Sec investigation stock options backdating companies

Your browser will take you to a Web page (URL) associated with that DOI name. Employee benefit plan authorized by Internal Revenue Code section 401(k), whereby an employer establishes an account for each participating employee and each participant elects to deposit a portion of his or her salary into the account. This is the most common type of salary reduction plans. As a consequence, the option is immediately profitable, or “in the money,” to the option holder.

The backdating problem was first highlighted by Professor Erik Lie of the University of Iowa, who published his initial study in 2004.All or portion of an ACCOUNT, loan, or note receivable considered to be uncollectible.You sit down at your computer with a fresh cocktail napkin or sticky note that has a single ticker scribbled across it - it's a ticker you've never researched before, but something (or someone) has piqued your interest.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.For example, large cap and mega cap companies tend to have more stable revenue streams and less volatility.


Leave a Reply