Steve Jobs has been subpoenaed by the SEC to testify in a stock-option backdating case brought against Apple’s (AAPL) former general counsel Nancy Heinen. Jobs’ lawyers will no doubt brush this news aside as immaterial, but it’s a dangerous situation for him (and, thereby, Apple shareholders).
Jobs has skated untouched through Apple’s backdating mess, despite findings that he helped select the dates chosen. Jobs’ defenders say he did nothing wrong because he “didn’t appreciate the accounting implications” of backdating (WSJ). Apple’s former CFO, Fred Anderson, meanwhile, said publicly that Jobs misled him about board actions on stock-option grants. So one of Jobs’ former lieutenants is accusing him of dishonesty on this issue, and the company’s official investigation pardoned him only because of his mindset about what he did (instead of, say, denying that he did it).
This creates an exceptionally tricky situation with regard to sworn testimony. Even though Jobs is a witness, not a target, the SEC’s litigators and Heinen’s lawyers will no doubt ask him questions that will require him to revisit previous statements. Because Apple’s defence of his conduct rests on subtle distinctions, Jobs’ testimony will have to be both 1) exceptionally precise, and 2) perfectly consistent with what he said previously (and with what the SEC and Heinen’s lawyers believe are the facts)…
Jobs’ testimony in this case will obviously be highly scrutinized–by the SEC and Heinen lawyers and by the media. One misstep in testimony could open Jobs up to reputational damage, perjury charges, or even a reassessment by regulators of his own conduct in the matter. Lawyers often handle such situations by having their clients take the Fifth (which, contrary to public opinion, is often just a smart legal strategy, not an admission of guilt). If Steve Jobs were to take the Fifth, however, it would be perceived as an admission of guilt–which could be almost as damaging as an actual admission.
What are the next steps? Jobs’s lawyers will probably try to find a way to quash the sub-poena. If that’s impossible, they’ll try to negotiate a way for Jobs to answer questions without being subjected to live cross-examination (i.e., via documents).