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The SEC Is Getting Closer To Jobs

Posted by kdawson on from the bigger-fish dept.

Strudelkugel writes "CNN is reporting that Apple's ex-CFO warned Steve Jobs about backdating options. From the article: 'Apple's former finance chief Fred Anderson blamed Apple CEO Steve Jobs for a 2001 stock option grant that was backdated, according to a statement from Anderson's lawyer released Tuesday. The statement was released by Anderson's lawyer, Jerome Roth, after Anderson settled with the Securities and Exchange Commission related to Apple's stock option plan without admitting or denying any wrongdoing.' This is serious business. It is quite possible that the SEC could someday require Jobs to resign from Apple."

17 of 154 comments (clear)

  1. More Likely than Resignation by Stanistani · · Score: 4, Insightful

    If Jobs has a good lawyer, and doesn't make the 'Martha Stewart' mistake of lying to federal investigators, then the worst thing that will happen to him is a hole in his wallet.

    --
    You can't talk about Wikipedia's flaws on Wikipedia
    1. Re:More Likely than Resignation by russotto · · Score: 4, Informative

      Right. Here's the ONLY thing Steve Jobs should be saying to Federal Investigators:

    2. Re:More Likely than Resignation by wass · · Score: 5, Interesting
      It also looks like Fred Anderson is also trying to stab back at Apple after their own internal investigation pointed to him and another former employee Heinen, after these two were let go. Apple claimed these two executives acted improperly, and now that Anderson settled with the SEC (and lost a bunch of time and cash in the process) he's trying to strike back.

      See this article and this other article from back in January. Interesting that back in January, from the article, Anderson's statement is

      And last week, a lawyer for Fred Anderson, Apple's former CFO, released a prepared statement that his client "did not play any day-to-day role in the granting, reporting, and accounting of stock options and he was not involved in any knowing manipulation of the process."

      Yet, now having claimed he knew that Jobs was awarded or considering these backdated options, he would either violated his SEC ethics obligations, or was so insanely incompetent he should have been fired anyway. So by settling with the SEC he basically admits he did act improperly. It's obvious he most likely lied (or sneakily phrased his statement) back in January.

      In light of this contradiction, why should anyone trust his word now?
      --

      make world, not war

    3. Re:More Likely than Resignation by Tickletaint · · Score: 5, Funny

      "No, Your Honor, I guess I just see things differently."

      "I'm a misfit. A rebel. A troublemaker. I admit it."

      "I'm not fond of rules. And I have no respect for the status quo."

      --
      Make Slashdot readable! See journal.
    4. Re:More Likely than Resignation by wattersa · · Score: 4, Insightful

      1. That is why you have a lawyer make those statements. Your lawyer is not under oath. Your lawyer only has an ethical duty not to mislead a court or a jury. That doesn't apply to the opposing side-- much less the public. See Cal. Rules of Professional Conduct 5-200. The idea is, you have someone other than the principal make statements so that the principal always has an excuse (i.e., that the representative made an error in transcription, etc.). Blame any "mistake" on the lawyer-- that's what is at work here.

      2. A lawyer's prepared statement is designed to give wiggle room while implying certain things that put the client in a favorable light or make the client appear innocent. See my breakdown of the statement:
      - Fred didn't play a "day to day" role
      -> could mean
      - Fred wasn't in charge of that, so he's not responsible for misconduct.
      - Fred was in charge of that, but he wasn't involved in the details, so someone else committed misconduct and he's not responsible for it.
      - Fred was in charge and is officially responsible for the misconduct, but he didn't know about it because he can't review _everything_ that happens or else he couldn't do his main job-- helping the company make money for shareholders.
      -> implies
      - Fred is innocent.
      - Fred is above the fray.
      - Fred is too important to have committed misconduct.
      - Fred couldn't have known about misconduct because he doesn't know all the details.
      - Whoever committed misconduct hid it from Fred.

      - "in the granting, reporting, and accounting of stock options."
      -> could mean
      - Fred doesn't have the authority to grant stock options (true: the Board of Directors may be the only entity that can grant stock options).
      - Fred isn't involved in reporting stock options to the SEC or shareholders.
      - Fred isn't involved in auditing/accounting.
      - Fred has authority to grant stock options but it's not one of his more significant duties.
      - Fred is involved in reporting to the SEC, but since reports to the SEC don't come out on a day to day basis, the statement is true.
      - Fred is involved in accounting of stock options, but since auditing and accounting isn't done on a day to day basis, the statement is true.
      -> implies
      - Fred is not responsible for misconduct.
      - Fred is above the fray.
      - Fred can manage a public company's finances in the future because he did nothing wrong here.
      - Fred knows nothing.

      - "he was not involved in any knowing manipulation of the process"
      -> could mean
      - Fred manipulated the process unknowingly.
      - Fred was involved in manipulating the process but didn't know the extent of his role.
      -> implies
      - Fred didn't

  2. Probably a standard, overblown scare by SashaM · · Score: 5, Insightful

    You can see from today's AAPL chart that the average investor thinks this overblown. The dip and the quick recovery occurred when the news about this accusation came out.

    1. Re:Probably a standard, overblown scare by maeka · · Score: 4, Insightful

      You can see from today's AAPL chart that the average investor thinks this overblown. The dip and the quick recovery occurred when the news about this accusation came out.


      That stock price chart merely reflects that the market hates uncertainty, the announcement of anticipated news always brings an up tick, as uncertainty is removed.

      The uncertainty, in this case, was on possible "smoking guns" revealed as part of Fred Anderson's settlement. There were none, his "punishment" was minimal, and as soon as the market processed this information the temporary downturn (during the period of imperfect information when traders are unsure if they have the full story) reversed and Apple's stock went higher than opening.

  3. And then he'll be right back by MikeRT · · Score: 4, Insightful

    As an extravagantly paid consultant. Who in their right mind thinks that they're going to let him go, unless the law puts a total barrier between Apple and Jobs?

  4. Despite it all by ShooterNeo · · Score: 4, Interesting

    Despite all our criticisms as techno-nerds about Steve Job's "reality distortion field", I think that we can agree that this man is the best person to remain head of Apple. One might argue that he is overpaid, but, with that said, this man can sell their products like no other. I think his fate should be to pay back whatever ill-begotten gains this dirty trick gained him, plus fines, and he should remain in his current position.

    1. Re:Despite it all by StikyPad · · Score: 4, Informative

      I think a few people might...

      His current salary at Apple officially remains US$1 per year, although he has traditionally been the recipient of a number of lucrative "executive gifts" from the board, including a US$46 million jet in 1999 and just under 30 million shares of restricted stock in 2000-2002. As such, Jobs is well compensated for his efforts at Apple despite the nominal one-dollar salary. This approach reduces his personal tax liability because, under current U.S. tax law, salary income is taxed at a significantly higher rate (currently up to 35%) than the capital gains tax (currently a maximum of 15%) applied to profits arising from the sale of stock grants. Obtaining remuneration through stock instead of salary is a common extrinsic rewarding technique which ties management performance to financial benefits. Furthermore, it acts as a tax minimization strategy.

      --
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    2. Re:Despite it all by catbutt · · Score: 4, Funny

      The $1 salary is purely symbolic now. A few years ago, of course, Jobs needed the money and the extra dollar a year came in handy.
  5. jobs probably won't be fired by k2enemy · · Score: 5, Informative

    Jobs probably won't be forced to quit by the SEC. From today's WSJ coverage:

    "The SEC said it will not pursue any further action against Apple itself, which cooperated fully with the probe"

  6. Maybe ... by PPH · · Score: 5, Funny

    ...Jobs can just claim that the backdating was the result of a really badly screwed up DST patch.

    --
    Have gnu, will travel.
  7. Re:Apple without Jobs by JQuick · · Score: 5, Informative

    CNN is not reporting the whole story.

    Yes, Fred Anderson's lawyer did claim that he had warned Job's about the issue in 2001, and implied that Job's had misled Anderson.

    However, in a press release today, the SEC made several statements that flatly contradict the CNN story.

    The SEC said it isn't bringing enforcement action against Apple "based in part on its swift, extensive, and extraordinary cooperation in the commission's investigation."

    They also stated that, "Apple's cooperation consisted of, among other things, prompt self-reporting, an independent internal investigation, the sharing of the results of that investigation with the government, and the implementation of new controls designed to prevent the recurrence of fraudulent conduct."

    In short, the SEC stance appears to be that Anderson and Apple's former general counsel Nancy Heinen had the direct responsibility to review the board's decisions in this matter and make sure that Apple complied with reporting requirements. The SEC publicly stated that they are not bringing any action against Apple, they have settled with Anderson already, and will continue prosecuting Heinen (since she has chosen to fight the charges against her.

    This is poor reporting on CNNs part, not a real story.

  8. Re:Apple without Jobs by mkiwi · · Score: 4, Informative
    This is the real article.

    The story has more info and content than the CNN acticle.

  9. SEC can ban people from being Officers & Direc by Steve+Hamlin · · Score: 4, Informative

    As background: I'm a forensic accountant, do large financial investigations of public companies, and am currently doing a stock option investigation. I do not have any inside knowledge of the issues at Apple.

    In fact, it isn't at all possible that the SEC could require Jobs to resign from Apple.

    Not true at all. The SEC has fairly broad powers to permanently ban a person from serving as director or officer of a public registrant.

    Section 10(b) of the 1934 Act. See: http://www.nysscpa.org/cpajournal/2003/0303/featur es/f031803.htm

    I'm free to take questions!

  10. Jobs has nothing to worry about by commodoresloat · · Score: 4, Funny

    I think you'll find Jobs' Reality Distortion Field is just as effective on investigators and lawyers as it is on your average computer user.