Brocade backdating stock options Sex chat in jackson ms
SAN FRANCISCO (Reuters) - Prospects for criminal prosecutions of scores of options-backdating cases rest heavily on the outcome of a jury trial in which the judge has already questioned the strength of the government’s evidence.
The case against former Brocade Communications Systems Inc BRCD.
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.
In essence, the revision enabled companies to increase executive compensation without informing their shareholders if the compensation was in the form of stock options contracts that would only become valuable if the underlying stock price were to increase at a later time.
For example, former Monster Worldwide Inc () general counsel Myron Olesnyckyj pleaded guilty in February to criminal options-related fraud charges and admitted in court that he gained 1,000 from backdating schemes. PK former CEO, Jacob “Kobi” Alexander, is in Namibia fighting extradition to the United States to face charges that he and others backdated millions of stock options for themselves and other employees when the shares were trading at lows. “What evidence is there that he actually understood the accounting implications of the backdating of the stock? “It is an area that is relatively new in terms of the charges out there,” conceded Michael Garcia, the U. Attorney for the Southern District of New York, in a July 25 Reuters interview.
He added, however: “I am fairly confident that we are going to see more options charges.” Complicating criminal backdating prosecutions of Silicon Valley companies are recent personnel changes in the San Francisco U. Attorney’s office, which took a leading role in such cases early on.
Additionally, companies can use backdating to produce greater executive incomes without having to report higher expenses to their shareholders, which can lower company earnings and/or cause the company to fall short of earnings predictions and public expectations.
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.
“It’s a pretty strong case for the defense, but if there’s a conviction, the Justice Department will be emboldened to bring these coin-toss cases” where the outcome is uncertain, he said. Experts said it may be difficult to convict Reyes because both sides agree he did not profit personally from the backdating, in which option grants were retroactively priced on days when Brocade’s stock was low, maximizing gains for employees.
This is a way of repricing options to make them valuable or more valuable when the option "strike price" (the fixed price at which the owner of the option can purchase stock) is fixed to the stock price at the date the option was granted.
Cases of backdating employee stock options have drawn public and media attention.
Numerous financial analysts replicated and expanded upon the prior academic research, developing lists of companies whose stock price performance immediately after options grants to senior management (the purported dates of which can be ascertained by inspecting a company's Form 4 filings, generally available online at the SEC's website) was suspicious.
For instance, public companies generally grant stock options in accordance with a formal stock option plan approved by shareholders at an annual meeting.