Sec back dating inquiry

26-Dec-2015 23:50 by 10 Comments

Sec back dating inquiry

In the case of two Golden State tech companies, the concept of granting undisclosed, “in the money” stock options to executives could have originated with their general counsel, according to the Securities and Exchange Commission.On Tuesday, the SEC charged Lisa Berry, former in-house corporate attorney of KLA-Tencor Corp.

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While headlines about backdating have concentrated on the top executives at the implicated companies, a handful of former internal attorneys have also been mentioned, such as Berry, Nancy Heinen, who settled charges with the SEC that she participated in fraudulent backdating of options while she was general counsel at Apple, and William Sorin, the former Comverse general counsel who in May became the first executive involved in the options-dating scandal to be sentenced to prison this past May.Her alleged scheme resulted in more than 0 million in expenses not being disclosed by Juniper, according to the SEC.Berry’s attorney, Melinda Haag of Orrick, Herrington & Sutcliffe, disputes the commission’s findings.These grants were given without proper disclosures, and thus hid true compensation numbers from investors, the SEC adds.Moreover, Berry acknowledged in a 1998 memorandum that repricing executive stock options with an earlier grant date’s lower price would result in KLA having to take “a charge to its P&L,” the SEC said.The concept could have been shared by employees switching jobs during the time period when most backdating occurred — the late 1990s and first few years of this decade.

During new job negotiations, a person may have said, “‘I had an interesting options package that was oddly dated and now that I’m moving to another company, and I want my options at last week’s price,'” theorizes Fagel.

However, both have restated their financials to correct how they had accounted for stock options: KLA took a 0 million non-cash expense for more than a decade’s worth of financial results, and Juniper took a 0 million non-cash charge for options granted between mid-1999 and the end of 2003.

KLA did not return’s request to comment on this article, and Juniper referred’s reporter to a press release.

and Juniper Networks, with backdating option grants from 1997 to 2003. “When we started looking at the players [of these two cases] and saw they had the same general counsel, we said ‘Wow,'” Marc Fagel, associate regional director in the SEC’s San Francisco office, told

She “devised the improper backdating scheme while serving as general counsel of KLA and then implemented similar practices after assuming the position of general counsel for Juniper,” the SEC said in its complaint filed with the U. “That certainly raised our eyebrows.” While at KLA, a San Jose semiconductor equipment company, Berry “routinely” used hindsight to pick dates when the company had had historically low stock prices and chose the corresponding prices for option grants given to KLA employees, the SEC alleges.

Both of their statements about their separate settlements with the SEC note that they did not pay a monetary penalty to the commission, but rather agreed to a permanent injunctions against future violations of the reporting, books and records, and internal-control provisions of the federal securities laws.

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