Ex-Apple CFO settles with SEC, repays $3.5m
updated 09:15 pm EDT, Mon April 23, 2007
Apple CFO settles with SEC
Former Apple executive Fred Anderson has settled with the Securities and Exchange Commission on his alleged participation in the backdating of stock options at the computer maker and the agency is expected to pursue a civil lawsuit against the company's ex-general counsel Nancy Heinen on similar charges, according to a Wall Street Journal report. Heinen, who left Apple last May and plans to contest the SEC charges, will be accused -- as early as this week -- of helping to manipulate one of her own option awards as well as a never-exercised options grant to Apple chief executive officer Steve Jobs based in part on testimony from other former Apple employees.
According to the report, Anderson's settlement with the SEC includes a fine of about $150,000 and repayment of about $3.5 million in realized gains from backdated options, but it will not include an admission of guilt. In addition, Anderson will not be barred from serving as a corporate officer or board member of public companies.
"Nancy Heinen did not backdate, and she will defend herself based on her actions, e-mails and integrity," Cristina Arguedas, one of Ms. Heinen's attorneys, told the Journal.
"The SEC is expected to charge Heinen for her role in a 2001 grant of a split-adjusted 15 million stock options to Jobs. Apple has said that the grant was 'originally approved' at a board meeting on Aug. 29, 2001, at an exercise price of $8.92 a share, adjusted for stock splits," the WSJ wrote. "But the company has said the terms of the grant weren't finalized until Dec. 18 of that year, when Apple shares closed at $10.51. Apple then dated the grant back to Oct. 19, when the share price was $9.15. Apple's internal investigation discovered the existence of falsified board meetings minutes related to the grant."
Heinen, who was Apple's board secretary, will be charged with creating and approving the falsified Board minutes, according to sources quoted by the publication. Wendy Howell, a former Apple attorney who was involved in processing stock options at the company, has reportedly told investigators that Heinen instructed her to create the false records, although Heinen will deny the allegations and say that the falsified dates for Jobs' option award and her own option award received received sufficient approval from Apple's Board and CEO, according to people familiar with her defense.
Heinen will also be implicated in January 2001 option grants to other top Apple executives, including Anderson and herself, the report said.
Last December, Apple took an $84 million charge for the options scandal, but cleared Jobs of any wrong-doing and he will likely avoid criminal charges as Jobs claimed he was unaware of the accounting implications of backdated grants; he did, however, recommend favorable dates for some options awards and hired outside legal help. Apple also claimed that he did not financially benefit from the option grants because he never exercised his options; however, the value of his options, however, was used to calculate the his new stock grant compensation package, according to some reports.
What did Jobs know,
04/23, 10:00pm reply
and when did he know it? You see, everyone, EVERYONE! is corrupt! Not just Bush.
tindrum
Fresh-Faced Recruit
Joined: Apr 2004
fines and gains
04/23, 10:54pm reply
I'm amazed at the idea that he's going to be hit with 3.6M or $150K or whatever and they expect to get any of that from him. If I got a traffic ticket, I'd have trouble paying 150 bucks, fercryinoutloud. These jokers rake off so much money that when they are caught this sort of thing is basically a slap on the wrist. It's depressing.
Hillbilly Geek
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Joined: Aug 2006
re: what did jobs know..
04/23, 11:13pm reply
perspective please. get some?
Flying Meat
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Joined: Jan 2007
finally, clearing this up
04/23, 11:39pm reply
good to see that Fred has agreed to the $150K fine and to simply pay back the $3.5 million that was in error. Hope Nancy can do something similar. Jobs was never involved, most everyone knew that all along since he has never been a "money" person. So I'm glad this will be cleared up soon, the stock will jump 10 points once it is settled.
OS11
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Joined: Apr 2007
refining the fine rant
04/23, 11:41pm reply
..let me say, I'm certainly not averse to someone being compensated for their expertise or contribution to a business... but what do the vast majority of these CEOs and CFOs CBOs actually do? DO they make the company or product that much better? arg. How much cheaper might my little 12" Powerbook have been, had the multi-layered management not been embroidering their golden parachutes? The mind boggles...
Hillbilly Geek
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Joined: Aug 2006
corporate justice?
04/24, 08:12am reply
It's amazing how, in the corporate world, if you steal but get caught, all you have to do is give your booty back and everything's okay! If some guy knocks over a liquor store, he's going to jail whether he gives the contents of the register back or not! Double standards...I think so!
Feathers
Forum Regular
Joined: Oct 1999
Innocence after guilt.
04/24, 10:18am reply
The American legal system is designed so that even if you are proven guilty, you can appeal that, and still win your innocence. Its not a double standard, just a second chance.
http://ThunkDifferent.com
ThunkDifferent.com
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Joined: Apr 2007
Re: innocence after guilt
04/24, 12:28pm reply
The American legal system is designed so that even if you are proven guilty, you can appeal that, and still win your innocence. Its not a double standard, just a second chance.
An appeal doesn't necessarily grant you your innocence. It may throw the case out, but, I believe, depending on the circumstances, allows the prosecutors to bring you to court again. And an appeal cannot be brought just because you don't like the verdict. There has to be a reason as to why you feel the verdict is unfair or incorrect (i.e. jurors who heard the defendant yell "I did it!" when they weren't supposed to, evidence was mis-gotten, etc).
And just remember, its the appeal process that keeps apple from having to pay 600 million to "IP innovations" for their new tab control patent they have.
testudo
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Joined: Aug 2001
who gets the 3.5M
04/24, 01:30pm reply
Does anyone know? I have not seen mentioned whether the $3.5M goes back to the shareholders, or Apple, or to SEC???
kw14
Junior Member
Joined: Sep 2004