Minimum Competence - Daily Legal News Podcast
Minimum Competence
Fri 10/6 - Challenges to Naval Academy’s Admissions Policy, SEC Tries to Force Musk to Testify, Continued Legal Drama at Bed, Bath & Beyond and Alex Jones Demands Backpay

Fri 10/6 - Challenges to Naval Academy’s Admissions Policy, SEC Tries to Force Musk to Testify, Continued Legal Drama at Bed, Bath & Beyond and Alex Jones Demands Backpay

Challenges to the Naval Academy’s admissions policy, SEC tries to force Musk to testify, 3 Directors of Bed, Bath & Beyond seek use of insurance funds for legal costs and Alex Jones seeks backpay

On this day in legal history, October 6, 1981, Egyptian President Anwar Sadat was assassinated in retaliation for signing a peace treaty with Israel. 

The assassination of Egyptian President Anwar Sadat on October 6, 1981, had profound legal and political ramifications for Egypt. Prior to his assassination, Sadat had initiated a crackdown on opposition figures, including Islamists and intellectuals, arresting more than 1,500 people. This move was highly unpopular and was seen as a suppression of civil liberties, including freedom of the press. Despite the crackdown, the government failed to apprehend a key cell within the military that was plotting Sadat's assassination.

The assassination was orchestrated by the Islamic Jihad, although numerous other groups claimed responsibility. The killing was not just a political act but also had legal implications, as it led to further crackdowns on opposition groups and increased state security measures. The assassin, was tried and executed, setting a precedent for how the Egyptian legal system would handle cases of high-profile political violence.

Vice President Mubarak, who was wounded in the attack, succeeded Sadat and continued policies of political repression, including the enforcement of emergency laws that gave sweeping powers to the state.

The assassination led to a reevaluation of the legal frameworks surrounding political dissent, terrorism, and state security. It also raised questions about the effectiveness of existing laws in preventing such acts of violence, leading to legal reforms aimed at bolstering state security mechanisms.

The group Students for Fair Admissions, led by affirmative action opponent Edward Blum, has filed a federal lawsuit against the U.S. Naval Academy, challenging its race-conscious admissions policies. This lawsuit comes on the heels of a similar case filed against the U.S. Military Academy at West Point. Both lawsuits aim to overturn an exemption in a recent Supreme Court ruling that allows military academies to consider race in admissions. The Supreme Court had previously invalidated race-conscious admissions policies at Harvard and the University of North Carolina but left the door open for military academies, citing "potentially distinct interests."

Blum argues that the Naval Academy has no legal basis for treating applicants differently based on race and ethnicity. The Naval Academy declined to comment on the lawsuit. The Biden administration has defended the use of race in military academy admissions, stating that a diverse officer corps is essential for an effective military. A 2020 Defense Department report highlighted disparities in racial representation among military officers compared to enlisted personnel.

The lawsuit alleges that the Naval Academy's admissions practices are discriminatory and violate the Fifth Amendment's principle of equal protection. It criticizes the academy for trying to "racially balance" each incoming class rather than focusing on leadership potential and other objective metrics. The lawsuit seeks to bar the academy from considering race in future admissions processes. Given the ongoing debates and legal challenges surrounding affirmative action, this case could have significant implications for admissions policies not just in military academies but also in educational institutions at large.

Anti-affirmative action group challenges US Naval Academy's admissions policy | Reuters

The U.S. Securities and Exchange Commission (SEC) is suing Elon Musk to compel him to testify in an investigation related to his $44 billion acquisition of Twitter. The probe focuses on whether Musk violated federal securities laws in 2022 when he purchased Twitter stock and renamed the platform "X," as well as the statements and SEC filings he made concerning the deal. The SEC had previously subpoenaed Musk in May 2023 for testimony, to which he initially agreed but later refused, citing "spurious objections." Among Musk's objections was the claim that the SEC was trying to "harass" him.

Musk's attorney, Alex Spiro, stated that the SEC has already taken Musk's testimony multiple times and called the investigation "misguided." The SEC, however, maintains that it seeks Musk's testimony to obtain information relevant to its "legitimate and lawful investigation." This lawsuit is the latest episode in a long-standing feud between Musk and the SEC, which began with Musk's 2018 tweet about taking Tesla private.

Musk's acquisition of Twitter has been fraught with complications, including his initial late filing disclosure and his vacillation over accepting a board seat at Twitter. He also tried to back out of the acquisition, alleging that Twitter was not fully disclosing bot activity. Despite a trial that sought to compel him to complete the deal, Musk finalized the acquisition in late October 2022.

The lawsuit adds another layer to Musk's existing legal challenges, which include a Justice Department investigation into Tesla over self-driving claims and a federal probe into Musk's corporate perks and vehicle driving range claims. Legal experts find Musk's refusal to appear for the September testimony extraordinary, given his positions at public companies.

SEC tries to force Musk to testify in Twitter takeover probe | Reuters

Three directors, two former and one current, designated to serve on the board of Bed Bath & Beyond Inc. by activist investor Ryan Cohen, have sought permission from the U.S. Bankruptcy Court for the District of New Jersey to use a $10 million Directors and Officers (D&O) insurance policy for unspecified legal costs. These costs are related to a "non-public, confidential matter" concerning their tenure on the company's board. The directors were appointed in March 2022 as part of an agreement with Cohen and his investment firm, RC Ventures LLC.

At that time, Cohen was using a 10% stake in Bed Bath & Beyond to criticize its business strategy and advocate for either a separation of its buybuy Baby Inc. chain or a potential sale of the company. Cohen, who is now the CEO of GameStop Corp., is currently facing shareholder litigation accusing him of manipulating Bed Bath & Beyond's stock prices through a pump-and-dump scheme. A federal judge declined to dismiss this lawsuit, citing the suspicious timing of Cohen's trades, which took place just before the company announced layoffs, an investment rating downgrade, and issues with supplier payments.

Additionally, Cohen is under investigation by the Securities and Exchange Commission concerning his sale of Bed Bath & Beyond stocks. The directors stated that the "confidential demand" they are facing will result in defense costs and other potential losses covered under the D&O policy. Both the company and its insurer, Zurich American Insurance Co., have agreed that the matter triggers the insurance policy.

Bed Bath & Beyond filed for Chapter 11 bankruptcy in April, burdened with over $5.2 billion in debt. During the bankruptcy process, the company sold its name brand to for $21.5 million and its buybuy Baby brand to Dream on Me Industries Inc. for $15.5 million. 

Bed Bath & Beyond Directors Seek ‘Confidential Matter’ Coverage

Alex Jones, a right-wing conspiracy theorist, is facing opposition from his own company, Free Speech Systems, and a court-appointed bankruptcy trustee over his request for $680,000 in disputed, unpaid salary. Free Speech Systems, the parent company of Infowars, and the trustee have asked a judge to reject Jones' request. Both Jones and Free Speech Systems are undergoing separate bankruptcy proceedings. The company had previously agreed to an annual salary of $1.3 million for Jones but filed for bankruptcy after being ordered to pay nearly $1.4 billion to the families of Sandy Hook Elementary School shooting victims.

Following the bankruptcy filing, court-approved budgets limited the company's ability to pay Jones his original salary. His salary was reduced to $20,000 every two weeks, down from the previous $50,000. In July, Jones asked the court to direct the company to pay him $680,000 in back salary, arguing that the reduction has resulted in a $290,000 administrative claim that is increasing by $30,000 per month.

Free Speech Systems disputed the amount claimed by Jones, stating that certain offsets should further reduce any claim. The company also argued that the Bankruptcy Code does not provide for immediate payment of the claim. The bankruptcy trustee overseeing the Free Speech estate supported the company's arguments against the back payments.

Judge Christopher Lopez, who is overseeing both bankruptcy cases, has indicated a willingness to increase Jones' salary, stating that Jones is critical to the Infowars business. Jones has argued that he cannot pay the nearly $1.4 billion he owes to the Sandy Hook families with less than $12 million in assets. 

Alex Jones Fights Bankrupt Infowars Over $680,000 in Back Pay

Minimum Competence - Daily Legal News Podcast
Minimum Competence
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