Stephanie Jensen Former Apple Employee to Settle Fraud Case

Stephanie
Jensen, former Apple Inc and Brocade Communications Systems Inc’s
employee, has been in talks with the U.S. Securities and Exchange
Commission “regarding the potential for settlement”  with securities regulators who sued her. Jensen was convicted of illegally backdating stock-option grants earlier this year.

She was sentenced to four months in prison and
ordered to pay $1.25 million in fines following her federal case
conviction. Jensen falsified board of directors’ meeting minutes  and
conspired to falsify other records and documents in order to hide the
backdating.

“Additional time may serve to promote those
settlement discussions, to allow the parties to resolve this matter
without further litigation,” - lawyers for both sides said in a joint
filing today in San Francisco.

Apple employees are no strangers to backdating stock
option lawsuits. In past two years different Apple shareholder groups
have taken Apple to court, dissatisfied with the results of SEC
investigation that exonerated Steve Jobs and most company directors of
any wrong-doing.

The scandal broke out in October 2006 with Apple
admitting that the company board members have approved hundreds of
millions in stock options from 1997 to 2001 for CEO Steve Jobs and
various others top-level executives. Jobs received stock that some now
estimate to be worth more than $1 billion. However, Jobs exchanged most
of the backdated options for regular common shares, so he didn’t
personally benefit from being privileged to buy stock to resell it under the backdated stock options. Subsequently, he apologized to AAPL shareholders.

On April 24, 2007, the SEC announced it had filed
charges against former Apple chief financial officer Fred D. Anderson
and former Apple general counsel Nancy R. Heinen for their alleged
roles in backdating Apple options. Anderson immediately settled the
charges for a payment of a civil penalty of US$150,000 and disgorgement
of “ill-gotten gains” of approximately US$3.49 million. Heinen was
charged with, among other things, violating the anti-fraud provisions
of the Securities Act of 1933 and the Securities Exchange Act of 1934,
lying to Apple’s auditors, and violating prohibitions on circumventing
internal controls, based on the options awarded to Steve Jobs (dated
October 19, 2001 but allegedly granted in December 2001) and also
option grants awarded to top company executives, including Heinen
(dated January 17, 2001, but allegedly granted in February 2001.) The
charges against Heinen remain pending.

Legally, backdating stocks is legal only if
disclosed and recorded as expenses. Backdating allows companies to to
change dates and grant stocks at a lower price, enabling them to enjoy
‘built-in’ profits.