SEC To File Charges Against Ex-Apple Execs Soon?

Let's hope Steve stays out of trouble on this one. Changing top management right now would not help Apple's gaining momentum.

I think (and hope) this will be the extent of the SEC troubles. They'll finally have some people to officially blame and hold accountable, showing the world that even rich execs can't get away with blah blah blah make an example of them blah blah. Whatever, as long as the current leadership stays in place and keeps thinking of the future, it's fine by me.

But wait, I thought people were saying that backdating stock options was legal, just frowned upon. Did these two do some other shady business?

I don't know much about the details of the case, but it just sounds like Steve may have done some things that were unethical but not illegal. It's bad to say, but it probably happens more times than not in large corporations.

wait, I thought people were saying that backdating stock options was legal, just frowned upon. Did these two do some other shady business?

Backdating options is legal, they just have to be accounted for properly, as an expense. This is why Apple took a charge against past earnings as a result of their internal investigation.

Does anyone have a WSJ subscription?

Does anyone have a WSJ subscription?

Because I'm guessing it's frowned upon to post the entire article (which is essentially about Broadcom anyway) in the forum, here is the relavent info about Apple:

"The government is nearing charges against a former official of computer-security company McAfee Inc., say people familiar with the situation, and is strongly considering bringing cases against ex-executives of Apple Inc. and semiconductor-equipment maker KLA-Tencor Corp. In St. Louis, at least one former executive of Engineered Support Systems Inc., a defense contractor now owned by DRS Technologies Inc. of Parsippany, N.J., has been told of a likely charge, says a person close to the matter."

And the last paragraphs that kind of wrap things up:

"Another obstacle for the government in prosecuting backdating is at some companies the practice was discussed openly, making it harder to argue that executives knew they were engaged in wrongful conduct.

Defense lawyers will doubtless pass blame around. Those representing CEOs are likely to argue that their clients -- being business leaders, not accountants -- relied on others to figure out how options should be issued and accounted for. Those representing subordinates are likely to argue that the boss made them do it.

Helping boost momentum toward the filing of charges is the statute of limitations. It's five years for securities fraud and wire fraud. But there's some flexibility, based on the notion that misdated options might affect earnings in later years."

i think it will be ok as long as Steve isn't hurt in any of this. i just hope this gets over with quick....

i think it will be ok as long as Steve isn't hurt in any of this. i just hope this gets over with quick....

Let's all prey for steve.. what is he, some sort of demi god or something?

Oh...wait..:rolleyes:

On a positive note, the report mentions only ex executives as likely to be indicted at this time.

I found that quote funny. :)

Attachment 68542

Uh oh.
They always start with lower down people, apply preasure in the form of the threat of jail time, and get them to implicate the higher-ups. I hope this doesn't go that far...

"Another obstacle for the government in prosecuting backdating is at some companies the practice was discussed openly, making it harder to argue that executives knew they were engaged in wrongful conduct.

Defense lawyers will doubtless pass blame around. Those representing CEOs are likely to argue that their clients -- being business leaders, not accountants -- relied on others to figure out how options should be issued and accounted for. Those representing subordinates are likely to argue that the boss made them do it.

Helping boost momentum toward the filing of charges is the statute of limitations. It's five years for securities fraud and wire fraud. But there's some flexibility, based on the notion that misdated options might affect earnings in later years."

I have a problem with the prosecutors here for several reasons. The primary motivations for prosecution is central to the prosecutors not the "victims" (what victims?), the public (who cares really?), or the courts.

The PROSECUTORS have looked long and hard to find SOMETHING wrong. You know what it took? It took a change in how stock options back-dating was viewed by accountants and the law. It took an arbitrary change in how procecutors selectively enforce this issue. It took an issue "easy enough to catch criminals" that they openy admitted their actions. They THOUGHT THEY WERE LEGAL.

They had past practice to see and point to. They had accountants passing on the practice which should be the ONLY issue here. They had corporate leadership not only in their company but peer and near-peer companies doing similar actions.

Why is it when a practice changes and becomes criminalized, the prosecutors choose to do "get-cha" and make an example of folks, rather than simply sending out a few letters and say from now on stop doing this?

It would be a lot more effective, would not suck dozens of otherwise good folks into the criminal justice system, and would have a far more rapid, widespread and effective result.

The answer?

This is about jobs for procecutors, ego events and political points for prosecutors. This is NOT being done for the public or the stockholders.

When a person is issued stock options it is compensation for value provided to the firm, and by reference to the public. Exercising those options is an event which is only noted when they are successful and profitable. What about all the folks whos options have become worthless?

Stockholders are not protected when a prosecutor soils the company's name or news cycle with allegations of wrongdoing, so the very folks PROSECUTORS caim to be protecting, are injured by the act of the prosecutor and not injured at all by the alleged wrong act, even if actually wrong!

Prosecutors gone wild! This is not the only area in society this is a problem, but it is perhaps one of the most obvious because the government official overtly harms the victim to "aid" them in the process of collecting professional points for themselves.

The options dating acts INCREASED income taxes to the treasury. Do they get a refund with interest and penalties commensurate with what IRS charges??

Rocketman