News & Events

Lie Research Leads To Investigations

In high-tech's heartland have become entangled in internal or government inquiries examining whether a few insiders rigged employee stock options to ensure larger windfalls without properly disclosing or accounting for the manipulation. The fallout threatens to lump scores of companies with hefty bills to cover delinquent taxes, regulatory fines and shareholder lawsuits alleging financial deception. Criminal charges also loom as a possibility if federal prosecutors investigating the imbroglio find evidence of deliberate fraud. "I don't think the stock market realizes how big this problem really is," said Randall Heron, an Indiana University associate professor of finance whose research into deceptive option awards helped focus attention on the issue. "If people were willing to push the envelope in this area of accounting, it's possible these investigations are going to dig up other skeletons in the accounting closet." So far, stock option probes have been disclosed by at least 57 companies, including 25 based in Silicon Valley or other parts of the San Francisco Bay area. Based on his research with University of Iowa professor ERIK LIE, Heron predicts both numbers will quadruple by year's end. The same story appeared on the Web sites of the CONTRA COSTA TIMES, BALTIMORE SUN, METROWEST DAILY NEWS (Mass.), WINSTON-SALEM JOURNAL, AUSTIN AMERICAN STATESMAN, NIAGARA GAZETTE, NORTHWEST INDIANA TIMES, SPOKANE SPOKESMAN REVIEW, MIAMI HERALD, BILOXI SUN HERALD and numerous other news organizations.


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