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The SEC does not have a sufficient case against Steve Jobs in an ongoing federal investigation of stock option backdating

An article in the San Jose Mercury News reports that Steve Jobs will likely be able to avoid a criminal case related to a stock-option backdating scandal at Apple.  The Apple CEO reportedly received 7.5 million backdated stock options during 2001, and an ongoing federal investigation had analysts curious to see if Jobs would face federal charges.

The main focus of the federal investigation surrounded the idea that the stock-options grant was approved through falsified documentation.  Even though Jobs approved Apple's backdating, there is not sufficient evidence that he directed the backdating or knowingly covered it up, according to reports.  The Apple board openly approved granted Job's backdated options.

However, it appears that someone on the Apple board falsified minutes of an Apple board meeting and was later signed by Apple's general counsel.

In December, an internal investigation concluded that Jobs did not do anything wrong in the backdating scandal.

Rumors surrounded Apple's MacWorld Conference & Expo, as spectators and members of the media speculated on whether or not Jobs would be back for another year.  An indictment would cause alarm for Apple shareholders, especially as Jobs plays such an important role with the company.

The Securities and Exchange Commission and U.S. Attorney's office in San Francisco will continue their investigation to see if Jobs did do anything illegal.  Charges are highly unlikely if federal prosecutors cannot prove that Jobs controlled his own backdating and then hid evidence of it.

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Above the Law?
By TomZ on 4/23/07, Rating: 0
RE: Above the Law?
By Zirconium on 4/23/2007 9:24:08 AM , Rating: 5
My guess is that they aren't able to make it stick. These backdating laws are weird; he approved the backdating, which is somehow legal, and he received backdated stocks, but they can't prove that he actually backdated the stocks himself, which would be illegal. Unless it was a Thursday, in which it would be legal again, until someone declared shenanigans.


RE: Above the Law?
By zombiexl on 4/23/2007 9:40:56 AM , Rating: 3
quote:
Unless it was a Thursday, in which it would be legal again, until someone declared shenanigans.

SP reference?

Anyway...

It's also legal on the 3rd new moon of any leap year ending in 0 or 2, which is also evenly divisible by 4.

The last part of the law mentions that if you are connected to Apple that the law does not apply (gotta read the fine print).


RE: Above the Law?
By EndPCNoise on 4/23/2007 11:22:46 AM , Rating: 2
Hello???

Steve Jobs should still go down for the 7.5 million backdated stock options. He had to have known this was wrong and illegal.

If you pay some company to do your taxes, and they screw up to your benefit, the IRS will still hold you accountable if and when they catch you.

If I buy a computer that has illegally copied software installed on it, and I use it, I will still be held responsible if I should get caught.

Steve Jobs should go down. Shareholders like us are the victims of backdated options. Backdated options screws people who have investments for their retirements and/or mutual funds. Guys like Steve Jobs are taking advantage of us.


RE: Above the Law?
By masher2 (blog) on 4/23/2007 3:21:27 PM , Rating: 4
> "If you pay some company to do your taxes, and they screw up to your benefit, the IRS will still hold you accountable if and when they catch you..."

The IRS will hold you financially responsible in this case, but not criminally liable. That's a big difference.


RE: Above the Law?
By Behlal on 4/23/2007 5:04:25 PM , Rating: 2
You fail to realize one rather important fact here. It isn't illegal to backdate stock options... It is only illegal to do it without approval from the board of directors (or stockholders) or if you hide the fact. If you legitimately declare the backdating and have it correctly approved, it is 100% legal.


RE: Above the Law?
By Oregonian2 on 4/23/2007 5:38:35 PM , Rating: 2
Not only that, they can make the "option price" be zero and have it be an out and out stock grant. Perfectly legal (so long as the paperwork is done properly of course). It's the doing of the paperwork properly where the problems lie.


RE: Above the Law?
By EndPCNoise on 4/23/2007 8:55:13 PM , Rating: 2
Thank you all. I stand corrected.

I still think backdated options are a shady practice.


An important addition
By crystal clear on 4/23/2007 10:39:51 AM , Rating: 2
quote:
However, it appears that someone on the Apple board falsified minutes of an Apple board meeting and was later signed by Apple's general counsel.


I will add this to the above portion of the article-

"Apple has implied that former general counsel Nancy Heinen and former CFO Fred Anderson failed in their duties, and the SEC is investigating them both."




RE: An important addition
By Scorpion on 4/23/2007 12:01:07 PM , Rating: 2
Notice how when the "big guys" get caught, then blame usually falls to someone who happens to not work there anymore? It seems all to easy for these White Collar crimes to go undetected, or at least make it very difficult to prove once they do.

I really would prefer the law to make examples of some of these people. I'm quite sick of this culture of corporate corruption.


RE: An important addition
By crystal clear on 4/23/2007 12:24:07 PM , Rating: 2
quote:
corporate corruption


I have full faith in the Security Exchange Commision("SEC")

In addition to my earlier comments, a new addition-

"Apple shareholders propose change to options dating"

The request is one of six shareholder proposals due to be voted on at Apple's annual meeting on May 10.

Amalgamated BankLongView Collective Investment Fund and Connecticut Retirement Plans and Trust Funds have proposed that stock options granted to senior Apple executives should have an exercise price equal to an average of the opening and closing prices of the underlying stock on the grant date.

The shareholders have also asked that options grant dates should be set and disclosed in advance, according to an Apple filing with the U.S. Securities and Exchange Commission.

http://www.reuters.com/article/ousiv/idUSN16278141...


RE: An important addition
By crystal clear on 4/23/2007 12:53:00 PM , Rating: 2
"Security Exchange Commision"- sorry did not review my comment,should read:-

"U.S. Securities and Exchange Commission"


RE: An important addition
By Oregonian2 on 4/23/2007 5:43:44 PM , Rating: 2
quote:
Notice how when the "big guys" get caught, then blame usually falls to someone who happens to not work there anymore? It seems all to easy for these White Collar crimes to go undetected, or at least make it very difficult to prove once they do.


You're saying that when companies find out about bad stuff going on (or the public finding out about it, however you want to phrase it), they should keep those people on staff, saving them for the investigations later? Or should they fire their butts like they have been (usually phrased as "leaving to pursue their own interests").


RE: An important addition
By Scorpion on 4/23/2007 6:42:49 PM , Rating: 2
Then why is it never stated that these people were fired for the very reasons that the inquiry was for. Oh wait, if they were fired for that reason before it was investigated and found that they were the guilty party then... yada yada yada why am I wasting my time arguing this trite response.

"like they have been". Ok show me.


RE: An important addition
By Oregonian2 on 4/23/2007 8:23:19 PM , Rating: 2
High up's are never fired. Just doesn't happen. They leave on their own volition to pursue their other interests. Just how it's always done even if everybody and their brother at the company knows they were fired, or more accurately asked to resign (in my experience). And indeed technically they're not fired even if it was suggested to them that they resign (and they do). At least in this state, it's also better if an employee resigns (for the company) having to do with company payments to the state unemployment division (which for some reason is always called the employment division). Both the company and evil-do'er don't like high level firings. Bad publicity, not good for stock prices. It's good for both the company and the stockholders that evil-doers are axed quietly-as-possible.


Conclusions......
By crystal clear on 4/23/2007 11:29:12 AM , Rating: 2
1). Regarding Steve Jobs, there "is little, if any, evidence that he knew the accounting implications of Apple's backdating."
(most CEOs dont know the accounting implications,if the CFO
doesnt advise him on that)

2) Its obvious that mistakes were made, even if they were more likely a result of incompetence than criminal intent.

3) Apple will have a rather large fine levied against it.

4) Who is to blame for improprieties that everyone, including Apple's Board of Directors, agrees occurred.

http://arstechnica.com/journals/apple.ars/2007/04/...




RE: Conclusions......
By TomZ on 4/23/2007 12:36:37 PM , Rating: 2
The question in my mind is, why would someone else, e.g., the CFO, break the law in order to benefit Jobs?

It seems to me that in general, the primary beneficiary of committing a crime is the criminal, assuming they don't get caught. It is much less to commit a crime on someone else's behalf.


RE: Conclusions......
By crystal clear on 4/23/2007 1:19:13 PM , Rating: 2
U.S. Securities and Exchange Commission is investigating to determine whether it was
quote:
criminal intent

or simple
quote:
incompetence
.

I am sure they will come up with their findings.


RE: Conclusions......
By KristopherKubicki (blog) on 4/23/2007 2:07:33 PM , Rating: 2
Hanlon's razor: Never attribute to malice that which can be adequately explained by stupidity.

Unless, of course, the person you're talking about stands to make millions of dollars. I somehow think that these guys didn't get to be billionaires by making sweeping accounting mistakes.


RE: Conclusions......
By crystal clear on 4/24/2007 1:48:24 AM , Rating: 2
You certainly have a stockpile of quotes for every occasion.

You launch them the Intel way-you time it perfectly.

If I read "conclusions" of any article on any website,

YOURS certainly is the best.


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