Apple Shareholder Lawsuit Dismissed

explosivejared wrote with a ZDNet article about Apple's win in the shareholder stock-options backdating lawsuit. This jives with Apple's own internal investigation of the matter. "The New York City Employees Retirement System had sued Apple claiming that the company's practice of backdating stock options diluted the value of the stock. Apple has admitted that it improperly backdated stock options on several occasions, including two awards to CEO Steve Jobs, and last December it took a $84 million charge to account for the options. But the suit had to show that Apple shareholders lost money in order to recover damages ..."

Must have lost money

But the suit had to show that Apple shareholders lost money in order to recover damages ...

Well, they certainly have now, with all the legal fees for this lost case!

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What would be ironic is if Apple had lost the case and had had to fire Steve Jobs

Exactly. Somebody mod the AC up.

I hope the plaintiffs paid through the ass. AAPL took a 7% 'hit' in after hours trading when the results of Apple's internal investigation

So basically...

Apple did something wrong. Admits they did something wrong and paid fines. Shareholders didn't technically lose money, so they can't sue for compensation for the wrongdoing.

You'd think the shareholders would've figure out whether they actually lost money before bringing the suit. Or waited for the volatile market to drop some so they would be losing some money arguably due to the backdating, and then sued.

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The shareholders did lost money in the form of lowered earnings per share. Of course, that's something that can be hidden in the end-of-year income statement. Anyone know how Apple accounts for stock options? Are they still using footnote disclosure, or

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It would be hard for them to convince anyone that they lost money holding AAPL [google.com] over the last 5 years.

Re:So basically...

Minor nitpick: Apple didn't pay a fine they 'took a charge', which is an accounting adjustment. It still hurt them on paper to the tune of $84 million, but it's not exactly the same thing.

But, yeah...that's pretty much correct otherwise. In order to sue for damages, you actually have to, you know, show and prove actual damages. Duh. What kind of lawyer did these idiots hire anyway?

Re:So basically...

Minor nitpick: Apple didn't pay a fine they 'took a charge', which is an accounting adjustment. It still hurt them on paper to the tune of $84 million, but it's not exactly the same thing.

Another nitpick: Share_holders_ were not actually damaged at all. Share options were given out, but not accounted for in the correct way. That means that paper profits were too high. This was later adjusted down by $84 million. However, the actual profit was not changed at all, just the reported profit.

You were only affected if you bought Apple after the backdating happened, assuming that Apple was worth more than it actually was, and sold after the adjustment, when everyone knew the true value. Or if you bought before the backdating, and sold afterwards, so you got more money for your shares than you should have.

If you bought before the backdating happened and kept your shares, then you wrongly believed for a few years that your shares were worth more than they actually were, but that is not damaging.

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If you bought before the backdating happened and kept your shares, then you wrongly believed for a few years that your shares were worth more than they actually were, but that is not damaging.

I am a money manager. To say that this scandal was not damag

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Another nitpick: Share_holders_ were not actually damaged at all. Share options were given out, but not accounted for in the correct way. That means that paper profits were too high. This was later adjusted down by $84 million. However, the actual profit was not changed at all, just the reported profit.

I never said shareholders were, I said Apple was, but only on paper.

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Apple did something wrong.

Ridiculous! That would violate the Second Law of Mac-tonian Thermodynamics: "The Apple Computer Corporation can only become cooler over time."

Every fanboy know this.

Re:So basically...

Oh, don't be silly. Nobody is claiming that they did not do something wrong. Nobody is even really supporting the idea that it was an innocent mistake. They should have known better, and IIRC, someone did lose their job over it.

What people are saying is that anyone who has held AAPL stock for any length of time over the last five years has made money--potentially lots of it--not lost it.

Was there a period of time where their apparent earnings were incorrectly valued at $84 million over what they should have been, and did that artificially inflate the stock value? Yes and probably. Was it wrong? Yes. Should people be able to sue for damages because they only made $10,000 off their investment instead of $15,000? I could probably argue both sides, but the story here is that the courts have said no.

For those people who are calling Jobs a crook and saying that he should be axed for this, I can probably see both sides of the equation. But I highly doubt that this was a planned attempt on his part to defraud anybody. Backdating options isn't illegal; reporting it incorrectly is, and that was the problem. It was fixed, and the hit to the stock value probably hit Jobs more than any other single shareholder. And gee, not that I want to see a criminal running a company I've invested in, but I think he's paid his dues, and if he were to leave, I think it's likely that AAPL would take a pretty significant dive, hurting shareholders more.

Just my $0.02

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Public accounting 101.

Chapter 1: Balance Sheet

Assets = Liabilities + Shareholders Equity

Your company occurs a fine. So to Pay off the fine they will need cash to do it. To keep the Balance Sheet Balanced they will need need to Reduce Cash by the fine amoun

Re:So basically...

So yes they lost money. The Shareholder my not had it directly effect their bank account but if Apple Decided to call a quits or got bought by Dell then they would receive less from their portion of ownership.

You are completely wrong. Apple did not pay a fine at all. Apple corrected their profit numbers which had been calculated incorrectly. And you may not believe it, but Apple actually benefits from this financially: Since it was found out that options were backdated, Apples profits were less than everyone (including Apple) assumed, so Apple paid too much in taxes, which they now get back. On the other hand, those people who received the options received more from Apple than they had believed, so they made more profit than believed, and they have to pay taxes for the difference.

Re:So basically...

This deals with options the company grants to employees, which are an expense, but one paid (eventually) with shares of the company. The options were granted with value, which should have been reflected on the income statement, but the value won't be paid directly, rather the company will create and issue new shares which don't have a "cost" to the company, but reduce the proportion of ownership that the remaining shareholders own. Apple said the options were issued on a certain day with the price on that day as the strike price, (which accountants still allow to be called a no cost transaction) but the options were actually issued later when the stock was at a higher price.
This is especially interesting because when back dated options are granted to employees, fewer shares are required (because the options are already in the money) so the ultimate hit to other shareholders is smaller, but accountants would require an expense be created reducing current earnings, so the company decieved the accountants and shareholders on the day the options were granted.

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Apple did something wrong. Admits they did something wrong and paid fines. Shareholders didn't technically lose money, so they can't sue for compensation for the wrongdoing.

You'd think the shareholders would've figure out whether they actually lost money before bringing the suit.

This is America: If you sue somebody you can make money - thus if you don't sue, you lose that money.

Pigs at the trough?

Yeah, those retired New York City public workers are real capitalist swine (read the article).

Pensions make up massive amounts of the stock market through sheer weight of numbers, it's hardly a bad call making sure they're getting everything they should fo

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Pensions make up massive amounts of the stock market through sheer weight of numbers, it's hardly a bad call making sure they're getting everything they should for their members retirement funds, is it?

Furthermore the pension fund managers have a very

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I'd say that it's their job to be pretty certain of success before launching these kind of lawsuits. The costs for this failure will be borne by the members, who will see a reduced retirement fund now.

The legal-action door is still open, but I'd be surpris

what i like about slashdot..

this is what i like about slashdot, they also tell you how things end.

most news sources rant big on 'scandals', 'big changes', etc. but the news that it all ended with out much effect does usually not make it to a head line.

thank you slashdot.

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Well I think it is an issue that Apple Right now is delivering better quality products then the rest of the competition right now... If you have been reading slashdot from say a decade ago, we were much more critical of Apple. eg "No Wirelsess, Less Spac

Jives?

Eh? Trying to be hip is it. Why not 'agrees with', or even 'has the same findings as'.

'Jives' is not a particularly useful term to use when describing financial dealings.

[/mutter]

They meant "Jibes"

(The definition about being in accord or agreeing.)

It's an easy typo... but a lot of people just don't realize those are two very different words.

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'Jives' is not a particularly useful term to use when describing financial dealings.

As in the following financial dealng?

Give me the fucking money, you jive-ass muthafucka!

Seems perfect in that context, and as someone else has pointed out, the word they w

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'Jives' is not a particularly useful term to use when describing financial dealings.

Right, because of course, "jibe" is part of the Queen's English that they use in the world of finance!

"Jive" can refer to "b:The jargon of jazz musicians and enthusiasts".

One of the dumbest lawsuits

Apple shareholders have been raking it in. The stock is up about 28x in the last 4.5 years. If you had invested $50K in April of 2003 you'd be sitting on $1.43M today. A shareholder suing Apple for losing money? Maybe they meant that they didn't make a

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Strictly speaking, only Apple shareholders who have owned the stock for that long made all that money. Those who bought in when they thought that the company was more profitable than it really was overpaid for it based on bad information.

Not that I'm happ

The suit is ridiculous

Since Jobs came back to Apple, the company's revenues, share price and market cap have all risen dramatically. Anyone that invested in Apple when the future of the company was in doubt, when Jobs first arrived back in the 1990s, would have done quite hand

It jives? Really? Does anyone here speak jive?

Do any of the Apple Shareholders speak jive? Where's June Cleaver?! (I think the word is supposed to be "jibes")

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Your statement is so wrong and such a non-sequitor, that I assume you accidentally replied to the wrong article.

What if Jobs were guilty

Suppose Jobs were guilty. Did it for his friends as he has plenty of $$$. He gets sent to jail and maybe has to leave Apple. Stock would tank and shareholders would be totally screwed. Now suppose you or I get caught shoplifting at an Apple store. We

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Your superior logic is no match for our puny greed.

If anyone anywhere ever gave a damn about the big picture, we wouldn't have class action lawsuits. We wouldn't have many lawyers either, because we would find better things to do than bicker in court over

If they're not happy with AAPL past two years'

I'll take'em.

Crappy ruling

...the suit had to show that Apple shareholders lost money in order to recover damages...

This is a pretty crappy ruling for investors.

It's kind of like saying, "yeah, I know the perp broke into your house and stole your TV, but you were still able to buy a

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It's kind of like saying, "yeah, I know the perp broke into your house and stole your TV, but you were still able to buy a new DVD that year, so we really can't make him give the TV back."

The complaint was that the backdating cost Apple shareholders money