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Apple in More Trouble than Originally Thought
Saturday, December 30, 2006 - reddit
The great thing about SEC filings is that companies are forced to divulge information that they'd rather keep secret but are going to have a negative impact on their financial status. First things first, Apple has been in trouble with the SEC, like many other companies lately, over the backdating of stock options. When happens is when you grant (give) stock options to executives, they aren't allowed to exercise (sell) them for a set period of time. When that time comes, they can cash them in for the value of the stock when it was issued, but not what the value of the stock would be today.
In order to make more money off these stocks than is legal, companies will often lie about when the stock was issued, picking a date in the past when the stock was flying high, making the executive more money than otherwise possible. Apples been doing it and so have a lot of other companies, the difference today is a lot of them are getting caught now. On top of that, Apple was found forging its board meeting minutes to cover for the fact that the board didn't convene and vote on the options granted to CEO Steve Jobs, a huge no-no.
The SEC hasn't decided whether or not to pursue legal action as of yet, but Apple's stock had already taken a hit when news of this broke earlier this month. Now that their SEC filings are out, we get to see all the other junk that they haven't made public, like lawsuits. According to the Associated Press, Apple is facing a lawsuit over the tying of its popular iTunes music store to its even more popular portal music device, the iPod.
The case, filed July 21, is over Apple's use of a copy-protection system that generally prevents iTunes music and video from playing on rival players. Likewise, songs purchased elsewhere aren't easily playable on iPods.
The plaintiff is seeking unspecified damages and other relief. The court denied Apple's motion to dismiss the complaint on Dec. 20.
And more for defective products.
Another lawsuit, filed Nov. 7, alleges that the logic board of Apple's iBook G4 fails at an abnormally high rate. The plaintiff is seeking unspecified damages
Apple is also being sued for patent infringement by PhatRat Technology, LLC. Oddly enough, Apples stock actually went up after the SEC filings, which makes one wonder if stock traders are hedging their bets that it's going to fall and they intend to sell it short, or they are just plain stupid. We'll find out which is the case when the SEC makes its decision.
tags: Apple, iPod, iTunes, Steve Jobs, SEC
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