Some Takeaways from Apple's Backdating Case

The U.S. Security and Exchange Commissions' actions today against Apple's former CFO and former general counsel, related to the running stock options backdating probe, cause a few issues to jump out at first glance.

Here are some noteworthy points from today's installment of the Apple saga:

- Apple benefited from its decision to share everything it had on the case with government investigators, and share it early:

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.

Similarly, the SEC is taking a tough stance on former Apple General Counsel Nancy Heinen who, the commission said, invoked her Fifth Amendment rights during questioning. Now the commission is suing Heinen;

- According to the SEC's complaint, Heinen widened the circle of people who knew about the issue to include employees who reported directly to her:

To substantiate October 19,2001 as the grant date for Jobs's grant, Heinen had fictitious minutes created for a phony "Special Meeting" of Apple's Board of Directors. Minutes purporting to be from the October 19,2001 Special Meeting state that all of the Board members (other than Jobs) met to discuss CEO compensation. According to the minutes, the Board voted to approve a grant to Jobs of an option to purchase 7.5 million shares at an exercise price equal to the closing price on the date of the grant (October 19). In fact, no such meeting occurred.

Heinen directed her staff to prepare the "Special Meeting" minutes in January 2002.

(Emphasis added.)

Once Apple's directors and SEC investigators started asking questions, there would have been a number of people still at the company to answer them;

- Linda Chatman Thomsen, who runs the SEC's Division of Enforcement, continues to take action against alleged misconduct at publicly held companies while demonstrating caution over punishing shareholders. In the SEC's press release, she said:

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."

Action against Apple or its CEO Steve Jobs (who ex-CFO Fred Anderson's lawyer places at the center of the scandal) could have hammered Apple's stock price.

As the market headed to its close for the day, Apple's shares were about unchanged for the day on Nasdaq.