SEC plans suit in Apple case, attorney says
EmptySAN JOSE, Calif. -- Securities regulators plan to file civil fraud charges this week against Apple Inc.'s former general counsel over her alleged role in the company's stock options backdating scandal, a defense attorney said Monday.
Cris Arguedas, a lawyer for Nancy Heinen, said the Securities and Exchange Commission has informed attorneys in the case that it plans to file a lawsuit against Heinen alleging fraud in connection with two options grants. One involved a grant to Apple chief executive Steve Jobs on Oct. 19, 2001, for 7.5 million shares and another involved a grant made to top executives, including Heinen herself, on Jan. 17, 2001.
"We do expect them to file against our client and we will be defending those charges because they are a misunderstanding of the activities of Apple," Arguedas said.
Heinen would be the first Apple executive to face legal action since the Cupertino-based maker of iPods and Macintosh computers acknowledged last year that it had backdated some stock options grants, including the one to Jobs where Apple said the grant date was improperly pegged to October 2001 instead of the correct date of Dec. 18 later that year.
Arguedas did not know whether other former Apple employees, including former CFO Fred Anderson, who also was being investigated by federal authorities, would be charged.
John Heine, an SEC spokesman, declined to comment.
The U.S. Attorney's Office also is investigating Apple for the accounting shenanigans but declined to comment Monday about the status of its case. Apple is arguably the highest-profile company among dozens facing stock options scrutiny by the SEC and federal prosecutors.
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, leading potentially to inflated corporate profits and underpayments in taxes. Several executives at other companies have recently pleaded guilty to criminal charges in connection with backdating.
Arguedas said her client did not break any laws.
"It's not a backdating case," she said. "It's a case in which the grant dates moved to later dates and higher prices."
Apple's own internal probe cleared Jobs and any current officers of misconduct, but pointed to "serious concerns" about the actions of two unnamed former employees, now widely believed to be Heinen and Anderson.
Anderson's attorney did not immediately return a phone call for comment, but has previously said Anderson did not knowingly participate in any manipulation of the options awards.