Jobs and Apple board fingered in backdating civil lawsuit

The US Securities and Exchange Commission may have washed its hands of the Apple stock option backdating affair, but Steve Jobs and company aren't quite clear of the dirt yet.

Jobs, along with ex-financial chief Fred Anderson, ex-general counsel Nancy Heinen, and four members of Apple's board of directors have been fingered in a new securities fraud class action lawsuit.

The case was filed June 27 in California Northern District Court. Apple stockholders Martin Vogel and Kenneth Mahoney accuse the Apple crew of knowingly altering the dates of when stock option grants were given to executives so they appeared to have been awarded when the price was at a low.

Easy money for corporate heads — and not in itself an illegal practice. But if one forgets to tell the SEC and one's fellow stockholders that the corporate books are a work of flexible reality, the feds tend to like a word.

Apple already received a knock on the door from the long arm of government regulators, and duly admitted it had incorrectly accounted for share options between 1997 and 2001.

After an internal investigation, the company tossed Anderson and Heinen to the mercy of the SEC. Anderson settled with the commission for $3.5m without admitting wrongdoing, but Heinen denied tampering with Apple's accounts and took the charges to court.

Apple then claimed the rest of its house, particularly its indispensable CEO Jobs, were erstwhile blissfully unaware of the accounting skullduggery. Although one of the dirty grants was issued to Jobs, it was subsequently canceled and "resulted in no financial gain to the CEO," according to the company. The SEC was apparently satisfied with Apple's bit of self-reflection and said it wouldn't pursue the matter any further.

But that didn't close the door on lawsuits. The recent stockholder legal scrap was obtained by InformationWeek.

“The defendants knew that options were not granted on the dates that were disclosed to shareholders and falsified the company’s records to create the appearance of illegality, and thus bear direct responsibility for their actions,” the complaint states. “Here, Jobs and the Individual Defendants clearly appreciated the fraudulent nature of their conduct.”

What the plaintiffs intend to prove is the financial harm Apple's backdating inflicted on its stockholders. Direct correlation in this case isn't easy to prove under normal circumstances — and Apple having offered cash payments to make up for a shortfall doesn't make the matter easier.

Nor are the plaintiffs the first to attempt such a lawsuit. A similar complaint filed by the New York City Employees' Retirement System against Apple was dismissed in 2007.

The attorney's representing Vogel and Mahoney weren't available for comment. ®