Lizzie, I don't know SEC requirements but if backdating were legal, Apple and a slew of dozens of others wouldn't be fessing up to questionable options pricing dates. Frankly, I deem backdating illegal since as a shareholder
As far as whether backdating in and of itself is legal, the SEC has said it was legal many times. It is legal. There is no grey area on backdating. The issue that the SEC has is basically about going back and altering prior financials after you backdate for things like taxes. I don't think anybody in SV ever went back and refiled after backdating, that is the issue. But then the question is, is this fraudulent intent or not. Accountants signed off on everything.
Backdating itself isn't illegal, but it has to be disclosed and must be properly accounted for in the company's expenses.
forbes.com
This is realistic as an assessment:
Carl Tobias, a professor at the University of Richmond School of Law, said that defense has better odds before a jury than a judge.
"We have always said ignorance of the law is not an excuse," Tobias said.
Elizabeth Nowicki, a former Securities and Exchange Commission attorney who teaches securities regulation at Cornell Law School, suggested the pair might have a good defense.
"The courts are likely to conclude they didn't have intent to deceive, manipulate or defraud because everybody was doing this and everybody thought it was legal," she said. "Because everybody was doing it, judges might find it was reasonable for everybody to think it was fine."
sfgate.com
So far, one-fifth of Silicon Valley's 150 biggest companies face federal investigation, internal reviews, financial restatements or shareholder lawsuits.
1/5? And this is just a start? So in other words about HALF of US companies are being run by crooks. Is that believeable to anybody? Not to me. Every company that used stock options backdated that I am aware of. There was typically a "grace period" where boards were willing to backdate, iow nobody backdated 10 years to get some executive, but one year or maybe even 2 was common. I believe Lee Iacocca's pay package to turn around Chrysler had backdated options so this is not just tech.
As far as whether this practice is stealing from shareholders, well thats a decision everybody needs to make on their own. My feeling is this decade the stock market is so bad nobody wants options anymore, this is now last year's battle. There is a lot more focus on BODs to do whats in the shareholder's interest and IMHO that is the real problem, the exec compensation packages. I am certain that once the rules are laid out clearly for backdating, going forward this won't occur anymore and there is no reason for it because stocks are so low now anyway. |
