macnn
07/01/2008, 9:00pm, EDT
Tuesday, July 1st
Apple, execs sued for fraud from backdating scandal
A lawsuit was brought against several key Apple executives on Friday, accusing CEO Steve Jobs and several others of fraud, in relation to the stock option backdating scandal in recent years. According to a filing with the US District Court in San Jose, Jobs stands with former financial officer Fred Anderson, as well as Nancy Heinen, William Campbel, Millard Drexler, Arthur Levinson, and Jerome York, in addition to the company itself.
Plaintiffs Martin Vogel and Kenneth Mahoney bring the class-action suit against Apple and its executives, due to a stock tumble that occurred after it acknowledged an internal investigation regarding the backdated grants. After two weeks, stock dropped 14-percent – over $7 billion in share value – and the suit is aimed at recuperating those losses.
Apple has lost millions on backdated stocks, which were allegedly not accounted for in the company's financial records, or reported to the proper authorities at the Securities and Exchange Commission.
Filed under: Investor, industry, Apple
Other story tags: Steve Jobs, lawsuit, financial, backdating, executives
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Apple Fraud
Trying to pull a fast one usually comes around to bite one in the arse. They all, including Steve, should have known better.
recovery?
Where did the share price stand on Friday compared with the time of the alleged drop? This case is going nowhere as they would have to "prove" both that the share price drop was as a direct consequence of the back-dating plus that they were materially out of pocket (you can't lose if you don't sell). Good luck with that!
my turn
Maybe I can sue Steve for appearing at the WWDC looking kinda skinny. That hurt the Apple stock price with the same meaningless blip--I mean critical investing-crippling drop--as did the backdating thing.
Get over it!
Damn lawyers. I REALLY wish our system were like the Brit's - the looser pays ALL legal costs for BOTH parties.
So...
...instead of $1,000,000,000 they got only $9,000,000. More whine please.
It was 2 years ago
On Friday, AAPL was around $170. When Apple disclosed the backdating issue in the spring of 2006, AAPL was around $70. During that summer, it sank to about $50. A year later, it was around $140. One big recession later still, we are at around $174, with a likely surge to $200 rather soon.
How they plan to prove that their stock holdings fell as a direct consequence of the disclosure, I have no idea. There is a chance, though, that Wall Street might react to this news today, and knock AAPL down again for a little while.
Higher prices...
We all pay higher prices for everything we buy because of greedy lawyers. You can bet your bottom dollar that some lawyer(s) initiated this, not an aggrieved stockholder. From step ladders to a loaf of bread the cost of litigation is passed on to the consumer. Because of the legal system in this country this case will generate huge payouts for the lawyers regardless of its merits. They do it because they can at no risk to themselves. And the next Mac you buy will cost more because of it.
re: higher prices
Oh, but we don't pay higher prices for greedy exectutives taking all they can from a company, and then some?
And the argument that "Hey, look at the price now!" is like saying "Hey, sure I beat the guy over the head with a baseball bat, but he's fine now, so why you coming after me?"
I'd sue if...
"instead of $1,000,000,000 (one billion dollars) I got only $9,000,000 (nine million dollars)"! That means I'm out $991,000,000 (nine hundred ninety one million dollars) which to me at least is quite a bit of change to loose!
How will they prove
During 2006, AAPL stock moved in sync with NASDAQ, as well as DJIA. How do they intend to prove that the fall between May and July was caused by this and not by the stock markets? More importantly, from the moment AAPL begun its fall in May, until six month later, AAPL lost 25% of its value, only to recover it all and surpass most other indices by almost 10%. In six months since the disclosure of this information.
Is there any legal limit regarding how soon a company stock is required to recover lost value due to adverse news related to the company? I didn't think so. Even if this tries to go by common sense, one would assume that if you are an investor (and not a trader), you would hold shares of a company for more than one year, in order to minimise tax liability. If these investors had done that, their holdings would have doubled. Anything less than a year, you're a trader and are buying and selling shares based on speculation.
In the end, lkrupp is right; this will only be good for the trial lawyers out there...