Another allegation of stock-option backdating has been dismissed, this time by a judge rather than the Securities and Exchange Commission.
A shareholder group led by the New York City Employees’ Retirement System had sued Apple Inc., claiming the company had diluted its stock’s value through its awards of stock options. But U.S. District Judge Jeremy Fogel said the plaintiffs did not make a direct link between the backdating and the subsequent drop in Apple’s stock price, according to Bloomberg. That is a critical allegation in many securities lawsuits.
The judge said the plaintiffs can refile their claims in a derivative lawsuit arguing that the company itself, rather than its stock price, was hurt by the alleged violations, the wire service reported.
In dispute are 6,428 stock-option grants totaling more than 200 million shares issued between 1997 and 2002 that were backdated and not properly accounted for or disclosed, according to the lawsuit, said Bloomberg.
“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,” Fogel wrote in his opinion, according to the report.
The dismissal comes at a time when the SEC has dropped six of its own investigations into historical stock-option granting practices without bringing charges since late October. VeriSign, Triquint Semiconductor, Zoran Corp., Electronic Arts, NVIDIA Corp., and PMC-Sierra were the subjects of those cases.