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Stock Options Fraud Alleged

Federal prosecutors yesterday filed the first criminal charges against a top executive who allegedly manipulated stock option awards in order to give his employees a bigger payday and conceal corporate expenses. The U.S. attorney's office in San Francisco, which a week ago formed a task force to probe corporate backdating of stock-option grants, in a criminal complaint accused former Brocade Communications Systems Inc. chief executive Gregory L. Reyes and former human resources executive Stephanie Jensen of securities fraud. An academic study released last week suggested that more than 29 percent of businesses may have tampered with stock grants from 1996 to 2005. Its authors, Indiana University professor Randall A. Heron and University of Iowa professor ERIK LIE, reported that they had uncovered a "higher frequency" of problems among technology companies, small businesses and ventures with volatile stock prices.

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