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Strategies & Market Trends : Option Granting Practices and exploits -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (21)	8/9/2006 1:24:51 PM
From: Glenn Petersen	Read Replies (2) \| Respond to of 165

Run Kobi, run. Add Cablevision and Pixar to the list. Comverse Execs Charged Options backdating probe brings tech company to court, and former CEO may be on the lam. August 9, 2006 Comverse Technology executives headed to court Wednesday to face charges over allegations of stock options backdating, with two former executives surrendering to U.S. Federal Bureau of Investigation agents in New York, and the whereabouts of the company’s former chief executive still a mystery. Former CFO David Kreinberg and former senior general counsel William Sorin faced the music, surrendering to authorities. They are expected to be arraigned in Brooklyn, and the U.S. Department of Justice has scheduled a press conference to talk about the charges in Washington, D.C. U.S. prosecutors in New York and the FBI charged them with criminal securities fraud and with backdating options. The former executives, according to the charges, “knowingly and willfully conspire[d] to use and employ manipulative and deceptive devices and contrivances.” The complaint said they “employed devices, schemes, and artifices to defraud.” The charges listed a number of instances in which the executives made untrue statements and omitted to state material facts, engaging in “acts, practices, and a course of business which would and did operate as a fraud and deceit upon members of the investing public.” But former CEO Jacob (“Kobi”) Alexander has not yet been seen and speculation has arisen that he may have fled to another country, perhaps Israel, where Comverse was founded. An arrest warrant has been issued for him. Comverse is the second company to face charges over stock option grants. Last month, three former executives of Brocade Communications Systems, including former CEO Gregory Reyes, faced charges (see U.S. Opens Fire in Options Probe). Fighting Delisting but Making Money The three Comverse executives who were charged Wednesday resigned back in early May (see Comverse Top Execs Resign). The Wakefield, Massachusetts-based company, which specializes in developing software for phone bills, has also been fighting against having its stock delisted. The company received a delisting notice in April from the Nasdaq for delaying the filing of its 10-K annual report (see Comverse Faces Delisting). Despite the bad news, shares of Comverse rose $0.15 to $19.67 in recent trading. “We continue to fully cooperate with the SEC and the DOJ,” said Paul Baker, vice president of corporate marketing at Comverse. He added that the company had no plans to change its business strategy, despite the recent changes in management at the top. “We’re a very successful growth company,” said Mr. Baker. “We achieved record revenues in the first quarter.” Meanwhile, Comverse has requested an extension from the Nasdaq to file its financial reports. Cablevision and Pixar in Trouble Comverse wasn’t the only company facing allegations of backdating stock options this week. On Tuesday, Cablevision Systems, the third-biggest cable TV company in the United States, said it would need to restate its past financial results due to some of its past option grants. The Bethpage, New York-based company said that the date and exercise price of a number of its grants from 1997 to 2002 did not correspond to the actual grant dates and closing prices of the company’s stock that day. Cablevision expects to restate its previously issued annual and quarterly financial statements to record the adjustments, but the company does not yet know the full extent of the restatements. The company also said it would not be able to file its quarterly 10-Q report for the quarter ending June 30. It has already contacted the U.S. Securities and Exchange Commission and the U.S. Attorney’s Office for the Eastern District of New York about the matter. Pixar Animation Studios also got into hot water as a result of options Monday. The Emeryville, California-based company founded by Apple CEO Steve Jobs and now owned by the Walt Disney Company made four stock option grants since 1997 on dates that matched the lowest stock price (see Disney Snags Pixar for $7.4B). While Mr. Jobs did not receive any of these grants, some of them went to John Lasseter, a former Pixar executive vice president who is now chief creative officer for animation at Disney, and Pixar President Ed Catmull, who is now president of the combined Disney and Pixar animation studios. Cablevision shares fell $0.45 to $22.05 in recent trading, while Disney shares rose $0.79 to $29.77 on news that the mouse house’s third-quarter profit had climbed. Contact the writer: MCohn@RedHerring.com redherring.com

To: RockyBalboa who wrote (21)	10/4/2006 8:00:48 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 165

Jobs knew. Jobs apologizes. The CFO falls on his sword...again. Apple CEO Jobs: 'I apologize' Mac maker finds options grants irregularities and Steve Jobs knew. October 4, 2006 Apple Computer said Wednesday that it has found irregularities in its stock options grants resulting from an internal probe that also discovered company CEO Steve Jobs knew of the activities. Also, former Apple CFO Fred Anderson resigned from the board of directors. The computer maker found irregularities in a grant from January 2002. The company also said that stock option grants made on 15 dates between 1997 and 2002 appeared to have grant dates that predated the approval of those grants. The grants concern the issue of backdated stock options. Backdating stock options is not illegal as long as they are properly accounted for and disclosed. Apple CEO Steve Jobs knew of the favorable grants, did not benefit, nor was he aware of the accounting implications, Apple said in a statement. "I apologize to Apple's shareholders and employees for these problems, which happened on my watch. They are completely out of character for Apple," Apple CEO Steve Jobs said. "We will now work to resolve the remaining issues as quickly as possible and to put the proper remedial measures in place to ensure that this never happens again." Apple's special committee’s investigation, however, cited serious concerns over the actions of two former officers in connection with accounting, recording, and reporting of stock option grants. Apple's committee said the probe found no misconduct by members of the company's current management team. “The company will provide all details regarding their actions to the SEC,” Apple reported on the committee findings. Former CFO Resigns The Mac maker also announced former Apple CFO Fred Anderson has resigned from the board of directors. Mr. Anderson, who was chief financial officer from 1996 to 2004, told the company that he believes it is in Apple's best interests, according to the computer maker. Apple said that it will likely need to restate financial reports to record noncash charges for compensation expenses related to past stock option grants. The Cupertino, California, company's special committee of its board of directors reported the findings after a three-month internal probe into its options-granting practices that began in June (see Apple Has an Option Problem). Apple shares were down $0.58 at $74.80 in after-hours trading. redherring.com;