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Apple Computer (Nasdaq: AAPL) shares dropped 4 percent -- the biggest drop in about six months -- after reports that federal prosecutors are investigating whether company officials falsified documents in what may be the latest in a string of corporate stock options scandals.
The Apple options investigation story originally broke in October, when Apple's internal probe uncovered suspect transactions, according to The Recorder, a San Francisco-based legal newspaper.
At that time, Apple said its investigation turned up "irregularities related to the issuance of certain stock option grants made between 1997 and 2001." While one of the grants in question was to Apple CEO Steve Jobs, those options were never exercised, the company said at the time.
Apple could not immediately be reached for comment, but The Recorder reported a development in the case that apparently sent Apple's stocks down Wednesday morning: Jobs has hired his own attorney to represent him in the probe.
Jobs Distancing Himself
"When the CEO hires his own attorney, that means he believes the company is no longer going to defend him adequately," Enderle Group Principal Analyst Rob Enderle told MacNewsWorld. "It is one of the first steps for a separation between the company and the CEO. It has now become serious."
If it were anybody but Steve Jobs, the company would part ways with the executive quickly, Enderle speculated, but Jobs is too critical to Apple's success 
to allow any rash decisions. Enderle expects Apple to explore every available option short of letting him go.
"It may not be enough. We've gone though an awful lot of CEOs with this options issue. So far, none of them have survived it. If anybody could survive, though, it would probably be Steve Jobs," Enderle argued.
Flurry of Options Scandals
Apple is just one of many firms to find itself in the midst of swirling controversy around the use of options. The focus has turned to whether or not companies intentionally misrepresented the granting dates of options in order to maximize their value.
In recent months, more than 100 companies have disclosed internal inquiries or acknowledged investigations by the Securities and Exchange Commission (SEC) or other regulatory agencies. In addition, a slew of lawsuits have been filed against publicly traded companies over the issue of options tampering.
Firms like CA, American Tower, Juniper, McAfee and Monster Worldwide are among the companies reporting stock options issues. Many CEOs have stepped down in the midst of the investigations.
Desperately Seeking Successor?
The news that Jobs hired an attorney creates a cloud over both the company and its chief. Jobs' departure would have significant implications for Apple for two reasons: First, Jobs has driven most of the company's success with his innovations; and second, there is no heir apparent.
"The fact that Apple doesn't have a strong number two is coming back to haunt the company. This came up once before when Steve Jobs had the cancer scare, and it exacerbates the problem," Enderle argued. "If Steve Jobs goes, the consensus opinion is that Apple fails. Having a strong number two would prevent folks from concluding in that fashion."
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