Securities Law Prof Blog

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

Friday, July 16, 2010

SEC and Trident Microsystems Settle Options Backdating Charges

Backdating stock options is such old news, but the SEC announced the settlement of charges against Trident Microsystems, Inc., a Santa Clara, California-based provider of integrated circuits, Trident's founder and former Chief Executive Officer, Frank C. Lin, and Trident's former Chief Accounting Officer, Peter Jen, alleging violations related to stock option backdating.  The SEC alleged that from at least 1993 to May 2006, Trident, through the conduct of Lin and Jen, engaged in a fraudulent and deceptive scheme to provide undisclosed compensation to executives and other employees, concealing millions of dollars in expenses from the Company's shareholders. According to the complaint, Lin used, and directed others to use, hindsight to select for stock option grants dates that coincided with the dates of low closing prices for the Company's stock. Lin backdated stock option documentation to make it appear as if options had been granted on earlier dates, resulting in disguised "in-the-money" option grants to Company employees, officers, and on at least one occasion to directors. Among the alleged backdating practices, Trident backdated offer letters to newly hired employees and "parked" low-priced options under the names of certain employees which were later allocated to different employees in subsequent months when Trident's stock price increased. The complaint alleges that Jen was aware of some of the backdating practices during at least 1998 to 2006 and that he approved backdated grants to certain employees.

Trident, Lin, and Jen agreed to settle the matter without admitting or denying the allegations of the Commission's complaint.

SEC Action | Permalink

TrackBack URL for this entry:

Listed below are links to weblogs that reference SEC and Trident Microsystems Settle Options Backdating Charges:


Post a comment