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Fund manager Einhorn wins ruling in Apple cash pile fight


A U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his court battle with Apple Inc. on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

District Judge Richard Sullivan in Manhattan granted a motion by Mr. Einhorn's Greenlight Capital for a preliminary injunction stopping the vote on that proposal.

The vote was scheduled for Feb. 27 as part of the company's annual stockholders' meeting.

Greenlight sued Apple on Feb. 7 as part of a broader pitch to unlock more of Apple's $137-billion (U.S.) in cash for shareholders. Mr. Einhorn has argued that Apple should issue preferred stock with a perpetual 4-per-cent dividend.

The lawsuit challenged a measure called Proposal No. 2 that Apple put forward that would eliminate Apple's power to issue preferred shares without a shareholder vote.

Judge Sullivan said Greenlight and another investor who also sued Apple "are likely to succeed on the merits and face irreparable harm if the vote on Proposal No. 2 is permitted to proceed."

Representatives for Apple and Mr. Einhorn did not immediately respond to requests for comment. Mr. Einhorn's lawsuit contended Apple violated U.S. Securities and Exchange Commission rules by "bundling" the preferred shares item with two other unrelated matters into one proxy proposal.

The Cupertino, Calif., company has questioned Greenlight's motives in bringing the lawsuit, accusing the hedge-fund firm of trying to prod Apple into issuing a type of preferred stock that Greenlight is advocating for.

Apple (AAPL)

Close: $450.81 (U.S.), up $4.75

© 2007 The Globe and Mail. All rights reserved.

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