Compliance June 30, 2003

Court: Intel Spammer Didn't Trespass

June 30, 2003 (PLANSPONSOR.com) - The California Supreme Court handed an ex-Intel worker a victory in his six-year legal dispute with the technology giant over 30,000 e-mails he sent critical of his former employer to staffers at work.
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>In a four to three decision, the state high court found that California’s trespass law requires evidence of damages, which wasn’t present in the case against former Intel employee Ken Hamidi, according to a report on CNET News.com.

“After reviewing the decisions analyzing unauthorized electronic contact with computer systems as potential trespasses to chattels, we conclude that under California law the tort does not encompass, and should not be extended to encompass, an electronic communication that neither damages the recipient computer system nor impairs its functioning,” the court wrote.

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>In March, Intel had asked the California Supreme Court to uphold an earlier legal ruling that found Hamidi had trespassed on its servers by sending thousands of unwanted e-mails to staff at work, dating back to 1996. The servers were private property, the company argued.   Hamidi, who charged unfair labor practices at the chip giant in the e-mails after his 1995 dismissal, contended that he had the right to express his opinions based on the First Amendment (See  CA Supreme Court Deciding E-mail Spam Free Speech Case). 

>Chuck Mulloy, an Intel spokesman, said the company was “disappointed in the court’s decision. We’re studying the opinion to assess our options in the event that Hamidi resumes spamming against Intel,” according to CNET News.com.

As with many free speech issues, the case generated widespread interest.  On the side of Intel, eight friend of the court petitions were filed, including the US Chamber of Commerce and eBay Inc.  However, to Hamidi’s support have come the American Civil Liberties Union and the Service Employees International Union.

Investing June 27, 2003

S&P To Investors: Hot Sector Funds Cool Off Quickly

June 27, 2003 (PLANSPONSOR.com) - The percentage of new bond funds among all mutual funds issued in 2003 rocketed up to 32% from just 15% in 2000, as fund companies continue to chase the hottest sectors in the market in hopes of catching investor dollars.
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Yet, Standard & Poor’s has some words of caution for mutual fund investors in search of the never-ending summer positive sector fund returns:   “the hottest sectors of the market often cool off quickly,” Gary Arne, S&P’s Managing Director of Funds Research, said in a statement.   Arne went on to caution that fund companies are well aware of this trend and that investors have an uncanny tendency to chase returns and hop on the best performing sector bandwagon.

S&P points to three separate occurrences for evidence of this trend:

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  • In 1980, when gold prices skyrocketed toward $800 an ounce and the mutual fund industry produced a flurry of new gold funds just in time for the metal’s slide in price. 
  • During the late 1980s, Japanese funds were all the rage.  Since the Japanese market bubble burst in 1989, however, analysts say investors have made more on currency gains than through the stock investments themselves.
  • Wall Street’s infatuation with emerging markets in the mid-1990s, ending abruptly with the emerging markets crash in 1997.

However, the most dramatic example is also the most recent: the torrid love affair investors and mutual fund companies had for “new economy” funds investing in Internet, technology and telecommunications stocks. For a time, funds that invested heavily in the technology sector and other high growth areas flourished. But like many other funds that concentrate in a particular sector, many “new economy” funds launched at the height or near the tail end of the Internet run up proved to be disastrous investments for many as the NASDAQ fell 78% from its March 2000 peak.

A case in point was Internet funds.  Launched just as the market peaked in March 2000, Internet funds raised billions of dollars for many funds companies, only to have many of the funds fold 18 months later.  US technology funds returned an average of 23.65% through the first two months of year 2000.  The same set of funds lost an average of 43.53% from March 1, 2000 through December 31, 2000, according to S&P’s mutual fund database.

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