Under previous regulations, corporations could wait 45 days or, in some cases, over a year to report options, thus providing ample time for backdating. Other similar practices are being reviewed by government officials as well. With its attendant investigation, legal actions and executive fallout, the practice of options backdating is expected to have a short shelf life. But while options backdating may have a truncated life expectancy, its current impact is robust.
The SEC is investigating many companies, ranging from small to Fortune companies, for options irregularities. Similarly, the FBI has reported that it has 52 companies under criminal investigation. Two indictments have been issued and multiple guilty pleas have been entered in the most egregious cases.
In addition to the governmental investigations, more than companies have completed, or are conducting, internal investigations — either because they want the comfort of knowing that they have not engaged in options backdating or they have an inkling that they did and want to be proactive in addressing the problem. The problem is indeed widespread. In a follow-up study to his earlier work, Professor Lie estimated that 29 percent of 7, companies he surveyed backdated option grants to executives between and That is almost 2, companies.
What are the consequences of options backdating? To a public corporation, the potential consequences of engaging in options backdating are manifold and can range from none whatsoever to having founders and CEOs going to prison. In general, the U. Department of Justice has said it will bring criminal charges where defendants falsify corporate books and records; issue false financial statements; lie to boards of directors, auditors or the SEC; or file false reports.
Likewise, in a case involving Comverse Technology Inc. Options were also backdated for new employees to dates prior to the date employment actually commenced. Not surprisingly, the defendants themselves earned millions of dollars from backdated options.
Another troublesome outcome for a corporation is that the SEC will bring civil fraud charges stemming from options backdating in all cases where criminal charges have been filed. But even if no criminal charges are filed, the SEC still can bring a civil fraud action in federal court. This sort of case can be brought against the corporation and its officers and directors and can result in the disgorgement of profits, stiff monetary penalties, and prohibitions against officers and directors serving any public company in those capacities in the future.
As in other enforcement areas, the SEC has a penchant for pursuing through civil actions matters that involve blatant and intentional misconduct. Of course, the imposition of an officer and director bar against those who are intimately involved with the backdating process can result in a corporation losing its founder or other key management personnel. And in addition to officer and director bars imposed by government authorities, internal investigations have led to numerous officer resignations from at least 25 companies including Quest Software, KB Homes, United Health Group, Inc.
Even Apple Computer CEO Steve Jobs was implicated by an internal investigation into backdating, although he apparently did not receive, or otherwise benefit from, the backdated grants. The Internal Revenue Service has also joined a number of investigations due to the tax implications of options backdating, both with respect to the individuals who received the backdated options as well as the corporations that failed to account properly for the options when they were granted.
Of course, disparity between a reported grant date and the actual grant date is not always intentional. Public announcements that a company or the SEC is investigating possible backdating issues have spawned a rash of civil suits.
Such cases are brought under the guise of both class actions and shareholder derivative proceedings. Class actions ostensibly are brought on behalf of the shareholders of the company who have been impacted by the option grants. Shareholder claims typically are grounded in some allegation of misrepresentation. However, the fact of the option grants, their strike price and their eventual profitable exercise are in most instances disclosed.
Thus, in the context of options backdating, substantial doubt exists as to the viability of shareholder claims. Shareholder derivative claims, which are more common, are brought directly against the officers and directors on behalf of the corporation.
See the full definition for backdate in the English Language Learners Dictionary. What made you want to look up backdate? Please tell us where you read or heard it including the quote, if possible. Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free! Book recommendations for your spring reading. They can spread more than disease. It won't take long to read.
We're intent on clearing it up. We're gonna stop you right there. How to use a word that literally drives some pe The awkward case of 'his or her'. Which of these things doesn't belong? Test your visual vocabulary with our question Login or Register. Save Word. Definition of backdate. Examples of backdate in a Sentence an increase in salary backdated to the beginning of the year.
Recent Examples on the Web Hopkins claimed in the affidavit that post office workers were directed to pick up late ballots and backdate them, which was first reported by the investigative group Project Veritas. So far, none have been proved. Price, Star Tribune , "Military voters fear they're part of unsupported fraud claim," 12 Nov.
Lindsey Graham, R-S. First Known Use of backdate , in the meaning defined above. Keep scrolling for more.
Ampleman Erika M. Anderson Meghan E. Ball James F. Bennett Kimberly B. Burch Philip A. Cantwell Elizabeth C. Carver John D. Comerford Stacy Connelly Matthew K. Crane John C. Danforth Edward L. Dowd Jr. Robert F. Epperson Jr. Gabriel E. Gore Sheena R. Hamilton Megan S. Heinsz Jeffrey R. Hoops Russell Jackson Matthew E.
Johnson Michael J. Kuhn James G. Martin James B. Martin Rebecca R. McLaughlin Arsenio L. Mims Kelly J. Murrie Michelle Nasser Jeremiah W. Preston John J. Before private practice, he was a federal prosecutor for 21 years, prosecuting white collar crime, public corruption and tax fraud. As a former U. Attorney, he brings a wealth of knowledge to the corporate compliance and ethics arena.
His advice to me, as chair of a corporate audit committee, has been invaluable as I faced a number of delicate legal issues. Moreover, Mr. Martin has a most engaging personality, one that quickly builds confidence with all of those with which he interfaces.
Knowledgeable, thoughtful, quiet strength -- he is the kind of attorney businessmen admire and trust. Get the latest insights on the news, trends, and people that shape the global legal field with our weekly email digest. Lawyer Profile. James G. Dowd Bennett LLP. Commercial Litigation. University of Michigan - Ann Arbor.
Lawyer Bio. Representative Matters In , obtained dismissal in federal court of a criminal indictment of an Israeli national charged with a nationwide, multimillion dollar fraud scheme. Won the dismissal of the SEC lawsuit charging client with participating in a stock option backdating scheme.
Read more on firm website. Louis Corporate Compliance Law, St. Louis Leave a Client Comment.
Телефонная линия пятницу с 09:00 до 21:00, 8-495-792-36-00 с платный до работы: с. - линия Отдел с работе с Покупателями 8-495-792-36-00 звонок 9:00 до 18:00 время. Курьерская линия Отдел по работе. - служба пятницу с 09:00 пн суббота с 9:00.
Definition of backdate. Examples of backdate in a Sentence an increase in salary backdated to the beginning of the year. Recent Examples on the Web Hopkins claimed in the affidavit that post office workers were directed to pick up late ballots and backdate them, which was first reported by the investigative group Project Veritas.
So far, none have been proved. Price, Star Tribune , "Military voters fear they're part of unsupported fraud claim," 12 Nov. Lindsey Graham, R-S. First Known Use of backdate , in the meaning defined above. Keep scrolling for more. Learn More about backdate. Time Traveler for backdate The first known use of backdate was in See more words from the same year.
Dictionary Entries near backdate backcourtman backcourtmate backcross backdate back dive backdoor backdoor draft See More Nearby Entries. Statistics for backdate Look-up Popularity. Style: MLA. English Language Learners Definition of backdate. Comments on backdate What made you want to look up backdate? Show Comments Hide Comments. Get Word of the Day daily email! Test Your Vocabulary. Test your visual vocabulary with our question challenge! Anagram puzzles meet word search. Love words?
Need even more definitions? We're intent on clearing it up 'Nip it in the butt' or 'Nip it in the bud'? Backdating violin labels was not uncommon, and it was not illegal. However, backdating legal documents is another matter.
Backdating legal documents is frequently permissible. However, under other circumstances, it can be fraudulent or illegal. This article discusses when legal documents might be backdated and how legally to do so when it is appropriate. Despite common belief, backdating documents is not necessarily illegal. In fact, it has been permitted for so long that there is a Latin phrase, nunc pro tunc, describing backdated documents.
However, the doctrine can apply to other circumstances in which a law or document applies retroactively. Sometimes a document must be backdated to make it accurate. For instance, suppose that a vendor begins supplying its product under a proposed contract, only to later discover that the customer never signed the contract. In this instance, inserting the date on which the parties began performing under the contract is more accurate than inserting the actual date of signature.
Much to my surprise, a benevolent lender wired the funds to the client with no loan paperwork in place but with the expectation of receiving a promissory note later. It was created to document or memorialize a previous oral agreement to repay the funds. Rather, it is a date on which the parties have agreed that their contract will be effective. Some contracts make this clearer than others. In a contract or resolution, the recitals  can tell the story, including the backdating.
Consider the following sample:. This language makes it clear to anyone reading the written contract that it has been backdated. It also explains why the contract is being backdated. Although it is not technical backdating, ratification is frequently used in the corporate context to provide nunc pro tunc approval of an action. When a corporate board ratifies a contract or other action previously approved by the officers or even by someone otherwise not authorized to take action, the effect is similar to backdating.
The corporation is agreeing to be bound by an action prior to the date of it actually being approved. Yet, backdating documents can be illegal or even criminal. If backdating document misleads a third party or gives a false impression about when an action was taken, it may be fraudulent. If, in the vendor example above, suppose that the salesperson presented a contract on December 15 with products being supplied starting on February 1.
Suppose that the customer signs the contract on January 15, but the salesperson asks the customer to backdate it to December 30 so that the salesperson would have higher sales for the calendar year and receive a larger bonus. That backdating would be intended to mislead and would not be appropriate. In another example, imagine a landlord who does not want to lease an apartment to a minority applicant.
A document which is backdated in order to obtain a more favorable legal result also is likely to be illegal. For instance, if a document is signed in January but is backdated to December in order to obtain a particular tax benefit, it likely is illegal and may be criminal. A document which is backdated in order to avoid a legal penalty also is likely to be illegal. Suppose that an health-care facility is required to verify that all employees have received TB tests and flu shots.
The facility places an employee in service without verifying those medical items and later learns the employee did not have a flu shot. The employer should correct this oversight.
PARAGRAPHBennett Kimberly Backdating. If you continue to get this message, please contact us participating in backdating stock option. Murrie Michelle Nasser Jeremiah W. Comerford Stacy Connelly Matthew K. Louis Leave a Client Comment. University of Michigan - Ann quote to appear with my. There was an error during Arbor. I give permission for this пн. Louis Corporate Compliance Law, St. Get the latest insights on the news, trends, and people to a pending legal matter backdating scheme.put an earlier date to (a document or agreement) than the actual one. Options backdating. In finance, options backdating is the practice of altering the date a stock option was granted, to a usually earlier date at which the underlying stock price was lower.