end is monopoly on internet search.

The DOJ proposals follow a landmark court ruling in August in which a federal judge ruled that Google maintained an illegal monopoly over search services.

The proposals filed to a Washington federal court include the forced sale of the Crome browser and a five-year ban from entering the browser market; a block on paying third parties such as Apple to make Google the default search engine on their products; and divestment of the Android mobile operation system if the initial proposals do not work.

ArsTechnica reported: Yesterday, the US Department of Justice filed its proposed final judgement, officially recommending a broad range of remedies to end Google’s search monopoly.

Predictably, Google is not happy with the DOJ’s plan, which require the company to sell its Crome browser. It also retains the option of forcing Google to divest Android if competition doesn’t increase the behavioral remedies, including bans on exclusive default deals with other browsers and device makers.

Additionally, Google is prohibited from building any new browsers and must fund an education campaign that shows people how to switch search engines and potentially even pays people to switch.

Google may also be restricted from using its data scale advantage to benefit its AI products.

In my opinion, it appears that Google is trying very hard to blame the Department of Justice for the decisions that the DOJ made. It is clear that Google is not interested in making changes.

Apple Wins $250 But Little Else At Trial On Watch Patents

Apple, Legal

A federal jury in Delaware awarded Apple Inc. $250 on Friday, finding the original designs of Masimo Corp’s smartwatches infringed Apple Watch design patterns, Bloomberg Law reported.

The jury’s mixed verdict marks the latest chapter in a long-running clash over smartwatch patents pitting Apple, a tech giant worth more than $3.5 trillion, against Masimo valued at $7.5 billion. The dispute led to an import ban of certain Apple Watch models on Christmas Day of last year, the appeal of which is pending at the US Court of Appeals for the Federal Circuit.

Apple’s $250 damages demand was the minimum it could ask for while seeking a jury trial instead of a bench trial over Masimo’s alleged infringement of the Apple Watch’s aesthetic and functionality. Although Apple won damages form the jury, the decision all but removed its chance to block Masimo’s current products.

Reuters reported Apple convinced a federal jury on Friday that early version of health monitoring tech company Masimo’s smartwatches infringe on two of its design patents as part of a broader intellectual property dispute between the companies.

The jury, in Delaware, agreed with Apple that previous iterations of Masimo’s W1 and Freedom watches and chargers willfully violated Apple’s patent rights in smartwatch designs.

But the jury awarded the tech giant, which is worth about $3.5 trillion, just $250 in damages — the statutory minimum for infringement in the United States.

Apple’s attorneys told the court the “ultimate purpose” of its lawsuit was not money, but to win an injunction against sales of Masimo’s smartwatches after an infringement ruling.

On that front, jury also determined that Masimo’s current watches did not infringe Apple patents covering inventions that the tech giant had accused Masimo of copying.

Engadget reported the legal battle between Apple and medical technology company Masimo rages on, with the bigger company — sorta, kinda — winning their latest face off. 

A federal jury has agreed with Apple that previous versions of Masimo’s W1 and Freedom watches infringed on its design patents, according to Reuters. It only awarded Apple $250 in damages, which is the smallest amount that could be awarded for patent infringement, but the company’s lawyers reportedly told the court that it wasn’t after money anyway.

What Apple, which is worth $3.5 trillion, wanted was an injunction on the sales of Masimo’s current smartwatch models. However, the jury determined that this newer models don’t violate Apple’s intellectual property. That is why Masimo is also treating the jury’s decision as a win, telling the news organization that it’s thankful for the verdict that’s “in favor of Masimo and against Apple on nearly all issues.”

In my opinion, it sounds as though Masimo and Apple are fighting for dominance over their specific patents. Both companies appear to believe that they have won their case.

U.S. DOJ Sues Visa, Alleging It Has An Illegal Monopoly

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The Department of Justice has filed an antitrust lawsuit against Visa, alleging that the financial services firm has an illegal monopoly over debit network markets and has attempted to unlawfully crush competitors, including fintech companies like PayPal and Square. The lawsuit, which was first rumored by Bloomberg, follows a multiyear investigation of Visa, which the company disclosed in 2021, The Verge reported.

“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” US Attorney General Merrick Garland said in a statement. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality of service. As a result, Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything.”

According to the complaint, Visa entered into paid agreements with potential competitors as part of an effort to fend off competition from newer entrants into the payment processing industry. These practices have allowed Visa to build an “enormous moat” around its business, the complaint alleges.

Reuters reported Visa shares took a hit on Tuesday after the U.S. Department of Justice filed a lawsuit accusing it of violating antitrust law by suppressing competition by threatening merchants with high fees and paying off potential rivals.

Visa, one of the world’s largest payment networks, processes more than 60% of debit transactions in the U.S., bringing it $7 billion each year in fees collected when transactions are routed over its network, the Justice Department said. The company protects that dominance through agreements with card issuers, merchants, and competitors, prosecutors allege.

Visa shares closed down around 5.5% on Tuesday.

CNBC reported The U.S. Justice Department on Tuesday sued Visa, the world’s biggest payments network, saying it propped up an illegal monopoly over debit payments by imposing “exclusionary” agreements on partners and smothering upstart firms.

Visa’s moves over the years have resulted in American consumers and merchants paying billions of dollars in additional fees, according to the DOJ, which filed a civil antitrust suit in New York for “monopolization” and other unlawful conduct.

Visa and its smaller rival Mastercard, have surged over the past two decades, reaching a combined market cap of roughly $1 trillion, as consumers tapped credit and debit cards for store purchases and e-commerce instead of paper money. They are essentially toll collectors, shuffling payments between the merchant’s banks and cardholders.

Visa called the DOJ suit “meritless.”

“Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services,” said Visa general counsel Julie Rottenberg.

“Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving,” Rottenberg said. “We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable.”

In my opinion, it sounds as though Visa has been doing some sketchy things. It is no wonder that the U.S. Department of Justice is looking into the situation.

DOJ Sues Landlord Software RealPage For Inflating Rent Prices

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The U.S. Department of Justice and eight state attorneys general have filed an antitrust suit against the real estate software company RealPage accusing it of colluding with landlords to decrease competition and artificially inflate rental prices, Gizmodo reported.

The complaint alleges that the Texas-based company feeds nonpublic information about rent rates and lease terms between competing landlords into its algorithms, which then recommend rate increases to landlords based on their competitors’ information. The result, the DOJ says, is that landlords don’t compete against each other to attract tenants and rents go up across entire markets.

“By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematic coordination of rental housing prices – undermining competition and fairness for consumers in the process,” Deputy Attorney General Lisa Monaco said in a statement. “Training a machine to break the law is still breaking the law.”

The U.S. Department of Justice posted a press release titled: “Justice Department Sues RealPage for Algorithmic Pricing Scheme that Harms Millions of American Renters” 

…The complaint cites internal documents and sworn testimony from RealPage and commercial landlords that make plain RealPage’s and landlords’ objective to maximize rental pricing and profitability at the expense of renters. For example:

RealPage acknowledged that its software is aimed at maximizing prices for landlords, referring to its products as “driving every possible opportunity to increase price,” “avoiding the race to the bottom in down markets,” and “a rising tide raises all ships.”

A RealPage executive observed that its products help landlords avoid competing on the merits, noting that “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.”

A RealPage executive explained to a landlord that using competitor data can help identify situations where the landlord “may have a $50 increase instead of a $10 increase for the day.”

California Attorney General Rob Bonta posted information regarding RealPage:

California Attorney General Rob Bonta today, alongside the U.S. Department of Justice, and a bipartisan coalition of eight attorney’s general, filed a lawsuit against RealPage, a revenue management software company used by landlords to price multifamily rental housing units. 

The lawsuit alleges RealPage enabled landlords to artificially raise rents in a pricing alignment scheme that increased their rent revenue across the board, enabled by the illegal sharing of confidential pricing and supply information. 

“Anticompetitive agreements are illegal, whether done by a human or a software program. RealPage misused private and sensitive consumer data to take competition out of the rental industry, leaving renters no other choice but to pay the intentionally high prices that landlords agreed to set,” said Attorney General Rob Bonta. 

“This means even if the rental home supply was high, rent prices stayed the same, and in some cases rents went up. This conduct is unacceptable and illegal, and given California’s current housing shortage and affordability crisis, it is causing real harm. Every day, millions of Californian’s worry about keeping a roof over their head and RealPage has directly made it more difficult to do so.”

In my opinion, it appears that the landlords, who decided to give themselves a raise through RealPage, should be ready to face legal charges from the U.S. Department of Justice. 

Musk’s X Corp Loses Lawsuit Against Hate Speech Watchdog

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A U.S. judge on Monday threw out Elon Musk’s lawsuit against a nonprofit group that faulted him for allowing a rise in hate speech on his social media platform X, formerly known as Twitter, Reuters reported.

U.S. District Judge Charles Breyer in San Francisco said it was “evident” that Musk’s X Corp sued the Center for Countering Digital Hate (CCDH) because he didn’t like its criticism, and thought its research would hurt X’s image and scare away advertisers.

“X Corp has brought this case in order to punish CCDH for CCDH publications that criticized X Corp — and perhaps in order to dissuade others who might wish to engage in such criticism, Breyer wrote.

“It is impossible to read the complaint and not conclude that X Corp is far more concerned about CCDH’s speech than it is its data collection methods,” he added.

X, in a statement, said it plans to appeal.

According to Reuters, the decision is a blow to Musk, the world’s third-richest person, who has for many years styled himself as a free-speech champion.

But since paying $44 billion for Twitter in October 2022, he has faced wide criticism for firing too many people who policed misinformation, and from civil rights groups for allowing more harmful and abusive posts.

Engadget reported a judge has dismissed a lawsuit from X against the Center for Countering Digital Hate (CCDH), a nonprofit that researches hate speech on the Elon Musk-owned platform. In the decision, the judge said that the lawsuit was an attempt to “punish” the organization for criticizing the company.

X sued the CCDH last summer, accusing the group of “scraping” its platform as part of a “scare campaign” to hurt its advertising business. The group had published research claiming X was failing to act on reports of hate speech, and was in some cases boosting such content.

In a ruling, federal judge Charles Breyer said that “this case is about punishing” CCDH for publishing unflattering research. “It is clear to the Court that if X Corp was indeed motived to spend money in response to CCDH’s scraping in 2023, it was not because of the harm such scraping posed to the X platform, but because of the harm it posed to X Corp’s image,” Breyer wrote. “X Corp’s motivation in bringing this case is evident. X Corp has brought this case in order to punish CCDH for CCDH publications that criticized X Corp – and perhaps in order to dissuade others.”

The Verge reported the CCDH is an organization aimed at identifying and pushing back against hate speech online. Last year, the CCDH found that X didn’t address hateful content posted by 99 percent of premium users and that the platform failed to take swift action against over 200 blatantly racist and antisemitic posts.

In my opinion, the judge made the correct ruling regarding X Corp. and its failure to remove racist and antisemitic posts. Perhaps Mr. Musk wouldn’t be in this situation if he had not fired so many Twitter workers.

FTX Sues Founder Bankman-Fried’s Parents

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Bankrupt crypto exchange FTX on Monday sued the parents of founder Sam Bankman-Fried, saying that Stanford professors Joseph Bankman and Barbara Fried used the company to enrich themselves at the expense of FTX’s customers, Reuters reported.

FTX, now being led by turnaround specialist John Ray, said that company founder Sam Bankman-Fried ran FTX as a “family business” and misappropriated billions in customer funds for the benefit of a small circle of insiders, including his parents.

According to Reuters, Sam Bankman-Fried has pleaded guilty to charges that he defrauded FTX customers by using their funds to prop up his own risky investments. He is currently jailed ahead of a trial scheduled to begin Oct. 3. Other former FTX executives have pleaded guilty to criminal charges.

Bankman and Fried’s attorneys, Sean Hecker and Michael Tremonte, said in a joint statement that FTX’s claims were “completely false” and the the new lawsuit was a waste of funds that could be returned to FTX customers.

FTX’s lawsuit alleges that Bankman and Fried accepted a $10-million cash gift and $16.4-million luxury property in the Bahamas from FTX, even as the company teetered on the brink of collapse. Bankman and Fried also pushed FTX to make tens of millions of dollars in charitable contributions, including to Stanford University, FTX said.

Fortune reported that in a late court filing on Monday, the bankruptcy estate of FTX sued the parents of Sam Bankman-Fried, seeking to recover millions of dollars that it alleges were fraudulently transferred and misappropriated.

In the 63-page lawsuit, the estate alleges that FTX was a self-described “family business” despite its appearance as a sophisticated cryptocurrency exchange that was “fueled by fraud.” Allan Joseph Bankman, Bankman-Fried’s father, is a top tax law professor at Stanford Law School, and the lawsuit alleges that he played a key role in “perpetuating this culture of misrepresentations and gross management” and in covering up allegations that would have exposed the fraud, Fortune reported.

According to Fortune, the lawsuit also alleges that Bankman-Fried’s parents “siphoned millions of dollars” from the crypto empire for “their own personal benefit,” with the estate now seeking to claw back the funds as part of its bankruptcy process.

The Block reported that bankrupt cryptocurrency exchange FTX has sued Joseph Bankman, and Barbara Fried, the parents of its founder Sam Bankman-Fried, aiming to recover millions of dollars in “fraudulently transferred and misappropriated funds.”

According to The Block, a Monday court filing showed that debtors of FTX and Alameda Research filed a complaint to recover damages caused by fraudulent transfers, breaches of fiduciary duties and other alleged misconduct.

“As Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors in these Chapter 11 Cases and their creditors,” the filing said.

In my opinion, it seems very odd that the parents of Sam Bankman-Fried allegedly made what appears to be problematic decisions regarding the amount of money they received from FTX. One would assume that Bankman, who is a top tax law professor, would know better.