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SEC charges two in Apple stock options scandal

Published April 25, 2007


SAN JOSE, Calif. - The Securities and Exchange Commission filed civil charges Tuesday against two former Apple Inc. officers over their alleged roles in backdating stock options. One of them immediately settled the case and cast some blame on Apple's CEO, Steve Jobs.

Former chief financial officer Fred Anderson, 62, has agreed to pay about $3.5-million in fines and penalties to settle, the SEC said. The case against former general counsel Nancy Heinen, 50, will proceed. Her attorneys have vowed to fight the charges.

The commission accused Heinen of participating in fraudulent backdating and altering company records to conceal the fraud. The charges were in connection with two large options grants that caused the company to underreport its expenses by nearly $40-million, the SEC said.

The grants in question were a February 2001 grant of 4.8-million options to Apple's executive team and a December 2001 grant of 7.5-million options to Jobs.

Anderson's attorney, Jerome Roth, said Tuesday the former CFO had warned Jobs of the implications of backdating the executive team's grant. Roth said Anderson was reassured by Jobs that the board of directors had given the necessary approvals.

Apple spokesman Steve Dowling declined to comment on Anderson's claims but said the SEC named only two former officers in its lawsuit Tuesday. "It did not file (charges) against Apple or any current employees."

Anderson and Heinen left Apple last year. Under Anderson's settlement, the former CFO did not admit any wrongdoing.

The backdating of stock options is the practice of pegging a grant date to an earlier, lower point in the company's stock price so the recipient can get a bigger future windfall. The manipulation itself is not necessarily illegal but could pose legal violations if it is not properly disclosed.

[Last modified April 25, 2007, 01:04:34]

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