The Apple iWash: Steve Jobs's premature exoneration
Apple's SEC filing last Friday disclosing the outcome of its internal probe into options backdating is masterfully, tantalizingly opaque. Though entitled "explanatory note," the 20-paragraph document contains precious little explanation. It recounts that certain events did, indeed, occur at Apple, but sheds almost no light on how or why.

Investors greeted the announcement with glee--Apple's stock rose 4.9%--but I can't imagine why.

It must be because the Special Committee of outside directors who looked into the matter said they "found no misconduct by current management." At the same time, the committee said that its inquiry "raised serious concerns regarding the actions of two former officers in connection with the accounting, recording and reporting of stock option grants." The designated fall guys here, though unnamed, are widely reported to be former general counsel Nancy R. Heinen and former chief financial officer Fred D. Anderson, but each of their lawyers issued statements vociferously denying any wrongdoing. This seems to set the stage for some lively he-said, she-said colloquy before federal regulators or prosecutors, and would not be prodding me to buy Apple stock at the moment.

The most intriguing factual revelation of the filing, of course, was that one of the two enormous options grants that CEO Steve Jobs received was priced as of October 19, 2001, a good two months before the grant was actually finalized on December 18, 2001. The price of these 7.5 million option shares had increased 15% during the time lapse, from $18.30 to $21.01. Worse still, records had been falsified, the committee concluded, to make it appear as if a special board meeting had been held on October 19 to approve the options grant when, in fact, none had occurred. The SEC has noted in the past (sensibly enough) that an important factor it uses to distinguish accidental-and-innocuous backdating from serious, enforcement-action-worthy backdating is any evidence of falsification of documents. (By the way, the circumstances surrounding Jobs's other options grant--for 10 million shares--were also fishy, as the New York Times describes toward the end of this good article.)

But here's the mysterious crux of the filing: "Although the investigation found that CEO Steve Jobs was aware or recommended the selection of some favorable grant dates, he did not receive or financially benefit from these grants or appreciate the accounting implications."

Let's unpack that sentence. What would it mean to "recommend the selection of some favorable grant dates"? I can think of three possibilities.

Scenario one is, he said something like: "Let's grant options as soon as we can since, in my opinion, our stock is generally undervalued at the moment." Nothing wrong with that at all. But if that's all he did, I can't believe they'd even be disclosing it, let alone doing so in such ominous terms.

Scenario two is: "Let's grant options now, since we're going to announce the release of our newest iPod next week, and our stock will soar." That would be spring-loading and, depending on what the directors were told and other variables, it could be a form of securities fraud.

Scenario three is: "Let's grant options today, but set the grant date as of two months ago, because our stock was much lower back then." That would be Backdating with a capital B, and under most circumstances it would be illegal.

So problematic scenarios sound more likely than innocuous ones. More worrisome still, the only reason we have to guess this way is that Apple chose not to tell us precisely what the special committee thinks Jobs did. I guess it concluded that the nitty-gritty just wouldn't interest us.

We're then told that no one needs to worry about whatever it was that Jobs "recommended" regarding "favorable grant dates" because "he did not receive or financially benefit from these grants or appreciate the accounting implications." That clause contains three arguments, so now let's look at those.

The first is: We don't have to worry about whether Jobs was trying to backdate or springload options because "he did not receive" some or all of the options in question. Well, his not having personally received the backdated options is no defense to anything. If he was knowingly giving someone else backdated options, he could still be deceiving shareholders and the IRS, and he could also be unfairly gaining an advantage over law-abiding competitors in the labor pool by being able to offer Apple employees illegally priced (i.e., improperly accounted for) options.

The second argument is: We don't have to worry about whether Jobs was trying to backdate or springload options because "he did not . . . financially benefit from these grants." Again, this is no defense. If a hypothetical CEO gave himself backdated options in a effort fraudulently to deceive shareholders and enrich himself, that attempt would be a completed crime regardless of whether the dot-com bubble subsequently burst before he could capitalize on the attempted fraud. (The bursting of the bubble did, in fact, wipe out the value of all Jobs's options. Apple replaced them with 5 million shares of restricted stock, worth almost $75 million, in 2003.) And if a hypothetical CEO gave someone else backdated options, then it's hard to believe that he really wasn't benefiting financially--albeit indirectly. His company would have been benefiting--it was able to offer higher compensation to employees than its law-abiding competitors could--and anything that benefited the company would have indirectly enhanced the CEO's compensation and the value of his stock.

The third claim is that we don't have to worry about whether Jobs was trying to backdate or springload options because he didn't "appreciate the accounting implications." Well, that's getting closer to a defense, but I still don't think he's there yet. None of us fully appreciated the accounting implications of awarding in-the-money options at that time; the rules were excruciatingly complex and everyone twisted themselves into pretzels to avoid ever having to grapple with them. The relevant question is whether Jobs understood that backdating was morally or legally wrong--and the filing doesn't tell us the answer to that one.

Furthermore, even if Jobs says he didn't understand that backdating was illegal or wrong, and even if we believe him, I'm still not sure that gets him out of the woods. Yes, ignorance of the law is a defense to some white-collar crimes (mainly tax offenses), but it's not a defense to most others. (Look at Pattie Dunn, the former chairman of Hewlett-Packard (HPQ), now facing four state-law felonies for having conducted an investigation that two top in-house attorneys repeatedly kept assuring her was A-okay.)

To me, Friday's filing does not look like the curtain closing on this particular play, but more like the curtain closing on Act I, Scene I. What do others think--am I missing something?
Posted by Roger Parloff 4:40 AM 61 Comments comment | Add a Comment

Great work. A journalist taking a deep, analytical look at the actual facts and very capably deducing the real meaning. And writes well, too. I could fall off my chair.
Posted By Rick Hanley, Plainsboro, NJ : 9:23 AM  

If this law is about defrauding the APPLE investor.How then is the APPLE investor who was relieved with the good news last week,should give a rats ass about your article,assuming of course thats who your article is so hypocritically trying to protect.SARBOX has been good to a large degree, but it may also be overdone in some areas like this and end up driving good US companies to relocate overseas,whats worse outsourcing jobs or this ?The IRAQ war was a good idea in the beginning also.Allow APPLE the benefit of the doubt and let them grow, and America will continue to be where all the best products are invented!

A very well put together and sound hypothesis of the facts. Be it moral or legal wrong is wrong and it shouldn't take a lawyer to tell you that cheating your shareholders is not only legally worng but morally wrong as well. I have to agree that this is just the closing of the first act, not the closing scene of the play. We shall see.
Posted By T Thomas, Davison, MI : 10:27 AM  

The article sheds good light on the wrong doings at Apple but it incorrectly relates it to the future prospects of Apple stock. It has been proven umpteen times that options scandal may have a very shot term pull back affect on the stock price of a company but it is usually ignored by investors in the long run and it is the actual earnings and future guidance that determine the performance of a stock.
In case of Apple I think any pull back due to any options backdating related news is an opportunity to buy as with Apple continuously increasing it's share in the PC market and a solid product pipeline, it is all set be an even greater success story in 2007.
Posted By Romil Jain, Boynton Beach, FL : 10:30 AM  

Your article makes you sound like a dismayed short seller! Was back-dating options illegal in the period 1997-2001(it is now)or simply unethical? You target every word, every phrase, every sentence...yes; I'm sure you ARE a short seller! Better get out as AAPL is heading to $100 on the results of selling innovative, easy to use and world-class competitive products!
Posted By Robert Longenecker, Clearwater, Florida : 10:58 AM  

My God! Honest to goodness journalism is alive and well. Bravo Mr. Parloff for a) not buying off on the PR sham Apple is putting out, but b) also explaining the sham so beautifully and clearly to the average investor.

You are absolutely right that this is simply "the end of the beginning" to quote a former British Prime Minister, and that the wise would avoid Apple Stock for a while. I'd sell short as much Apple stock as I could and wait a couple of months to see what happens next. I don't think it'll be pretty for Apple or Jobs.

Now if we could get that sort of analysis on congressional and executive branch coverage we might actually start getting something resembling a 4th Estate.
Posted By Meredith Pratt Harvard, MA : 11:15 AM  

I don't think the wirter of this article is smarter than the committe who did the investigation, they won't hide something in the 10K filing as they know they will be in trouble if they did so. I think the writer is definitely missing something, as he wondered.
Posted By Hansen, Chicago : 11:48 AM  

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Posted By Anonymous : 11:58 AM  

Posted By BEVERLY HILLS CA : 12:01 PM  

It's pretty simple...did Mr. Jobs commit a crime...more than likely he did. Does fraud exist in Corporate America...yes, it's all over the place. Is America one of the least corrupt business places in the world...ABSOLUTELY. We love to publicize wrong doings by those in the public limelight. That can be actors, musicians, politicians, sports stars, well-known CEOs, etc. In reality, these same people tend to get a slap on the wrist. Don't expect anything different here. Steve will get a team of attorneys to protect the ignorance is bliss methodology and get a "verbal warning" for conduct. Will the stock get adversely effected...absolutely not.
Posted By Will T., Newark DE : 12:56 PM  

Doesn't matter if it Steve Jobs, if he breaks the law he should go to jail.
Posted By BULO, Edison, NJ : 1:12 PM  

Jobs only receives a salary of $1. If he chose to be compensated with restricted stock, what's wrong with that? He has definitely earned it.
Posted By Jeanne, Seattle, WA : 1:30 PM  

Thank you, I was wondering if I was the only one thinking this was a whitewash. I think Steve Jobs is Apple, and has done a great job. However, he is not above the law and the law is not to be interpreted differently for some.
Posted By Carolyn San Mateo Ca : 2:03 PM  

Apple`s special investigation reports that Steve Jobs received no benefit from backdated options basically because the value of Apple stock declined-in fact he did with issuance of restricted stock in exchange for those options.But, putting that aside, What Steve Jobs did was analagous to someone robbing a bank to find that there was no money in the drawers-is it a crime, Hell yes. Does the FBI tell the bank robber it is ok to go home as there was no money to steal-of course not. You would HAVE TO BE AN IDIOT TO BELIEVE THAT STEVE JOBS DID NOTHING WRONG-but look who was the author of the Apple Report was-Al Gore!!!!!!!!!-what a teacher he had in the art of deception!
Posted By Gary Lutz Feasterville, Pa : 2:05 PM  

"Let's unpack that sentence. What would it mean to "recommend the selection of some favorable grant dates"? I can think of three possibilities."

Great article and analysis, but you left out the most obvious possiblity associated with the meaning of this statement. That is, that in the context of the time - when AAPL was a relic of tech history -, Jobs wielded his incredible leverage and made it crystal clear to the Board members that they'd better play ball...and play precisely according to his rules, or he would walk.

So, it's not implausible that the conversation went something like this:

Board Member: "Steve, how many options do you think you're worth, and what strike price would you like to see us establish for them?"

Steve: "I know that you'll be very fair to me, so there's no need for me to suggest anything. Just make sure that you pleasantly surprise me."

Gene from
Posted By Gene, Southeast, NY : 2:17 PM  

Good thoughts Parloff. Saw another news - Jobs hires lawyer - if the restatement is clear and he is clean, why would he hire a lawyer. I agree it is just setting a stage for long legal battle. Hope it wouldnt drag apple shares and hurt shareholders.
Posted By D, cupertino, CA : 2:25 PM  

Share holders awareness of back dating stock options does not seem to matter in this case (or most other back dating scenarios). Back dating is only possible if the stock goes up and continues to go up, this usually means that management is doing a good job. Therefore, lets not punish great performing companies that pay for things like the Iraq war. I don't see any investigations into stocks that have gone down...
Posted By Jarl, Nyack NY : 2:35 PM  

to break down corporate wrong doing as a crime , is a crime !! , each day he opens his office he is probably guilty of many things as is any CEO all i can say is wow Mr jobs your took apple out of guaranteed chapter 11 , now they want to send you to jail ,and of course he has a team of lawyers should he go undefended against charges ?,defense is not admission of guilt its defense
Posted By dallas tx : 3:57 PM  

I can't believe the amount of ignorance and belief that Jobs is entitled to backdated options.

If he backdated options he is effectively front-running a stock and committing securities fraud. This is no better than insider trading when somebody is in possession of knowledge that the stock is going to shoot through the roof so they buy before that information is public.

Why is this illegal? Because their gain is somebody else's loss and they used unfair practices to get that gain. Jobs and these other crooks have done the same thing, played the system to reap as much profit as possible.

How can anybody justify that?

If a "normal" person commits security fraud they have the book tossed at them and are thrown in jail or face outrageous fines. If Jobs or Stewart commit it, they are seen as "upstanding citizens" who just wanted to take advantage of the company they built.

But did they build it or did individual people who work for apple build it? A CEO provides vision, the workers make the parts and sell them. The same people who justify what Jobs did are the same ones who justify a $200M/yr salary or Jack Welch's private jet, when the lowly worker is barely making 1% of what a CEO makes, yet contributes quite a bit.

As I always ask people, how many other people is a CEO worth? Do they really provide the effort of 100, 1,000, 10,000 workers?

Greed isn't good.
Posted By Shawn, VA : 4:12 PM  

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Posted By Mick L Blackledge Destin Florida : 4:17 PM  

I fully agree, I sold all my AAPL on Friday morning pre-market trade.
Posted By Raj, Miami FL : 4:18 PM  

No, you did not miss anything. Your article sifts through the legal window dressing to the heart of the matter: be it professional sports or publicly- held companies, during a winning season the star is unimpeachable. Once the star fades, woe unto all that are attached to other words, every man for themselves. Lawyers can provide the artificial reality to sustain this nonsense as long as the laws remain so complex that none of us can even understand the issues, much less the truth until the entire mess implodes. Enron, Worldcom and other seemingly "complex accounting issues" come to mind.

That Jobs would do this is disappointing but, given the conduct of demigod CEOs today, is sadly not surprising.
Posted By Jim Hurley, Western Springs, IL : 4:24 PM  

Most of the commentors are missing the point. The crux is did Jobs participate in anyway in the faking (aka forging) of documents? This has ALWAYS been illegal and always will be. So if he did participate in or knew about (accomplice) the forging of documents the big risk for apple is he get's convicted of this crime. Even if not completely convicted the result could be that he get's banned from being an officer of a public company. The result would be a headless apple which will not be good for the company or stock. The report actually doesn't really exonerate him and leaves more questions than answers, hence he's hired a lawyer.

Since this is a public company and they are governed by many SEC and stock exchange rules, it is possible that even if he is not convicted in a "criminal" sense he may be forced to resign.
Posted By stevy, austin, TX : 4:32 PM  

The simple fact is that he "appears" to have stacked the deck in favor of his Officers snd himself. Everyone is just afraid to go after the guy. He should be canned. Any impact to the stock will ultimately be negligle.
Posted By TE, KS : 4:37 PM  

Let me point out one error in the analysis. It is not illegal to backdate option grant dates. It is perfectly legal provided there is disclosure and an "expense" is recognized on the company's P/L in the quarter the grant was executed.

So the illegal act was one of lack of disclosure.

Further, on this silly stock option expense issue. Stock options are not an "expense" to the corporation. What they really are is a dilution of the market capital held by pre-existing shareholders. I know that the response will be "the corporation and the shareholders are one". If that's true, I'll believe it when shareholders stop suing themselves by proxy through their corporation.

Corporations and shareholders interests intersect only in market capitalization. All of the accounting voodoo is irrelevant.
Posted By RAP, Saratoga, CA : 4:37 PM  

Very good article. The comments about the article seem to fall into two groups. One says not to worry about it since Apple is a great company and people will still make a lot of money if they buy Apple stock. Inessence, it doesn't matter since we'll all get rich anyway. The other group takes, in my opinion, the higher road. Yes, Steve Jobs is a wonderfully talented person and has done great things for Apple. But back-dating is dishonest and wrong. That's why it is illegal. If Mr. Jobs was involved, he should be punished as any other less-popular CEO would.

Honesty in corporate governace cannot be sacraficed upon the altar of profits uber alles. If Steve Jobs did a fabulous job with Apple, just tell us investors that and give him more money. It's no big deal. If it gets out-of-hand, I can dump my sock and look elsewhere.

I look upon Apple's explanation as a bit of whitewash, unfortunately. I can't help but think that a Greek tradgedy is about to unfold. What a shame.
Posted By Ken Wuttke : 5:05 PM  

Is he did he do wrong....maybe but without Steve coming back there would be no Apple today.
Posted By Jim Murch, Stockton, CA : 5:05 PM  

Much ado - Mr. Parloff will keep this story alive as long as readers remain interested - which is to say until Apple stops being a fascinating corporation and Mr. Jobs stops being a master innovator of hype and iT design. This story is old news - Apple has mantained the same position since June. Last week's filing was significant because of the numbers - the bottom line for the company - they barely felt the hit. As an investor that was my major concern and why I will continue to hold and possibly buy whenever hysteria drags down the price of the stock in the short term.

Innocent until proven guilty. However, if he is found guilty, I can only hope folks will not keep defending him. I see folks discussing how America is tearing down their own companies. I can only counter that with saying your misplacing your blame on a judicial system and back to the perpetrators. A crime is a crime. But lets hold back emotional judgement for now so we can concentrate on the facts, which I must admit, are sketchy at best. I always find it amusing when the dollar value of the crime goes up, so does the length of time it takes to convict the person and find good evidence. Not a good social statement.
Posted By Henry, Seattle, WA : 5:39 PM  

backdating used to be acceptable biz practice , now it became the issue of the month and they want to drag down good people for it, go back 10yrs
Posted By Anonymous : 5:48 PM  

If you take the time to check the pertinent SEC filings, you can see what Apple pays its "independent" directors and you will have an accurate picture of how things are done at the company.
Posted By jim, Portland, Maine : 7:04 PM  

Who is winning in this case?
Lawyers and accountants. Management listen to them and they are the one who create unwanted situation and then want to be the heros to save you.....

I think innovators thought process is mostly indulge with the product. remember we use 10% of our brain. The truth probably is at the time people did not know what they were doing.

Options backdating is over over rating. It is like driving over the speed limit. The question is how much over. Is it worth taking the license (wreckless or going 10-20 MPH) so get a ticket and some points/

So all the people who are preaching all the ethics and moral please show up in the police station and show how moral you are next time you break the law -- driving over the speed limit.

Real culprit are mostly their advisor who are well protected by the law -- he said - she said issue. You can't get caught or punish for giving a bad advice. So if you want to fix the back dating.. Call for amnesty and put a deadline. With apple option charges of 18M didnot seem that was a common practice in the company. If you run a company, you will understand - you cant know everything and you have to trust people around you.

I really dont care about the past.. What is current being done and if APPLE lying now and issuing back-dated options. If they have corrected; lets just SEC impose some fines and move on.

Shareholders of this company will agreed with me.. and people who missed the boat or anti-apple people will not.

The main problem is the CEO salary for some companies. whose stock are not performing but CEO takes big fat check and sell the stocks immediately..

I dont see jobs doing that.

I agree no one is above the law. But the law is not about hanging people for any crime -- is this a dark age??
Posted By kumar, new york ny : 7:08 PM  

I believe that Al Gore (THE Al gore), one of the outside directors, received fees, grants and various other emoluments totaling in excess of $500,000. That's more per meeting than Manny Ramirez of the Red Sox gets each time he is at bat.
Posted By jim Portland Maine : 7:10 PM  

thank god for mr jobs in his accoplishments growing one of americas greatest companys. oh i have made a good deal of money off that stock aapl, buy more and parloff sell your shorts.
Posted By Anonymous : 7:54 PM  

backdating is fraud. plain and simple.
then we you lie about so called board approval to justify the backdating; that just further indicts the management team. favorable dates were obviously cherrypicked by Jobs and he got caught and then tried to cover it up with a factitious board meeting.
just b/c 300 other companies were also cheating doesn't make it right. why does this country currently allow its so called leaders to break the rules without retribution or punishment. Spitzer wouldn't allow it, but the attorney general in California is quiet as a mouse.
Posted By steve, ny : 9:15 PM  

Am I surprised of the result of the 'internal investigation'? No. Am I surprised how divided this board is about the whole matter? No. Denial runs deep...
Posted By Mike Blum, Washington, DC : 9:26 PM  

i am surprised to see how many people want to see a great man hung

duh every ceo does and did it

how sad it is that we live in a country of jelouse people who always want to see a good man get knocked down

its sad to see how many of you want to hang a great man over what is realy a speeding ticket , you should all reflect on your own wrong doings
Posted By austin ,tx : 9:55 PM  

Mr. Parloff's article is well written and likely close to the mark. Comments in the blog are what shock me. So many have forgotten just 6 years ago... are willing to allow potential crime because its to their advantage, call others of differing opinion "short-seller" (as though being a short seller is a crime), willing to exonerate a crime because the criminal is "good for the nation or Apple", or blame it on Democrats. Alas, greed as always is intoxicating.
Posted By Atul, Philadelphia, PA : 9:55 PM  

We the public, get screwed a little here and there more than any of us want to acknowledge. Sometimes it's a greedy CEO, sometimes a congressman who gets a pork barrel project for his district, or sometimes its a false workman's compensation claim. In the end, someone will ask "was it good or evil?" The stockholders that make gobs of money with the CEO, the distict that gets the pork barrel project, and the striper the workman's comp claimant visits may all say that it was good for them. We all draw are good/evil line in different places. I think this good/evil line over the years has not really changed that much; i.e. there were just as many crooks in the old days. What is different about today is the ability of this information to be communicated to anyone who wants or does not want to know about it. This is very very good. Great work in spreading the news. We all get to decide where our good/evil line is on this issue. Hopefully, in the long run, it makes us better people.
Posted By Albuquerque, New Mexico : 12:45 AM  

I don't understand why so many misleading articles around. First of all, if you read AAPL 10-K, the board has approved for the mentioned option grant back in August, 4 months prior to the settlement date. So, what's the fuss about it? After all, they were cancelled and never been vested. Also, Steve Jobs might have selected the date of option with the understanding that it was already granted by the board back in August. So, what's wrong with that?
Posted By Steve Slovic, New York, NY : 12:46 AM  

OS X is the best!!!

Re the options, Jobs is an fanatically detail oriented control freak! I have a hard time believing that he didn't fully understand what they were doing when backdating options. I find it even harder to believe that Steve did not know that fake board meeting notes were created to justify the options.
Posted By Robert Johnson, Mpls, MN : 1:30 AM  

??? continued misconception of backdating and what is legal and illegal. Backdating = Legal. Not accounting for it properly = illegal.
Posted By Hugh, Seattle, WA : 9:44 AM  

Steve Jobs's premature exoneration

but I can't imagine why!!!!!

He is the man...tripled the stock price and no end in site...

new products coming.... and he is the captain of the ship.....give him credit
Posted By hb new york : 10:39 AM  

For those who lament how all of these legal technicalities will drive good businesses overseas to foreign completely miss the point. It's the slippery slope. If markets accept these kind of questionable tactics, where does it stop? How can you trust any filing put out by a publicly traded company? These knee-jerk Apple apologists need to accept the fact that yes, even the "pristine" Apple can perform illegal and unethical acts. Making cool products does not absolve you from legal and ethical rules.
Posted By Brad, Sammamish WA : 10:44 AM  

Here is a point that no one has mentioned yet which I think bears some importance. Apple filed a 10-K on Friday saying that Steve Jobs (and all other current management) are in the clear as far as they are concerned. By filing this 10-K with this information, they are publicly declaring that they are confident that Steve is safe from any SEC investigation, and any stock movement caused by investor's fears about Steve having to leave the company are overblown. Basically, they moved the market with this news, and it was inevitable that this filing and this statement would move the stock higher and they would be complete morons if they didn't know that when filing it.

Therefore, if the SEC does decide to pursue Steve and they do determine that he is at fault for a criminal act or criminal acts, and does indeed have to resign (or worse), then the stock will plummet in the same way it did during this summer when the options backdating issue came to light and again in the middle of last week when everyone thought Steve had hired a lawyer because he was implicated somehow.

Should that happen, then it is only a matter of time before many many investors file a class-action lawsuit against the company saying that they misled us in their 10-K filing, giving us a false sense of security that everything was fine and we could invest in the company with confidence, and unlike some investor class-action lawsuits which are basically people looking to make a buck for no reason, this one will have validity and could cost the company.

Then again, this is all assuming that Steve Jobs IS Apple and that, without Steve, Apple would not be able to perform or innovate in the same way, and that investing in AAPL is the same as investing in Steve (which IS what some people believe). This is not something I am willing to accept 100%, but even if Steve is forced to resign, the company has strong fundamentals, great products and a heck of an R&D team. Steve could also stay on as an independent "consultant" in some way, shape or form, unless he is found guilty of flagrant crimes.

Anyone else see this as a major issue that the company would foresee and desperately try to avoid? I personally think the risk of lying or even slightly deceiving us in their 10-K is too great and that the company firmly believes that Steve is in the clear from a legal standpoint with the SEC. I would be (and I am) a buyer of AAPL at any price below $95.
Posted By Scott, New York : 10:57 AM  

It is fine to have this investigated and wrong doing punished. I hope the punishment fits the crime. I am not an accountant but it doesn't seem that anything truly horrific occurred. I don't see the need to force Steve (or others) to resign. I agree with an earlier poster, Steve knows everything that goes on at Apple so he certainly knew a lot about this.
Posted By John Konopka, San Mateo, CA : 4:07 PM  

Only conjectures no facts. his work was just spinning the old new that have been bouncing for few weeks between, FT, CNBC (which is own by MSFT btw like this thing). same old new proposed again and again from different angle but always trown to the media like it was a new development on the matter of this option issue.
Typical work of a reporter/analyst working on the behave of some hedge fund and institution short on aapl, or just late to the party.

this kind of journalism, should be considered as illegal as the backdating of options.
Posted By alex bundle NY : 4:16 PM  

You fan boys make me sick. It just goes to prove that some of the most dishonest people on the net are Mac fan boys.

Steve Jobs had to know what was being done.

Oh but then again he is Steve Jobs therefore he is above the law! Hopefully if found guilty he will go to jail for his crimes. If I work at Wal-Mart and steal a pack of gum I will get fired and go to court. If Steve Jobs steals from the investors he gets the pardon. A criminal is a criminal no matter how rich the criminal.

Time for you dishonest Apple fan boys to shut up and uphold US law. Of coarse an internal probe will wash Jobs clean. The only way we will know the truth is when our government probes Apple and "if" he is found guilty I hope Jobs rots in jail.

As Americans we need to push for these corp criminals to go to jail with huge fines. After Enron, HP, etc... something must be done. Spin all you want but as honest citizens we should not make excuses for a criminal just because we like that criminal!
Posted By Dave, Laurens SC : 5:05 PM  

There are something like 200 companies either under investigation or undergoing internal investigations related to backdating options. Before I congratulate you on being such a swell journalist, I need to ask: are we talking only about Apple because the company is successful? Where is the attention on all of the other companies?
Posted By Bob, Ashland, NE : 6:47 PM  

I thought that the article was well written but is missing a very important point. Steve Jobs Spring loaded options when he was running Pixar Corporation. Same Problem, different people. The SEC has many different people who may lay the blame on Jobs. If Steve Jobs was backdating options to benefit Fred Anderson, What else do you think he may have asked him to do to meet the quarterly numbers? Admittingly, this is pure speculation. You can be sure if Anderson has Criminal Exposure he will not be taking a hit for Jobs. I believe that Jobs should resign before he backs the SEC into a no win situation. Martha Stewart refused to take a plea and her arrogance cost her a jail Sentence.
Posted By John Grunenberg St. James NY : 7:17 PM  

Go back and read Romil Jain's comment. Apple's market performance is unrelated and will suffer no long term effects from the current inconvenience. Yep, maybe someone enriched themselves unduly, but it's small potatoes compared to the market cap and the where the company seems to be going. Remember why you bought the stock in the first place.
Posted By J. Shoffner - Reno, NV : 8:13 PM  

I agree 100% with Jone of St. James NY.

It is only a matter of time before NH and FA are spilling their guts as to other acts they condoned after SJ suggested to them. The Apple Stores profitability comes to mind as being absolutely over-inflated by playing games with the cost they charge this market segment for their own product.

Apple and Jobs are not off the hook yet and I think the proverbial excrement is going to start hitting the fan.
Posted By Thomas, San Francisco, CA : 12:30 AM  

No way is Apple going to take a chance at this time by filing a false 10K while under investigation by the SEC. That would amount to corporate suicide. Clearly, Apple feels that the preponderance of evidence supports that Jobs is not guilty of any crime.

What is interesting is how media outlets owned by Microsoft are trying to turn speculation based on no evidence into an assumption of fact. One could speculate that Microsoft is attempting to manipulate the market by spreading false information about Apple...
Posted By Warren, Calgary, : 1:28 PM  

NOTE: Several commenters have theorized that CNNMoney or Fortune are owned by Microsoft. They aren't. They're owned by Time Warner.
Posted By Roger Parloff, NY, NY : 7:10 AM  

While I love Apple's products, there are too many cases of corporate executives hurting the investors and shareholders with their crooked schemes. If Jobs was part of this stock options backdating scheme then he too needs to face the courts for this crime as would you and I. He should be no exception to the rule of law regardless of fame or fortune.
Posted By Tom Buffer, Alpharetta, Georgia : 4:37 PM  

Sure - Al Gore, head of the committee is one Apple's Board. Hmmmm ... think there's a connection. It's just sickening isn't it. But we'll have more clarity on global warming before we get clarity on Apple's backdating.
Posted By Andrew, Garfield, NJ : 4:38 PM  

Being an Apple shareholder, Steve Jobs defrauded himself. Poetic justice?
Posted By Viswakarma, Federal Way, WA : 12:52 AM  

The Press loves Apple and Steve Jobs ... and they ignore the facts at their discretion. This same scenario within another company, would have been treated synically with outcries of fraud, congressional investigations, etc.... he's their high-tech celebrity and they they have different rules for him. Let's hope the SEC doesn't ..........
Posted By Rick from CA : 4:12 PM  

The press has blown this issue way out of proportion. Backdating is not a crime! What can be a crime is if the company does not account for the options correctly. Time and time again, the press has messed this up. Read the WSJ op ed articles from two days ago that address this issue. Basically, it's a compensation question. If they didn't backdate the options for Jobs to give him an extra $2 per option, all they had to do was to give him more options at the current price. This was a widespread practice for many companies that has been disclosed properly for many years. And we have all just discovered this now?

Come on people, wake up and understand the rules. Do you really think a politically motivated personality such as Al Gore would come out in support of Jobs, after teams of lawyers had looked at this for several months, and put his neck on the line? I'm no Gore fan, but I can't believe he's that dumb. But it seems many in the press, including Parloff just don't get it.

Whether I date options on date X or Y, those options have a value based on the stock price at that time. As long as I account for those options correctly, there's nothing wrong with that. This is a bookeeping error, and nothing more.
Posted By Chris, New York, NY : 1:43 PM  

Your article appears to be a lot of intellectual huffing and puffing. This kind of speculation often moves the market for a stock when, in fact, the author fails to be up-front about the speculative nature of his/her comments. I am left believing that the author wants to hurt the stock price. Let's "unpack" his motivation.
Posted By Tom Stevenson, Austin, Texas : 2:47 PM  

So sad to see all these posters who bury their own morality because they are long AAPL and cry like sissies when the stock goes down. I have no position in AAPL shares. If Jobs committed a crime he must, and will, pay. No one is entitled to commit crimes just because their stock price has does done well. Thank you for the article; and keep pressing this.
Posted By Jeff, Chicago, IL : 12:17 PM  

Or feel free to send a letter to the editor about this story. Top of page

About this blog
This blog is about legal issues that matter to business people, and it's geared for nonlawyers and lawyers alike. Roger Parloff is Fortune magazine's senior editor (legal affairs). He practiced law for five years in Manhattan before becoming a full-time journalist. To join in the discussion or suggest topics, please email

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.