SEC considers looking into Apple

Author: Brett Thomas
Published: 28th December 2006
Comments (7) Stumble
Uh-oh, Steve-o.

Uh-oh, Steve-o.

If you somehow missed the wranglings that took place buried three pages down in the business section of your paper, I don't blame you - but here's the chance to catch up. Months ago, a scandal was uncovered - it appeared that Apple had issued Steve-o millions of dollars in stock options in and since 2001, some without any board approval. Now, it looks like that wasn't the end of it.

The options were actually "backdated," or made to look like they were given in a different period than initially reported. At the time this was found out (October of this year), Jobs immediately returned the options, which he hadn't cashed in anyways. However, backdating the options skews accounting quite considerably, and is considered a material fraud.

Since he had returned the funds, it was expected that this rather sordid little chapter in Apple's history could be quietly closed. However, it appears that the US Securities and Exchange Commission (SEC) feels differently. Apple will need to restate several years worth of earnings to properly reflect the issue, and now the SEC is rumoured to be sending federal prosecutors to find out more.

Further rumour on the grapevine says that Jobs may be looking to step down amid the turmoil, despite having already been acquitted of any wrongdoing by the board. In the case of his options, he would never have been responsible for the backdating even if made aware, and he would have needed to truly understand the implications of it to have done anything wrong.

Whether Jobs will stay at the helm of Apple is anyone's guess - but I'd bet that if he did leave, it wouldn't be over something quite this small. It could cause a great disturbance in the force, however, as he's one of the last CEOs that has as much name recognition as the products he helped create.

Either way, Apple may be in for a few bumps in the road. Have you got a thought on the mis-statement? Think Jobs should've known what was happening? Tell us your thoughts in our forums.
Quote M4RTIN 28th December 2006, 21:15
i cant see jobs leaving. he is apple to all intents and purposes
Quote Cthippo 28th December 2006, 21:37
Backdating options is legal, however it has to be accounted for in the earnings statements. All of this is relatively new law since the Enron mess and so a LOT of comapnies are struggling with compliance. I wouldn't get too worked up about it.
Quote HugoB 28th December 2006, 21:53
I doubt much will come of this, just another case of media speculation > actual facts
Quote MrBurritoMan 28th December 2006, 22:58
i would have also have to say that Steve would not leave apple however right now its anyone's guess. I'm not going to assume anything until this whole thing is done with and the facts are laid out in full (might never happen) still i think that its something I'm not surprised about. i have never felt good about apple's business practices anyway. its nice to see the US government agrees with me on some of those terms. this is one case im going to be watching very closely.
Quote J-Pepper 29th December 2006, 16:14
This is very old news... since July in fact!

It's no biggie, Jobs is staying, external Board of Directors have full confidence in him and Apple is one in a couple hundred companies under the spotlight for backdating.
The SEC is unlikely to pursue via the criminal courts since there are so many companies under review.

All-in-all, this news accounts in size to a fly on a bulls back.
Quote Da Dego 29th December 2006, 16:27
Quote:
Originally Posted by J-Pepper
This is very old news... since July in fact!

It's no biggie, Jobs is staying, external Board of Directors have full confidence in him and Apple is one in a couple hundred companies under the spotlight for backdating.
The SEC is unlikely to pursue via the criminal courts since there are so many companies under review.

All-in-all, this news accounts in size to a fly on a bulls back.
Well, actually J-Pepper, the reason I bring it up now is because it's back in the business pages - but this time in the headlines. NOW is the time that Apple will actually have to restate its earnings, which means it's the first time that many stockholders and the markets-at-large will ever have a true understanding of what happened.

With all the corporate malfeasance, bad board members, company theft, etc., Wall Street is getting to have a knack for punishing companies that don't sack a CEO when things like this go down. Just like the masses at an execution, someone's head is supposed to roll for the impropriety - and it often has to be the biggest, not the guiltiest.

And if there's one thing that's totally mob-like - unpredictable, messy, and often very pushy -it's the forces of the Stock Exchanges...
Quote J-Pepper 29th December 2006, 16:37
Well.. they have restated earnings to the iTune of $84 million (did you see what I did there? )

Steve Jobs has been independently cleared of any wrong doing as he didn't benefit from these schemes and the external board, chaired by people such as Al Gore all give Steve Jobs the thumbs up.

With this news, the Apple stocks this morning is currently up 5% on this news. It's not bad news, it's a good end to a bad story perhaps but not one that will have any sort of detrimental effect on the fundamentals of the company.
Log in

You are not logged in, please login with your forum account below. If you don't already have an account please register to start contributing.





Stats: 0.130 seconds