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Sec investigation stock options backdating companies

Also, Loberto must complete an OSC-approved course on the duties of directors and officers of public companies before he can again act in that capacity.The practice of “backdating” stock option grants has recently captured the attention of regulators, prosecutors, the plaintiffs’ bar, shareholders and the media.A company may want to give a new employee the benefit of any increase in the stock price from the date of acceptance of the employment offer.Grants to new employees based on inaccurate employment commencement dates are troublesome.The SEC’s Enforcement Division and the offices of the United States Attorney are investigating the option granting practices of dozens of companies and actions taken by their executives.

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In its most basic form, backdating can range from the blatant falsification of a document to take advantage of a lower stock price to allowing executives to select a grant date during a specified period, for example during the 30 days after the grant is approved by the board or committee.

For the 245 implicated companies, we detect negative abnormal stock returns, which are modest for internal investigation, larger for SEC probes, and the most severe for Department of Justice investigations.

We also find that the market reaction is more negative for companies with higher stock price volatility, less effective corporate governance, and lower quality of financial statements.

A company may decide to grant options on a specific date but the corporate formalities may not be completed until a later date.

This problem occurs most often when boards or committees act by unanimous written consent but there is a delay in the receipt of all of the signed consents.


  1. Jan 8, 2018. In the mid-2000s, an investigation by the Securities and Exchange Commission resulted in the resignations of more than 50 senior executives and CEOs at firms across the spectrum. The first was in 1995, when a professor at New York University reviewed option-grant data that the SEC forced companies to publish.

  2. Apr 25, 2007. A former chief financial officer of Apple reached a settlement with the Securities and Exchange Commission yesterday over the backdating of stock options and said company founder Steve Jobs had reassured him that the questionable options had been approved by the company board.

  3. The corporate stock option backdating scandal has dominated business page headlines during the summer of 2006. The SEC is currently investigating more than seventy-five companies with respect to the timing and pricing of stock options granted during the boom years of the late 1990s and early 2000s, and the number.

  4. During the past five years, the Securities and Exchange Commission SEC has investigated over. 140 companies for their practices of backdating the grant dates of employee stock options ESOs, and has cited a number of these companies for their part in this behavior that has led to huge financial losses to corporate.

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