Others had the same reaction we did to news that the SEC has subpoenaed Apple’s (AAPL) Jobs: This is a tricky situation indeed. According to Apple 2.0, the SEC has not ruled out going after Jobs for backdating, and as the familiar patter goes, “Anything you say can be used against you.” The most interesting question, therefore, is whether Jobs will take the smart legal (but reputation destroying) step of pleading the Fifth. Here are some reactions:
Jobs’ “non-appreciation” defence is likely to get more tenuous if people like Heinen, and possibly Anderson, start talking. But here the plot is thicker, because the pursuers have their own problems. As Jobs goes, so goes Apple. And, more interesting, if Jobs doesn’t go, and yet the evidence against him mounts, how do you distinguish all the other backdating executives? Is it just because Jobs is successful – what I’ve called the Apple rule? Indeed, it may be that all this backdating stuff really is all about stock price. When the alleged backdating was going on at Apple, the stock was hovering at around 20. Under several more years of Jobs leadership, it’s up over 90. Backdating could bring back to 20…
What’s really going on? It’s like this. We threw Fred and Nancy under a bus, and said that I was completely innocent due to my utter ignorance of all things related to stock and money and finances. So the SEC says, OK, well, Steve, then we’d like you to help us build our case against Nancy. How about you come in and answer some questions. Tell us all about how you knew nothing and it was all Nancy’s idea. No problem if we put you under oath, right? It’s called a perjury trap. Oldest trick in the book. So how did I respond? That part I can’t tell you.
Jobs’ testimony will 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 almost certainly 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 quash the subpoena.