Wednesday, December 27, 2006

Report: Apple forged options documents

Shares of Apple Computer Inc. fell Wednesday after a legal publication reported that former company executives apparently forged documents to maximize executives' stock option profits.

The Recorder, a San Francisco-based publication owned by American Lawyer Media, reported late Tuesday that federal prosecutors are looking into forged documents at Apple related to administering stock options.

The publication also disclosed that CEO Steve Jobs has hired his own outside counsel separate from the company's legal team.

Apple is one of nearly 200 companies that have disclosed SEC, DOJ or internal investigations for potential backdating of stock options. Backdating refers to retroactively pegging the strike price of an option to a day when the stock traded cheaply. Options with low strike prices are more valuable to their owner because they are less expensive to exercise.

In October, Apple said an internal investigation raised concerns about how two former officers recorded and accounted for stock options. Citing people with knowledge of the investigation, The Recorder reported those two former officers were General Counsel Nancy Heinen and Chief Financial Officer Fred Anderson.

Shares of Cupertino, Calif.-based Apple Computer fell $3.84, or 4.7 percent, to $77.67 in morning trading on the Nasdaq. The stock has traded in a range of $50.16 and $93.16 in the past year.

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