Wednesday, June 14, 2006

REGULATORS GET TOUGH ON BACK-DATING -- "The Securities and Exchange Commission is to issue a statement, possibly as early as next month, clarifying the agency's view of when current law allows backdating of stock options -- picking a date when the stock was at a low point to be the date of the award, thereby immediately guaranteeing a profit. Companies need the permission of directors, consistent with company policy, and full disclosure to investors, including properly counting the added costs against earnings."

This issue has received a significant amount of attention (and has been discussed in this File). Interestingly, much of the reporting has discussed civil suits (some even suggest criminal probes). The SEC's action suggests that the law on back-dating is murky. Does that seem to undercut plaintiffs' (or prosecutors') efforts?