Aug 2016 articles backdating stock options playing it cool dating boring
To quote the legendary chanteuse, Alanis Morrisette: “Isn’t it ironic?” We’d gone many many months without giving a whit of thought to stock-options backdating, and lo and behold, today we get a veritable flood of news. Greg Reyes (pictured), the former CEO of Brocade who was convicted in 2007 on charges related to stock-options backdating got a huge dose of good news today: His conviction was tossed aside by the Ninth Circuit, which ordered a new trial.Click here for the opinion; here and here for early reports from Bloomberg and the San Jose Mercury-News, respectively.The reason behind the ruling: prosecutorial misconduct. He had long been fighting extradition to the United States, where he was indicted on 35 charges that included securities fraud, money laundering and obstruction.
Stock options are the right, but not the obligation, to purchase stock at a specific price no matter the current price.
Concealing the practice through improper accounting is illegal, and can inflate earnings.
In court, Alexander admitted he and other executives from 1998 to 2001 used "hindsight" to select the effective dates for granting options for employees, resulting in misleading statements to investors.
Professor Lie concluded that the robust profitability of so many options was statistically impossible absent some artificial influence such as backdating.
Subsequently, the Securities and Exchange Commission (SEC) took an interest, followed by the securities plaintiffs’ bar and many corporations. The practice of options backdating, apparently widespread from 1996 through 2002, is widely believed to have been short-circuited by the enactment of Sarbanes-Oxley in 2002.