This was one of many options backdating scandals to occur within the last decade. To prevent similar fraudulent activity in the future, Apple should take measures to increase consequences for bad behavior or incentivize whistle-blowers. Options backdating consists of granting an option that is dated prior to the date the option is actually granted. It allows the grantee to receive options that are already in the money, which allows him or her to glean a much higher profit. Apple admitted to granting backdated options on 15 dates between and 2.
How CEOs Reinvented the Dating Game Scandal in Stock Options | Stanford Graduate School of Business
Silicon Valley cannot seem to shake off the sins of its dot-com past. Many in the Valley thought, or at least hoped, that they could put the excesses of the Internet boom behind them when all those carpet-bagging M. Other signal events in recent years had prompted the technorati to declare optimistically that the dot-com era was officially behind them. But once again, the corporate scandal of the moment — the manipulation of stock options — is placing Silicon Valley and its past practices in an unflattering light. Of the more than 80 businesses that have been caught up in federal investigations or have announced their own internal reviews, technology companies make up the overwhelming majority. That list includes Brocade Communications, the Silicon Valley-based data storage equipment maker, whose two former top executives were charged on Thursday with securities fraud in the doctoring of documents on behalf of employees.
Steve Jobs Obituary: the Backdated Options Scandal
In the mids, an investigation by the Securities and Exchange Commission resulted in the resignations of more than 50 senior executives and CEO s at firms across the spectrum from restaurant chains and recruiters to home builders and health care. What was it all about? Options backdating. Read on to find out how the scandal emerged, what brought it to and end and what you can learn from it now.
Before Lehman Brothers imploded, before Bernard L. Karatz, the former chief executive of KB Home , to five years of probation. His case is likely to be the last criminal trial relating to backdating, a scandal that ensnared dozens of executives over allegations that the dates of stock-option awards had been manipulated to enrich recipients. When the first cases emerged in , they looked like low-hanging fruit for federal prosecutors. The Securities and Exchange Commission and the Justice Department investigated more than companies.