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Lie Study Cited

Options backdating may still be occurring - despite measures intended to prevent it in the 2002 Sarbanes-Oxley Act - judging by recent news about companies that were tardy in filing forms disclosing options grants. Proxy advisory firm Glass Lewis & Co. LLC, in a report from Oct. 20, pointed to nine companies where there had been delays in filing Form 4 reports with the Securities and Exchange Commission and a material rise in the company's stock from the purported grant date to the disclosure date. The Glass Lewis report didn't contain actual evidence of options backdating or say that backdating necessarily occurred at the nine companies, but said "the lateness (of filing) itself is what creates the opportunity for backdating." The Glass Lewis report, which used three factors - delayed Form 4s, a rallying stock price and repeat offenses - to select the nine companies, drew from a surprisingly large universe: The report estimates that one-fifth of grants were filed late since Aug. 29, 2002, the day the Form 4 rule went into effect. Almost 10 percent were filed an entire month late. Those findings draw on a July 2006 study from Professor ERIK LIE of the University of Iowa and Professor Randy Heron of Indiana University.


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