Wednesday, December 27, 2006

Apple shares tumbles 6% due to options fraud scandal

Apple is making headlines again, but it isn't about new gadgets.


Justin Scheck reports:

According to people with knowledge of Apple's situation, federal prosecutors are looking closely at stock option administration documents that were apparently falsified by company officials to maximize the profitability of option grants to executives.

The faked documents were revealed in a three-month internal probe — conducted by Quinn Emanuel Urquhart Oliver & Hedges — that concluded in October, said individuals familiar with the case who requested anonymity because it remains the subject of criminal and civil government investigations.

The falsification of documents is perhaps the key issue for government officials trying to determine which of their 100-plus backdating investigations will be pursued as criminal matters and which will be limited to civil SEC inquiries.


Steve Jobs reportedly has hired an independent lawyer to mount a defense against SEC inquiries. Hopefully, this will end soon. Worst case scenario = Jobs quits, Apple gets fined (fines for companies like Apple are like ant bites, the bottom line isn't significantly hurt).

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