Apple Stock Irregularities Probe Completed, Fallout Begins

[Analog Kid]

If I'm reading this right, the problem is that Apple options were priced on the wrong date-- wrong in the sense of, uh, illegalish. Not sure how many shares we're talking about here, but restating this would just be a matter of the number of shares granted times the difference in price between the dates plus whatever penalties get attached, right?

None of the current officers are going to jail or being shamed into retiring, so the management team stays intact. Doesn't seem that big to me. Anyone know what the estimates are for the restatement?

I suppose it beats being to blame but not responsible.

Ugh. I know that feeling... "Look, Honey, I had nothing to do with it!" No matter...

 

[longofest]

I wouldn't be surprised however if this final report took place sometime around another positive announcement--just to minimize the blow.

Part of me is wondering whether today's announcement was timed with the hubbub on Capital Hill. I know a lot of the news was paying attention to the Foley scandal, and if it was a lighter news day this may have made news.

Probably pure coincidence, but interesting none the less.

 

[iMikeT]

I can't believe it!

Microsoft first copies Apple's ideas regarding technology, now they copy Apple's business decisions?

When will Microsoft finally cease copying everyone else?

 

[rdrr]

If I'm reading this right, the problem is that Apple options were priced on the wrong date-- wrong in the sense of, uh, illegalish. Not sure how many shares we're talking about here, but restating this would just be a matter of the number of shares granted times the difference in price between the dates plus whatever penalties get attached, right?

None of the current officers are going to jail or being shamed into retiring, so the management team stays intact. Doesn't seem that big to me. Anyone know what the estimates are for the restatement?

Its not if the act was or wasn't illegal, it is more of an ethics issue. Believe me I have witness first hand a recent market scandal. I worked for a financial company that was investigated for "market timing" the overall gain of the unethical activities was around 200k split between a handful of portfolio managers. It ended up costing the company millions in fines, and loss of reputation.

 

[m-dogg]

Apple is not the only one that is running into these problems. Dell and Microsoft are on the hook as well. Apple, being the darling company, is just today's poster child.

For some reason, I believe that Dell and MS will have more problems getting this fixed than Apple will. And will take alot more flak considering their current stock price.

This isn't something isolated to tech companies either. There are other companies in other industries that are facing these issues as well...

 

[suwandy]

Does this also mean that MMB and MMBP will be available soon? (after they solved the stock problems?) Or is it a completely unrelated issue?

 

[andrew050703]

I misread the title on the main page as 'CEO resigns' - had a horrible feeling in my stomach until i read that as 'CFO resigns'.

guess that means i'm a steve zealot?

 

[MikeTheC]

It seems to me like the stock market is full of people who feed off their own hype, stupidity and emotion.

I think the big thing is that, apart from not finding any of the current board culpable, Steve has publicly accepted responsibility, acknowledged, and apologized for the situation. It's an act of good faith that truly takes the wind out of the sails of anyone wishing to destroy Apple or it's leadership.

 

[bazzalisk]

If I'm reading this right, the problem is that Apple options were priced on the wrong date-- wrong in the sense of, uh, illegalish. Not sure how many shares we're talking about here, but restating this would just be a matter of the number of shares granted times the difference in price between the dates plus whatever penalties get attached, right?

The penalties could be quite large. Since such things are hard to catch when they happen the government tries to make them unprofitable by making the penalty when they are caught quite large -- knowing that much of the time such people are getting away with it.

 

[blackstarliner]

The reason why the ex-CFO resigned, I presume, was that the SOX regulations make the individual in charge of accounting personally responsible for financial procedures and any 'irregularities' that may exist within it. If the period of alleged 'wrongdoing' was 97-02, it seems likely that this chap was in charge of the books at the time. The SOX act provides for 'certifiers' along the management chain to actually sign a statement saying that all is good and proper (amongst other things elsewhere in the financial reporting areas). Even the guys in charge of the IT systems have to make sure that the processes fit in with the stated accounting procedures. It has to be signed off twice yearly. There's a current SOX certification run taking place at US-listed companies right now. The idea is to protect the shareholder from his share of the profits (paid in dividends) being back-handed without approval at the AGM, or worse, the companies lying about their real financial status to prop up their rating and share price and hence 'value'.

'Retiring from the board' is no biggie, happens all the time, but it's not impossible (at all) that prosecutions and fines will follow, but that's a matter for the courts to decide I suppose. Better to spend more time with the family now I guess.

The inquiry indicates that there was alleged 'wrongdoing' during a 5 year period, but how much of that is covered by the SOX act I don't know, not that it makes much difference, as Apple (and all the others) will be keen to open it all up to clear the air anyway. If you are a shareholder this is good news I think.

 

[billyboy]

well it could have been worse i guess. I hope the stock doesn't get hit in the near future though

I hope the stock gets slaughtered but only because I sold at the equivalent of $19 a share when it was on the rise and seeing it low again wouldnt make me feel like such a loser.

 

[IJ Reilly]

I hope the stock gets slaughtered but only because I sold at the equivalent of $19 a share when it was on the rise and seeing it low again wouldnt make me feel like such a loser.

Oh, thanks. Please be sure to let me know when you can use a favor.

 

[Sun Baked]

Yup, looks like all that hand wringing over a SEC investigation was rather overzealous. Not much ot see here.

Wonder how Dell's investigation will come out?

Doesn't look too good for Dell, went from an informal probe to a Formal SEC Investigation today.

Look's like something got messed up besides the stock timing, since it "may" be unrelated to the current informal inquiry.

Of course, the issue for the execs just got a bit stickier last week since the IRS is also going to hammer the shifty execs for the irregularities ....

Backdating Issues Create a Taxing Situation in More Than One Way

A exta tax 20% penalty for those found 'in the soup' and the states may also impose an additional tax for these options.