SOURCE:  Parish & Company.

Cisco Systems Legal Counsel Issues Parish & Company "Gag Order" Citing "Trade Secrets Act".

PORTLAND, Ore. In July 2001 Parish & Company anonymously received a document purporting to be "Cisco Systems October 2000 Corporate Public Relations Plan."  After making a good faith attempt to confirm the validity of this document with various Cisco executives and receiving no response, it was then provided to a select group of leading business journalists and academics with the hope that Cisco would confirm whether the document was a hoax or indeed genuine.  Eventually Cisco's legal counsel responded with two brief letters, both of which are included in this press release.

Doing nothing regarding this document was not a practical option given that more than 90 percent of its 12 pages involved a comprehensive strategy regarding how to deal with Parish & Company.  Unfortunately I am now unable to discuss the details of this October 2000 Corporate PR Plan because Cisco's counsel has told me that it represents a "Trade Secret" and doing so would violate this most important legal statute.

It is however a matter of public record that our primary lack of agreement is over Cisco's lobbying Congress to overrule the SEC in its attempted repeal of the pooling loophole for mergers.  This loophole has had a ruinous impact on both the economy and the stock market. Books are now being written on this subject and highlighting that Cisco Systems CEO John Chambers is indeed the most aggressive advocate and user of this loophole which has resulted in what I refer to as legal "watered stock fraud."  If that seems too complicated one need only consider that Cisco now has more than 8 billion shares of stock outstanding, including options.

All I can now do given the Trade Secret status of this document is make public two letters received from Cisco's legal counsel so that leading journalists, academics and law firms might contact Cisco directly to see if they may gain access to the full text of this "October 2000 Corporate Public Relations Plan."

Given the most unusual nature of this effort, copies of the document, along with the following two letters from Cisco's legal counsel, have also been forwarded to the Securities and Exchange Commission in addition to appropriate federal law enforcement authorities with a request that they be maintained on file for 5 years.  These government agencies are experts in this area and will certainly destroy the document if that is appropriate. My legal representative is also now maintaining a copy in a sealed envelope for the same period.  I had returned the original and destroyed copies, as requested by Cisco's legal counsel, but later anonymously received another copy of the same document.  Any additional copies received in the future will be forwarded directly to Cisco's legal counsel as requested.

Please allow me to again clarify that under no circumstances will I be able to discuss the specifics of this document given that it is now considered a "Trade Secret."  All inquiries should be made directly to Cisco Systems.

Also note that during the last two years I have received many very appreciative letters and emails from Cisco employees, thanking me for the honest and candid nature of my reports regarding their company's financial practices. On one day alone in October 2000 more than 2,000 Cisco employees accessed my web site.  As a courtesy to Cisco's management I have also provided an advance copy of each such report for their review, prior to posting them on my website.  I find it startling that Cisco would accuse me of inappropriately using their "proprietary email system" by doing this.  It seemed like the ethical thing to do.

My records indicate that an average of 1-2 emails per month have been sent to Cisco Executives while at the same time Cisco's management and employees have aggressively used my web site.  These records also indicate that only John Chambers, CEO, Larry Carter, CFO, Abby Smith, PR, and Mark Michels, Legal Counsel, have received emails since January 2001.  The average employee has not had direct access to these communications, nor has the general investing public.

Directly informing top management and Pricewaterhouse Coopers, Cisco's outside audit firm, in addition to their outside legal counsel regarding these financial management concerns, in particular what appeared to be unusual and escalating "sales adjustments" early in calendar year 2000, was the right thing to do rather than risk unfairly criticizing the company.  Many journalists may recall my specific request that Pricewaterhouse Coopers issue a qualified audit opinion for the year ended July 31, 2000 due to these issues.

It does seem somewhat remarkable that Cisco could aggressively use my web site and object to me sending management 1-2 emails a month.   After all, this is not Moscow. If this is truly a problem, however, I would encourage Cisco to install a filter which could effectively block any Cisco employee from receiving emails from me and could also block access to my web site.
 

Note:  Original copies of these letters received from Cisco's outside counsel, Barran Liebman, are available upon request.

July 24, 2001

Mr. Bill Parish
Parish & Company
10260 SW Greenburg Rd, Suite 400
Portland, OR  97223

Dear Mr. Parish:

On July 20, 2001 you advised the company that you had in your possession one or more copies of a Cisco corporate document.  This document is confidential and proprietary and constitutes a trade secret of Cisco which is entitled to protection, among other things, under the Uniform Trade Secrets Act which has been adopted in Oregon.  See ORS 646.461 et sec. Your possession of this document without Cisco's consent may also constitute conversion under Oregon law.

On behalf of Cisco we are demanding that you immediately return all copies of this confidential document, and that you confirm that you have not retained any copies, whether in print or electronic or other form.  In addition, we demand that you commit that you will not use or disclose this document or its contents either for your own advantage or to the detriment of Cisco.

Any continued retention, use or disclosure of this confidential and propriety material will constitute further misappropriation under Oregon law.  Your use, or threatened use, of this material is interfering and will interfere with Csico's legal rights including its relationships with its employees, customers and shareholders.

We have been instructed to protect Cisco's legal interests and evaluate the company's legal options.  Please direct all further correspondence or communication on this subject to this firm as Cisco's counsel.

July 27, 2001

Mr. Bill Parish
Parish & Company
10260 SW Greenburg Road, Suite 400
Portland, OR  97223

Dear Mr. Parish

I have reviewed your latest e-mail to our client, Cisco Systems, in which you agreed to comply with the company's request that you return the original and destroy copies of the original confidential corporate document of Cisco.  I have been directed to inform you that the original document which you have in your possession must be returned to me.  Demand is made that you return the original immediately.

In addition, as I indicated in my prior letter, all further correspondence should be directed to this law firm.  You should not transmit any further e-mail communications to Cisco Systems or its executives or managers.  The company's proprietary e-mail system has been established for business related purposes.  In other words, the only appropriate use is by Cisco employees internally with other Cisco employees or business related matters or for communications between Cisco employees and third parties, including customers, contractors, partners, and other persons or entities having a need to communicate with Cisco on matters related to its business.

We have advised Cisco that continued unsolicited, unwelcome e-mail communications by outside individuals or entities of an annoying or inappropriate nature are not proper and that the company may pursue remedies in the event that outside persons or entities abuse the company's proprietary e-mail system.  In addition, I have advised the company that recent legislation in states such as California may provide additional remedies to the company if your e-mail contact with the company continues.

Please provide me with the original of Cisco's confidential corporate document at your earliest convenience and also verify that you have not retained any copies and will not use or disclose any copies.

Summary and Analysis by Parish & Company

It is my belief that this "October 2000 Corporate PR Plan" document was probably sent by a recently laid off employee wanting to clear their conscience.  Cisco dismissed almost 10,000 workers in June and many of these people were long-term dedicated employees.  It is also noteworthy that Cisco Systems is now subject to several significant legal actions, including a class action lawsuit by Milberg Weiss which alleges that John Chambers, CEO, and Larry Carter, CFO, made significant illegal insider sales of Cisco stock while fully aware of underlying problems in the business prior to the general investing public.

The following link is to Milberg Weiss class action legal claim against Cisco Systems.
Milberg Weiss Cisco Systems Class Action Filing

The text of this claim against Cisco reads like an executive summary of Parish & Company's original reports on Cisco Systems.  This and other related reports were posted on my website and not copyrighted and therefore Milberg and other legal firms have been able to use the reports without seeking prior authorization.
Parish & Company's Cisco Systems Watered Stock Summary

Comments regarding Parish & Company analysis are always most appreciated.

Parish & Company is an independent fee based investment advisor to individuals, pensions and trusts based in Portland, Oregon.  No fees are accepted, either directly or indirectly, from any provider of investment products.  Your comments are most appreciated and please do visit my research archive at www.billparish.com.