Shares of Apple Computer Inc. had another wild ride Thursday after new details of a federal investigation into the company’s stock options practices raised questions about the role played by its charismatic CEO, Steve Jobs.
Shares of the iPod and Macintosh computer maker closed at $80.87, down 65 cents, or less than a percent, after falling more than 2 percent during the day. On Wednesday, shares slid 5 percent before rebounding.
Citing unnamed people familiar with the matter, the Financial Times reported that Jobs received 7.5 million stock options in 2001 without the required board authorization and that documents were later falsified to indicate otherwise.
The Securities and Exchange Commission is looking at those documents among other evidence in its review of Apple’s backdating of stock options, the British newspaper said.
Backdating is the manipulation of the timing of stock options to bolster the profits of executives and employees. Apple is among nearly 200 companies ensnared in the scandal and that have disclosed SEC, Department of Justice or internal investigations.
Full details of Apple’s options troubles have yet to emerge, but the Cupertino-based company largely exonerated Jobs in October when it said an internal probe had not found any misconduct by current management. The probe did raise serious questions, however, about two former officers, the company said.
How does that assessment fit with the new detail Thursday that a fake board meeting may have been created to issue Jobs’ options?
Experts who would only speak generally without any facts about the Apple imbroglio say that if Jobs knew about the falsification of documents, he could be in trouble.
“Any CEO that has falsified documents and filed or certified false statements made to investors and the SEC will put themselves in the cross hairs of law enforcement agencies,” Lynn Turner, a former chief accountant of SEC, said in an e-mail.
But even if Jobs was aware, proving it would be a challenge, said Dennis Codon, an attorney at Robins, Kaplan, Miller & Ciresi LLP in Los Angeles.
Jobs later surrendered those options without exercising them and realized no financial benefit.
Faking documents to make it look like a meeting occurred to support the practice of backdating has happened in corporate America and is not a surprise, said Codon, whose office aids companies in crisis management.
At the same time, the falsification of records could have been done by others without an executives’ knowledge, he said.
Codon said he knows of top executives who truly were unaware of some of the accounting implications in backdating, which Apple said in October was the case for Jobs.
“I could see how a chairman would not have a clue,” Codon said. “I’m not convinced Jobs is in trouble, but he could be if he knew and participated in putting that situation together.”
SEC spokesman John Heine, and Luke Macauley, a spokesman for the U.S. Attorney’s Office in the Northern District of California, which created a stock-options task force in July, both declined to comment.
Financial analysts have largely shrugged off the reports, seeing little impact as long as Jobs, Apple’s iconic co-founder and CEO, remained unscathed.