Another Worm Crawls From Apple

This statement from the attorney of former Apple (AAPL - commentary - Cramer's Take) CFO Fred Anderson is awfully provocative. I'm reading it much worse than the Street seems to be, as the key takeaway in my mind is this:

"It now appears the Board may not have given the necessary prior approval to the grants, contrary to what Mr. Anderson understood from Mr. Jobs and from the Board's signing of the UWC with an effective date of January 17."

The entire note seems to imply that Anderson was misled at worst, or not fully communicated with at best, by his boss, the one and only Steve Jobs. I'm still blown away at how the mainstream media and most investors seem to think that Jobs' job isn't at risk here and that he's in the clear on all these issues.

One of the primary justifications for that Jobs-as-cleared line of thinking is that he's been "cleared" by the board of directors about any major wrongdoings in this backdating. That's sort of like Dick Cheney and Condoleezza Rice clearing George Bush for option-backdating his approval rating. That wouldn't exactly make me conclude that everybody else investigating it would clear it.

This entire letter reflects very poorly on the CEO, and I think we just found another worm in this can that Jobs and company chose to open by not communicating to all of us shareholders at what strike and at what date he and his cohorts were given their options to dilute our shares.

I've been railing on this subject here on these pages, on TV and in the Financial Times since the news first came to light. These issues might have just become catalysts for this stock.

Given that conventional wisdom is that Jobs is in the clear, that's most likely the scenario priced into the stock. And that means this is mostly a catalyst to the downside. I just bought puts to hedge my Apple stock, which I've owned since about $7 in March 2003.

I just don't think the former CFO would be this disrespectful or blunt toward Jobs if there weren't some serious nightcrawlers in this can of Apple's option-backdating dirt.

At the time of publication, the firm in which Willard is a partner was net long Apple common and Apple puts, although positions can change at any time and without notice.

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Cody Willard is the manager of CL Willard Capital Management, LLC. He is a regular guest on Fox News, CNBC and other networks, and he writes a monthly column for the Financial Times. He is also an adjunct professor at Seton Hall University and the author of TheCodyReport.net, a monthly stock market newsletter. Willard appreciates your feedback -- click here to send him an email.