The IAC/InterActiveCorp (NASDAQ:IACI) and Expedia Inc (NASDAQ:EXPE) chairman Barry Diller discussed several issues at The New York Times DealBook Opportunities For Tomorrow Conference. Diller came out openly against how regulators play a dirty game with corporations. Instead of taking legal action and proceeding along those lines, regulatory agencies threaten a company that must then pay an upfront penalty or face legal action. Companies fear the consequences of a legal action, so they agree to settle the deal, no matter how large the penalty.
A Look Back At Warren Buffett’s Best and Worst Oil & Gas Investments
Warren Buffett is perhaps best known for his large investments in some of the world's most recognizable brands, companies like Coca-Cola, American Express and Apple. Q1 2020 hedge fund letters, conferences and more Companies that fit into this bracket seem to fall squarely within his circle of competence. They sell a product that's easy to Read More
In fact, says Barry Diller, if a company says “yes, let’s go to court”, it’s highly likely that regulators will lose the battle. That’s because government agencies can’t nail an individual and say confidently that “this guy has conducted the fraud.”
Barry Diller’s view on JPMorgan
Talking about JPMorgan Chase & Co. (NYSE:JPM)’s recent $13 billion settlement with the Department of Justice, Barry Diller said that only a small portion of that amount goes to the individuals harmed. The remaining amount goes to the government. Regulators grabbed the bank and demanded a hefty figure simply because they knew the bank wouldn’t risk harming its reputation, even if there may not be strong evidences. Regulators knew they can’t convict anybody, so they began pressing for settlements. He said the same thing happened with Steven Cohen, who reached an agreement with authorities for $1.8 billion.
Barry Diller said most such lawsuits come from lawyers on class actions. They presume that you wouldn’t want to get dirty in court, and avoid incurring legal and related costs. So, you’ll hand out a big fat check. Diller cited his own story. He was recently asked to pay $485,000 in penalties related to the purchase of The Coca-Cola Company (NYSE:KO)’s shares as the director of the soft drink maker. Representatives of the regulatory agency came to him, asking Diller to pay $485,000 upfront or he will be dragged to the court. Barry Diller agreed to go to the court. The regulators said, “If we take the matter to the court, we’ll demand a $10 million fine.” So, Mr. Diller thought it was better to pay $485K rather than risk $10 million.
Barry Diller also shared another incident that took place about 18 years ago. His colleagues advised him to sign a check and settle the deal. Diller refused to do so and went to court. This process was repeated 2-3 times, but he still refused. After that, the authorities stopped suing him.
Coming back to JPMorgan Chase & Co. (NYSE:JPM), Barry Diller said Jamie Dimon is one of the finest and most honest executives in the country. But the size of the bank is a problem. Diller said large institutions that are unmanageable, and shouldn’t be managed that way. In his own business, Barry Diller has spun off eight public companies. That’s because he believed those business could be better managed on a standalone basis.
Barry Diller says nobody is investing in Twitter
When asked if Twitter Inc (NYSE:TWTR) is really worth more than $20 billion, Mr. Diller said it may be worth that much in 2075. But not now. And nobody except early investors is actually investing in Twitter Inc (NYSE:TWTR). Everyone is getting in and then getting out. People just want to make some money and exit the stock.
Talking about the National Security Agency digging for a huge amount of data, Mr. Diller says he finds it amusing. He says if the country has good institutions and good policies, invasion of privacy is not required. Diller thinks what Edward Snowden did was international spying. He could have made it a public issue without releasing any document. What he did is criminal.