Wednesday, June 14, 2006

It's Raining Grand Jury Subpoenas in the Options-Timing Probe

The U.S. Attorney's Office for the Southern District of New York may now be in the lead in issuing grand jury subpoenas to companies for documents related to the timing of stock options granted to senior executive.  RSA Security Inc. issued a press release (here) on June 13 stating that the company "announced that it has received a document subpoena from the U.S. Attorney for the Southern District of New York requesting records from 1996 to the present relating to the Company‚Äôs granting of stock options. The Company plans to cooperate fully with the office of the United States Attorney in connection with this subpoena."  On June 12, Monster Worldwide Inc., parent company of Monster.Com, issued a press release (here) that "the company has been served with a subpoena from the United States Attorney for the Southern District of New York relating to stock option grants. Monster Worldwide intends to cooperate fully in this matter."  Strikingly similar language, but then there is no way for counsel to spin the receipt of a grand jury subpoena other than to promise cooperation, something companies are virtually required to do these days if they hope to avoid indictment should the investigation come to that point. 

A Wall Street Journal scorecard (here) tracking the various government and internal investigations of stock option timing now lists twenty companies that have received grand jury subpoenas, from U.S. Attorney's Offices in New York, Brooklyn, San Francisco, and Boston.  The question is whether anything will come of these various inquiries -- aside from the tidal wave of attorney's fees, of course.  A key step to watch for is a plea agreement and SEC settlement with a corporate officer involved in backdating documents, which will indicate the types of violations prosecutors and the SEC are looking at in the cases. (ph)

Grand Jury, Investigations, Securities | Permalink

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