Jobs Stepdown Could Lead to Lawsuits

| Apple Stock Watch

When Apple CEO Steve Jobs announced that he was temporarily stepping down for health reasons, he may have unintentionally set of a series of lawsuits against the company. Shareholders could see the announcement as a mismanagement of information and a cause for a stock price drop, according to Forbes.

While CEOs aren't typically required to divulge information about their personal health, Mr. Jobs may be seen differently because of his perceived involvement in the company's success. Any stock drop following his announcement could be seen by shareholders as a blow to the company.

Robert M. Daines, director of the Arthur and Toni Rembe Rock Center for Corporate Governance at Stanford University, commented "From the defense bar's point of view, there's a suit every time there's a stock drop, basically."

John Coffee, the Adolf A. Berle professor of law at Columbia University, added "If you see the market significantly decline [on Thursday] it will suggest that his health and his status are material to the stock price. If there was a material misstatement and a significant market loss we can count on plaintiff lawyers testing that."

Apple's stock closed on Wednesday at US$85.33, but dropped in after hours trading some 7.1 percent. The company's stock has, however, started inching back up to hit $80.74 in pre-market trading. AAPL is currently down 4.59 (-5.38%) compared to its closing price on Wednesday.

So far, no lawsuits have been filed by shareholders over Mr. Jobs's health announcement.

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7 Comments Leave Your Own

Mike P

Vultures.

All of them.

adamC

I am surprise they didn’t take actions against the analysts for causing the Apple stock price to fall throughout the year through their wild guesses .

Dean Lewis

“Kick ‘em when they’re up,
Kick ‘em when they’re down…”
—- Don Henley

geoduck

I might have some sympathy for the plaintiffs except that they are not really aggrieved. This reminds me of the shareholders lawsuit claiming the backdating scandal had hurt their stock value. By the time it came to trial hadn’t Apple been cleared and the stock value increased substantially?

If you look at the string of lawsuits over the last number of years they are nearly always some group of greedy shareholders and unethical attorneys hoping to grab free money from a sympathetic judge. It’s just greed. They are the people that give capitalism and the legal profession a bad name. In among all the money grubbing parasites there have been a couple of suits that I taught might have merit. Unfortunately, they get lost in the noise.

Laurie Fleming

Not that I’m cynical or anything, but I really liked the phrase “because of his perceived involvement in the company’s success”. So all the other CEOs (Bob Nardelli, Alan Mulally) should be sacked because they have no perceived involvement in their company’s success or complete lack of it? What are they doing there?

Unfettered capitalism propped up by socialism when things get tough - I love it!

Carl

Whatever happened to long term investing?

resume advice

This is quite interesting. The author has highlighted some fine aspects. Certainly, job step down could affect the interests of the share holders to a minimal extant.

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