Reviewing 5 of May’s top stories

Rajat Gupta’s trial, Facebook’s controversial IPO, a new Penn State lawsuit and more

Goldman Gaffe

It seems as though Rajat Gupta has been on trial forever, but his first day in court didn’t officially arrive until this week. Prosecutors say the former Goldman Sachs director, who was arrested in October 2011, passed insider trading tips to one-time hedge fund manager Raj Rajaratnam. Rajaratnam is currently serving an 11-year prison term for conspiracy and securities fraud.

This week, jurors heard testimony from Rajaratnam’s former assistant Caryn Eisenberg, who said that her boss received a call about Goldman just before Berkshire Hathaway invested $5 billion in the bank. Though Eisenberg recognized the caller’s voice, she could not definitively identify him as Gupta.

Gupta argues that it was another Goldman employee who passed illegal information to Rajaratnam. Prosecutors identified that man as senior Goldman salesman David Loeb. Loeb, who has not been charged, tipped Rajaratnam about Intel Corp., Apple Inc. and Hewlett-Packard Co.

Good News for Google

The long saga of Oracle vs. Google has ended, at least until appeals time rolls around. Oracle sued Google in 2010, alleging that the search engine giant infringed on its intellectual property when developing Android software.

Oracle won a slight victory in the first phase of the trial, when jurors found that Google had infringed on several Java interfaces while developing its smartphone software. However, as jurors could not decide if the infringement constituted fair use, Oracle only was allowed to seek statutory damages of $150,000 for nine lines of infringed code.

Things didn’t get much better for Oracle in the second phase of the trial. Earlier this week, jurors unanimously ruled that Google did not infringe any Oracle patents. Judge William Alsup dismissed the jury and canceled the trial’s third phase, which would have dealt with damages. Alsup himself will decide whether Oracle’s interfaces fall under the fair use doctrine before resolving the issue of damages.

Penn State Problems

It’s been a tempestuous six months for Penn State University. Last November news broke that former defensive coordinator Jerry Sandusky reportedly sexually abused multiple young boys over a 15-year period.

A key piece of evidence in the case came from assistant football coach Mike McQueary, who said he saw Sandusky engaged in a sex act with a young boy in a campus locker room. McQueary says he reported the incident to then-football coach Joe Paterno, but other university officials have argued that he underplayed the severity of the incident. The coach was ultimately placed on paid administrative leave in November 2011.

Now the university could be facing a whistleblower lawsuit from McQueary, in addition to potential civil suits from the victims. McQueary filed preliminary paperwork this week, warning Penn State that he will seek damages “outside normal arbitration limits.”

Facebook Fraud?

Facebook was riding high after its highly anticipated initial public offering (IPO) and the wedding of founder Mark Zuckerberg. But the pendulum swung the other way this week, as the social media company was hit with multiple lawsuits from perturbed users and investors.

First was a $15 billion lawsuit from users who claim that the company violated their privacy by tracking their Internet usage after they logged out of their accounts. Then came a proposed class action, arguing that Facebook’s IPO prospectus was materially false.

In the weeks leading up to its IPO, Facebook suggested that its profits would be lower than originally estimated, owing to decreased ad revenue. Morgan Stanley, the IPO’s chief underwriter, advised some clients of the revised profit estimates, but left many others in the dark. As of Thursday, Facebook stock has fallen 16 percent below its offer price.

Fighting Footballers

Football is a violent sport, but the New Orleans Saints took it to another level when they allegedly engaged in a “pay for pain” bounty program that financially rewarded defensive players for administering brutal hits to opponents.

In the wake of the scandal, the National Football League (NFL) suspended eight Saints coaches and players, including head coach Sean Payton and defensive coordinator Gregg Williams. All of the suspended players have appealed the league’s decision, but linebacker Jonathan Vilma went one step further, suing NFL commissioner Roger Goodell for defamation.

In a letter to all 32 NFL teams, Goodell identified Vilma as a ringleader of the bounty program, alleging that the linebacker offered his own money to any teammate who could knock opposing quarterback Brett Favre out of a January 2010 playoff game. According to the suit, “media will forever mention his name in the context of the Bounty investigation and fans will remember Vilma with ill repute rather than remember his substantial accomplishments on the field.”

In a Tuesday press conference, Goodell defended the suspensions to reporters, adding that he expects evidence related to the bounty program to eventually be made public.

Alanna Byrne

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