Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, May 31, 2007

SEC Settles Backdating Charges Against Mercury

The SEC announced a settlement of the stock options backdating charges against Mercury Interactive, LLC (formerly known as Mercury Interactive Corporation) for $28 million civil penalty.  The litigation against four former senior officers of Mercury — former Chairman and Chief Executive Officer Amnon Landan, former Chief Financial Officers Sharlene Abrams and Douglas Smith, and former General Counsel Susan Skaer-- is ongoing.  The SEC alleges that the former senior officers perpetrated a fraudulent and deceptive scheme from 1997 to 2005 to award themselves and other employees undisclosed, secret compensation by backdating stock option grants, failing to record hundreds of millions of dollars of compensation expense, and falsifying documents to further this scheme.  The SEC also alleges that during this period Mercury, through Landan and at times Abrams, Smith or Skaer, made fraudulent disclosures concerning Mercury's "backlog" of sales revenues to manage its reported earnings, and structured fraudulent loans for option exercises by overseas employees to avoid recording expenses. Mercury was acquired by Hewlett-Packard Company after the alleged misconduct.

http://lawprofessors.typepad.com/securities/2007/05/sec_settles_bac.html

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