Whether to Sue; Who and How Much

AB&CT

Issue: Whether to sue; who and how much?

What is meant by market efficiency?

- Prices fully and immediately reflect all relevant information

- Public Info: Supply and demand, analyst reports, sales performance, past prices and trends, etc...

- Private Info

- Technical Analysts: Using past price trends and behavior to determine what the prices will be in the future. Momentum Trading is not benefited by this

There are three types of efficiencies:

1. Weak: incorporates all information that somebody can get from past prices (only reflected in the current price). This form says that technical analysis is not necessary.

2. Semi-Strong: All public information is incorporated (Ex. The sell side analyst reports)

3. Strong: All information is incorporated in the current price whether public or private. Publicly available or otherwise is already into market prices.

Insider Trading:

Who's an insider?

- Anyone who knowingly obtains private information (non-public) that affects the share price. This includes people that work in the company or is tipped from somebody in the company. (Managers, secretary, security guards that obtain this info-inherit someone's FR)

- Paul Thayer has a fiduciary responsibility to shareholders; if the tippees get this information from Paul they inherit the fiduciary responsibility.

- If you're an insider, you must reveal the information (disclose) or stay away from trading. You have a fiduciary responsibility to protect shareholders

- Anyone trading based on knowledge of a takeover once the takeover process is initiated is guilty of fraud.

Typically, you pay a premium on the price for a takeover

- If x=y then AB is hurt, you pay a premium on a higher price

- If x=z then AB is not hurt

- When we are trying to figure