Brocade communications options backdating dating online service woman
The problem with this practice, according to the SEC, was that stock option backdating, while difficult to prove, could be considered a criminal act.
One of the larger backdating scandals occurred at Brocade Communications, a data storage company.
He could face decades in jail and millions of dollars in fines. He was also the first executive to go on trial on criminal charges stemming from a scandal involving more than 170 U. companies that are auditing past stock-option grants or are facing government investigations over backdating of options.
About 100 companies have announced restatements totaling more than billion to account for past stock-option grants. Securities and Exchange Commission also is pressing cases over backdating.
Corporations, however, have defended the practice of stock option backdating with their legal right to issue options that are already in the money as they see fit, as well as the frequent occurrence in which a lengthy approval process is required.
In 1972, a new revision (APB 25) in accounting rules resulted in the ability of any company to avoid having to report executive incomes as an expense to their shareholders if the income resulted from an issuance of “at the money” stock options.
Since the advent of stock option backdating, corporate policies have moved first toward a posture of encouraging backdating as a standard business practice, but then toward a posture of avoidance as public scandals emerged and investigations into fraudulent or dishonest business practices increased despite a commonly held belief that backdating was an acceptable and legal practice.
In the modern business world, the Sarbanes-Oxley Act has all but eliminated fraudulent options backdating by requiring companies to report all options issuances within 2 days of the date of issue.
As a result, numerous companies are conducting internal investigations to determine if, when, and how backdating occurred, and are filing amended earnings statements and tax forms to show the issuance of “in the money” options in place of the “at the money” options that were previously reported.It was forced to restate earnings by recognizing a stock-based expense increase of 3 million between 19, after allegedly manipulating its stock options grants for the benefit of its senior executives.It allegedly failed to inform investors, or account for the options expense(s) properly.In a showdown next week in a federal appeals court in San Francisco, former Brocade Communications CEO Gregory Reyes will present arguments that his 2007 convictions and 21-month prison sentence should be set aside, in large part because of what his high-powered legal team maintains was a government prosecution marked by “foul blows” and misconduct.Reyes is apparently sparing no expense to defend himself at Tuesday’s hearing; he’ll be represented by Seth Waxman, former U. Solicitor General during the Clinton administration. During the same hearing, Stephanie Jensen, Brocade’s former human resources chief, will also attempt to convince the 9th Circuit that her conviction and four-month prison term related to the same backdating scandal should be overturned.