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Apple stock was down about 5% in early trading Wednesday following a report from Law.com that federal investigators are examining stock-option documents allegedly falsified by company officials to maximize potential executive gains. The report, citing anonymous "people with knowledge of Apple's situation," claims that criminal charges are being considered by prosecutors and that CEO Steve Jobs has decided to hire an attorney to defend against forthcoming Justice Dept. and SEC actions. Jobs previously relied upon the company's outside counsel. This Friday's delayed 10-k filing by Apple may contain further information on the options investigation, including the possibility of further earnings restatements. The stock completely recovered from Wednesday early drop, however, ending the day up a penny. But an unsourced report late Wednesday from the Financial Times has the stock trading down 3-4% again -- the FT indicates Jobs was handed 7.5 million in stock options in 2001 without required authorization from the company's board of directors, and documents were falsified afterwards to cover this up. Jobs later surrendered these options before they were exercised.

• Sources: Law.com: Faked Documents May Be at Core of Apple Case, Financial Times: Apple ‘falsified’ files on Jobs’ options, CNN Money, MarketWatch
• Related commentary: UBS: Apple Options Fears Overdone, Apple's Options Problems Deepen - Likely To Restate Results, Apple Stores Now More Profitable Than Tiffany's Per Square Foot, High School Math 101: iTunes Sales Not Collapsing . Conference call transcripts: Apple F4Q06 (Qtr End 9/30/06)
• Potentially impacted stocks and ETFs: Apple Computer (NASDAQ:AAPL)

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Source: Apple Stock See-Saws On Reports Of Faked Options Docs