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.