On this day in history, August 30, 1967 Thurgood Marshall was confirmed as a Supreme Court Justice, becoming the first African-American to be seated on the court.
Thurgood Marshall was a pioneering American civil rights lawyer and jurist, serving as the first African-American associate justice on the U.S. Supreme Court from 1967 to 1991. Before his time on the bench, he was a leading attorney for the NAACP Legal Defense and Educational Fund, where he played a crucial role in the fight against racial segregation in American public schools. His most notable achievement came with the landmark 1954 case Brown v. Board of Education, which declared segregation in public schools unconstitutional. Marshall was appointed to the Supreme Court by President Lyndon B. Johnson, and he was known for his liberal views, often dissenting as the Court shifted to a more conservative stance.
Born and educated in Baltimore, Maryland, Marshall was mentored by Charles Hamilton Houston at Howard University School of Law. Together with Houston, he worked on several significant civil rights cases, eventually succeeding him as the special counsel of the NAACP. In 1961, he was appointed to the U.S. Court of Appeals for the Second Circuit by President John F. Kennedy and later served as the U.S. Solicitor General before his Supreme Court appointment.
Throughout his tenure, Marshall was known for his pragmatic jurisprudence and his "sliding-scale" approach to the Equal Protection Clause, advocating for a flexible balancing test. He was a fervent opponent of the death penalty and supported a broad interpretation of constitutional protections, including First Amendment rights and abortion rights. Marshall retired in 1991 and was succeeded by Clarence Thomas; he passed away in 1993.
An investor in AMC Entertainment Holdings Inc., Rose Izzo, is seeking a financial reward for her role in reducing legal fees in a recent settlement concerning the conversion of AMC's APE preferred units into common stock. Izzo argues that her legal team should receive $650,000 for convincing a Delaware judge to award only about $7 million in fees to the lawyers representing the pension fund and individual investor in the case, instead of the $20 million they had initially sought. This legal skirmish is the latest chapter in a contentious battle over AMC's APE units, which were created to raise new equity capital without increasing the company's authorized share limit.
AMC's stock price has plummeted nearly 80% since the settlement was approved on August 11. Izzo claims that her efforts saved the company $13 million, as the judge decided to base the 12% fee award on the post-conversion stock price, as she had recommended. The case originally began when a pension fund and other shareholders opposed allowing APE holders to vote on AMC's recapitalization proposals. The settlement aimed to address these objections by offering one extra class A share for every 7.5 held, valuing the deal at around $110 million to $120 million, depending on AMC's volatile stock price.
Vice Chancellor Morgan T. Zurn initially rejected the deal but later approved a revised settlement, causing fluctuations in AMC's stock and the value of APE units. Izzo's role has been considered unusual due to the involvement of "meme stock" investors, who have been vocal about their concerns regarding stock dilution and market manipulation. Izzo and her legal team have faced significant online harassment, which they argue justifies their requested financial reward. The case continues to be a focal point of legal and financial scrutiny, with a new lawsuit filed by an APE holder challenging the settlement for diluting the value of preferred units.
A pension fund has filed a lawsuit against Peter Thiel and other board members of Palantir Technologies Inc., accusing them of making billions through insider trading while artificially inflating the company's stock price. The suit also targets Palantir's president Stephen Cohen and CEO Alex Karp, alleging that they led the company into risky investments with special purpose acquisition companies (SPACs) for personal gain. According to the complaint, many of these SPACs had unrealistic business plans and were doomed to fail. The lawsuit claims that Thiel and others were motivated to keep Palantir's stock price high to maximize their returns through stock options.
The suit alleges that these actions led to a stock crash, resulting in $272 million in losses for Palantir due to the failure of its SPAC investments. Before the crash, Thiel, Karp, and Cohen reportedly made over $1.5 billion by selling shares at inflated prices. Other company leaders allegedly made around $700 million. The lawsuit states that these SPAC deals were closely tied to Palantir's public debut in September 2020 and were part of a larger scheme to inflate the stock price, which also involved misleading investors about the sustainability of government contracts.
The complaint notes that out of the 28 SPACs Palantir invested in, five have declared bankruptcy, one has been delisted, and several others have either failed to go public or were taken private again. The lawsuit is a shareholder derivative claim, meaning any damages awarded would go into Palantir's corporate coffers. The suit mirrors securities fraud claims already facing Palantir in a federal court in Denver, exposing the company to potentially hundreds of millions of dollars in additional liability. The lawsuit was filed by the Central Laborers’ Pension Fund and eight individual investors.
If you’re wondering where you’ve heard of Peter Thiel before, it might be me. Peter Thiel is an entrepreneur, investor, and co-founder of companies like PayPal and Palantir. Earlier this year I wrote a column about his utilizing Roth IRAs to amass significant wealth, specifically by converting a $2,000 investment in 1999 into $5 billion by 2027. Thiel managed this by purchasing undervalued stock options in startups, leveraging his unique access to these investment opportunities. His case has highlighted the capacity for high earners to exploit Roth IRAs far beyond their intended use as retirement savings for the middle class, sparking discussions on reforming the tax code. Now, it seems, he is facing accusations of insider trading.
Grayscale Investments LLC has secured a significant legal victory in its effort to launch a Bitcoin exchange-traded fund (ETF), potentially opening the door for billions of dollars in retail investments. The win came against the U.S. Securities and Exchange Commission (SEC) in a three-judge appeals panel in Washington. The SEC has generally only approved crypto ETFs based on futures, citing them as safer, but is now reviewing this latest decision. The ruling is seen as a setback for SEC Chair Gary Gensler's efforts to regulate the crypto industry more tightly.
Following the news, Grayscale's Bitcoin Trust saw a rally of up to 21%, and Bitcoin itself surged by as much as 8.3%. Grayscale argues that converting to an ETF would unlock billions in value for its $16.2 billion trust by making it easier to create and redeem shares. The current closed-end structure of the trust does not allow for share redemption when prices fall, leading to steep discounts to its underlying Bitcoin value.
This ruling marks the SEC's second recent high-profile court defeat regarding its stance on cryptocurrencies. The agency is also contesting a federal judge's ruling that Ripple Labs' XRP tokens are not securities. Grayscale's victory could have a broad impact, as several major financial institutions have recently filed applications to launch Bitcoin ETFs.
Grayscale called the decision a "monumental step forward for American investors." Analysts see the ruling as adding momentum to the digital asset industry, especially following the Ripple case. The SEC had initially rejected Grayscale's proposal in 2022, arguing that a Bitcoin-based ETF lacked sufficient oversight for fraud detection. Grayscale sued the SEC, accusing it of discriminatory treatment.
The court found that Grayscale had provided "substantial evidence" that its product was similar to approved Bitcoin futures ETFs. The SEC now has 45 days to ask for a full review by the DC Circuit Court of Appeals, and if declined, 90 days to petition the U.S. Supreme Court.
A U.S. judge is set to consider the sentencing of two former leaders of the right-wing group Proud Boys, Enrique Tarrio and Ethan Nordean, who were convicted of seditious conspiracy and other crimes related to the January 6, 2021, attack on the U.S. Capitol. Prosecutors are recommending 33 years in prison for Tarrio and 27 years for Nordean, exceeding the longest sentence given so far for the Capitol assault. The attack aimed to prevent Congress from certifying President Joe Biden's election win. Prosecutors are also seeking a terrorism enhancement for the sentences, which could add approximately 15 years to each term.
More than 1,000 people have been arrested in connection with the Capitol attack, with at least 570 pleading guilty and 78 convicted at trial. The riot resulted in five deaths, including a police officer, and injuries to over 140 police officers, along with millions of dollars in damage to the Capitol. Special Counsel Jack Smith has charged former President Donald Trump for attempting to remain in power unlawfully.
Attorneys for Tarrio and Nordean are opposing the terrorism enhancement, arguing that their clients' actions should not be equated with acts like the Oklahoma City bombing. Tarrio was not present in Washington, D.C., during the attack but is accused of directing it from Baltimore. The case has had a significant emotional impact on Capitol Police, as described in a letter submitted to the court. Sentencing for two other defendants, Joseph Biggs and Zachary Rehl, is due on Thursday, with prosecutors seeking 33 and 30 years respectively. A fifth defendant, Dominic Pezzola, faces a recommended 20-year sentence.
A study at the University of Minnesota found that low-performing law students improved their exam scores when using artificial intelligence, specifically GPT-4, while high-performing students saw a decline in their scores. Researchers compared the final exam scores of 48 students in two law courses. The students first took exams without AI assistance and then took different exams using GPT-4. The study found that GPT-4 significantly improved student performance on multiple-choice questions, with a 29 percentage-point improvement overall and a 45 percentage-point increase for low-performing students.
However, GPT-4 did not help students on the essay portions of the exams. High-performing students actually scored about 20 percentage points lower when using the AI. The study suggests that AI could have an equalizing effect in the legal profession by mitigating inequalities between elite and non-elite lawyers.
The study's lead researcher, Daniel Schwarcz, speculated that high-performing students might have become lazier or less inclined to use their legal reasoning skills when assisted by AI. He noted that once an issue is framed by someone else, or in this case, something else like AI, it can affect the cognitive mindset for independent assessment. Schwarcz also suggested that AI's impact within the legal profession would most likely affect paralegals and younger attorneys, as some of their tasks could be automated.
iFixit, known for its teardowns and repair guides, is petitioning the U.S. government to allow it to create parts for fixing McDonald's notoriously unreliable ice cream machines. The company purchased the same model of ice cream machine used by McDonald's and found that despite having "easily replaceable parts," the machine could only be repaired by its manufacturer, Taylor, due to an agreement with McDonald's. iFixit is facing legal hurdles because of the Digital Millennium Copyright Act (DMCA), which prevents circumventing digital locks to access copyrighted works.
To address this, iFixit and nonprofit Public Knowledge have filed for an exemption to the DMCA specifically for ice cream machines. iFixit has previously won such exemptions for products like Xboxes, tractors, and smartphones. However, even if the exemption is granted, iFixit won't be able to distribute a tool for fixing the machines under current law.
Therefore, iFixit is also urging Congress to reintroduce the Freedom to Repair Act, which would make it legal to bypass software locks for the purpose of repair. If these changes are implemented, the days of broken McDonald's ice cream machines could be numbered.