Saturday, Jul 03, 2021, 18:17 Economy

15 Years Ago: The Scandal That Threatened Both Steve Jobs & Apple

While Apple is now fighting against accusations of monopolising behaviour, and while various patent lawsuits involving Samsung, Nokia, HP, and more were resolved 10 years ago – Apple had its first encounter with the law 15 years ago. Things in an unusually calm manner after Apple sent a report to the SEC: The report claimed that there were irregularities in some of the stock options that had been issued. The necessary investigations were now going to be carried out by members of a supervisory board not active at Apple. They were going to check the awarding of stock options to Apple's executive management team, there were also irregularities concerning stock options held by Steve Jobs.

Not An Isolated Case – Systematic Counterfeiting
However, things didn't simply stop after Apple's letter to the SEC. Manipulation of an even larger scale was suspected. Apple had regularly and systematically backdated stock options so that the beneficiaries could receive unusually high profit margins. The burning question at the time was how much of this Steve Jobs was aware of. Market analysts were more than certain that Jobs had knowledge of the matter – but would Apple be able to convince the SEC investigators otherwise?

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Fewer Jobs, More Problems
At the time of the announcement, Steve Jobs was still indispensable to Apple. If the SEC was able to prove that Jobs had knowledge of the matter and its implications and results could have been devastating to the striving company. The situation became even warmer after Apple's Director of Finance, Fred Anderson, hoisted heavy accusations against Jobs during a hearing. Jobs was accused of not only having had knowledge of the matter but also of having actively partaken in and led discussions concerning the matter.

Protecting Jobs At All Cost
Apple's defence spouted that although Jobs may have had knowledge of the matter, he had neither enriched himself personally nor overlooked any legal implications of the matter. In addition, his options packet was already cancelled in 2003 and would have been of no use. The combined SEC and Department of Justice investigation took more than two years and included various subpoenas against Jobs and other high-ranking officials at Apple.

Anderson & Heinen Forced To Pay Millions – Jobs Unaffected
Things went well for both Apple and Steve Jobs, although they were quite different for Fred Anderson and earlier leading lawyer for the company, Nancy Heinen. Both were slapped with millions in fines and forced to make a settlement, all while Steve Jobs remained entirely unaffected by the entire ordeal. Many Apple employees saw Anderson and Heinen as pawn sacrifices to protect the company's CEO. Apple had done everything in its power to portray the two as the main parties responsible so that current staff wouldn't be shuffled towards the door. Although the settlements didn't contain any admission of guilt, the names and reputations of the parties involved were rather seriously damaged. In 2008 the DoJ closed the investigation and by the end of September, all charges against Apple were dropped.

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