Apple stock option backdating scandal

Apple stock option backdating scandal

Author: Incansict Date: 19.06.2017

The Commission accused former General Counsel Nancy R. The Commission's complaint alleges that Heinen, of Portola Valley, Calif. The Commission also filed, and simultaneously settled, charges against former Apple Chief Financial Officer Fred D.

Anderson, of Atherton, Calif. Linda Chatman Thomsen, Director of the SEC's Division of Enforcement, stated, "The Apple case demonstrates the Commission's ongoing commitment to take action against stock options backdating and other executive compensation abuses. When corporate officers enrich themselves at the expense of a company's shareholders, the Commission will hold the responsible individuals accountable, particularly where, as here, the responsible individuals are among those obligated to ensure that the company complies with all applicable securities laws and that its financial statements are accurate.

Press Release: SEC Charges Former Apple General Counsel for Illegal Stock Option Backdating; ; April 24,

Fagel, Associate Regional Director of the SEC's San Francisco Regional Office, stated, "Apple's shareholders relied on Heinen and Anderson, as respected legal and accounting professionals, to ensure the accurate reporting of the company's executive compensation.

Instead, they failed in their duties as gatekeepers and caused Apple to conceal millions of dollars in stock option expenses. According to the Commission's complaint, filed in the Northern District of California, Apple granted 4. Because the options were in-the-money when granted i.

The Commission alleges that, in order to avoid reporting this expense, Heinen caused Apple to backdate options to January 17, , when Apple's share price was substantially lower. Heinen is also alleged to have directed her staff to prepare documents falsely indicating that Apple's Board had approved the Executive Team grant on January Anderson, who should have realized the implications of Heinen's actions, failed to disclose key information to Apple's auditors and neglected to ensure that the company's financial statements were accurate.

Both Heinen and Anderson personally received millions of dollars in unreported compensation as a result of the backdating.

apple stock option backdating scandal

The Commission's complaint also alleges improprieties in connection with a December grant of 7. Although the options were in-the-money at that time, Heinen — as with the Executive Team grant — caused Apple to backdate the grant to October 19, , when Apple's share price was lower.

The Commission further alleges that Heinen then signed fictitious Board minutes stating that the Board had approved the grant to Jobs on October 19 at a "Special Meeting of the Board of Directors" — a meeting that, in fact, never occurred. Heinen is charged with, among other things, violating the antifraud provisions of the Securities Act of and the Securities Exchange Act of , lying to Apple's auditors, and violating prohibitions on circumventing internal controls.

Apple's Options Backdating Scandal

The Commission is seeking injunctive relief, disgorgement, and money penalties against Heinen, in addition to an order barring her from serving as an officer or director of a public company. Anderson, without admitting or denying the allegations in the Commission's complaint, has agreed to a permanent injunction from further violations of the antifraud, reporting, internal controls, and other provisions of the federal securities laws.

apple stock option backdating scandal

The Commission also announced today that it would not bring any enforcement action against Apple based in part on its swift, extensive, and extraordinary cooperation in the Commission's investigation.

Apple's cooperation consisted of, among other things, prompt self-reporting, an independent internal investigation, the sharing of the results of that investigation with the government, and the implementation of new controls designed to prevent the recurrence of fraudulent conduct. Fagel Associate Regional Director San Francisco Regional Office Dicke Assistant Regional Director San Francisco Regional Office For more information, contact: Fagel Associate Regional Director San Francisco Regional Office Michael S.

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