News More corporate shennanigans - backdating stock options

[Astronuc]

Backdating charges filed
http://marketplace.publicradio.org/shows/2006/07/21/AM200607216.html

The Department of Justice and the Securities and Exchange Commission have brought the first criminal charges in the expanding stock options backdating probe. John Dimsdale reports.

CHERYL GLASER: Here at home, US regulators have started their crackdown on companies accused of backdating stock options. Two former executives with Brocade Communications were charged yesterday, as John Dimsdale reports

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JOHN DIMSDALE: Gregory Reyes is the first former chief executive brought up on criminal charges of fraudulent dating of stock options. But he's unlikely to be the last.

Federal investigators say they're looking at some 80 companies accused of changing the dates on stock option offers to benefit employees.

Research by Indiana University professor Randall Herron found more than two thousand companies manipulated option dates going back to 1995.

Anyone who might have taken options, or if one has received backdate options from one's company, one may wish to follow this story.

Whether or not 'backdating' is legal or not is still to be resolved. The coverup or failure to disclose the backdating is illegal.

Companies who have backdated shares or individuals who have received income from such shares may be required to return the money.

This may belong with the Enron thread. It is a similar topic concerning government regulation and oversight of businesses.

 

[pcorbett]

Whether or not 'backdating' is legal or not is still to be resolved. The coverup or failure to disclose the backdating is illegal.

Backdating options is entirely legal. Coverup isn't a legal term. Sarbanes-Oxley places certain disclosure requirements pertaining to options, but the case here concerns disclosed criteria for selecting the strike price and actual selection. Put it simply, this is an alleged case of someone who, in a legal document concerning a securities transaction, falsely claimed they were going to do this and that and receive this and that at such and such time. Aka, good ole'fashioned fraud.