Monday, August 7, 2006

An Options-Timing Internal Investigation Mulligan

The options-timing investigations have hit approximately 80 companies, with the first criminal charges filed recently and more may be coming in the next few weeks involving former senior executives at Comverse Technology, including possibly the company's former in-house counsel (see Law.Com story here).  The first response at companies targeted in the various government investigations has been to announce an internal investigation along with a pledge of support.  For Affiliated Computer Services, Inc. (ACS), a Dallas-based tech company, a quick announcement that an initial investigation found nothing problematic in its options-granting practices may have backfired.  In a May 15 SEC filing (here), ACS stated: "Notwithstanding the above-referenced accounting determination, based on the initial findings of its internal investigation (which is on-going and not complete as of the date of this filing), ACS does not believe that any director or officer of the Company has engaged in the intentional backdating of stock option grants in order to achieve a more advantageous exercise price."  In a press release (here) issued on August 7, however, it now states that its earlier assertion "can no longer be relied upon . . . ."  Much like Ron Ziegler called prior statements "inoperative" or Emily Litella said "Never mind," ACS would rather just skip over that earlier admission, tempered as it was with the claim that the investigation was "not complete."  The company earlier received a grand jury subpoena from the Southern District of New York, and federal prosecutors there will be eager to hear about what has changed in a little less than three months. (ph)

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Investigations, Securities | Permalink

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