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Stock-Option Abuses Called Far-Reaching

Wall Street's stock-options scandal is far larger than the 200 or so companies swept up in investigations and lawsuits, said the Iowa professor who found the problem. ERIK LIE, an associate professor of finance at the University of Iowa, made the comment Monday in Kansas City. He was here to discuss the options-backdating scandal with other academics and financial executives. The scandal stemmed from discoveries that companies had granted stock options to executives on dates when the stock's price was noticeably low. The options allowed executives to buy shares later at that low price. Lie found that stock options generally had been granted on dates so favorable to executives that they had to have been picked sometime later, after the stock price had risen.


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