Brocade backdating stock options Free login for cam 4 ultimate
The Bottom Line Although more culprits in the options backdating scandal are likely to emerge, because standards such as Sarbanes-Oxley have been instituted, the assumption is that it will be more difficult for public companies and/or their executives to hide the details of equity compensation plans in the future.
In a stunning victory for government prosecutors, Gregory Reyes, the former hard-charging chief executive of Brocade Communications Systems, was found guilty Tuesday in the nation’s first criminal trial related to stock options back dating.
Another potential ticking time bomb, is that many of the companies that are caught bending the rules will probably be required to restate their historical financials to reflect the costs associated with previous options grants. In others, the costs may be in the tens or even hundreds of millions of dollars.
In a worst-case scenario, bad press and restatements may be the least of a company's worries.
In this litigious society, shareholders will almost certainly file a class-action lawsuit against the company for filing false earnings reports.
In the worst cases of options backdating abuse, the stock exchange on which the offending company's stock trades and/or regulatory bodies such as the Securities and Exchange Commission (SEC) or National Association of Securities Dealers can levy substantial fines against the company for perpetrating fraud.
Clearly, for those who own shares in companies that don't play by the rules, options backdating poses serious risks.
While not quantifiable in terms of dollars and cents, in some cases, the damage to the company's reputation could be irreparable.
This means that corporations will have less time to backdate their grants or pull any other behind-the-scenes trickery.
It also provides investors with timely access to (grant) pricing information.
On the surface - at least compared to some of the other shenanigans executives have been accused of in the past - the options backdating scandal seems relatively innocuous.
But ultimately, it can prove to be quite costly to shareholders.