Stock option backdating cases

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In order to lock in a profit on day one of an options grant, some executives simply backdate (set the date to an earlier time than the actual grant date) the exercise price of the options to a date when the stock was trading at a lower level. In this article, we'll explore what options backdating is and what it means for companies and their investors. Most businesses or executives avoid options backdating; executives who receive stock options as part of their compensation, are given an exercise price that is equivalent to the closing stock price on the date the options grant is issued.

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It presents a question about the propriety of these cases.

Our system of justice only functions properly when the government honors and fully implements both of those obligations.

Before any more stock option backdating cases are litigated, it is incumbent on the Justice Department and the SEC to revisit their cases, reassess the merits of each and ensure that prosecutors are fully meeting their duel obligations.

A series of these red flags have emerged in the stock option backdating cases. Jurors deadlocked some which the trial judge strongly recommended be dropped. Indeed, the fact that DOJ lost this case should, at a minimum, raise questions, since the government typically prevails in criminal cases. When prosecutors distort the evidence to win, it raises a serious red flag, not just about the misconduct, but also the quality of the evidence.

Faced with these red flags, Attorney General Eric Holder and SEC Chairman Mary Schapiro should immediately review the merits and propriety of these prosecutions. Roberts, claiming he engaged in criminal conduct when the company backdated its stock options. Those concerns should be intensified by the fact that the jury deadlocked on a few charges requiring the judge intervene to avoid a possible miscarriage of justice since the facts clearly were not there to support the charges. If the evidence is solid, there is no need for such conduct.

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