SEC set to charge former Apple legal chief
The Securities and Exchange Commission is expected this week to bring formal charges against Apple's former top legal aid for her integral role in the company's options backdating scandal, and is separately mulling a case against the firm's former CFO, The Mercury News is reporting.
The paper cited sources familiar with the matter in saying that former General Counsel Nancy Heinen is being targeted primarily for her involvement in a December 2001 grant of 7.5 million stock options to Chief Executive Steve Jobs that were backdated to October through falsified minutes of a board meeting that did not occur.
"A securities fraud charge from the SEC would depend on proving Heinen's actions deceived investors because the true cost of the options was hidden by shifting the grant date from Dec. 18, when the stock was $21.01 a share, to Oct. 19, when it stood at $18.30," according to the report.
The former top Apple legal aid also reportedly faces SEC actions because of allegations she approved the falsification of documents that led to the backdated grant to Jobs. Sources told the paper that she ordered Wendy Howell -- an in-house Apple lawyer -- to handle the Jobs documents, which included the fabrication of Board meeting minutes to show the board approved the Jobs grant on Oct. 19, 2001.
In addition to the December 2001 grant to Jobs, the Mercury News reports that the SEC is targeting Heinen and former Chief FInancial Officer Fred Anderson for a January 2001 option grant approved by Jobs for top Apple executives, including both Heinen and Anderson. The grant, which the paper's sources say was approved by Jobs in late December 2000, would normally have been dated the following Tuesday, Jan. 2, 2001. However, it wasn't finalized until Jan. 31.
"In the interim, Heinen and Anderson discussed an appropriate date for the options, sources say, and decided that it would appear improper to use the Jan. 2 date, when the shares closed at $14.80," according to the report. "These sources say Heinen and Anderson settled on Jan. 17, when the stock was at $16.81 a share, believing it was proper to drag the date forward from Jan. 2 because the price was lower. But the options were backdated to that Jan. 17 date on Jan. 31, when the stock was at about $21 a share."
People familiar with the evidence in the case told the Mercury News the Jobs does not appear to have been involved in the decision to settle on the Jan. 17 grant date. They also say that Heinen holds no damaging information against Jobs, offering further evidence the Apple chief may avoid legal repercussions from the company's backdating mess.
Apple's former General Counsel, Nancy Heinen, and former Chief Financial Officer, Fred Anderson.
For its part, the SEC is expected to allege Heinen's involvement in her own grant amounted to self-dealing.
A representative for the SEC declined comment on the report. However, the agency has maintained that general counsels and CFOs have special obligations to protect investors against accounting fraud.
The paper cited sources familiar with the matter in saying that former General Counsel Nancy Heinen is being targeted primarily for her involvement in a December 2001 grant of 7.5 million stock options to Chief Executive Steve Jobs that were backdated to October through falsified minutes of a board meeting that did not occur.
"A securities fraud charge from the SEC would depend on proving Heinen's actions deceived investors because the true cost of the options was hidden by shifting the grant date from Dec. 18, when the stock was $21.01 a share, to Oct. 19, when it stood at $18.30," according to the report.
The former top Apple legal aid also reportedly faces SEC actions because of allegations she approved the falsification of documents that led to the backdated grant to Jobs. Sources told the paper that she ordered Wendy Howell -- an in-house Apple lawyer -- to handle the Jobs documents, which included the fabrication of Board meeting minutes to show the board approved the Jobs grant on Oct. 19, 2001.
In addition to the December 2001 grant to Jobs, the Mercury News reports that the SEC is targeting Heinen and former Chief FInancial Officer Fred Anderson for a January 2001 option grant approved by Jobs for top Apple executives, including both Heinen and Anderson. The grant, which the paper's sources say was approved by Jobs in late December 2000, would normally have been dated the following Tuesday, Jan. 2, 2001. However, it wasn't finalized until Jan. 31.
"In the interim, Heinen and Anderson discussed an appropriate date for the options, sources say, and decided that it would appear improper to use the Jan. 2 date, when the shares closed at $14.80," according to the report. "These sources say Heinen and Anderson settled on Jan. 17, when the stock was at $16.81 a share, believing it was proper to drag the date forward from Jan. 2 because the price was lower. But the options were backdated to that Jan. 17 date on Jan. 31, when the stock was at about $21 a share."
People familiar with the evidence in the case told the Mercury News the Jobs does not appear to have been involved in the decision to settle on the Jan. 17 grant date. They also say that Heinen holds no damaging information against Jobs, offering further evidence the Apple chief may avoid legal repercussions from the company's backdating mess.
Apple's former General Counsel, Nancy Heinen, and former Chief Financial Officer, Fred Anderson.
For its part, the SEC is expected to allege Heinen's involvement in her own grant amounted to self-dealing.
A representative for the SEC declined comment on the report. However, the agency has maintained that general counsels and CFOs have special obligations to protect investors against accounting fraud.
Comments
We need real consequences that will repay the stockholders what they deserve, both for the backdated stocks and for the detrimental effect this investigation has had on its present stock price.
-Clive
Both have made loads of money on Apple stock so what good does charging them do? Slap them with at $50,000 fine? Big deal. They have millions.
We need real consequences that will repay the stockholders what they deserve, both for the backdated stocks and for the detrimental effect this investigation has had on its present stock price.
-Clive
I don't think that's the type of "charge" that they're facing
I don't think that's the type of "charge" that they're facing
No, I meant that even if they are convicted, they will only face a "small" fee. It's not small to us, but it is to them. I've corrected my post to more accurately depict what I meant to say.
-Clive
Fees would be a joke.
No, I meant that even if they are convicted, they will only face a "small" fee. It's not small to us, but it is to them. I've corrected my post to more accurately depict what I meant to say.
-Clive
Ok, I agree. However, if they face jail time I'll be content.
Not that it will happen ... but a few years in jail would make it difficult to spend their ill gotten funds.
Fees would be a joke.
If it's a few years. What did Martha Stewart get? 5 months?
Not that it will happen ... but a few years in jail would make it difficult to spend their ill gotten funds.
Fees would be a joke.
All it will do is keep them from spending too much of it while away. But that won't stop it.
Problem is, they didn't make their money from the backdating (if anyone did, it was jobs). So you can't really fine them to get the money back (at least not their stock share money - they could be ordered to pay retribution to shareholders).
If it's a few years. What did Martha Stewart get? 5 months?
Yup, 5 months in the klink and 5 more with an ankle bracelet.
She got a resort prison, though. From wikipedia:
FPC Alderson opened in 1927 as the Federal Industrial Institution for Women and was the first federal prison for women. The camp is comprised of 105 acres (425,000 m²) of rolling hills. While there are no metal fences surrounding the camp, prisoners have schedules and must work. Free time is spent playing volleyball, softball or tennis.
Most of the inmates at FPC Alderson have been convicted of non-violent or white-collar crime. They sleep in bunk beds in dormitories or in cottages.
The prison is nicknamed "Camp Cupcake" by most residents and the media, and "Yale" by one-time attendee Martha Stewart.
Shame shame, Martha Stewart. You're now only a near-billionaire with millions of subscribers to your magazine and millions of viewers to your TV show. You only own 96% of MSO stock.
I hereby pronounce you 'punished.'
-Clive
Nancy will be a "loyal Jobsie" and take the fall as stoically as Alberto Gonzales and Scooter Libby have for their bosses!
I don't like your implications.
However, if Jobs had been involved, that would be tragic. Apple's future without Jobs would be good, but it might not be *as* good.
Nancy will be a "loyal Jobsie" and take the fall as stoically as Alberto Gonzales and Scooter Libby have for their bosses!
Well at least her boss is worth taking a fall for
Well at least her boss is worth taking a fall for
I don't know about this...... altho I have been quite vehement about my distaste for Apple's options backdating in the past, to make just these two the fall guy/gal -- assuming there is truth to this report -- is a bit sad, really.
This happened in a larger cultural setting that Jobs oversaw, and as CEO he has to be held accountable too. And, the board.
I think all of them should be asked to pay (out-of-pocket, not from the corporate kitty) shareholders the excess amounts + a fine + the same sum to charity, and the board should be charged a stiff pro-rated amount for falling asleep at the switch. And they all hold a public mea culpa news conference.
No jail time for anyone.
has been keeping a lid on AAPL stock for a long time. As long as
Jobs remains CEO, any resolution will be a positive.
I don't know about this...... altho I have been quite vehement about my distaste for Apple's options backdating in the past, to make just these two the fall guy/gal -- assuming there is truth to this report -- is a bit sad, really.
This happened in a larger cultural setting that Jobs oversaw, and as CEO he has to be held accountable too. And, the board.
I think all of them should be asked to pay (out-of-pocket, not from the corporate kitty) shareholders the excess amounts + a fine + the same sum to charity, and the board should be charged a stiff pro-rated amount for falling asleep at the switch. And they all hold a public mea culpa news conference.
No jail time for anyone.
I can see this as being fair, but pay to share holders not charity seems more appropriate. It's our money they were playing with. But as many have said - sooner over and done the better and we do need SJ at the helm.
I don't like your implications.
However, if Jobs had been involved, that would be tragic. Apple's future without Jobs would be good, but it might not be *as* good.
<fred armisen's "ferocito" character>I JUST KEEDEEENG!!!</fred armisen's "ferocito" character>
OR
<sgt hulka>Lighten up, Francis.</sgt hulka>
I don't like your implications.
However, if Jobs had been involved, that would be tragic. Apple's future without Jobs would be good, but it might not be *as* good.
Why would they have to be without jobs. He certainly can still control the company from behind bars. Hell, with his RDF, within 6 months, the warden will move aside and Steve will take over (as interim warden). Then half the prisoner activities will be "steved". Of course, he'll insist only on $1 for salary.