News & Events

Federal Backdating Charges Coming

The waiting game has begun. It appears it's now a question of when -- not if -- federal investigators will prosecute a top executive or a company in the scandal over the rigging of stock options. Securities and Exchange Commission Chairman Christopher Cox told reporters in Washington on Monday that his agency is on the brink of filing a complaint over stock option abuses "very soon." Meanwhile in San Francisco, U.S. Attorney Kevin Ryan said a task force he announced last week is "looking very strongly and quickly" for signs of fraud. More than 29 percent of the nearly 8,000 companies they analyzed issued some form of tainted stock option to top executives from 1995 through 2005, according to a report released Saturday by ERIK LIE, an associate finance professor at the University of Iowa, and Randall A. Heron, an associate professor at the University of Indiana. If Lie and Heron are right -- and they think they're underestimating the abuses -- more than 2,250 companies rigged stock options. High-tech firms, smaller firms and firms with volatile stock prices had the highest frequency of abuse, they say.


Return to top of page