Guilty of backdating
TEXT OF STORY
SCOTT JAGOW: About 150 companies have admitted to backdating stock options. That means when the firms handed out options to employees, they put a very favorable date on them for a day when the stock price was low. The Feds started looking into this practice a few months ago. Yesterday, they got their first guilty plea. Bob Moon reports.
BOB MOON: It took only a few months for the former financial chief of the telecommunications firm Comverse Technology to go from vowing to fight the charges to pleading guilty to conspiracy and securities fraud.
David Kreinberg faces up to 15 years in prison and fines and restitution in the millions when he’s sentenced in February.
Columbia University business law professor John Coffee says unlike the complicated Enron and WorldCom prosecutions, cases like this should be straightforward.
JOHN COFFEE:“There won’t be the same debate about accounting principles or the fear that the jury will just not be able to understand those kind of arguments. As soon as you show any falsification of a corporate book or record, you have a criminal charge.”
As simple as such cases might be, a new study by a shareholder advisory group suggests the fallout has been huge.
It’s already estimated to have cost companies caught up in the scandal a combined $10 billion in lost share prices and additional compensation expenses.
In Los Angeles, I’m Bob Moon for Marketplace.
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