Archive for the ‘Apple’ Category


Yet another shareholder lawsuit was filed last week against Apple in the United States District Court for the Northern District of California. Filed by the law firm of Kantrowitz, Goldhamer & Graifman and its co-counsel, the lawsuit claims to be filed on behalf of “shareholders who purchased securities and/or sold put options of Apple” and seeks certification as a “class action.” As with many of the previous lawsuits, it charges that Apple and certain of its officers and directors violated Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rules 10-b(5) and 14a-9 promulgated thereunder as well as alleges that defendants made false and misleading statements and omissions concerning Apple’s improper and undisclosed practice of backdating options granted to executives.

The case follows a string of earlier lawsuits filed throughout July and into August, naming top executives and alleging that defendants breached their fiduciary duties and colluded with one another to improperly backdate stock grants.

“This improper backdating masked the virtually instant profits the option recipients obtained,” the new complaint alleges. “Under generally accepted accounting principles, these profits were required to be recognized as an expense in the Company’s financial statements for the appropriate period, but were not. Thus, the Company’s financial statements in its Form 10-K filing for the fiscal year 2005 and interim financial statements for 2005 and 2006 were materially false and misleading.”

In June, Apple disclosed that it discovered option grant irregularities and later said that it may have to restate its earnings for the affected years following the internal investigation. The company has been notified by NASDAQ for failure to file its quarterly report–ending July 2006 (but will unlikely be delisted). Apple CEO Steve Jobs, among other executives–atleast one of whom has already retained legal counsel–may also be at risk of criminal charges.


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