Tuesday, January 23, 2007

Steve Jobs on the Hot Seat

It appears that Apple Inc. CEO Steve Jobs met with prosecutors from the U.S. Attorney's Office for the Northern District of California and SEC investigators to explain his role in options backdating at the company in 2001.  Apple earlier revealed that "[a]lthough the investigation found that CEO Steve Jobs was aware or recommended the selection of some favorable grant dates, he did not receive or financially benefit from these grants or appreciate the accounting implications."  According to an article in The Recorder (here), Jobs was interviewed by the government to explain his lack of knowledge of the accounting issues and that he did not knowingly violate the securities laws. 

While risky, Jobs' meeting with prosecutors is not unprecedented in white collar crime investigations, and there can be substantial benefits in presenting a well-prepared witness to provide the government with additional information that can dissuade it from pursuing a case against the individual.  There is always the risk of the "Martha Stewart" effect, that the witness will be prosecuted for making a false statement.  But the upside can also be significant if the government perceives that the witness has nothing to hide and presents a plausible story.  While counsel must proceed cautiously, there is no firm rule against having a client meet with investigators to present his or her side of the transaction, especially when the case will revolve around intent.

The Recorder also notes a bit of disarray in the options-timing investigations in the Northern District of California, with U.S. Attorney Kevin Ryan and two of the lead prosecutors in the probes headed out the door.  Ryan was among the U.S. Attorneys recently forced out of office, and it will be interesting to see if the new leadership in the USAO has the same commitment to undertaking these types of complex, document-intensive cases that may not generate any criminal prosecutions. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2007/01/steve_jobs_on_t.html

Investigations, Securities | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef00d83511649b69e2

Listed below are links to weblogs that reference Steve Jobs on the Hot Seat:

Comments

Re:

Apple earlier revealed that "[a]lthough the investigation found that CEO Steve Jobs was aware or recommended the selection of some favorable grant dates, he did not receive or financially benefit from these grants or appreciate the accounting implications."

My comment:

You do not have to financially benefit from the crime to be criminally culpable. The people at Apple writing the press releases are well aware of this and are putting the most positive spin on this item. I was considered an “insider trader” and yet lost money selling my Crazy Eddie stock.

Regarding Mr. Jobs lack of understanding of the accounting implications, again it is a common strategy when a target cannot dispute the underlying facts they often try to “rationalize” their actions. I tried that trick too.

While I am not saying Mr. Jobs is in fact guilty, understand that Mr. Jobs has some very astute high powered professional handlers advising him how to “tell his side of the story” and put it in the most positive light.

This investigation will take quite awhile before any final conclusion can be drawn.

Sam E. Antar (former Crazy Eddie CFO & convicted felon)

Posted by: Sam E. Antar (Former Crazy Eddie CFO & convicted felon) | Jan 24, 2007 12:25:27 AM

Post a comment