Disclaimer backdating options
However, some companies choose to backdate options, which means that the reported date of a grant will differ from the date on which the option was actually awarded.While backdating stock options is not technically against the law, it can lead to other actions that are considered fraudulent.Certainly auditors are rarely mentioned even when someone actually does.Of all the parties who could have been seriously singed in the options back dating law enforcement conflagration ignited by Iowa academic Erik Lie, auditors were left pretty much unscathed.Judge Jeremy Fogel dismissed the case against Pw C contending that the plaintiffs had not provided proof supporting a “strong inference of knowledge or recklessness” on Pw C’s part.From Law360: The complaint also targeted Mercury’s auditor, Pricewaterhouse Coopers, claiming it knew or should have known about Mercury’s alleged backdated options.
As a result, I knew that what he said was 100% what he believed and had nothing to do with anything else. (Bloomberg’s Mark Gimein fleshes it out a bit more and seems skeptical of Horowitz’s “holier than thou” tone regarding his near brush with incarceration.) Sharlene Abrams’ prior company, Mercury Interactive, was audited by Pricewaterhouse Coopers.In fact, as long as companies take the following steps, they should be able to avoid prosecution for backdating stock options: When these conditions are not met, companies could face charges of fraud and tax evasion, both of which can have serious consequences, including jail time.Legal Issues Companies that use stock option backdating practices are often suspected of having inadequate internal controls and disclosure procedures, especially if inaccurate compensation statements are submitted to the SEC.I’m not sure why Horowitz bothered to change the name of the CFO. Sharlene Abrams was CFO of Opsware and her previous employer was Mercury Interactive. Abrams was barred from serving as an officer or a director of a public company. was planning an enforcement action against her in connection to her previous employment at Mercury Interactive, an enterprise software company.The New York Times Dealbook’s William Alden picks up on Horowitz’s hero story and gives us more details. She later pleaded guilty to tax evasion after a Justice Department inquiry into the stock options scheme. Abrams, the chief financial officer of Opsware at that time, was forced to resign in 2006 after it emerged that the S. No one talks about stock options backdating much anymore.
She reported that her previous company’s practice of setting the stock option price at the low during the month it was granted yielded a far more favorable result for employees than ours. Abrams and three other former officers committed fraud by backdating stock option grants and failing to record hundreds of millions of dollars of compensation expenses.