Apple Shares Recover From Sharp Losses
Shares of Apple Computer rebounded from a 6% selloff after a legal publication reported that federal prosecutors are probing whether former company executives forged documents to maximize executives' stock option profits.
The Recorder, a San Francisco-based publication owned by American Lawyer Media, reported late Tuesday that federal prosecutors are looking into forged documents at Apple related to administering stock options. The report cited people with knowledge of the case who requested anonymity because the case is the subject of criminal and civil government investigations.
Apple spokesman Steve Dowling said the company is providing the Securities and Exchange Commission with the results of its internal investigation into its stock options granting practices, but had no further comment.
The publication also reported that CEO Steve Jobs has hired his own outside counsel separate from the company's legal team.
Apple is one of nearly 200 companies that have disclosed SEC, DOJ or internal investigations for potential backdating of stock options. Backdating refers to retroactively pegging the strike price of an option to a day when the stock traded cheaply. Options with low strike prices are more valuable to their owner because they are less expensive to exercise.
In October, Apple said the internal investigation raised concerns about how two former officers recorded and accounted for stock options. Citing people with knowledge of the investigation, The Recorder also reported those two former officers were General Counsel Nancy Heinen and Chief Financial Officer Fred Anderson.
On Dec. 15, Apple said it was delaying filing its annual report with the Securities and Exchange Commission due to its ongoing investigation into stock option grants. In a filing with the SEC, the company said it needs to restate historical financial statements to record charges for compensation related to past grants. As a result, Apple was unable to file its 10-K Form for the fiscal year ended Sept. 30 by the required filing date of Dec. 14.
Apple expects to file its annual report and its quarterly report for the period ending July 1 by Dec. 29.