nah, I know this subject and all its intricacies, HerbVic.
I know that apple and most other companies here are equally guilty. in apples case they are more guilty than Reyes/Brocade. There isn't anything "cleaner" about Apple, Cisco, Oracle etc. than Brocade/Reyes. Its all the same animal. The note at the bottom of that blog stated something I believe is true: That Apple is considered a "special case" because apple is a very successful company in this decade and nobody wants to see apple go down.
But if the feds are going to prosecute Reyes, Anderson, etc etc CRIMINALLY- then Jobs must go down. Sorry but I am not a fan of the "little people" suffering so that the king shall live. The feds are going to have to acknowledge the widespread nature of this "scandal" and back off- or else take down half the businesses in the US.
There are 3 distinct aspects to the "options scandal" in terms of what the fed is deeming criminal (or civil charges in some cases)- and apple is guilty of all of these as are Reyes/Brocade, KLA tencor, Marvel, Home Depot, Gymboree, etc etc (virtually every company that has an employee stock option program):
1. Somebody in the company chooses a date (usually the lowest in the quarter) to backdate all the new employee hire signon options. This person then either creates documents or uses a 10-yr old options software program that prints out SEC filing forms (kind of like turbotax) dated on the date of the low price stock grant date and NOT the actual date the document was created. This is fraud #1. At apple this is Heinen, at Brocade the HR VP. (please note that this practice has been done for so many years nobody even thinks about it. The software programs everybody uses were written in 1990 before options were expensed. I would say 90% of this "wrongdating" is an honest oversight and if anybody did think about it they would just look around at MSFT and big options backdaters with no expense and assume they were doing it right)
2. Somebody takes the stack of these documents to the CEO to sign. this is Jobs and Reyes. this is fraud #2 and what Reyes was just convicted on TEN FELONY COUNTS for. Sorry, Jobs is equally guity or moreso since he principally benefitted, than Reyes. Thats 10 felony counts and hard jail time, and thats what the poster on Law blog is saying. This is "the law" not a popularity contest.
3. The CFO then doesn't take the "in the money" stock option expense because he/she doesn't have the documents that indicate an expense is required (since due to #1 they are dated incorrectly). This is Anderson at Apple and at Brocade the DOJ actually lied to the jury saying the Brocade CFO didn't know anything about the backdating in the closing arguments- and a week later they indicted the CFO. Prosecutorial misconduct? Anyway this CFO situation is similar to #1 above where if the CFO had any reservations he would look at MSFTs books or Cisco or other big cos and see no expensing.
So, there you have it. Within the context of the above 3 items, which **every** company that has an employee stock option plan engages in, and I do mean EVERY ONE, there are some diversions where lawyers are trying to find an "out" for the witch hunt. One diversion which is perfectly reasonable is that any of the above frauds are not frauds because stock options expenses are not meaningful to investors and hence, nobody was hurt. I actually agree with this line of thinking. Thats what the legal pad article is about:
the plaintiff bar could bring class actions related to the conduct since, in many cases, the companies’ stock value didn’t drop as a result of the conduct.
But the probem is, according to GV Tucker and our "LOCK EM UP" friends on this thread, MAJOR FRAUD HAS OCCURRED. Oh yes, Danesh and friends applaud these verdicts as some sort of testament to honesty and integrity. Gregory Reyes who created Brocade from nothing has *stolen* from the company (even though he never received any backdated options- huh?) and thats a 10 felony count crime- <extreme sarcasm on> HOORAY FOR HONESTY AND INTEGRITY! </extreme sarcasm off>
EXCEPT, when it comes to Apple- well then this fraud doesn't matter to the posters on this thread, so whatever huge monumental 20 year criminal lockup act has happened- doesn't seem to be enough for them to sell their apple stock.
Well thats BS people, and I am going to call you on it. If you think that the Reyes case was some sort of valid justice, then Jobs, Heinen Anderson and all must go to jail for 10 felony counts, hard time. And this comment from the judge that somehow Apple's "fraud" wasn't material except for the Reyes case IT WAS, well thats not ok either, and I am glad to see the lawyers on legalpad calling it out.
NO SPECIAL TREATMENT FOR APPLE and JOBS. Nobody is above the hand of justice, blah blah blah
And to whoever posted me that Microsoft was somehow beyond reproach, here you go, gates also must go down and do hard time (unless the statute of limitations has run out):
Microsoft's Past Options Practices Skirted Accounting Rule, Experts Say
online.wsj.com
MORAL of the story: Once you start applauding "zero tolerance" you better make DAMN SURE your kid doesn't go to school with cough medicine in his pocket. |
