Ex-Apple Execs Smacked with SEC Suit

Two former Apple executives expect to be sued this week by the Securities and Exchange Commission over the company’s backdating of employee stock options, several people involved in negotiations between the former executives and the government said yesterday.

The move against the two would be the first fruit of separate investigations into Apple’s options practices by the commission and the Justice Department. The investigations, into events more than five years ago, have cast a cloud over the company even at the height of its iPod-driven renaissance.

After its own investigation late last year, Apple acknowledged improper dating of options grants to Steven P. Jobs, its chief executive, and others. It cited “serious concerns” about the actions of two unnamed former officials, but absolved Mr. Jobs of any responsibility.

One of the executives facing S.E.C. action is Nancy R. Heinen, Apple’s former general counsel and a longtime confidant of Mr. Jobs. Her lawyer said she would contest the accusations, which involve options grants to Mr. Jobs and others in 2001.

“We have a very good defense,” said the lawyer, Cristina Arguedas. The expected lawsuit against Ms. Heinen was reported yesterday in The San Jose Mercury News.

The other executive, Fred D. Anderson, the company’s former chief financial officer, is preparing to enter into a settlement with the S.E.C. over the dating of an option grant to senior officials in January 2001, according to a person close to the settlement negotiations.

The settlement terms are said to include a payment of about $3.5 million, an amount representing his personal gains from the options and a small civil penalty.

Significantly, as part of the agreement, Mr. Anderson will not be required to give up his role as a director of several public companies, the person close to the negotiations said. He is currently chairman of the audit committee of eBay and a managing director at Elevation Partners, a venture capital firm.

A spokesman for Mr. Anderson said he would not comment, pending a decision by the S.E.C. to file a lawsuit. A commission spokesman also declined to comment.

Mr. Anderson joined Apple in 1996 and left as chief financial officer in 2004 to join Elevation Partners. He stepped down from the Apple board last October in the course of the internal investigation of options practices. Ms. Heinen, who followed Mr. Jobs to Apple from Next Software in 1997, left the company last spring.

It is not clear whether the two prospective S.E.C. civil lawsuits will be the extent of the commission’s action against Apple or its executives over the backdating activities. Nor is it clear when an investigation by the United States attorney’s office in San Francisco will come to a conclusion. A spokesman for the office had no comment yesterday.

But Apple’s stock rose $2.54, to $93.51, yesterday after an article in The Mercury News on Sunday, citing unidentified sources, said evidence suggested that Mr. Jobs was unlikely to face civil or criminal charges.

Apple said it was continuing to cooperate with the investigations.

http://www.nytimes.com/2007/04/24/technology/24apple.html?ref=business