Updated The Securities and Exchange Commision (SEC) today accused Apple's former top lawyer of fraudulently backdating options to under-report company expenses by $40m.
Nancy Heinen is also accused of altering company records to conceal the fraud. She is contesting the charges, the WSJ reports today.
The SEC also filed charges against former CFO Fred Anderson for being asleep on his watch. He should have noticed what Heinen had done, the regulator said. It has already settled with Anderson, who will kiss goodbye to $3.5m worth of option gains. The settlement won't see Anderson admit any wrongdoing.
Anderson will also pay a fine of $150,000 to the government agency, which has been trawling Silicon Valley for foul play in the awarding of options during the tech boom.
Options backdating was a favoured way for tech firms to attract and award talent, particularly in the frothier days of the dot com boom. It referred to the setting of option prices not at the price the day they were granted but at another, typically earlier day, when the price was lower. This gave the option more room to increase in value by the time the execs cashed them in.
The practice is not illegal, as long as the backdating is disclosed to shareholders and the relevant authorities. It was the small matter of informing shareholders that seems to have defeated many leading firms in the information technology industry.
Apple coughed to backdating options earlier this year, offering to make up the shortfall to employees who were affected.®