Tuesday, April 24, 2007

Apple's Former CFO Settles With SEC

According to the Wall Street Jrl here, Apple's Former CFO settled civil matters with the SEC.



UPDATE (4/24):  The SEC filed its civil case against Apple's former CFO, Fred D. Anderson, and former general counsel, Nancy R. Heinen, for their role in backdating two options grants in 2001.  Anderson settled the case without admitting or denying liability, and will pay $3.5 million in disgorgement and a civil penalty.  The settlement does not include a director/officer bar, perhaps largely because Anderson's role in the backdating involved his failure to prevent the creation of documents allegedly falsifying the date of board meetings authorizing the grants.  Heinen did not settle the matter, and she is accused in the complaint (here) of ordering the creation in one instance of fictitious board minutes and then signing them.  According to the SEC Litigation Release (here):

The Commission's complaint also alleges improprieties in connection with a December 2001 grant of 7.5 million options to CEO Steve Jobs. Although the options were in-the-money at that time, Heinen — as with the Executive Team grant — caused Apple to backdate the grant to October 19, 2001, when Apple's share price was lower. As a result, the Commission alleges that Heinen caused Apple to improperly fail to record $20.3 million in compensation expense associated with the in-the-money options grant. The Commission further alleges that Heinen then signed fictitious Board minutes stating that the Board had approved the grant to Jobs on October 19 at a "Special Meeting of the Board of Directors" — a meeting that, in fact, never occurred.

Apple CEO Steve Jobs has avoided any entanglement with the SEC to this point, even though he had some awareness of the backdating, according to company filings in late 2006.  The U.S. Attorney's Office for the Northern District of California has also been investigating the Apple backdating, and there is no word yet on whether any criminal charges will be filed. (ph)


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