Last month we brought you word that US District Judge Jeremy Fogel had dismissed a suit brought by the New York City Employees’ Retirement System over the options backdating scandal. The suit claimed that the value of Apple’s stock had been diluted, but Fogel pointed out that since the stock has gone consistently upwards, there was no “discernible drop in the stock price,” and thus no basis for a case. But, as I wrote at the time:
…it ain’t over ‘til it’s been staked, decapitated, burned, and buried on consecrated ground sprinkled liberally with quicklime.Sure enough, NYCERS opted not to fold their claims into an existing suit; they’ve re-filed and are seeking damages. They’re complaining that the price of Apple’s stock “fell over 14%” after the company disclosed the information about stock backdating; the NYCERS own around 1 million shares.
Here’s the thing, though. As the above article points out, Apple stock has risen 500% since 2005. So, it seems like unless they sold off a bunch of their shares, they should have made that money back and then some. While I’m not trying to defend the backdating in any way, my—extremely simple—understanding of civil law is that if there’s no victim, there’s not grounds for a case. It would seem like this is a case of “no harm, no foul.” A hearing will be held by Judge Fogel in January to see if the case will go to trial. We’ll be waiting with bated breath.
Hey, this is a case of playing the stock market is like gambling. You can win big, you can loose big. That's life. Deal with it. Sore losers!
The question of damages isn't answered by looking at whether Apple's stock increased by 500% over X months in spite of asserted mismanagement. The question is whether it would have increased by more than 500% over that same time period if there had not been the asserted mismanagement. If so, the damages would be measured by the difference between the two.