Apple Financial Scandal?

Apple recovers after new options info
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By MarketWatch
Last Update: 9:56 PM ET Dec 27, 2006

NEW YORK (MarketWatch) -- Apple Computer Inc. shares regained ground after being rocked Wednesday by a published report that some company officials may have falsified stock-option documents, and that Chief Executive Steve Jobs has hired a lawyer to represent him in federal inquiries.
The report from the California legal newspaper the Recorder, which appeared on the Web site Law.com, said federal prosecutors are examining the documents to determine whether criminal charges should be filed. The report cited "individuals familiar with the case who requested anonymity."
A separate report, which appeared in the Financial Times online edition, indicated that Jobs gained 7.5 million stock options in 2001 without the board's authorization, which is required.
The FT report, which cites unnamed people familiar with the matter, added that records were falsified to show that the board had approved the options for Jobs. The Securities and Exchange Commission is looking at those records to decide whether to pursue a case against Apple, according to the FT story.
The FT story didn't say who allegedly gave the options to Jobs or who allegedly falsified company records.
The Recorder story also said Jobs had decided to hire his own attorney to deal with inquiries by the Justice Department and the SEC. The high-profile chief executive had been represented by the company's outside law firm.
Apple had previously said that its own internal investigation found no misconduct by Jobs or other senior executives. The company did say that its probe had raised concerns about the actions of two unidentified former executives.
Company spokesman Steve Dowling had no specific comment on the news report, except to say Apple is "providing all the details of its investigation" to the SEC.
He said Apple plans to file its 10-K on or before Dec. 29, but he declined to say if it will contain any update on the stock-option investigation.
In trading Wednesday, Apple (AAPL :
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8:00pm 12/27/2006
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AAPL81.52, +0.01, +0.0% ) shares dropped as much as 5% before closing at $81.52, up 1 cent.
Gene Munster, an analyst at Piper Jaffray, pegged the odds that Jobs was involved in any shenanigans at less than 5%.
"We believe there is a very low likelihood that Steve Jobs was involved in the falsification of options documents, although we expect the investigation may continue to point to former Apple officers," Munster wrote Wednesday in a research note.
He reiterated his outperform rating on the stock.
Further details about Apple's situation are expected to be unveiled Friday, when the company plans to file several quarterly reports and its annual report for the fiscal year ended Sept. 30.
Apple has delayed the filings amid an internal probe into the backdating of employee stock-option grants.
Chart of AAPL
The company previously has said that it would restate financial results for prior reporting periods to record noncash compensation charges after it found accounting irregularities for some grants issued between 1997 and 2002. Apple has not given an estimate of those charges.
The maker of Macintosh personal computers and iPod music and video players is among more than 100 firms under scrutiny for the practice of pricing option grants on dates that were different from their actual grant dates.
Grants priced on days when the underlying stock price was at monthly or quarterly lows led, in many cases, to sizable financial windfalls for corporate executives.
Revelations of options backdating have led to the ouster of more than 30 executives at companies. Among them is a former Apple chief financial officer, Fred Anderson, who resigned on Oct. 4, the same day that the company said its internal probe had found evidence of backdating.
That same investigation revealed that "in a few instances, Chief Executive Steve Jobs was aware that favorable grant dates had been selected, but he did not receive or otherwise benefit from these grants and was unaware of the accounting implications" of backdating. End of Story

 

I don't think I would worry too much. Here is a story quoting Piper Jaffray saying that Steve Jobs is not in danger:
http://www.macnn.com/articles/06/12/27/analyst.jobs.not.at.risk/
As long as Steve Jobs is at Apple they will be ok.

 

It is not very healthy for a company to depend so much on one person. Anyways, HP has just been through an scandal involving its higher management and its operations never gone so well, so I guess even if Steve is involved this won't mean much for Apple.

 

I hope you are right