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Erik Lie Says Current Scandal Just Tip Of Iceberg

Business types were quick to argue that Enron Corp. and HealthSouth Corp. were nasty aberrations to the way corporate America behaves. So just how did we wind up with an epidemic stock options mess dominating today's headlines? It was spread by the most contagious germ of all: Everybody's doing it, so it must be OK, says business columnist Cheryl Hall. The SEC is investigating about 100 companies for their options practices. We've only seen the tip of the iceberg, predicts ERIK LIE, an associate professor of finance at the UNIVERSITY OF IOWA. "Those that have not come to the surface yet may have been more clever about hiding their practices by not being so greedy as to pick the lowest price in a period, but the second- or third-lowest price," Lie says. "Or maybe they did it for a couple of grants and not for every grant." He estimates that more than 2,000 companies backdated options in some fashion: "This has been passed along from general counsel to general counsel, director to director, executive to executive. When you have interlocking boards, if one was involved in a scandal, the other one probably was also."

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