Feds Probe For Potential Illegalities in Apple Options Affair


Federal investigators are investigating possible illegalities in the Apple stock options issues, The Star reports. The report originally appeared in the Wall Street Journal Friday.

Federal authorities are examining whether any criminal behavior took place in the issuance of the options. The internal Apple investigation revealed forgeries and backdating. The backdating in itself is not illegal, but can give considerable advantages to the options' recipient. A group of Apple shareholders recently filed suit against the company, as executives allegedly gained advantage from backdating. However, Apple's internal inquiry put CEO Steve Jobs in the clear and the board reiterated its confidence in Jobs.

However, Federal investigators are examining the 7.5 million share issue to Jobs that was given a false October 2001 date. The SEC is also allegedly questioning a former Apple lawyer, Wendy Howell, who administered Apple's stock options issues. Ms. Howell was dismissed in December.

Analysis: The probes - both internal and external - don't appear to have damaged Apple's market cred yet. Possibly, even a series of fines wouldn't seriously dent confidence. It's also difficult to believe, since Apple had the opportunity to be up-front about any irregularities in its internal inquiry, that it would simply delay the inevitable by covering up improprieties, which would undoubtedly be revealed at a later stage.