Sec investigation stock options backdating companies

A number of commentators have suggested that there may be other circumstances under which option grant dates may be open to question, including grants made by use of unanimous written consents.

These circumstances do not appear to be the focus of the recent articles and research reports, and their possible consequences are currently subject to considerable debate.

Your investor relations department may be receiving calls from investors asking if you have a backdating problem.

Here are the most immediate issues that you should discuss with counsel: Preliminary Review of Stock Option Practices.Until very recently, most companies accounted for stock option grants under APB 25.Under this method of accounting, if a stock option was granted at the money, then no compensation expense was recorded.Backdating could be accomplished either at the time of the grant, by arbitrarily selecting an earlier date when the stocks price was lower, or after the grant has been made, by retroactively changing the grant date.Published reports have highlighted some instances in which a companys stock price increased substantially shortly after the reported grant date, suggesting that backdating may have occurred.

Sec investigation stock options backdating companies