Securities Law Prof Blog

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

Tuesday, June 1, 2010

Former Monsters Controller Settles Backdating Charges

The SEC announced that on May 28, 2010, the U.S. District Court for the Southern District of New York entered a Final Judgment by consent in a previously-filed enforcement action alleging backdating stock options against Anthony Bonica (Bonica), a certified public accountant who formerly served as the controller of Monster Worldwide, Inc. (Monster). The Final Judgment enjoined Bonica from direct and indirect violations of the federal securities laws and ordered him to pay a total of $209,537.60 in disgorgement of ill-gotten gains, interest and penalties.

The Commission's complaint alleged, among other things, that Bonica participated in a fraudulent stock option backdating scheme; that Bonica's fraudulent conduct caused Monster's periodic filings and proxy statements to falsely portray Monster's options as having been granted at exercise prices equal to the fair market value of Monster's common stock on the date of the grant, when, in fact, Monster was granting in-the-money options; and that Bonica understood the accounting consequences of granting in-the-money options but did nothing to ensure that Monster properly accounted for these options in its financial statements. The complaint alleged that Bonica's conduct caused Monster to file materially false and misleading public reports that contained financial statements that materially understated Monster's compensation expenses and materially overstated its quarterly and annual net income. On December 13, 2006, Monster restated its historical financial results for 1997-2005 in a cumulative pre-tax amount of approximately $339.5 million to record additional non-cash charges for option related compensation. The complaint further alleged that Bonica benefited from the scheme, including the receipt and exercise of backdated grants of in-the-money options.

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