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Einhorn wins ruling against Apple in cash pile fight

People line up in front of an Apple store as they await sales of the new iPad in Munich in this file photo taken March 16, 2012.

MICHAELA REHLE/REUTERS

A 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.

U.S. District Judge Richard Sullivan in Manhattan granted a motion by 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.

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Greenlight sued Apple on Feb. 7 as part of a broader pitch to unlock more of Apple's $137-billion in cash for shareholders. Einhorn has argued 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.

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 Einhorn did not immediately respond to requests for comment.

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 case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.

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