Jobs to take the stand in options backdating case

Apple CEO Steve Jobs will have to appear before federal investigators as part of the Securities and Exchange Commission's (SEC) lawsuit against Nancy Heinen, Apple's former head lawyer, Bloomberg has reported.

In April, the SEC filed suit against Heinen and Fred Anderson, Apple's former CFO, charging them with orchestrating the backdating of stock options at the company. Anderson agreed to settle his suit with the SEC at the time it was filed but the proceedings are underway against Heinen.

Bloomberg's report said the SEC is not opening an investigation of Jobs with this move but that it wants his testimony in connection with the ongoing suit. An Apple representative declined to comment.

Apple admitted last year that stock option backdating - the practice of selecting a favourable date for a stock option award - occurred at the company, and it took an $84m charge to set the ledger straight. Jobs has never been charged with any wrongdoing in connection with the backdating, which is an illegal business practice if it's not properly recorded as an expense.

Apple conducted its own investigation into the matter and cleared Jobs, even though it also said he was aware of the backdating and actually recommended some of the dates. An independent investigator hired by the company said Jobs did not benefit from the backdating (he never exercised the options, although he traded them for a restricted stock award), and that he was unaware of the accounting implications of backdating.

The SEC's case has focused on Heinen's role in creating the minutes of an October 2001 meeting of Apple's board of directors that never actually happened. In the fall of 2001, Jobs and Apple's board haggled over the terms of an option grant to the CEO, specifically over the vesting terms of the agreement. According to the SEC's complaint against Heinen, the board approved a grant of 7.5 million options in late August but Jobs' objections to the vesting terms of that grant delayed the final approval until 18 December.

Apple had missed a November deadline to report the terms of the August grant to the SEC, and it had entered a new fiscal year in October, so in December Heinen recommended an October grant date for this options package and had minutes created of a board meeting dated 19 October to finalise the grant. Of course, that grant wasn't finalised that day, and Apple's full board never met that day; the fake minutes weren't even created until 2002. The SEC has charged that Heinen was the mastermind behind the fake minutes, and falsified other meeting documents to cover the trail.

So what does the SEC want from Jobs? It's important to note that he still hasn't been charged with anything. But he's going to have to testify under oath about the depth of his involvement in the entire stock option mess at Apple. That might finally clear his name of any suspicion but it could also create serious problems for the company if anything surfaces that's contrary to Apple's public statements about his involvement.

Tom Krazit writes for CNET News.com