US may charge former Apple executives in stock backdating imbroglio

“Federal prosecutors are strongly considering criminal charges against former executives of Broadcom, Apple, and KLA-Tencor, related to the backdating of stock options, The Wall Street Journal reported on Friday, citing people familiar with the situation,” Reuters reports.

Reuters reports, “Prosecutors are also nearing charges against a former official of computer-security company McAfee, the paper said, citing people familiar with the situation.”

“More than 170 companies have been investigated by U.S. authorities or have conducted internal inquiries into possible manipulation of option grant dates,” Reuters reports. “Officials at Apple, KLA-Tencor, McAfee and DRS could not immediately be reached.”

Full article here.

[Thanks to MacDailyNews Reader “Adam W.” for the heads up.]

Related articles:
Apple options probe shines spotlight on former execs Anderson and Heinen – January 02, 2007
Analyst: Anderson, Heinen may be former Apple executives responsible for irregular options grants – October 05, 2006


  1. As there is no way Apple could have undertaken and announced their own review without being 100% satisfied that Jobs was not involved this could be the beginning of the end of the matter.

    What everyone has not taken into account is the fact that Jobs is a CEO that leads and is massively more involved in products and customers than in finance. Surely its easy to see that he has other people to take care of that? The idea that he ever need to put a hand in the til for himself or others is preposterous.

    Let’s get this whole thing finished and put to bed and let’s see APPL back where it belongs $110.

  2. Linux guy etc:
    “The key word is “former”. That implies that SJ is safe.”

    Depends how you define “former” and back date the termination papers. Maybe the Steve will back date his retirement to last year.
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  3. Fed Pros: “Until it happens, forget everything you read. It’s just hearsay.”

    Head in the sand. Then when it happens kick yourself in the butt for not selling your stock earlier and being dumb enough to listen to some anonymous dweeb expert at MDN.

  4. This does NOT mean that SJ is safe; in fact, it is even MORE dangerous for SJ and Apple.
    When these former execs are about to be indicted, and even after they are indicted, they will have both an incentive and an opportunity to strike a deal with prosecutors. In exchange for reduced sentences, they will be invited to testify against more senior execs at Apple, especially SJ–that will be the only thing that could save them. If they lack integrity, they won’t care what they have to say about SJ, true or not. And different prosecutors have different levels of “proof” that they would expect these execs to provide to back up whatever they say. For a Spitzer-type, a simple “oh, I just remembered a conversation with Steve where he said that he knew what we were doing was illegal” will be perfectly good enough; then, the prosecutor could portray SJ to the jury as a an evil–even worse, hypocritical–CEO and figure he would win political points with the public for “standing up for the little guy,” regardless of whether the jury buys it or not.
    The only safe decisions now for SJ and Apple would if the prosecutors either decide not to prosecute the former execs, or if they announce that they will be the ONLY ones to be prosecuted (as Fitzgerald did with Libby).
    As an investor, I’m sitting on my Apple shares, but not buying any more. As Spitzer had demonstrated, innocent execs are easy prey for ambitious prosecutors, and it doesn’t even matter whether they can ever win in court.

  5. No matter who was responsible inside Apple, as CEO, Steve Jobs literally signs off on the financial statements for filing with the SEC and takes responsibility for their accuracy. From that standpoint he is culpable no matter what.

    What the SEC and prosecutors will look for in an investigation is intent to mislead or defraud investors. That is why the Worlcom and Enron guys went to jail. They intentionally “cooked the books” to make a bad situation look like there was nothing wrong.

    One other factor for consideration is if anyone suffered damages as a result of this. IN the case of Apple, investors were not hurt in a material way, unless you count the damage done by the press in the way it covers this story.

  6. What’s interesting is that technically speaking, stock backdating is certainly unethical, but NOT illegal. How the Feds think they can get a conviction that would stand judicial review will be interesting. If you are short selling slimeball, it’s Christmas day. But someone, please show me how this explicitly breaks laws. That’s what makes this so fascinating.

    Stay tuned.

  7. The article clearly uses the words “criminal” and “indictment”. I would think that this means something “illegal” not simply “unethical” has occurred. Anyhow, if backdating stock options is not illegal, hiding the fact from investors and the federal government most probably is. Failing to report receiving backdated stock options is the most probable criminal charge. How well deserved that these people spend whatever unreported profits that they had accrued to pay their lawyers.

  8. How the hell long is this thing going to weigh down on Apple and Steve Jobs? Marketshare is going to be anchored down until the clouds of suspicion dissipate. Months, years???? If Steve Jobs goes down, Apple goes down, at least down far enough to lose its edge and perpetual growth. I, for one, am waiting on pins and needles to see this freaking thing go away. Is Disney/Pixar doing their own investigation to clear jobs internally like Apple did? I’d feel better if at least he was cleared internally of wrongdoing. Right now, I hate the freaking government no matter how in-the-right they may be to pursue it. This is the dawn of a new Apple era, and pancreatic cancer and scandal make it a worrisome forecast. I know Steve doesn’t need any money, but he certainly needs our prayers.

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