Options Backdating

Backdating, as the name would imply, is the practice of dating a stock option prior to the date it was actually granted. The option value is higher when the exercise price is lower, so it is obviously best to be granted options when the market price was lowest.

While falsifying financial records and filings with the SEC and IRS is against the law, discounted stock options and backdating are not necessarily illegal. Backdated stock options incur additional taxes and penalties at vesting or exercise; legal issues only arise when the corporation makes improper disclosures to shareholders in order to obscure the backdating.

Options Backdating:  A Serious Offense

Civil penalties resulting from backdating are generally lower than those for Accounting Fraud cases, but they still frequently amount to several million dollars. For example, in 2007, Hewlett-Packard unit Mercury Interactive agreed to a $28 million fine for options backdating.

We Can Help

If you are facing similar accusations, the Blanch Law Firm can educate you about your legal options as well as help you select the best one. For a free initial consultation, Contact one of our experienced white collar defense attorneys by calling (917) 472-9883 or toll-free (866) 690-9316. You should not have to fight to clear your name, but if you do, you certainly should not have to fight alone.