Apple CEO Steve Jobs drawn into stock options scandal

“It is the scandal Wall Street can no longer dismiss as ‘a few bad apples.’ In what amounts to systematic corruption, dozens of American companies stand accused of manipulating share options to inflate executive pay artificially, and then lying to shareholders about it,” Stephen Foley reports for The Independent.

Foley reports, “As many as 2,000 companies may be involved. So far, 85 have publicly admitted they are under investigation. Directors from nine companies have quit in disgrace. Six executives from two firms are facing criminal charges. Angry shareholders are lining up their lawsuits.”

“And now we have the extraordinary possibility that shares in Apple Computer might be thrown off Nasdaq, and that Steve Jobs, the iPod maker’s visionary leader, could be questioned by the Securities and Exchange Commission, the Wall Street regulator,” Foley reports.

Foley reports, “…Last Friday, Apple said it might be forced to delist from Nasdaq. It missed the deadline for filing its latest quarterly results, which will have to include significant changes to the old figures and possible reductions to future earnings guidance. The company has a period of grace but will have to meet Nasdaq within the next couple of months.”

Foley reports, “Mr Jobs received an option to purchase 10 million shares, dated on the stock’s lowest point in January 2000. News of the investigation into that and other executive grants sent Apple shares lower as investors feared the legendary chief executive, who founded the company 30 years ago, might be forced to quit, although there has been no indication of wrongdoing on his part. He faces questions, too, over another of his companies, Pixar, the film animation studio he sold to Disney last year. Two senior Pixar executives received options grants at low points for the share price.”

“New companies are admitting they have been drawn into the regulatory investigation at a rate of almost one a day but the scandal has taken a long time to unfold,” Foley reports.

Full article here.

Related articles:
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As expected, Apple delays quarterly results due to stock-options grants review – August 11, 2006
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Disney: no material impact from Pixar options – August 09, 2006
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Apple stock options scandal? What scandal? – August 07, 2006
Class action lawsuit over stock options filed against Apple Computer, Inc. – August 04, 2006
Wall Street forgiving of Apple’s stock option irregularities; CEO Jobs unlikely to be terminated – August 04, 2006
Apple’s stock option irregularities escalate into a scandal as world awaits Steve Jobs’ WWDC keynote – August 04, 2006
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UBS: stock options probe unlikely to hurt Apple – June 30, 2006
Apple joins growing list of companies entangled in stock option ‘irregularities’ – June 29, 2006
Apple to investigate stock option grant ‘irregularities’ made between 1997 and 2001 – June 29, 2006

53 Comments

  1. The Independent is a tabloit, discredited rag in the UK.

    This has all been already announced, studied, commented on. Of course there will be no dilisting, no criminal charges, no implication of Jobs, etc.

    Apple will restate, take a small revenue hit, pay an SEC fine, and move on.

    Poof, it never happened.

  2. Of course it’s not an honest mistake. Somebody’s writing different dates on the forms. It’s common practice, though. Not typically investigated, but this is an SEC crackdown.

    MAYBE Jobs could say he didn’t think it was serious, but he can’t say he didn’t know it was illegal, or wrong.

  3. Percy, I agree, but there are two things which make me believe it was an honest mistake.

    1. The options were cancelled before anyone profited from them.

    2. The irregularities were discovered and brought to the SEC’s attention by Apple.

  4. Backdating options is perfectly legal.

    You have to do it in the open, and also have to pay the employer taxes on the extra compensation gain the employee gets.

    Apple probably did not do it in the open, but no criminal intent here.

    I see a fine coming, and the sun will rise in the east.

  5. Sell your Apple shares.

    I actually would have recommended a buy but after thinking about it deep, irealize. deflation means less revenues for ANY company especially tech companies such as Apple.

    on top of that, when Apple hit $50’s recently, it actually would have gone under it, if it wasnt for barrons and few other companies that started releasing positive news as soon as Apple was about to fall below $50.

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