Tech Crunch landed a nifty scoop Saturday, publishing the name of a wealth-management advisor who purportedly is trying to sell shares of Facebook belonging either to an early investor or early employee. This is a peak inside the murky netherworld of investing in startups whereby shareholders in a private company can sell their shares under certain circumstances directly to other investors.

What’s particularly juicy about the revelation is that the investors are shopping a valuation significantly below the infamous $15-billion point Microsoft established when it invested in Facebook last year (the valuation at which a company raises money becomes the de facto valuation). Tech Crunch is reporting that Facebook’s valuation may have fallen as low as $3 billion, at least according to those doing the selling.

The amount an individual is willing to accept in order to dump an asset is one thing. What the company itself will take the next time it raises capital makes a significant statement about what Facebook is worth. Though Facebook has raised oodles of money – most recently the $100 million in debt financing it took from TriplePoint Capital — it undoubtedly will need more. When that happens, let’s say the valuation is still $3 billion. Microsoft would then have to write down 4/5 of its $240 million investment in Facebook. Not a big deal to Microsoft financially, but embarrassing all the same.

A final thought. Reading the purported details in Tech Crunch of the e-mail from Bill Dagley of Private Wealth Partners (I say “purported” because I have no way of verifying the veracity of an e-mail sent to Michael Arrington), I’m reminded how foolish it is to put anything sensitive in an e-mail these days — or ever. I’ve recently noticed an uptick in the number of people who pick up the phone to have a conversation they once might have e-mailed. It’s undoubtedly a healthy development, as folks like Eliot Spitzer, Frank Quattrone, and the two former fund managers at Bear Stearns assuredly would agree.

Be careful what you say about trolley conductors in Boston. That’s the message Boston’s transit officials sent to a chain of seafood restaurants that devised an irreverent ad campaign that turned into a nasty battle over free speech.

Earlier this month, the Massachusetts Bay Transportation Authority yanked a series of advertisements that Legal Sea Foods, a Boston-based chain, started running on the sides of Boston buses and trolleys.

The ad campaign, devised by the DeVito/Verdi agency in New York, plays on a “really fresh fish” theme; each ad depicts a cartoon fish with a message bubble containing a borscht-belt-style insulting (i.e., “fresh”) remark.

Though some of the tart messages passed muster with the MBTA, at least one crossed the line, and the MBTA barred it. The forbidden message which had provoked complaints from the Boston Carmen’s Union, said, “This conductor has a face like a halibut.”

MBTA spokesman Joe Pesaturo says that the authority considered the ad “disparaging to employees,” “disrespectful,” and “not appropriate.”

Another ad, which bore a simple “Bite Me” message was also pulled down, but that was only due to a “miscommunication” between the MBTA and its transit advertising contractor, according to Pesaturo. (A DeVito/Verdi representative and Legal Sea Foods lawyer both say that Pesaturo is mistaken, and that the MBTA definitely barred the “Bite me” ad, too. The miscommunication, they say, was over yet a third ad.)

The MBTA had no problem with ads that proclaimed, “Hey lady, I’ve seen smaller noses on a swordfish,” and “This trolley gets around more than your sister.”

When the two ads were initially taken down, Legal Sea Foods hired First Amendment icon Martin Garbus, a partner at Davis & Gilbert, whose previous clients have included Lenny Bruce, Daniel Ellsberg, and Don Imus. Garbus wrote a letter threatening legal action on the grounds that the MBTA was violating Legal Sea Foods’ commercial free speech rights. (Though commercial speech gets less First Amendment protection than political speech, it still gets some, which is why, for instance, ads for lawyers, tobacco, and liquor can only be regulated — not banned outright.)

The halibut ad could not violate the MBTA’s rules against “demeaning or disparaging” advertisements, he argued, because “no reasonable person would take this quip by a talking fish seriously.”

On Thursday, Legal Seafood began running a new set of advertisements that mock the MBTA’s decision to pull down the earlier ad. The new ads will be the same as the old one, except for a big, red “censored” banner covering the words that triggered the controversy.

Legal Sea Foods new “censored” campaign may have defused the controversy for the moment. After mulling over the propriety of these “censored” ads for a week, according to a DeVito/Verdi representative, the MBTA okayed them on Wednesday.

The ad agency DeVito/Verdi knows well the free advertising attracted by a public controversy. In 1997 it devised the now famous bus-side campaign for New York Magazine that poked fun at then-Mayor Rudolph Giuliani by calling itself “Possibly the only good thing in New York that Rudy hasn’t taken credit for.” Giuliani tried unsuccessfully tried to have the ad taken down.

In an interview Garbus warns that the MBTA’s actions to date have created a “chilling effect for all ad writers,” although he seems to have a little trouble working himself into a full lather over this one. “I mean, this is not Armageddon,” he admits.

To my mind, Garbus’s threatening letter was commendably understated. Under the circumstances, I suspect a lot of Bostonians would have just told the MBTA: “Get scrod.”

When word first leaked last week about the coming reorganization at Yahoo (YHOO) my immediate reaction was, ‘What, they didn’t do that two years ago?’ I had the same reaction when the shell-game-type shuffling finally was announced Thursday. Then came the following over my transom. Give it a read. It’s from a Yahoo employee who decided to e-mail me directly with a unique view of what’s going on inside the company. I guarantee it’s better than any analysis you’ll see in the media on the subject. It also makes you wonder, does Yahoo’s board, which includes corporate luminaries like VJ Joshi of Hewlett-Packard (HPQ) and Bobby Kotick of Activision (ATVI), have the slightest idea what’s up at Yahoo?

Here’s the e-mail:

“I wanted to let you know about some of the good things going on at Yahoo. We are poised to double free cash flow in two years; we have the right people in the right places; our senior management is aligned with our shareholders; our employees are fully behind our senior management; and our advertisers are delighted with our services. This is the dawning of Yahoo’s best era ever. Things could not be better!

Ok, so there are some details to be worked out about how we actually meet those revenue targets, the fact that our new org chart shows absolutely no changes at the top, and the fact that we can’t get our stock price anywhere near what Mircosoft (MSFT) offered. But those are really just details, aren’t they? A few headwinds now will only make our sailing that much smoother later.

Take the new re-org announced today as one example. It had only one objective: solely to make our organization better aligned with our corporate priorities. Perish the thought that it had anything to do with personal power plays or internal politics. Sure, we just had a major re-org in January, which was really just a completion of the re-org that we had in October. But we work in the Internet, and we have to be nimble and responsive to the market demands. Just by example, when Hillary Schneider was promoted in Spring of last year to run HotJobs, Autos, Real Estate, Local, Shopping, Travel and Personals, we were all moved across campus into one larger org for no reason other than to ensure that our customers would be better served. Then, when Hillary moved on to run Sales for Yahoo (but kept HotJobs) at the end of the summer and we were moved back to our old homes, it was only to meet the needs of our customers again. When that uber-org was divided up in November and Autos and Real Estate went to our old Media group while the others fell under the Search group, it was because our customers demanded it. When the head of this group switched places with the head of the Search group in January just in time to do annual reviews for all of the people in their new orgs, well, you knew all along that our customers would be reaping the benefits. Now that this re-org will put all of those properties back under Hilary – except for Local, which is going to be under the group called Global Products (just out of curiosity, what is the opposite of Local?) – I can say with the utmost confidence that our customers will be delighted with the greater efficiencies that this structure will bring. (As a side note, the Engineering team, which has for the past few years re-org’d in lock step with the business re-org’s will not in fact re-org in lockstep this time, because quite frankly, they don’t need to be better aligned with the business teams.)

Sure, we have lost a few executives over the last week – eight in six days by my count. The fact that so many are leaving in such a short period of time right after we announced the end of all discussions with Microsoft might appear to be a lack of confidence in our own prospects, but I can assure you that nothing could be further from the truth. If you read the official announcements, their motives were made clear: all of them had decided either to spend more time with the families or pursue other opportunities. End of story.

As for the Microsoft offer, well, I can’t emphasize how relieved we are that we did not sell ourselves short. All of us who are working in the trenches know the full potential of Yahoo! Sure, we may be losing market share in search to Google (GOOG) every month and we may be losing market share in pageviews to social networks, but our future has never been brighter! As the market grows and our share declines, our opportunities for growth only increase! Simple math there. We have another 80% of the search market left to capture – Google only has about 30%. Now, whose future is truly brighter?

As for the Google deal, HOORRAY! Now, you might be thinking that we employees – particularly those in Search – who have spent most of our waking hours trying to do battle with Google might in some way be disappointed that we are now getting into bed with the enemy. Au contraire! We love it! Nothing indicates a job well done better than outsourcing your own job to the competition. Am I right, or am I right? After all, it is not as if we had sold the entire search team to another company for a premium price – that would have been a slap in the face! By contrast, outsourcing as much of the search business to Google as legally allowed in exchange for near term cash, that is much more re-assuring. It tells us all that we are truly valued.

So, as you can see, things here are great. Hope you are doing half as well.”

The U.S. Supreme Court’s decision Wednesday slashing the damages Exxon Mobil (XOM) must pay as a result of the 1989 Exxon Valdez oil spill could have unexpectedly wide-ranging consequences. An award to Alaskan fishermen and other residents was reduced from $2.5 billion to about $500 million.

In its ruling, the high court grapples once more with an issue that has long dogged corporate America and its adversaries: at what point is a verdict that’s meant to punish a defendant and deter future wrongdoing — rather than to compensate the plaintiff for his actual damages — excessive? In one the best-known cases, the Supreme Court in 1996 struck down a $2 million punitive-damages award over a $4,000 BMW paint job.

The decision in Exxon Shipping v. Baker arose in a different context than any of the previous punitive-damages cases decided by the Supreme Court — and in a context that many experts had thought might give the ruling somewhat less significance than usual. In earlier cases, the Court always decided whether the jury in a state court case had imposed an excessive punitive damages award. In such cases, the Supreme Court’s only justification for intervening was if it found that the federal Constitution barred the outcome — i.e., by ruling that the award was so outrageous as to violate due process.

The Exxon case, in contrast, was a federal maritime case, and the U.S. Supreme Court had the power to reduce the award on much narrower grounds: as a mere exercise of its so-called federal common-law jurisdiction. Since punitive damages awards in federal maritime cases are not a major source of anxiety for the business community, the case could easily have been decided in a way that would have had little significance for Chamber-of-Commerce types.

Nevertheless, Justice David Souter, writing for a 5-3 majority, seemed to go out of his way to hint that the rule he was announcing for federal maritime cases in the Exxon case – a rule that generally dictates a maximum 1:1 ratio between a punitive damages award and a jury’s compensatory award – might also reflect what the outcome would have been had it been decided on constitutional grounds. “In this case,” he wrote in the last footnote of the decision, “the constitutional outer limit may well be 1:1.” By cutting the Exxon Valdez verdict to $500 million, the high court set a 1:1 ratio with the $507.5 million compensatory damage portion of the jury’s award in the case.

“It can’t have been an accident,” says Evan Tager of Souter’s inclusion of Souter’s provocative footnote. Tager is a partner in the national law firm Mayer Brown, a specialist in punitive-damages cases (always on the pro-business side of the ledger, I should disclose), and worked on an amicus brief supporting Exxon’s position in this case. “They didn’t have to talk about constitutional issues at all. It seems like a signal to the lower courts that they intend to take this 1:1 line, which was first drawn in State Farm [v. Campbell], much more seriously than they have been in prior cases.”

In the State Farm case, decided in 2003, the Supreme Court court ruled that as a matter of constitutional law, it would be an extremely rare case in which punitive damages could constitutionally exceed compensatory damages by a more than 9:1 ratio, and added that “[w]hen compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.” Souter argued in the footnote that the compensatory award of $507.5 million was “substantial,” especially in the sense that it was sufficient in itself to act as “encouragement” for wronged parties to bring suit.

Three justices from the more liberal wing of the court — John Paul Stevens, Ruth Bader Ginsberg, and Stephen Breyer — dissented from the ruling, arguing that the Court should let Congress fashion a 1:1 rule if it wants one, rather than taking the initiative and fashioning one of its own. (They tweaked the conservative majority for failing to exhibit “judicial restraint” – a principle conservative judges ordinarily champion.) The dissenters also rejected the majority’s apparent assumption that Exxon as a company was largely blameless for the criminal recklessness of the Exxon Valdez pilot, who, according to the court record, had downed five double vodkas before leaving port and, ultimately, running the tanker aground on a reef.

“The jury could reasonably have believed,” wrote Justice Stephen Breyer, “that Exxon knowingly allowed a relapsed alcoholic repeatedly to pilot a vessel filled with millions of gallons of oil through waters that provided the livelihood for the many plaintiffs in this case. Given that conduct, it was only a matter of time before a crash and spill like this occurred.”

The Exxon case also raised one side issue – an increasingly sore point among Supreme Court practitioners: the problem of justices recusing themselves from cases, usually because of stock-holdings. Justice Samuel Alito recused himself in the Exxon case (the justices do not state their reasons when they do so) and, as a result, one of the issues the Court had planned to decide in this case – whether federal maritime law permits punitive damages to be awarded against a corporate defendant solely based upon the reckless conduct of a “managerial employee” – resulted in a 4-4 tie vote. In such cases, the lower court’s ruling stands, but has no precedential weight.

Earlier this term an important preemption case, Warner-Lambert v. Kent, suffered a similar fate, while the Court last month was forced to decline review of a decision permitting a massive lawsuit against companies who did business with apartheid South Africa to go forward when four justices had to recuse themselves, leaving the court without a quorum.

Our layoffs post got such an amazing response that we need to continue that conversation, and in the meantime, it’s also fed some thinking on other parts of the Gen Y “experience,” like this story I did for the Big Idea with Donny Deutsch. Had a chance to do the show on Monday, and the big idea was winning — what it is, what it means, how to be a winner — a concept some think we Gen Yers not only have a unique perspective on, but might even be changing. (Generation Team, anyone?) Thought you’d enjoy taking a look, and as always, tell us what you think…

Here’s a no-win situation for an attorney: What do you do when a your client, the founder and former CEO of a billion-dollar public company, is supposedly being shown on YouTube using illegal drugs?

According to a motion filed by federal prosecutors on Thursday, the quandary arose last summer when such videos were posted of Henry T. Nicholas, III, the co-founder and former CEO of Broadcom (BRCM), the high-profile, fabless semiconductor company based in Irvine, California.

(Last Thursday Nicholas pleaded not guilty to two federal indictments, one charging options backdating and the other conspiracy to distribute drugs, including MDMA (ecstacy), methamphetamine, and cocaine.)

In August 2007 Nicholas attorney Susan Szabo of Munger Tolles & Olson wrote e-mails and faxes to YouTube and parent Google (GOOG) demanding they take down a video of Nicholas, which, she said, invaded his privacy.

A YouTube support rep e-mailed Szabo back explaining that the company couldn’t process a privacy complaint “based on what a video ‘purports’ to portray,” so he invited her to confirm that the video really did show her client in a private setting without his consent.

Szabo complied: “I can confirm that the video portrays my client and that the video was taken surreptitiously in his bedroom, without his knowledge and consent, and that any distribution of the video is without his consent.”

Now, in a motion asking that Nicholas be detained pending his trial on the two indictments, the government cites the video – which, it claims, shows Nicholas using drugs at a time when he knew the government was investigating him and when he was publicly denying drug use to the media – as tending to show that Nicholas presents a risk to the community and a flight risk. Prosecutors write: “There can be no doubt it was defendant in the video as his attorneys sent an e-mail and letter to YouTube confirming that the person in the video using drugs is, in fact, defendant.” (The judge ultimately ordered certain “home detention” measures for Nicholas.)

An e-mail to attorney Szabo was not immediately returned. Nicholas’s criminal defense attorney, Brendan Sullivan, wrote: “I adhere to a policy that I should not discuss matters in litigation.”

The government’s 18-page detention motion, with 100 pages of appended exhibits, also levels a variety of other unflattering accusations beyond those already contained in the indictments. During a June 2007 flight on one of his private jets, for instance, Nicholas allegedly accused a “longtime friend, personal attorney, and employee” of wearing a “wire”; threatened to “chase him to the ends of the earth” if the friend “screwed” him; and then struck the friend in the face, causing him to fall to the ground.

The papers also allege that in November 2007 Nicholas, while driving with his son, crashed his black Lamborghini into a lamp post while returning from a Shake Shack. He switched cars with a security staffer in his convoy and then left the scene while the staffer waited for the police and took the rap. Through an attorney, Nicholas later admitted to local police that he’d been driving the Lamborghini, but claimed that the security staffer had suggested Nicholas drive home for “security reasons,” and that Nicholas had never intended that the staffer take responsibility for the crash. (The staffer, according to prosecutors, has refused to testify about the incident notwithstanding an immunity order, and is currently incarcerated on contempt charges.)

Nicholas stepped down as Broadcom’s CEO and co-chairman in 2003, explaining in a statement that he wanted “to attend to serious family matters.”

Quote of the week: “My managers always liked me — because they never had to see me.” Hah! Just had to share that bit of straight-faced wisdom from an otherwise wonderful Boomer manager, as I was sitting in his office when he dropped it on me. And they wonder why we’re always calling our parents; clearly, no one else will talk to us! Kidding, kidding, but thought you guys would enjoy that. I’ll refrain from further overanalysis, but needless to say, he busted up laughing when I offered to leave: “Oh, no, I mean, um, I love to chat, I’m just saying, my managers didn’t have to worry about me.” Uh-huh.

What about your bosses? Laid any hilarious words to the wise on you lately?

The great business journalist Joe Nocera set out to write a column Saturday in The New York Times about a classic Nocerian conflict, in this case the annual meeting of ExxonMobil (XOM), which pitted America’s largest company against the founding Rockefeller family.

He ended up writing a different column altogether, one of the better pieces of intelligent ecoskepticism I’ve seen in a while. (So you know, Nocera is my friend, mentor, drinking buddy, former editor and colleague, role model, and so on.) Read the column yourself to get the full story. In a nutshell, Nocera explained that school of thought that says that while global warming is real, all the policy prescriptions intended to stop it don’t necessarily make sense. It’s a similar position to the one pushed by Bjorn Lomborg. I wrote a little about this after our green conference in April. Nocera writes about the Yale economist William Nordhaus. I’ve discussed this with his Yale colleague, Robert Mendelsohn, who has argued intelligently that global climate change policy debates often underestimate the power of human adaptability.

Two nits for my man Joe:

1. Of Exxon’s financial success he writes: “You can argue, as many do, that this performance is nothing more than a case of holding out the umbrella while it rains money — that it’s all due to the dramatic run-up in the price of oil.” I guess he means holding the umbrella upside down, because holding it the normal way wouldn’t be a particularly effective way of collecting anything. Is this a common expression I don’t know about? And aren’t there better ways of catching rain than an upside-down umbrella?

2. I kind of expected Joe to note the Rockefeller family’s ownership stake in Exxon, which I’ve seen reported various ways (Fortune’s Marc Gunther reports it’s less than .01 percent) but never in an amount that’s all that impressive in the sense of being able to push around Exxon’s management.

[For a more recent feature story about these events, see Inside Job, which came out in the issue of Fortune dated "July 7, 2008" on the spine. -- RHP, 7/2/08.]

In a stunning development, two former high-level Dow Chemical (DOW) executives, J. Pedro Reinhard and Romeo Kreinberg, settled their litigation against the company Monday, admitting that Dow acted properly in firing them in April 2007, and that they had, indeed, been engaging in secret discussions about a leverage buy-out of the company without the board’s knowledge or approval. The contemplated $50-60 billion buyout would have been the largest LBO ever.

The joint press release states that “Mr. Reinhard and Mr. Kreinberg acknowledge participating in discussions which were not authorized by nor disclosed to Dow’s Board concerning a potential LBO of Dow [and that] the actions taken by Dow’s Board were appropriate under the circumstances.”

At the same time, it says, Dow’s board “acknowledges Mr. Reinhard and Mr. Kreinberg’s substantial contributions to Dow over their lengthy and illustrious careers at Dow.”

There are also undisclosed portions of the settlement. Under the circumstances, that fact might mean that company has agreed to impose financial penalties on the executives that are less onerous than the company had originally sought.

At the time of the firings on April 12, 2007, Reinhard was a Dow director and advisor and a former chief financial officer, while Kreinberg was the executive vice president for the performance plastics and chemicals portfolio. On May 8, each executive sued Dow for defamation, claiming that the press release Dow had issued explaining their terminations had been false. The terms of today’s settlement amount to a near total retraction and renunciation by the executives of these claims.

Also on May 8, 2007, Dow sued each executive for having violated the duties of loyalty they owed Dow, seeking contractual damages. In Reinhard’s case, Dow cut off $10 to $15 million worth of deferred equity awards he had already earned but had not yet been paid, and the company was also seeking to force him to disgorge (under so-called “claw-back” provisions of his contract) a nearly equal sum that he had already been paid over the previous three years.

Kreinberg was facing a loss of roughly $10 million in equity compensation not yet paid, and another $5 million in disgorgement.

Since the financial terms of the settlement are confidential, it is unclear how this portion of the dispute was resolved, but it seems unlikely that the executives would have “settled” had they not received anything in return.

Based on court filings and other discovery materials that have come to light thus far, the executives’ LBO discussions primarily involved a plan by an Omani sovereign wealth fund which was being advised by JP Morgan Cazenove (a UK joint venture of JP Morgan Chase). The discovery materials suggest that the Omanis hoped to form a consortium with two marquee US private equity firms (KKR and TPG were approached) to do a break-up takeover in which the remaining entity’s CEO would have been Kreinberg and its new chairman Reinhard.

As a result of information gained during the discovery process, Dow Chemical’s board later leveled an additional charge against Reinhard – that he had, without its board’s knowledge or permission, served as an observer at board meetings of another chemical company, Basell, which recently merged to become LyondellBasell. (Basell and, now, LyondellBasell are businesses privately owned by the holding company Access Industries, an investment vehicle privately owned by billionaire Len Blavatnik.)

Reinhard is currently a director on the boards of Royal Bank of Canada (RY), Sigma-Aldrich (SIAL), and Colgate-Palmolive (CL). He left the board of Coca-Cola (KO) in April 2006.

The planned LBO came to light after three London newspapers reported rumors about the bid. Dow CEO Andrew Liveris then made inquiries of JP Morgan Chase CEO Jamie Dimon, who ultimately confirmed that, in fact, the bank’s London office had pursued such a plan, and that Kreinberg and Reinhard had been involved. Dow’s board terminated the two executives two days later.

A call and e-mail to Kreinberg’s lead attorney, Stanley Arkin, were not immediately returned.

Reinhard’s attorney, Gary Naftalis, referred inquiries to a spokesperson, who issued this statement: “Pedro Reinhard is pleased with the settlement. . . . He has served as a loyal and committed employee and Board member of Dow Chemical and has served its shareholders for many years. The dispute with his former company and colleagues was distressing to him personally and he greatly appreciates the company’s public recognition and kind words about his illustrious career at the company.”

Dow’s lead attorney, David Bernick, said, “This was a very important piece of litigation for the company and for the board. The company is very pleased with the fact it has been resolved in this way.”

Dow spokesperson Chris Huntley said: “It’s fair to say we’re pleased that what had been a disappointing chapter in Dow’s history has been closed, and that the board’s swift and decisive action in April [2007] has been vindicated.”

Here is an earlier blog item I did on the case.