WASHINGTON - A former Apple executive who settled charges linked to stock-options fraud said Tuesday he warned chief executive Steve Jobs about potential accounting problems from the way the grants were made.
The claims about Jobs` knowledge of the scheme came as Apple`s former top lawyer, Nancy Heinen, was charged by US federal regulators in a civil suit with participating in a fraud related to multi-million dollar Apple stock option awards.
The US Securities and Exchange Commission claimed Heinen had participated in a scheme to backdate two large stock option grants to top Apple management, including Jobs, and then altered company records in a bid to hide her wrongdoing.
The market watchdog said it had also filed civil charges, which were simultaneously settled, against Apple`s former chief financial officer, Fred Anderson, alleging he should have seen what Heinen was doing and that he failed to correct Apple`s financial disclosures.
Anderson agreed to pay 3.5 million dollars as part of a settlement with the SEC.
Heinen`s attorney, Miles Ehrlich, denied in a statement sent to AFP that his client had backdated stock options or acted improperly.
"Every action Nancy took was fully understood and authorized by Apple`s board of directors," Ehrlich said, adding that her "integrity is unimpeachable."
Separately, an attorney for Anderson, Jerome Roth, said the former Apple CFO was pleased to put the matter behind him.
Roth also said that Anderson was told by Apple CEO Jobs in January 2001 that the firm`s board of directors backed one of the option grants.
Anderson`s lawyer said the executive had "cautioned Mr. Jobs that the Executive Team grant would have to be priced based on the date of the actual Board agreement or there could be an accounting charge," the statement said.
The SEC said Heinen`s actions led Apple, known for its fashionable computers and popular iPod digital music players, to misreport its expenses by nearly 40 million dollars.
The practice of awarding special stock options to top executives is common at many American companies, but it is improper to alter the dates on which the options were awarded without informing the SEC and investors.
Tweaking the date on which such an option was awarded can in theory enrich the holder of the options if the award is "backdated" to a time when a company`s share price was lower.
"The Apple case demonstrates the Commission`s ongoing commitment to take action against stock options backdating and other executive compensation abuses," SEC enforcement chief Linda Chatman said in a statement.
"When corporate officers enrich themselves at the expense of a companys shareholders, the Commission will hold the responsible individuals accountable," Chatman said.
The SEC charges follow a high level SEC probe into Apple`s stock option practices. Prosecutors are seeking financial penalties against Heinen and want to stop her serving again as an officer or director of a public company.
Officials said the SEC would not be bringing any charges against Apple due to its "extensive" cooperation with the government`s probe.
04/24/2007 19:08 GMT