In some instances, shareholders are suing the companies, their top officials and directors, alleging manipulation to enrich executives at the expense of the bottom line.The flock of company executives and directors being ousted, he added, "increases the likelihood that somebody's going to be prosecuted." At issue is whether company insiders manipulated the timing of stock option grants to bring big payoffs to executives by improperly backdating the grants to coincide with low points in stock prices.As first noted in a series of groundbreaking articles in the Wall Street Journal , these patterns of almost too-good-to-be-true timing took place in the late 1990s and early years of this century.Brocade, based in San Jose, Calif., is a data storage networking company with 1,300 employees.
In a 12-page affidavit filed with the criminal complaint, a Federal Bureau of Investigation special agent alleged that Mr. Jensen schemed to grant employees "valuable in-the-money stock options, while hiding the true nature and value of the stock option grants from the company's board, shareholders, auditors, the public and the Securities and Exchange Commission." Offering stock options to potential employees is not illegal.
Was it sloppy bookkeeping and confusion, or an intent to deceive shareholders for monetary gain?
Backdating investigation comments