Updated from 1:55 p.m. EDT
Securities and Exchange Commission
former top lawyer in a stock backdating scheme, while settling similar charges against the company's former financial chief -- who blamed the actions of CEO Steve Jobs.
The commission alleges that former General Counsel Nancy R. Heinen participated in backdating of options granted to Apple's top officers that caused the company to underreport its expenses by nearly $40 million.
The SEC's complaint says Heinen caused Apple to backdate two large options grants to senior executives of Apple -- 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 Apple CEO Steve Jobs -- and altered company records to conceal the fraud.
The commission also filed -- and simultaneously settled -- charges against former Apple CFO Fred D. Anderson, alleging that Anderson should have noticed Heinen's efforts to backdate the executive team grant but failed to take steps to ensure that Apple's financial statements were correct.
As part of the settlement, Anderson agreed to pay about $3.5 million in disgorgement and penalties without admitting or denying the allegations.
In a subsequent press release through his attorney, Jerome Roth, Anderson said he was told by Jobs in late January 2001 that Jobs had the board's agreement for the executive team grant on Jan. 2, 2001.
According to Roth, Anderson "cautioned" Jobs that the executive team grant would have to be priced at the date of the actual board agreement or there could be an accounting charge. He also advised Jobs that the board would have to confirm the prior approval in a "legally satisfactory method."
Anderson was told by Mr. Jobs that the Board had given its prior approval and the Board would verify it," said Roth.
Roth said that Anderson also understood that the grant date was to be moved forward to Jan. 17 from Jan. 2 pursuant to a company provision allowing such a move when the later date coincided with a higher stock price. The move, according to Anderson, was to avoid any appearance of impropriety that might arise from a grant awarded just prior to the stock price rise that resulted from the 2001 MacWorld exhibition and Job's keynote speech on Jan. 9.
Anderson further understood that the Jan. 17 date was selected by Jobs and Heinen and that the stock price on Jan. 17 was higher than the price on Jan.2, Roth said.
Roth said Anderson also believed that the board had verified the Jan. 17 date by signing a Unanimous Written Consent in early February with an effective date of Jan. 17.
"It now appears the Board may not have given the necessary prior approval to the grants, contrary to what Mr. Anderson understood from Mr. Jobs and from the Board's signing of the UWC
Unanimous Written Consent with an effective date of January 17," said Roth.
As for the October 2001 grant to Jobs, Anderson "had virtually no involvement as he was not a member of the Board and did not have a formal role in compensation matters pertaining to the CEO."
Citing lawyers intimately familiar with the Jobs grant,
The San Jose Mercury News
reported on Monday that prospects are slim for a criminal case against Jobs, who approved widespread backdating at the company, but no evidence exists that he directed his own grant -- or covered it up.
The SEC also said it would not bring any enforcement action against Apple, based in part on "its swift, extensive, and extraordinary cooperation in the Commission's investigation."
Shares of Apple slipped on news of the charges but were recently trading back near their highs for the session -- up 85 cents, or 0.9%, to $94.37.