The Wall Street Journal reports that the Justice Department has ended its criminal investigation into whether Apple executives broke the law when they backdated some options without proper accounting and disclosure. Neither Apple nor the Justice Department has made a statement confirming that the investigation is over, but lawyers representing some of those under a cloud told the Journal that they were informed the probe is finished. A civil action by the SEC and private lawsuits are still underway, however.

The SEC looked into Apple's revelation that they had issued stock options to a variety of employees, including Steve Jobs and other executives, that tied the options to a date prior to that on which the options were granted, so called backdating. Stock options are the right, but not the obligation, to purchase stock at a specific price no matter the current price.

By backdating options, a company can assure a windfall to the recipients. Companies may backdate options in many circumstances, but must account for them as a higher expense than merely granting current-dated options, as there's a negative effect on the equity of a firm's shareholders. An academic researcher and The Wall Street Journal blew the lid off this widespread and long-running practice; executives at other firms were indicted, sued by shareholders, fired, or all three. (For more background on backdating, see "Apple Reports on Options Backdating Problems," 2006-10-06.)

The investigation has lasted nearly two years. A parallel SEC examination led to civil charges filed against two former Apple executives. Former chief financial officer Fred Anderson, who did not admit to wrongdoing or any of the charges, settled them almost immediately, giving up $3.7 million in gains, interest, and penalties (see "Former Apple Employees Charged in Stock Option Backdating," 2007-04-30). Anderson, who had left his job as CFO at Apple on good terms in 2004, resigned from Apple's board the day it released its first report on backdating in October 2006.

Nancy Heinen, Apple's former general counsel, was also charged and still faces civil action by the SEC, according to her lawyer as quoted in the Journal. The charges against Anderson and Heinen centered on options granted to Steve Jobs, which were canceled before they were exercised, and replaced with 10 million properly restricted stock grants that were properly accounted for. (Jobs sold about $300 million of those shares when the restrictions ended in 2006 to pay the tax due. He still holds 5.5 million shares worth nearly $1 billion.)

Apple released its own report on the matter back in January 2007 from an internal committee headed by former Vice President Al Gore, a board member (see "Apple Releases Stock Option Backdating Report," 2007-01-08). That report will likely stand as the public accounting unless Heinen's case goes to trial and additional facts are revealed.

The apparent end of this Justice Department probe also means an end to the speculation that Jobs would face a trial or be forced to resign as part of a settlement. While in recent months this issue seemed to be in abeyance, this probably relaxes the stock market and analysts who speculated on an abrupt change in who would be running Apple.

The backdating kerfuffle in part led to Daniel Lyons's blog, The Secret Diary of Steve Jobs, written by Lyons's nom-de-blog Fake Steve Jobs. Lyons wrote a book called oPtion$ that fictionalized and satirized the minor scandal (see "My Real Breakfast with Fake Steve Jobs," 2007-10-24).

Lyons recently announced on his Fake Steve blog that he was discontinuing writing in a faux Jobs style. Lyons was recently hired away from his current employer, Forbes, to take over Steven Levy's technology beat at Newsweek. (Levy had previously left Newsweek for Wired.)

The timing was suspicious - how did Lyons know that his story arc was at an end? Perhaps...an investigation will be launched.