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Former Apple CFO points finger at Jobs

updated 03:40 pm EDT, Tue April 24, 2007

Former CFO points to Jobs

Apple's former Chief Financial Officer (CFO) Fred Anderson, who has agreed to pay approximately $3.5 million to make up for his personal gains in Apple's illegal stock options scandal, has pointed a finger at company CEO Steve Jobs. The ex-executive told his attorney that he warned Jobs in late January of 2001 that the options grant in question would need to be priced based on the date of the actual agreement from the board of directors, according to Marketwatch. Anderson's attorney, Jerome Roth, said Apple's chief assured Anderson that the board had already approved the options grant. Anderson says that he now believes the Apple board may not have given the necessary prior approval to the grants issued in February of 2001, according to the report. SEC officials wouldn't say whether Jobs has been implicated throughout their lengthy investigation, but industry experts agree that Apple will suffer greatly if its chief is forced to step down as CEO of the company. [updated]

Apple's stock took a large hit when word came that Jobs was at least partially involved in 'irregularities' of the company's prior stock options grants. Fears that Apple's chief would lose his foothold as visionary and driving force at the Cupertino-based company sent tremors through its share price as investors acted quickly to avoid a potential stock dropout.

Those fears mostly subsided, however, as Apple's own internal investigation turned up no links to Jobs knowing involvement with the scandal. Industry analysts repeatedly denounced the likelihood that criminal charges would be brought against the executive, but several legal experts stressed that Jobs wasn't "out of the woods" yet.

The San Jose Mercury News yesterday published a report discussing Jobs' likely legal stance in the ongoing investigation, and cited reasons why Apple's head would likely skirt criminal charges.

"When you start thinking about lying, cheating and stealing, there's a mental state that you know what you're doing is wrong," said one former federal prosecutor not involved in the Apple case, according to the report. "If you don't appreciate that, it's very difficult for the government to show that you're a criminal."

Prosecutors would be hard pressed to base a securities fraud case against Jobs on the backdating of his own grant, the report stated, mostly because the grant was approved by Apple's board and not Jobs himself.

"Jobs can take the defense, 'What do I know about the proper accounting for this transaction? I didn't keep a secret from anybody and assumed the accounting would be proper,'" said Stanford law professor and former SEC commissioner Joseph Grundfest. "That would seem to distinguish the Apple situation."

These defense strategies could collapse, however, if Anderson's claim that Jobs knew about the erroneous dates proves true. Further, if Jobs intentionally misled the former CFO by insisting that the grant had been pre-approved by Apple's board -- which Apple already admitted occurred via a fictitious board meeting that never happened -- Jobs could find himself on center stage in the investigation without a solid defense.




by MacNN Staff

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Comments

  1. climacs

    Joined: Dec 1969

    0

    ...but it won't happen

    "industry experts agree that Apple will suffer greatly if its chief is forced to step down as CEO of the company."

    well duh, but it ain't gonna happen. Not over this.

    Frankly, I think Jobs knew enough to know that he didn't want to know too much about this at the time. "Plausible deniability" and all.

  1. rotuts

    Joined: Dec 1969

    0

    grapes a little sour Fred

    remember the SEC goes after those who gain and those who then lie

    SJ = neither

  1. starwarrior

    Joined: Dec 1969

    0

    Report the News

    For Goodness Sake:

    WASHINGTON (Dow Jones)--The U.S. Securities and Exchange said on Tuesday that it won't bring charges against Apple Inc. (AAPL) in connection with allegations of options backdating in 2001, citing in part the company's cooperation in the probe. "Apple's cooperation consisted of, among other things, prompt self-reporting, an independent internal investigation, the sharing of the results of that investigation with the government, and the implementation of new controls designed to prevent the recurrence of fraudulent conduct," the SEC said in a statement.

  1. testudo

    Joined: Dec 1969

    0

    Re: but it won't happen

    Maybe not from this (although its the first comment that actually does say Jobs was somehow involved, even at a periphery).

    Now if Nancy comes out and says Jobs pushed her to falsify those documents in November, that's another story. Then again, its another story if we find out Jobs kidnapped the Lindburgh baby, told the Rosenberg's that spying on the US was OK, was up on the grassy knoll in Dallas, and told Michael Richards that using the "N" word during a performance would be funny. So I guess we're stuck with waiting for another shoe to drop.

  1. testudo

    Joined: Dec 1969

    0

    Re: report the news

    Just because they won't go after apple doesn't mean they won't go after people associated to Apple (like Jobs, Ive, Gore, Campbell, etc).

  1. Guest

    Joined: Dec 1969

    0

    Ryu

    So the financial officer needs Jobs to assure him that the financial procedures are alright and correct? What kind of CFO is that?

  1. trenchcoat77

    Joined: Dec 1969

    0

    Watch the market tomorrow

    Should be an interesting day, with both the quarterly report coming out at the same time as these rumors about Jobs. Apple stock is always volatile in the best of times.

  1. hokizpokis

    Joined: Dec 1969

    0

    SEC witch hunt

    quoting from the article in question: 'Through his attorney, the 62-year-old Anderson said that he warned Jobs in late January of that year that the options grant in question would need to be priced based on the date of the actual agreement from the board of directors. Jerome Roth, Anderson's attorney, said Jobs had assured Anderson that the board had given prior approval of the options grant. Anderson, through his attorney, said he now believes that the Apple board may not have given the necessary prior approval to the grants issued in February 2001, "contrary to what Anderson understood from Mr. Jobs, and from the board," according to the statement.'

    >>>so just basic hearsay from a former CFO that just paid the SEC 3.5 million in fines; it's no wonder that he would have little love for Steve... errr... their such good friends, go figure

    so the SEC witch hunt continues... blah, blah, blah

  1. JohnnyFive

    Joined: Dec 1969

    0

    this is going to be ugly

    and it's going to be a rough ride.

  1. Jeronimo2000

    Joined: Dec 1969

    0

    tsss

    Not cool, Freddie, not cool.

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