$2.2M Settlement Ends Chapter in Apple Backdating Scandal

Without admitting wrongdoing, attorney Nancy Heinen agreed to a settlement that appears to end one of the highest-profile cases in a wave of options backdating investigations that shook Silicon Valley companies in recent years.

Similar Deals

Heinen and former chief financial officer Fred Anderson were the only two Apple executives named in civil lawsuits by the SEC. Anderson negotiated a similar settlement last year. After a two-year investigation, defense attorneys said last month that federal prosecutors indicated they will not press criminal charges against anyone involved.

Citing standard policy, however, SEC trial attorney Robert Mitchell declined to say if his agency has closed its investigation.

Heinen, 51, will be barred from serving as an officer or director of any public company for five years, the SEC said Thursday.

OK if Properly Disclosed

Though she resigned as Apple's general counsel in 2006, the SEC filed a lawsuit last year that accused her of fraudulently backdating two large options grants in 2001. Regulators said her actions caused the company to under-report its expenses by $40 million.

Stock options allow the recipients to buy shares at the price for which a stock is trading on a certain date. Backdating can make options more valuable, by allowing the recipient to pay the price at which a stock was trading on an earlier date, when the stock may have been selling for less. Companies are required to disclose and account for any back-dating.

Apple, which declined comment Thursday, previously said its own investigation led it to restate earnings by $84 million because of grants made between 1997 and 2002. The company told the SEC that Jobs was aware of some options granted for more favorable dates, but that he did not personally benefit from those grants and that he did not understand the accounting implications.

Allegations of Falsification

The SEC had alleged that Heinen tried to conceal the backdating by directing her staff to prepare false documents and that she signed fictitious minutes from a board of directors meeting that never occurred. Heinen denied wrongdoing; her lawyers said she routinely signed board minutes but had not closely reviewed that particular document.

"This settlement isn't an admission; it's a recognition that life is short," said her attorney, Miles Ehrlich in a statement Thursday.