Apple options backdating 2016 gay dating services online
(“Apple”) and fourteen of its officers and directors for the alleged false and misleading proxy solicitation of a stock option plan on the ground that plaintiff-appellant did not adequately plead economic loss in the form of “dilution to shareholder interests.” This decision provides yet another instance where courts have strictly applied the “loss causation” principles set forth in Dura Pharmaceuticals, Inc. In its consolidated complaint, it alleged direct class claims under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934. 28, 2010), the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a class action lawsuit against Apple, Inc. Plaintiff-appellant New York City Employees’ Retirement System (“NYCERS”) is a public pension fund that manages retirement assets for over 200,000 current and former employees of the City of New York.
NYCERS alleged misrepresentation because backdating can surreptitiously increase compensation.
NYCERS alleged that the backdating of stock options rendered Apple’s 2005 proxy statement false and misleading for three reasons.
First, NYCERS alleged that while the proxy statement explained that Apple’s compensation practices “aligned the interests of employees and stockholders” because stock options would have value only if Apple’s stock price increases, Apple’s issuance of “backdated” options could have value even if Apple’s stock price does not increase, thereby decoupling employee and shareholder interests.
Tech Crunch has an interesting look at Steve Jobs’ deposition testimony which was taken during the SEC’s 2008 investigation into alleged options backdating.
It’s well worth a read, and provides some interesting insight into Jobs’ thoughts on a variety of matters, from his failure to find an adequate CEO for Apple in 1997 to his thoughts on which Apple employees he considered to be the most valuable.
The United States District Court for the Northern District of California dismissed the Section 14(a) claim, holding (among other things) that the consolidated complaint failed to plead loss causation under the Private Securities Litigation Reform Act of 1995 (“Reform Act”). The Ninth Circuit held that to state a claim under Section 14(a) and Securities & Exchange Commission Rule 14a-9, private plaintiffs must plead that (1) a proxy statement contained a material misrepresentation or omission which (2) caused the plaintiff injury and (3) that the proxy solicitation itself, rather than the particular defect in the solicitation materials, was an essential link in the accomplishment of the transaction. 2000), the Ninth Circuit held that loss causation must be proven in the context of a private action under Section 14(a) and Rule 14a-9. In Dura Pharmaceuticals, the Supreme Court considered whether investors successfully plead economic loss by alleging they paid artificially inflated prices for [the issuer’s] securities. NYCERS next argued that even if Dura Pharmaceuticals were to apply, it does not purport to establish a single method of proving loss causation.