After Michael E. Clark reviewed then-emerging issues in the area of stock option backdating in last December's issue of Business Crimes Bulletin, former Brocade Communications Systems, Inc. CEO Gregory Reyes was found guilty of backdating-related crimes despite what most observers agree was a vigorous and well-funded defense.
Prosecution and Defense of Stock Option Backdating Cases
Backdating is different from conduct typically alleged as stock fraud because it is not in itself illegal. So long as the backdating of options is accompanied by proper accounting treatment and public disclosure, there is no securities law violation. Backdating cases thus have come to be thought of largely as accounting cases. As a result, a potent potential defense has emerged for corporate officers who may have known backdating was occurring but, because they did not have hands-on responsibility for their company's financial or accounting practices, were unaware of the accounting or disclosure consequences of that practice.
By
Steven F. Reich And Andrew C. DevoreThis premium content is locked for Business Crimes Bulletin subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN Business Crimes Bulletin
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already have an account? Sign In Now
For enterprise-wide or corporate access, please contact Customer Service at [email protected] or call 1-877-256-2473.
