SEC closes in on ex-Apple lawyer Heinen, mulls lawsuit against former CFO Anderson

Apple Store“The Securities and Exchange Commission is expected this week to bring its first legal action in the Apple backdating probe, targeting the company’s former top lawyer for her alleged role in rigging options, according to sources familiar with the matter,” Howard Mintz reports for The Mercury News,

“Former General Counsel Nancy Heinen’s lawyers are vowing to fight any SEC charges, saying she’s the scapegoat in an investigation that has generated unusual attention because it involves Apple and Steve Jobs, its famous CEO. In their first public comments, Heinen’s attorneys say she broke no laws and only took steps approved by Apple’s directors,” Mintz reports.

“The SEC also is weighing a lawsuit against Fred Anderson, Apple’s former chief financial officer, according to sources involved in the case. Anderson lawyer Jerome Roth did not return messages seeking comment,” Mintz reports.

“Heinen resigned last May, as Apple started to investigate allegations that stock options had been improperly backdated. Based on interviews with people knowledgeable about the Apple probe, Heinen played a central role in two instances of alleged backdating being examined by both the SEC and federal prosecutors. The first involves a grant to Jobs. The second – which has not previously been reported in detail – involves grants to top executives, including Heinen, who faces SEC allegations she profited herself from backdating,” Mintz reports.

“There are no signs criminal charges from federal prosecutors are looming, but that separate probe continues. The U.S. Attorney’s Office has declined comment,” Mintz reports. “Perhaps most significant, two people familiar with Heinen’s defense say she has no damaging information against Jobs, further evidence Apple’s leader may avoid legal repercussions from the company’s backdating problems. The SEC could still sue Jobs, but has not signaled it intends to do so.”

Much more in the full article here.

[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son” for the heads up.]

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  1. “Heinen’s attorneys say she broke no laws and only took steps approved by Apple’s directors”

    Isn’t the job of a corporate counsel to advise a board as to what actions are legal, veto the ones that are not, and not to follow executive or board directives blindly? What that sentence says to me is that if Heinen was criminal she was utterly incompetent.

  2. You are 100% correct Tommy Boy.

    She is legal counsel. That means informing about what is legal. And if she loses her job for not following the “demands” of the board then she is doing her job.

    I abhor it that so few take responsibility for their actions and have the moral courage to stand up for what is wrong.

  3. So Karen, you’re saying that Heinen approved/concurred/advised as legal the steps that the directors approved. As it is her job to evaluate and advise the directors as to what is legal and what is not, is it not?

  4. By the way, Heinen was paid half-million a year to provide legal advice and direction, not rubberstamp what others ask of her, and that includes the CEO and BOD. If she was just rubberstamping, then heck, I’d be willing to do that job for a couple of hundred thou less. Oh, wait, on the other hand, maybe not, cause if I really didn’t know what I was doing, a jail term could be in the offing…

  5. I haven’t studied the byzantine facts of this case, and frankly I doubt anyone has because it seems that not all the facts are out. Even if Heinen made a mistake, it’s not yet clear that it should be criminalized. For years, the SEC had no objection to back-dating options, then they changed their standards. Why are so many eager to see Heinen, Anderson, and many like them, ruined without even bothering to know the facts? Honestly, it reminds me of the crowds that would cheer at witch burnings, not so long ago.

  6. Karen is correct: backdating of options was fully lawful then, and it remains fully lawful today. That is not the problem.

    Rather, It was the failure to account properly for the backdating, in the published company accounts, that violated accounting standards and SEC regulations.

    Nancy Heinen, in her capacity as legal counsel, would not have been responsible for preparing the company accounts. That would have been the responsbility of the CFO (Fred Anderson at the time), and the CEO (Steve Jobs).

  7. Who cares. All of these people involved here in this case have plenty enough money to hire all of the legal representation they’ll ever need. It’s not like these are common folks making $50,000 per year that we’re talking about getting accused here.

    If they’re truly guilty of wrong doing, there is still a good chance that their high priced attorneys can get them off on a technicality. And if they can’t, then they must have done something really, really wrong.

  8. Macaday spake: “Falsifying official documents IS illegal. Wasn’t that THAT the allegation?”

    The issue is the option grant should have been approved at a board meeting. However, on the option grant date shown on the documents, there was no board meeting, nor was there any subsequent documentation of board approval.

    Whether this rises to a criminal violation of statutes depends very much on intent. And intent can be VERY difficult for prosecutors to prove.

    Heinen could easily defend her actions in a myriad of ways, and it would be up to the prosecutor to prove that she was lying or covering up something or defrauding somebody.

  9. Karen, I agree that Heinen may not be guilty of breaking any backdating laws, but if she authorized the falsification of Board minutes to cover up her actions, then that’s a problem. The full article actually provides much greater insight into the predicament of choosing between the date it was authorized by the CEO and the subsequent delayed date of final approval by the Board, and the strategy to pick a value in the middle.

    My beef was not with the first part of the statement; but with the latter half of her lawyer’s statement – that she’s just doing what she was told, because that’s not an excuse for the General Counsel of a corporation.

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