Aug articles on stock option backdating
Such companies as Broadcom, Apple, Deloitte & Touche, and others got caught up in investigations.The reason CEOs and boards hid the activity was the second part of the controversy.The result was a 2,382 increase, according to Reuters.
But how does that relate to hiring prostitutes and drugging customers without their knowledge?
Stock options allow people to buy corporate shares at a pre-arranged price. Lots of times the accounting was not done properly.”hide the maneuver from investors and accountants, so the illegality wasn’t a simple technical oversight.
In backdating, a board would edit the original option grants, changing the date to one when the price was lower, letting a person pay less and instantly net more money. Although in theory legal, “the place where these companies got into trouble was in the accounting,” said Robin Ferracone, CEO of executive compensation consultancy Farient Advisors. Such companies as Broadcom, Apple, Deloitte & Touche, and others got caught up in investigations." data-reactid="22"For many companies that were caught up in the scandals, backdating was an attempt to hide the maneuver from investors and accountants, so the illegality wasn’t a simple technical oversight.
But during cross-examination, Ray said he initially told FBI agents that he didn’t think there was anything wrong with way the company timed its stock options.
Asked about the discrepancy by Karatz’s lawyer, Ray explained, “I lied.”During his closing argument, defense attorney Keker told the jury of nine men and three women that the prosecution’s case hinged on Ray’s testimony, which he said lacked credibility because of Ray’s admitted lies. He also argued that Karatz never intended to defraud shareholders and was acting with the knowledge of company accountants and lawyers when he set option grant dates.
A federal jury in Los Angeles convicted Karatz of two counts of mail fraud, making false statements in a regulatory filing and lying to the company’s accountants. The jury rejected the government’s claim that Karatz intentionally defrauded shareholders by backdating stock option grants from 1999 to 2005 to make them more valuable. Wright II said Karatz could remain free on $2-million bond, secured by his Bel-Air home, until sentencing. Companies can boost the value of these options by backdating them to dates when the stock price was lower than the actual grant date. A federal judge in Santa Ana dismissed charges against both men and against two other company executives, saying prosecutors and unfairly influenced witnesses, making it impossible for the defendants to receive a fair trial.