Apple stock backdating scandal

Last year, Apple restated its financial reports from 1997 to 2002 by $84 million to cover options-related charges.The SEC did not file charges against Wendy Howell, who reported to Heinen in Apple's legal department and who completed paperwork on an option award for Jobs in 2001.Ingrid Ebeling, an analyst at JMP Securities, noted that Anderson's response contradicted Apple's earlier statements that Jobs was unaware of the accounting significance of backdating options.Though Anderson might be bitter, Ebeling said, "I would give his statement credibility." At the same time, she said, the fact that the SEC investigation has proceeded thus far without charging Jobs is a good sign for the Apple chief executive.Steve Dowling, a spokesman for Apple, declined to comment on Jobs's conversations with Anderson.Dowling emphasized that the SEC did not "file any action against Apple or any of its current employees." Government authorities praised Apple for coming forward with the backdating problems last year and for sharing information with investigators.

According to a study by Erik Lie, a finance professor at the University of Iowa, more than 2,000 companies used options backdating in some form to reward their senior executives between 19.Late last year, Apple said that Jobs helped pick some favorable dates but that he "did not appreciate the accounting implications." Explaining Anderson's motive for issuing the statement, his lawyer Jerome Roth said: "We thought it was important that the world understand what we believe occurred here." Roth said his client, a prominent Silicon Valley figure and a managing director at the venture capital firm Elevation Partners, will not be barred from serving as a public-company officer or board member under the settlement, in which Anderson did not admit wrongdoing.Roth declined to characterize the current relationship between Anderson and Jobs.The SEC’s opinions regarding backdating and fraud were primarily due to the various tax rules that apply when issuing “in the money” stock options versus the much different – and more financially beneficial – tax rules that apply when issuing “at the money” or "out of the money" stock options.

Additionally, companies can use backdating to produce greater executive incomes without having to report higher expenses to their shareholders, which can lower company earnings and/or cause the company to fall short of earnings predictions and public expectations.

Options backdating is the practice of altering the date a stock option was granted, to a usually earlier (but sometimes later) date at which the underlying stock price was lower.

Apple stock backdating scandal comments

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