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Apple Shareholder Lawsuit Dismissed

Posted by Zonk on from the hard-to-get-anything-past-them dept.

explosivejared wrote with a ZDNet article about Apple's win in the shareholder stock-options backdating lawsuit. This jives with Apple's own internal investigation of the matter. "The New York City Employees Retirement System had sued Apple claiming that the company's practice of backdating stock options diluted the value of the stock. Apple has admitted that it improperly backdated stock options on several occasions, including two awards to CEO Steve Jobs, and last December it took a $84 million charge to account for the options. But the suit had to show that Apple shareholders lost money in order to recover damages ..."

6 of 46 comments (clear)

  1. Must have lost money by noidentity · · Score: 4, Funny

    But the suit had to show that Apple shareholders lost money in order to recover damages ...

    Well, they certainly have now, with all the legal fees for this lost case!

  2. So basically... by faloi · · Score: 4, Insightful

    Apple did something wrong. Admits they did something wrong and paid fines. Shareholders didn't technically lose money, so they can't sue for compensation for the wrongdoing.

    You'd think the shareholders would've figure out whether they actually lost money before bringing the suit. Or waited for the volatile market to drop some so they would be losing some money arguably due to the backdating, and then sued.

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    1. Re:So basically... by morgan_greywolf · · Score: 4, Informative

      Minor nitpick: Apple didn't pay a fine they 'took a charge', which is an accounting adjustment. It still hurt them on paper to the tune of $84 million, but it's not exactly the same thing.

      But, yeah...that's pretty much correct otherwise. In order to sue for damages, you actually have to, you know, show and prove actual damages. Duh. What kind of lawyer did these idiots hire anyway?

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    2. Re:So basically... by gnasher719 · · Score: 4, Informative

      Minor nitpick: Apple didn't pay a fine they 'took a charge', which is an accounting adjustment. It still hurt them on paper to the tune of $84 million, but it's not exactly the same thing. Another nitpick: Share_holders_ were not actually damaged at all. Share options were given out, but not accounted for in the correct way. That means that paper profits were too high. This was later adjusted down by $84 million. However, the actual profit was not changed at all, just the reported profit.

      You were only affected if you bought Apple after the backdating happened, assuming that Apple was worth more than it actually was, and sold after the adjustment, when everyone knew the true value. Or if you bought before the backdating, and sold afterwards, so you got more money for your shares than you should have.

      If you bought before the backdating happened and kept your shares, then you wrongly believed for a few years that your shares were worth more than they actually were, but that is not damaging.
    3. Re:So basically... by gnasher719 · · Score: 4, Insightful

      So yes they lost money. The Shareholder my not had it directly effect their bank account but if Apple Decided to call a quits or got bought by Dell then they would receive less from their portion of ownership. You are completely wrong. Apple did not pay a fine at all. Apple corrected their profit numbers which had been calculated incorrectly. And you may not believe it, but Apple actually benefits from this financially: Since it was found out that options were backdated, Apples profits were less than everyone (including Apple) assumed, so Apple paid too much in taxes, which they now get back. On the other hand, those people who received the options received more from Apple than they had believed, so they made more profit than believed, and they have to pay taxes for the difference.
    4. Re:So basically... by bennomatic · · Score: 4, Insightful
      Oh, don't be silly. Nobody is claiming that they did not do something wrong. Nobody is even really supporting the idea that it was an innocent mistake. They should have known better, and IIRC, someone did lose their job over it.

      What people are saying is that anyone who has held AAPL stock for any length of time over the last five years has made money--potentially lots of it--not lost it.

      Was there a period of time where their apparent earnings were incorrectly valued at $84 million over what they should have been, and did that artificially inflate the stock value? Yes and probably. Was it wrong? Yes. Should people be able to sue for damages because they only made $10,000 off their investment instead of $15,000? I could probably argue both sides, but the story here is that the courts have said no.

      For those people who are calling Jobs a crook and saying that he should be axed for this, I can probably see both sides of the equation. But I highly doubt that this was a planned attempt on his part to defraud anybody. Backdating options isn't illegal; reporting it incorrectly is, and that was the problem. It was fixed, and the hit to the stock value probably hit Jobs more than any other single shareholder. And gee, not that I want to see a criminal running a company I've invested in, but I think he's paid his dues, and if he were to leave, I think it's likely that AAPL would take a pretty significant dive, hurting shareholders more.

      Just my $0.02

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