Plaintiffs to amend Apple stock-options lawsuit

Plaintiffs in a stock-options backdating suit against Apple plan to amend their suit to include information from Apple's internal probe

The attorney for shareholders suing Apple Computer executives and directors over stock options backdating says he will amend the federal lawsuit to reflect new information Apple disclosed about its internal investigation of the matter.

A report filed Dec. 29 by Apple with the U.S. Securities and Exchange Commission (SEC) adds to the case against Chief Executive Officer Steve Jobs and other Apple officials, said attorney Mark Molumphy, representing plaintiffs in a suit filed in U.S. District Court for the Northern District of California prior to Apple's SEC filing. Apple acknowledged Jobs' involvement in the backdating, but absolved him of wrongdoing in the SEC report.

While a few Apple shareholders are named as plaintiffs, it is not a shareholder lawsuit, per se, but a "derivative" suit, Molumphy explained. The shareholders are suing executives and directors of Apple on behalf of the company, alleging that the improper backdating has harmed the company financially.

Apple's internal investigation revealed that 6,428 stock-option grants had been improperly backdated between 1997 and 2002, but that, while Jobs was aware of the grants, he did not financially benefit from any of them. The Apple filing noted that the company will take an additional after-tax charge against earnings of US$84 million (AUD$106 million) in 2006 to account for the options.

"What makes the Apple case unique is that the backdating happened on such a wide scale and involved the top executives of the company, including the face of Apple Computer, which is Steve Jobs," said Molumphy.

Apple's acknowledgement in the SEC filing is a "tacit admission" of a practice of backdating, he said. "It's been speculated about but it's never been part of an admission."

Stock-options backdating involves changing the date options are granted to a previous day, particularly to a date when share prices were lower than on the actual date stock options were granted. When executives exercise the option to buy the stock, they make more of a profit than if the grant date were recorded accurately.

More than 120 companies have been investigated by the SEC, the U.S Department of Justice and the Internal Revenue Service over backdating practices. Some executives have been forced from their jobs and a few have been criminally charged.

Molumphy, a principal at the Cotchett, Pitre, Simon & McCarthy law firm in San Francisco, says his firm has investigated backdating by other companies, but this is the first lawsuit the firm has filed on behalf of clients.

Apple did not reply to a call seeking comment.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Robert Mullins

IDG News Service
Show Comments

Father’s Day Gift Guide

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?