Apple Sued Over Stock Option Irregularities
Apple Sued Over Stock Option Irregularities
by , 7:55 PM EDT, July 5th, 2006
Apple Computer announced Wednesday that the company has been hit with two law suits relating to the way the company has handled stock options. According to a statement issued by Apple, the suits include claims against both current and former officers and directors regarding the way options have been managed within the company.
One suit was filed in the United States District Court for the Northern District of California, a federal court, and the second was filed in the California Superior Court for Santa Clara County.
Apple announced on June 29th, 2006 that it had found irregularities in the stock option grants, and that it had hired independent counsel to investigate the matter further. The company also said it had informed the SEC of the situation.
After that announcement, American Technology Research analyst Shaw Wu and Piper Jaffray analyst Gene Munster issued research reports in which they both concluded that Apple's investigation into previously-issued stock grants is unlikely to have a major impact on the company.
While Apple's usual policy is to not comment on ongoing litigation, the company said in a statement that it is, "currently evaluating its response to the lawsuits."
Apple stock is trading lower today at US$57, a loss of $.095 (-1.64%) on moderate volume of 18.5 million shares trading hands.
*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.
If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.
Observer Comments
Wed Jul 05, 2006 8:37 pm Subject: Blood in the Water
I wonder... does anyone think it's another case of Ambulance Chasers filing suit for someone who doesn't want representation. http://www.ipodobserver.com/story/26844
MHO, the wedge
Well, it is a derivative lawsuit, not a direct lawsuit. Meaning that the shareholders are seeking for the corporation, namely Apple, to sue its directors and officers to recover any damages from this mistake.
Accordingly, if successful (which is highly unlikley), the directors and officers responsible for the mistake would have to pay Apple back any damages or gains. The plaintiffs will receive nothing. The suit really is silly, however, because generally corporations indemnify their officers and directors for mere mistakes, as opposed to intentional acts. Consequently, the only party who will benefit here is the lawyers.
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