SEC Scrutiny of Stock Option Practices Heats Up - Defense Claims Misdating, Not Backdating
As executives of Brocade Communications Systems appeared in court on charges of securities fraud for allegedly backdating stock option grants, Christopher Cox noted that the new stock option grant rules were one of the highlights of his first year as SEC Chairmen. Indeed, Cox noted that at least 80 companies are currently under SEC scrutiny for possible backdating of stock options. And on Thursday, the Cheesecake Factory, Inc. announced that it is one of those companies under scrutiny, while several other companies announced that they had launched internal investigations into their option grant practices.
By contrast, Molex, Inc. announced Wednesday that it had "misdated" stock options for executives going back to 1995, distinguishing this from the fraudulent backdating practice. The Molex options were reportedly issued on incorrect dates, which lead to $685,000 in overpayments to more than 10 executives. However, the company reported that: no one would profit from the incorrect dates; the company would not need to restate its earnings; and, the SEC had been advised.
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