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Anderson Fingers Apple CEO in Backdating Scandal
by , 8:15 AM EDT, April 25th, 2007
Following a deal struck with the Securities and Exchange Commission, former Apple CFO Fred Anderson implicated CEO Steve Jobs in the company's improperly backdated stock option grant scandal. In a statement issued by his attorney, Mr. Anderson claimed that he advised Mr. Jobs that proper procedures must be followed when changing option dates.
The statement claims that in late January 2001 Mr. Jobs told Mr. Anderson that Apple's Board of Directors had approved an Executive Team grant on January 2. Mr. Anderson "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."
He also told Mr. Jobs "that the Board would have to confirm its prior approval in a legally satisfactory method." The statement then claims that Mr. Anderson "was told by Mr. Jobs that the Board had given its prior approval and the Board would verify it."
Should the claims prove to be true, that could potentially spell trouble for Apple and its CEO. So far, Mr. Jobs has appeared to be relatively safe since Apple's own independent internal investigation cleared him of any wrongdoing, and the SEC did not name him when it filed its charges against former General Counsel Nancy Heinen and Mr. Anderson on Tuesday.
Mr. Anderson's claims, however, seem to contradict the investigation findings - raising the possibility that information was withheld during the investigations, or that Mr. Anderson agreed to testify against Mr. Jobs in exchange for his deal. Another possibility is that both Mr. Anderson and Mr. Jobs were acting in good faith on false information provided to them by someone else.
Regardless of Mr. Anderson's statements, it appears that the finger pointing in Apple's stock option backdating incident is far from over. Ms. Heinen's legal team confirmed she would fight any charges against her, which means that we will likely see even more name dropping and finger pointing in court. It also means that an embarrassing series of events Apple would prefer to leave in the past will continue to hound the company for some time to come.
The charges against Mr. Anderson were dropped as part of a deal where he is required to repay US$3.5 million along with a $150,000 fine.
The full text of the Mr. Anderson's statement as issued by his attorney Jerome Roth is available at CNNMoney.com.
Observer Comments
The SEC has pretty much come out and said that they're done with the matter:
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070424:MTFH42349_2007-04-24_18-04-15_WAT007385&type=comktNews&rpc=44
Anderson is probably just pointing fingers so he can remain gainfully employable in the future.
So, the CEO told the Chief FINANCIAL Officer to do something with stock options and reporting that was improper and it was perfectly fine with the CFO?
If that is true then Anderson wasn't much of a financial wiz and if anything should be labeled as grossly incompetent.
So next we should expect the general council to state that the CEO knew more about the law that she did.
None of us know the details yet (and likely we'll never know them all) but maneuvering like this to cover one's ass and shift blame is pretty much how the US legal system works. The last thing anyone is ever going to admit is 'yes I knew what I was doing was wrong'. Just not how the game is played.
And before anyone thinks I'm blindly sticking up for Jobs, the investigation team cleared him (but yes, they could have motive for doing that. But with several of the people that were on that team any impropriety in the investigation would be VERY bad for them professionally and some politically) but also the SEC cleared him. (Again, not that the government never covers up or lies, especially nowadays, but they also do love stringing up a CEO for a show trial. Whether the end punishment is big or not, it's the display and public circus that makes it seem like they are doing something.)
I also could just be feeling excessively cynical today.
</rant>
Oh, and as of this moment the Apple stock is up almost a dollar. We'll see what it looks like at the 5pm bell.
Wed Apr 25, 2007 1:48 pm Subject: General Counsel, not CFO
QuoteGuest wrote:
No, just the opposite, they say that "Apple" is not responsible and won't sue the corporation. If you read the article you linked, on the same day they say that "Apple" is not responsible, they filed the lawsuit against the CFO. The corporation is not responsible, but individuals are still being investigated & sued. SJ can still have a lawsuit filed against him in the future. The SEC is far from done with the matter.
"If you read the article you linked," you'll find that the SEC filed suit against the company's former General Counsel, not the CFO. The SEC settled with the CFO.
Edit: Technically, the SEC did file a suit against the CFO, but it was immediately settled. The filing was probably a legal pro forma for the settlement.
QuoteGuest wrote:
No, just the opposite, they say that "Apple" is not responsible and won't sue the corporation. If you read the article you linked, on the same day they say that "Apple" is not responsible, they filed the lawsuit against the CFO.
You might want to try reading the article again. Who did they file a lawsuit against?
http://www.macworld.com/news/2007/04/24/heinen/index.php
"... She then told her staff to prepare false documents showing the board of directors had acted on that day. Anderson colluded by failing to the disclose those actions to Apple’s auditors, or ensuring that Apple’s financial statements were correct, the SEC said.
"Later, in December 2001, the company granted 7.5 million options to Jobs. Again, Heinen avoided a $20.3 million charge by drafting minutes for a fake board meeting she said happened on Oct. 19, the SEC said. That meeting had never occurred."
It appears that, as far as the SEC is concerned, Jobs is in the clear.
QuoteAnonymous wrote:
True, I got a little dyslexic with CFO & GC. Point being, they have not dropped interest in the matter, but in fact the opposite, filing a brand new lawsuit! SJ gets the finger pointed at him in the defense in this lawsuit, far from over!
That's an expected line of defense: "It wasn't just me!" The big difference is that the CFO is supposed to be a financial expert. According to the bio on his company's website and the Wikipedia article, he has an MBA and was CFO of another company before Apple. He is now a partner in an investment firm. He should know better.
Anderson did not admit to any wrong-doing as part of the deal, probably so that he can hold an executive office in another corporation. [/url]
QuoteGuest wrote:
True, I got a little dyslexic with CFO & GC. Point being, they have not dropped interest in the matter, but in fact the opposite, filing a brand new lawsuit! SJ gets the finger pointed at him in the defense in this lawsuit, far from over!
Er, again, you seem to be misreading. It wasn't the defense to the lawsuit. The lawsuit was settled. AFTER it was settled, the ex-CFO's attorney issued a press release claiming it wasn't his fault, it was Steve Jobs's fault. If you think he didn't already raise this when the SEC was investigating him, it'd be naïve. Yet the SEC chose to file its action against Anderson instead.
It's pretty much over.
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