Apple issued a stern warning yesterday to cult members that they may “permanently damage” their cell phone/iPod combos by using “unlocking programs” in an effort to get the Cadillac of mobiles to work on unauthorized, non-AT&T networks. Speaking in hushed tones the company was vague in describing the actual technical problems, only saying that fraternization with the evil programs (that might jeopardize their licensing agreement with AT&T) would render the phone “permanently inoperable” when users install future software updates. Any issues that arise from the installation of forbidden software are not covered in the warranty.

In a recent interview, Mock Turtleneck cackled at the idea of being threatened by such programs. "It's a cat-and-mouse game," the High Priest of A said. "We have a lot of really good cats."

Apple Sounds Warning on iPhones [WSJ]

Steve Jobs has been subpoenaed by the SEC to be deposed in a backdating case against Apple's former general counsel, Nancy Heinen. Though the news sent shares of the fruit down 1 percent, with a $140.31 close (-0.33%), investors should rest assured that while Heinen may fry, this doesn't mean jack for the company or Steve.* Why? Because, in SJ's words, "Fuck you, that's why, I'm Steve Jobs. Death to the right click. Buy an iPod. Or don't. I could really care less either way. It's your funeral."

Jobs subpoenaed over Apple stock scandal [The Guardian]

*Who backdating specialist Al Gore cleared of any wrongdoing earlier in the year.

Or spend on babes, or light on fire--JUST 'CAUSE HE CAN.

Breaking: Apple Offering $100 Store Credit For All iPhone Owners [Gizmodo]

So tomorrow Apple will hold a special event in San Francisco called "And the Beat Goes On," presumably to make some sort of an announcement about iPods that could raise shares to the sort of levels that would allow Mock Turtleneck to continue to enjoy the sartorial lifestyle he and his cervical spine have grown accustomed to, for many years to come. The most pervasive rumor-on which shares of AAPL have risen 18.8%-is a new line "with significantly greater functionality at current price points, including the much-anticipated full-screen video iPod," according to Goldman Sachs analyst David Bailey. And that would be good, considering that in the middle of last year, Apple's iPod sales dropped for the first time since the slightly more compact Disc Man debuted in 2002, a failure largely blamed on a dearth of new versions.

But what, exactly does Jobs possibly have up his sleeve? There's talk of the new 'Pods running on OS X; a Wi-Fi-enabled iPod that would allow for wireless music and video; and the introduction of the Beatles to iTunes. If you work for JP Morgan, you probably also think that a low-cost, Nano-sized iPhone is on the horizon. Then there are the fringe rumors that the new iPod will: feature no buttons, knobs or screens of any kind, instead employing newly-patented mind-reading technology for functionality; produce a force-field causing all Zune products within a 200-foot radius to immolate, rendering them as useful as they are in non-burned-to-a-crisp state; and come with videos personally damning to Microsoft founder Bill Gates, preloaded.

And, of course, the name of the invite-only conference seems to indicate that a reception will follow featuring group sex led by Sonny (surprise! SJ is a necrophiliac) and Cher, while the video for "The Beat Goes On" plays on an 80 GB iPod plugged into speakers nearby. Stay tuned.

Apple's 'Beat' To Go On Tomorrow (Be Here!) [CNBC]
Apple likely to introduce new iPod with large touch screen [Times Online]

Wouldn’t it suck if you paid $50,000 for a cell phone/iPod combo and then couldn’t activate it? Perhaps we should ask the 2% of iPhone purchases who suffered such a fate, which, according to estimates by Steve Jobs, translates to roughly 1 billion people.

Jay Gurfein bought his mobile Friday night at an Apple store in Nassau County (…). As of Sunday afternoon, he hadn’t been able to use the device. And just to make things interesting, when the Jay-man-LI initially tried to activate his service, AT&T immediately ended service on his existing BlackBerry, leaving him alone in the world for “more than 45 hours.”. By late Sunday night, AT&T, having had a spark lit under its ass by iGod himself, had gotten Gurfein’s phone on and given him a $150 credit for ruining his life.

In Louisiana, pretty much the same deal happened to Jaci Russo, except she also dropped two calls. In Murray Hill, one disgruntled user reported his iPhone’s failure to get him laid, even after whipping it out Joshua Tree and asking several female patrons if they’d like to touch it. Steve Jobs—sleep with one eye open.

Some iPhones Are Stuck on Hold [WSJ]

We keep thinking it would have been better if they had mentioned backdating. But maybe that's just us.

Things that had no effect on Apple's share price: Jobs's backdating, the iPhone-Engadget blooper, Portnoy fucking (an) Apple.

Also: Apple posts higher profit on strong MacBook sales [Reuters]

The force field that seems to have protected Steve Jobs from the harsh scrutiny that the press and regulators have applied to other executives allegedly involved in stock options backdating is being put to the test today. The Securities and Exchange Commission filed charges against two former Apple executives—former chief financial officer Fred Anderson and former general counsel Nancy Heinen. And one of them has reacted by pointing an accusatory finger at the man at the top of the Apple.

Each of the two formers have reacted very differently to the charges. Heinen has vowed to fight the backdating charges, joining the thin ranks of other corporate executives who have decided to fight the SEC rather than settle. Anderson is going the other way. The announcement of his settlement with the SEC was made right after the charges were filed. But Anderson didn’t just settle—he released a statement placing the blame for the backdating of stock options at Apple squarely on the shoulders of chief executive Steve Jobs.

The statement shreds one of Jobs strongest lines of defense—that he didn’t understand the accounting implications of changing the options grant dates. Anderson’s statement has Steve Jobs as the key actor at each of the critical points. It sounds as if the ‘Apple Rule’—the unwritten rule protecting high-profile, popular executives (but not unpopular executives or formers) that regulators, prosecutors and the press seem to follow on backdating—is about to take a pounding.

The stock is trading up on the news—perhaps under the impression that the Apple Rule will continue to protect Jobs—but the reactions from the press and online media have been swift and punishing.
ValleyWag predicts that Jobs may face charges, going so far as to announce that its editor has sold out his position.

“Disclosure. I just sold all my Apple stock, before writing this post. (The stock is soaring, but I can't believe traders have properly digested the news.) Steve Jobs, the company's hugely valuable chief executive, must now be squarely in the sights of securities regulators,” ValleyWag says.

Endgadget also smells blood in the waters of Cupertino, where Apple’s headquarters is located. “The tech exec superstar who's largely gotten off clean despite Apple's lingering backdated stock options scandal is now being publicly blamed for wrongdoings by former Apple CFO Fred Anderson,” Endgaget writes.

Perhaps the most surprising reaction comes from Business 2.0’s blog, which examines how Jobs and Anderson dealt with their backdated stock options and concludes that the difference proves that Anderson is financially much smarter than Jobs. Anderson reportedly made as much as $3.5 million on his backdated stock options—an amount he has now agreed to “disgorge” (read: fork-over) to the government—while Jobs exchanged his backdated stock options for restricted shares. Jobs trade means he missed out on a $3.6 billion gain.

Oddly enough, that financially unsound decision may be what keeps Jobs out of trouble on backdating. He can credibly claim that he did not profit from the backdated stock options since he never cashed them in. But prosecutors and regulators have already shown a willingness to bring charges in other cases where executives did not personally see profits from backdating, so this might not be enough to keep the Apple Rule intact.

SEC files charges against 2 former Apple officers over options [Associated Press in the International Herald Tribune]
Former Apple CFO settles with SEC [Reuters]
Former CFO blames Jobs for backdated options grant [San Jose Mercury News]
Ex-CFO says Jobs was warned of options dates [Market Watch]
Attorney for Fred Anderson Issues Statement Regarding Settlement of Claims with the SEC [Press Release via Business Wire]
Steve Jobs in regulators' sights [ValleyWag]
Former Apple CFO publicly blames Jobs for stock options scandal [Endgadget]
Why Fred Anderson Is Smarter Than Steve Jobs [Business 2.0]

Earlier on DealBreaker: Backdating and Apple stories from the DealBreaker Archives.

Yet another company has cleared Steve Jobs of any wrong-doing in the backdating of stock options that occurred while he was hanging around. Pixar, which is owned by Disney, issued a statement declaring that "no one now associated with Disney committed 'any intentional or deliberate acts of misconduct,'" according to the Wall Street Journal. Since Jobs is now a director at Disney, this is pretty much meant to clear his name.

Roger Parloff at Fortune finds this a bit implausible.

The story line at both Apple and Pixar appears to be that Jobs, the notorious micromanager who headed both companies at the time of the backdating, did not understand the legal or accounting ramifications of backdating. Interestingly enough, virtually Jobs's only compensation at either company during this period was coming from the Apple options whose workings he so poorly understood. (During the relevant years, his salary at Apple was famously just $1 per year, while at Pixar it was about $55 per year.)

The thing that puzzles me most is this: If you don't understand the accounting ramifications of backdating, why do it? Why not just issue the options dated as of the actual date you're issuing them, and simply choose whatever strike price you think is appropriate -- even though it may not correspond to the current stock price?

Meanwhile, over at Ideoblog, Larry Ribstein wonders how Jobs' case is different from executives who have been indicted for their role in backdating stock options grants. One possibility:

Of course, if Jobs were charged, and Apple crushed, lots of people might start asking whether this whole corporate crime thing has gone too far.

Disney clears (wink-wink) Steve Jobs of options backdating misconduct at Pixar [Fortune]

Disney and the Apple rule [Ideoblog]

The former general counsel of McAffee yesterday became the eleventh person charged with criminal offenses related to stock-options backdating. The feds have said they are examining some 140 companies for backdating but its not hard to see why McAffee's former general counsel ended up high on its lists for criminal indictments.

First, McAffee was an early and somewhat easy target for the feds because the company has had to restated its financial results five times in the past five years. The company faced securities fraud charges in connection with an alleged scheme to overstate revenue from 1998 to 2000. It settled with the authorities by agreeing to pay a $50 million civil penalty, but neither admitted nor denied any wrong-doing. It's former controller, however, pleaded guilty to one count of securities fraud.

Kent Roberts, the indicted former general counsel, allegedly manipulated his own stock options grant date, as well as that of his chief executive. He then allegedly turned around and fired the controller for manipulating stock options grant dates. Nasty. His indictment has been expected for at least two weeks now.

Roberts seemed to have tripped the self-dealing alert that we've seen in other backdating indictments, and engaged in some corporate backstabbing that makes him hardly a sympathetic character. Here are the details on the indictment from the Wall Street Journal:

According to a seven-count indictment returned by a federal grand jury in San Francisco, Mr. Roberts in late 2000 became dismayed that an option grant made to him earlier that year was "underwater" -- that is, its exercise price of $29.62 was higher than the stock's price at the time. An option can only be cashed out for profit if the exercise price is below the open-market price of the stock.

According to the indictment, Mr. Roberts directed the company's then-controller, Terry W. Davis, to change the grant's record so it appeared to have been granted April 14, 2000, a day the stock fell to $19.75. That immediately made his grant more valuable, though he never later cashed out any of the options for a profit.

Mr. Roberts got Mr. Davis pushed out of his job, the indictment says. In 2002, Mr. Roberts headed an internal probe of irregularities at McAfee, which was then known as Network Associates Inc. Upon learning that Mr. Davis, who wasn't identified by name in the indictment, had among other things lowered the exercise price on some other options, Mr. Roberts recommended that he be removed from his finance-department position, the indictment said. It added that Mr. Roberts didn't tell internal auditors or the SEC that Mr. Davis had manipulated Mr. Roberts's own grant.

It's notable that the prosecutors seem to have concluded that the self-dealing trigger was pulled when Robert's manipulated his own grant even though he never cashed out the backdated options. This is important because the "no gain from backdating" has become a major line of defense for some corporate executives, including Apple chief Steve Jobs. So the question remains: will the feds indict Jobs or will the "Apple Rule" continue to protect him? (More on the "Apple Rule" from the man who coined the term here)

McAfee's Ex-Counsel Is Charged With Options Fraud [$$] [Wall Street Journal]
McAfee Ex-GC Indictment [pdf file via WSJ Law Blog]

Today those sadomasochists over at thestreet.com take a look at a something so perverse, so unspeakable, that we don’t even want to say it but have to because only a few of you DB readers—Holman Jenkins—have the ability to read our minds: a world in which Steve Jobs is not the CEO of Apple. Sends shivers down your spine, doesn’t it? While most people on the Street (Wall and dot com) believe that Mock Turtle neck won’t be going anywhere any time soon because of the rock-solid (and uncomfortably existential) argument that “Steve Jobs is Steve Jobs,” in spite of a few run ins of his own with Carney’s FAVORITE THING TO TALK ABOUT EVER!!!, “snowballing prosecutions for corporate backdating prompt the [sick and twisted] question of how the company would fare if Jobs were no longer in charge.” Here’s what they came up with:

1. If Jobs were to be charged with securities fraud…the stock would take a 25% hit. Apple shares closed Thursday trading at $89.51, gaining 31 cents. The stock has remained somewhat range-bound in the past three months.

2. Investors would have an initial emotional reaction if Jobs were to leave, but "stocks ultimately move around their fundamental value," he says. "If Jobs leaves, it's not necessary that Apple falls apart. The perception might be that."

3. COO Tim Cook would play a more vital role in the company.

Here are a few other things we think might happen if Apple lost Jobs:

And speaking of Steve Jobs…wait for it…backdating is back! As we mentioned this morning in the Opening Bell, the Wall Street Journal reported this morning that back in his Pixar days Steve Jobs had a role in negotiating a contract with film director John Lasseter that included stock options dated months before the contract negotiations even began. The news here is not the backdated stock options grant—those were acknowledged by Pixar-owner Disney months ago—but Steve Jobs role in the contracts. First Apple, now Pixar. This guy is starting too look like more than just a "typical backdating miscreant." He's practically the Typhoid Mary of backdating.

And look at how both Apple and Disney are trying to manage today's news. Apple refers all inquiries to Disney on the grounds that Disney now owns Pixar. Disney refers all inquiries to Apple on the grounds that that's where Jobs works these days. This kind of circular buck-passing can't go on forever. Soon someone will have to announce that it's all okay because Steve Jobs might have known about the options grants and the backdating but he didn't know about the legal or accounting implications and so that makes it all okay. And that's an idea that sounds pretty reasonable but vanishes in the presence of thought.

Did Jobs think that all this backdating going on around him was just because those dates were the birthdays of the accountants or something? What did he think was going on when the agreements he was negotiating for himself and Lasseter kept including options grant dates fixed at some point in the past?

We have no idea but we can take a guess. The advantage of fixing the date and therefore the price of the stock options was not that it let Jobs and other executives secretly steal money from the company or its investors. It's that it let them negotiate other things, like price points, without worrying about getting screwed by day-to-day movements in the stock-prices.

Let's go through this one more time. If we agree you should get $10 million in options today, and write that down at today's numbers of 10,000 shares, but the price jumps 10% by the time we finalize the agreement, you either better be on the ball and make sure you are getting 11,000 shares or you'll end up with less value than you negotiated for. If you're a busy executive, or say a film-director, you probably are doing more important things than watching the day to day fluctuations of the stock price. So odds are you are going to get screwed.

But if we fix the options grant at a certain date in the past, everyone knows exactly how many options equals how many dollars. We can all move on to thinking about more important things. As it happens, many companies were under the impression that accounting rules allowed them to account for these as "at the money" if they pegged these to earlier dates with historically low share prices, even though they were in fact granted on dates when they were "in the money." This turns out to have been wrong but it depends on an obscure, poorly understood and widely misunderstood, somewhat arbitrary accounting rule.

So here's what the Apple-Pixar-Disney people should really say: This isn't a bid deal. Not because Jobs was too ignorant to understand it, but because it just isn't a big deal. We'll fix the financial statements. But nothing criminal or fraudulent happened here. Time to move on. Have we mentioned we're coming out with the iPhone?

Larry Ribstein wonders if this latest revelation will test the strength of the "Apple Rule"—which holds that scandalous misdeeds by popular CEOs are neither scandalous nor misdeeds. He concludes with the most pertinent question:

Now we have both Jobs and Lasseter, and possibly Michael Dell. So are we going to lock up America's most popular entrepreneurs, make untenable distinctions in who gets prosecuted, or finally understand that the criminal justice system is a wildly inappropriate way to deal with agency costs like those involved in backdating?

Pixar Pay Package to Lasseter Included Well-Timed Options [Wall Street Journal]

The Apple rule gets a workout[Ideoblog]

Roger Ehrenberg has an exhaustive (and exhausting to read, because we don’t function before 8 am, though job constraints dictate otherwise) analysis on the debut of the Vista and, moreover, the Bill Gates-Steve Jobs celebrity death match ’07. Seems, in spite of questionable business ethics, Mock Turtleneck is beating Four-Eyes by a landslide. Why? Because Steve Jobs is young, fun, and marketable to law abiding and non-abiding citizens alike. Whereas Bill is behind the times, transparently resentful, and cranky (RE likens him to Glenn Close in Fatal Attraction, which we kind of get but don’t think is the part Bill’s playing so much as Jennifer Jason Leigh’s a la SWF). Take, for instance, last week’s interview with NewsWeek:

Tonight at midnight, Microsoft will roll out the hotly anticipated version of its old-timey Windows operating system, the majestically-named Vista, which will make the PC “the place where it all comes together for multimedia applications such as photos, music and videos.” The Big V—which Microsoft poured $6 billion in to develop—is the first update of Windows since 2001, when XP was released. To coincide with big day (night, whatever), Gates and wife Melinda will jump out of an airplane naked. Joking about that last part but thanks for the indulgence. Anywho, what’s actually going to happen approximately 7 hours prior to the release will be Gates’s appearance on The Daily Show (or, 1 hour prior, wink, wink, if we’re going to play that game wherein we pretend we don’t know how previously taped shows work). Usually this would be the time for us to wax poetic on our love for the vertically challenged but oh so irresistible and Jewish-parent friendly host of the show, but tonight is not about Jon Stewart. No, tonight represents So. Much. More. We’re pretty sure you get what we’re hinting at, but for the people in the cheap seats, we’ll spell it out: tonight, PC (Gates) will come face to face with…PC. (Meaning TDS resident expert and “PC,” John Hodgman). Obviously this is HUGE, the consequences of which could be disastrous. But we’re thinking less along the lines of the destruction of the galaxy and more like—is this (the rolling out of Vista/the MONUMENTAL meeting of PC and PC) just a big diversion that Gates created to cover up his own (backdating?) scandal, a la Mr. Jobs’s “quick, everyone look at this awesome cell phone that let’s you watch The Office whenever you want and don’t pay attention to my tinkering of stock options, etc, etc”? We’ll soon find out.

On a less cataclysmic note, in an interview for CNN’s American Morning , Gates was visibly ticked off at the suggestion that the Vista has similarities to OS X, as demonstrated in his repetition of the word “No”: “No, no, no. There are whole areas where we've innovated," Gates said during the interview. Also, and this is not meant to get Billy-boy any more riled up than he already is, but there are some experts out there—obviously morons who have no idea what they’re talking about—that say consumers needn’t upgrade from XP if they’re not buying a new computer in the next several years. Shooting of the messenger not necessary.

Bill Gates touts Vista [CNN Money]
TDS schedule of guests [Comedy Central]

The Steve Jobs/backdating thing held our interest for a while but ultimately tapered off because of the all talk, no action nature of the whole situation. Yes, we get that it’s hard to take (literal) shots at the man who brought us the singular sensation that is the PC half of the “I’m A MAC, I’m a PC” commercials but come on—don’t get us all excited with your verbal assaults for nothing. So we were pretty happy to read that The New York City Employees’ Retirement System will be the lead plaintiff in a shareholder suit against Apple, brought to you by the fund’s law firm, Grant & Eisenhofer. The NYC fund was selected by Judge Jeremy Fogel, of the U.S. District Court for the Northern District of California, late last Friday. The fund owns about 1 million shares of Apple (approximately $87 million).

New York pension fund takes lead in Apple lawsuit [Reuters via ZDNet via Daily Intel]

There’s admittedly been a lot of backdating talk around these parts of late (and mostly of the will they/won’t they Steve Jobs sort). Backdating this. Backdating that. Carney, Larry Ribstein, and Holman Jenkins (of the eponymous “Backdating Dissident Crew”) think Jobs has done nothing wrong. Everyone besides Carney, Ribstein, and Jenkins wants Jobs to fry. Jobs considers any attempt to take him down (and, perhaps more importantly, John Hodgman) an act of war. And so on and so forth. We were going to issue a fatwa on writing anything else about the aforementioned but that went to hell when we realized this damn thing just won’t die. But just so you know, we do feel bad about forcing you to ride what we regard as a dead horse with us. Anyway, today Fortune’s Roger Parloff writes about former Apple chief financial officer Fred D. Anderson and former general counsel and corporate secretary Nancy R. Heinen, (who was also Jobs' general counsel at Next). Mere clogs in the machine right? Wrong, apparently. Anderson and Heinen are the two former officers that the results of Apple’s own internal investigation flagged as having “serious concerns regarding [their] actions.” More importantly, they may be evidence of Jobs’s wrongdoing.

Though most investors dearly hope the company's conclusion [of “no misconduct by current management”] holds up, many can't quite suspend disbelief. "The idea that Nancy or Fred would've acted independently of the biggest control freak in the entire tech industry is laugh-out-loud funny," says one big Silicon Valley player.

Lawyers for Heinen and Anderson have issued statements "vigorously denying” any illegal behavior, and Mark Pomerantz has been hired by Jobs, though neither he nor Apple would confirm this. This “they couldn’t have acted without Jobs" theory may actually be kind of a tough one for the big guy to sort out, in regards to which story he should go with. Either Jobs acted with Heinen and Anderson, and, therefore, did something kind of illegalish, or they did it all by themselves, WITHOUT The Most Powerful And Influential Man On Earth (because of him you can watch “The Office” on your phone for god’s sake!), and he’s actually just a big puss.

Apple's Jobs could face uphill court battle [Fortune]

The early reactions to news that federal authorities are probing the backdated stock option grants to Apple CEO Steve Jobs are coming in. Not surprisingly, the best reactions are coming from the Backdating Dissident Crew (which now includes Jobs himself).

Larry Ribstein at Ideoblog makes the point that no-one negotiating their salary really gives a damn about when a stock option was priced. They care about what you'd care about: that you know the value of the grant and that no-one is going to game the grant by handing the options to you on a high-water stock price date. If you agree on the date of the past, you can understand exactly what the grant is worth. What Steve Jobs cared about was how much it was worth to him. This is an important point that bears repeating: it’s the level of compensation that an employee or an executive cares about. As in, “Show me the money!”

In the typical backdating situation (and there may be some cases of more serious abuse—the things that allegedly went on at Comverse seem far fishier than the typical backdating case), fiddling around with the grant date was not a way for employees or executives underhandedly inflate their compensation. It was an attempt by company to compensate its employees while avoiding having to expense the grant as an “in the money” option. This violated accounting rules (rules by the way that many people seem not to have understood very well) but, well, let’s let Larry ask the appropriate question:

My question: is this really the stuff of a criminal investigation? Which bad result are the screeching journalists and executive compensation moralists going to make us live with: trashing the career of one of the country's most successful business executives? Letting him walk and ruining the life of a young lawyer who found herself in the middle? Or letting Apple off the hook because it's successful and the journalists all have iPods, but sending backdaters at lesser companies to jail?

And over at Houston’s Clear Thinkers, Tom Kirkendall draws a comparison between the abusive, malicious and absolutely evil prosecution of the Duke lacrosse team with the mob mentality that seems to have arisen in the immediate wake of the first backdating revelations:

In the Duke lacrosse team case, it is particularly ironic that many in the media and on Duke's faculty were enablers of abusive, dishonest law enforcement and prosecution tactics that are far more often used in cases against minorities that those enablers would decry. They now share responsibility for the continued use of such tactics long after the spotlight on the Duke lacrosse team case has moved on to the next fixation of the mob.

A report on the Apple investigation [Ideoblog]
Rabinowitz on the mob in the Duke lacrosse team case [Houston's Clear Thinkers]

The Wall Street Journal this morning reports that the feds are investigating Apple's backdated stock options grants to Steve Jobs. The way the story reads, however, makes it sound as if the investigators are reading from the script that Al Gore and Steve Jobs wrote: no wrong doing by current management--all the backdating miscreants are formers. You know, former attorneys for Apple. Former financial offers. Formers.

But can Jobs really escape further scrutiny? Apple itself has admitted that Jobs personally recommended favorable dates for some stock options grants, although not the grants that he received. Have the feds adopted the Apple standard of guilt? If so, this will be news to us. In the past, the feds have indicated that direct self-dealing was not sole the test for criminality of backdating, and that the benefit to executives from employee retention through backdated grants crossed the line. We're not saying we want the feds to go after Jobs but we're sure there are quite a few executives out there who are scratching their heads over what appears to be the Jobs Immunity Defense to backdating.

Investigators are now focusing on the grant to Mr. Jobs for 7.5 million options that were finalized in December 2001, when Apple's share price was higher. The false dating increased the value of the grant to Mr. Jobs, and resulted in a retroactive $20 million charge to Apple's earnings when it was discovered by a special internal investigation.

People familiar with the matter say the false documentation was created by an Apple attorney named Wendy Howell, whom the company quietly dismissed last month. Ms. Howell contends that Apple's general counsel at the time, Nancy Heinen, instructed her to create the false documentation, these people say. Thomas Carlucci, Ms. Howell's attorney, said that while at Apple "Ms. Howell acted as instructed by Apple management and with the company's best interest being paramount."

Ms. Heinen left Apple in May for reasons that were unrelated to backdated options, a person familiar with the matter says. Her attorney, Cristina C. Arguedas, says Ms. Heinen didn't knowingly engage in any wrongdoing and denies she instructed Ms. Howell to falsify documentation. Ms. Arguedas said in a statement that "each of the option grants involving Ms. Heinen was authorized and approved by her superiors."

Here's CNBC's sit down with Apple CEO Steve Jobs. There's lots of talk about the iPhone, of course. But in the final minutes (at around the 5:15 mark in this clip), they ask him about backdating. Jobs actually seems to agree with DealBreaker, Larry Ribstein, Holman Jenkins and the rest of the Backdating Dissident Crew that the press coverage of backdating has been way off base. And, for you all you nervous Apple investors, Jobs tells CNBC "I don't think it will affect current management."