Brad Greenspan is an internet entrepreneur who has been involved in the founding and proliferation of various web properties including MySpace. Greenspan founded eUniverse Inc. in 1998, which went public in 1999. The company survived the .com-bust of 2001 and was the incubator that launched MySpace.com in 2003. Greenspan left his position as CEO at eUniverse towards the end of 2003, after accounting problems which led to three quarters of financial results having to be revised forced a four-month halt in trading of eUniverse stock. Greenspan retained a significant percentage of shares in the company and owned 10% of the company when it sold to News Corp in 2005. Greenspan opposed the acquisition, and has been fighting News Corp both legally and publicly ever since. He increased the market capital of Euniverse from $70m to $650m when the company was sold to News Corp.
Greenspan has continued to innovate and has established Broadwebasia (an Asian internet company), Borba (a health product-line), and LiveUniverse (a social network focused internet company).
The MySpace service was founded in August 2003 as a new initiative and 100% owned division of publicly traded internet company eUniverse (which later in mid-2004 changed its name to Intermix). eUniverse created and marketed the Myspace website, providing the division with a complete infrastructure of finance, human resources, technical expertise, bandwidth, and server capacity right out of the gate so the MySpace team wasn’t distracted with typical start-up issues. The project was overseen by Brad Greenspan (eUniverse's Founder, Chairman, CEO), with Chris DeWolfe (MySpace's former CEO), Josh Berman, Tom Anderson (MySpace's former president), and a team of programmers and resources provided by eUniverse.
Greenspan was forced to resign from the company he founded, eUniverse. Greenspan battled with board members, who changed the company's name to Intermix Media shortly after his departure. Among the disputes: restated earnings during his watch that prompted an informal Securities & Exchange Commission accounting investigation and a temporary delisting of its stock by NASDAQ. Separately, both the company and Greenspan were charged by New York Attorney General Eliot Spitzer for inserting spyware on unknowing consumers' Web pages.
Brad Greenspan / The MySpace Report
In October 2006, Brad Greenspan launched a website, called freemyspace.com, and published reports that called for the Securities and Exchange Commission, the United States Department of Justice and the U.S. Senate Committee on Finance to investigate News Corp's acquisition of MySpace as "one of the largest merger and acquisition scandals in U.S. history." The report's main allegation is that News Corp. should have valued MySpace at US$20 billion rather than US$327 million, and had, in effect, defrauded Intermix shareholders through an unfair deal process. The report received a mixed response from financial commentators in the press. A lawsuit led by Greenspan challenging the acquisition was dismissed by a judge. however, the first lawsuit had none of the evidence discovered after the first lawsuit in State court had been filed in 2005, and the second lawsuit in Federal Court where the evidence discovered after the first lawsuit was filed, resulted in a sweeping victory for Greeenspan in a landmark decision Federal Summary Judgement ruling in June 2010 where Federal Judge George King found the Directors Greenspan fingered as criminals in 2006 were indeed likely to be found by a jury to be guilty of breach of their duty of loyalty to shareholders and approved $670 million in damages from a Federal Expert damage report. Judge King further stated among other findings, that there existed:
i) "at least triable issues of fact as to whether Mosher was manipulated by a self interested director, Rosenblatt. Moreover, based on Mosher’s description of the content of Rosenblatt’s presentations to the board, the issue of manipulation is triable with respect to all of the other board members. Accordingly, as a reasonable jury could potentially conclude that a majority of the directors was interested or manipulated by someone who was, we hereby DENY Defendants’ Motion for Summary Judgment on this second basis for Plaintiff’s claim of breach of the duty of loyalty." and
ii) "we conclude that there is at least a triable issue as to the materiality of the omission of Intermix’s internal financial projections.
Accordingly, Defendants’ Motion for Summary Judgment is DENIED as to this alleged material omission." and
iii) "Since we have denied summary judgment with respect to three of the proffered material omissions in the Proxy, and Defendants have admitted to participating in “the process of preparing, reviewing, and disseminating” that Proxy, we must also DENY summary judgment with respect to the element of negligence. If Plaintiff can persuade a jury as to both materiality and Defendants’ participation in the preparation and/or review of the Proxy at trial, then a finding of negligence will flow from those findings."
iv) "We think the evidence fairly presents such triable issues as to Defendants’ purported conscious disregard of their duties."
v) " we think a reasonable jury could find that the other six directors exceeded the bounds of negligent conduct, willfully proceeded to their decisions knowing they lacked material information, Gesoff, 902 A.2d at 1165, and thereby consciously disregarded their fiduciary duties. Disney, 906 A.2d at 66 (“Cases have arisen where corporate directors have no conflicting self-interest in a decision, yet engage in misconduct that is more culpable than simple inattention or failure to be informed of all facts material to the decision. To protect the interests of the corporation and its shareholders, fiduciary conduct of this kind, which does not involve disloyalty (as traditionally defined) but is qualitatively more culpable than gross negligence, should be proscribed.”.
vi) Defendants "consciously abdicated their responsibilities as corporate fiduciaries in allegedly swallowing Rosenblatt’s version of events and utterly failing to assess the situation for themselves. More generally, a reasonable fact-finder could conclude that the other board members acted in bad faith by making “decisions with knowledge that they lacked material information.” Gesoff, 902 A.2d at 1165. With respect to their knowledge of the relative likelihood of a Viacom bid, Mosher stated that he could not recall if he or any other board member had “asked any questions regarding Viacom or its status.” (Mosher Tr. at 26:14-21). Additionally, he could not recall whether he had “any knowledge of whether anyone from management was providing equal information to Viacom and Fox News Corp about the time line” for submitting a bid for Intermix. (Id. at 43:17-21). With respect to their knowledge of bidder favoritism, though Mosher testified that he could not recall the board ever instructing Rosenblatt to favor one bidder over another, he also could not definitively represent that the board had not so instructed Rosenblatt. (Id. at 41:10-21). Other board members besides Rosenblatt have also testified that they were unaware that any due diligence meetings with Viacom had been cancelled. (Brewer Tr. at 119:11-15; Sheehan Tr. at 98:1-20). Furthermore, Brewer testified that he was simply unaware that Viacom was conducting due diligence over the July 16-17, 2005 weekend. (Brewer Tr. at 26:5-24). With respect to their knowledge of the fairness of the merger price, Rosenblatt did not inform Brewer that he was requesting $12 per share from News Corp. until the day of the “handshake deal” with Rupert Murdoch; it is unclear when the rest of the board learned this information. (Id. at 122:2-9). He also did not explain how that requested price was derived. (Id. at 122:10-14). Brewer testified that the board did not ask, and Mosher could not recall whether any board member sought an explanation. (Id.; Mosher Tr. at 53:6-9). Moreover, Brewer testified that the board as a whole never conducted any independent analysis to determine what “an appropriate price per share” would be. (Brewer Tr. at 122:15-18; see also Mosher Tr. at 49:24-50:4 (testifying that he himself did not perform any independent analysis)). Additionally, Mosher confirmed that the board had not “directed the management team to go get the specific valuation work done prior to the acquisition.” (Mosher Tr. at 52:4-18). Finally, Brewer has testified that he could not even recall whether any of the directors had asked “any questions about [Montgomery and TWP’s] fairness presentations.” (Brewer Tr. at 104:2- 10). Though Brewer’s failure to recall what everyone had specifically asked back in 2005 would be understandable, a reasonable jury might draw a negative inference from his representation that he could not recall any discussion as to the investment banks’ analyses. Construing all of the above testimony in the light most favorable to Plaintiff as we must on Defendants’ motion for summary judgment, we conclude that it is at least triable as to whether the remaining six board members consciously disregarded their duties and acted in bad faith. There is evidence in the record suggesting that no one on the board asked any questions about the requested per share price, the treatment of the competing bidders, the fairness valuations, or the relative likelihood of a Viacom bid. A reasonable jury could infer that this evidence demonstrates the other six directors consciously abdicated their roles as corporate fiduciaries required by law to do their utmost to maximize" and
vii) "Having reviewed the record in full, we conclude that there is sufficient admissible evidence to create a triable question of fact as to whether the rest of the board, as in Macmillan, “plac[ed] the entire process in the hands of” Rosenblatt and to a lesser extent Sheehan and thereby “materially contributed to the [allegedly] unprincipled conduct of those upon whom it looked with a blind eye.” 559 A.2d at 1281.f" >"Cross-Motions for Summary Judgment". Federal Central District Court;Judge George King. 2010-06-17. Retrieved 2014-01-01.</ref>
- Boy wonder at eUniverse quits as investor group raises profile. - Free Online Library
- Founder: News Corp. Hijacked MySpace | WebProNews
- Greenspan outlines alternate plan for Dow Jones - MarketWatch
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Cross-Motions for Summary Judgment | Judge George King