Judge shoots down pension lawsuit against Apple—again
Posted by Dennis Sellers 
May 22, 2008 at 12:15pm
A federal judge in California has, for the second time, told the pension fund for New York City’s public employees that it can’t sue Apple, reports the New York Sun. The pension fund has been trying to sue the company over backdated stock options even though the pension fund had profited from its million shares of Apple’s stock, which have risen dramatically in value in recent years.
Last year, the judge, Jeremy Fogel of U.S. District Court in a San Jose, said that “while the subsequent disclosure that the options were backdated might require a restatement, without a discernable drop in the stock price there is no basis upon which to establish an injury to shareholders.” Still the city tried to re-file a suit making similar claims, this time basing the suit on a different claims under the Securities Exchange Act.
The updated lawsuit added four additional instances of alleged backdating by the Apple executive team and directors. The original lawsuit was filed in June of 2006.
The new complaint tallied up proceeds of the exercise by Apple executives of the backdated options at more than US$1 billion and places the value of shares held by Apple CEO Steve Jobs that were received in exchange for backdated options at nearly $1 billion. The amended lawsuit also tied the Apple board closer to the backdating of shares to executives by alleging that the full board acted as the company’s compensation committee when it signed off on options with false grant dates, the article adds.
That application was the subject of Judge Fogel’s recent decision, in which he said, in essence, “that the pension fund couldn’t get two bites at the apple,” notes the Sun. He added that allowing the city to add new claims at this point would “run counter to well-established” precedent and impose a “financial burden to Defendents.”
“We’re considering an appeal and believe that our claims are still strong,” the deputy chief of the pension’s division for the city’s Law Department, Carolyn Wolpert, told the New York Sun.
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Rich Sanfilippo Says:
I don’t understand what they’re trying to accomplish. Let’s assume they’re successful and they force Jobs or Oppenheimer out - what does that do to the share price for their beneficiaries?
Posted on May 23, 2008
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Dennis Sellers
Dennis has been a newspaper editor/reporter (seven years) and teacher (seven years). He has over 4,000 magazine, newspaper and online articles to his credit. He has also covered the Mac and tech industries for over a decade for such online publications as MacCentral, MacMinute and now MacsimumNews.
Bic Parker Says:
This is really surprising… no it is just plain stupid, that the pension fund is still trying to get something here. I think this pension fund should get the Bonehead of the Year award for this effort. These kind of cases come down to establishing specific dollar amount damages based on the the bottom line difference between what you bought the stock for and what it is either worth or what you sold it for. If it is higher than what you paid for, it really doesn’t matter what transactions occurred or what their financials stated… there are no damages because you are ahead.
Trying to argue that you are not as far ahead as you should have been (especially when the stock price has doubled in less than a 2 year period during a relatively flat market) is not only fruitless but bordering on reckless behavior, spending money on legal fees that should be going to the pensioners instead of a groundless case. I wonder how those pension beneficiaries feel about that?
Posted on May 22, 2008