November 25, 2006
Cooperate or You're Gone (Again)
Another internal investigation of options back-dating, another executive decides not to cooperate, and another resignation -- something of a broken record on this topic. This time, it is Quest Software, Inc. announcing the resignation of a senior executive who decided not to meet with the special committee of the board of directors conducting an internal investigation of the options issuance practices, thus ending his job with the company. According to its 8-K (here):
On November 18, 2006, the Board of Directors of Quest Software, Inc. (the “Company”), upon the recommendation of the Special Committee formed to investigate the Company’s historical stock option grant practices and related accounting, unanimously accepted the resignation, effective immediately, of M. Brinkley Morse, Senior Vice President, Corporate Development of the Company. Prior to his resignation, Mr. Morse’s counsel had informed the Special Committee that Mr. Morse declined to be interviewed by the Special Committee as part of its investigation.
As discussed in an earlier post "What Happens When the Former CEO Skips a Meeting with the Internal Investigators" on this topic, such a refusal can lead to a quick resignation from the board. The pressure on companies to demonstrate their cooperation is almost overwhelming these days. According to the Wall Street Journal's options-timing investigations scorecard (here), Quest Software has not received a grand jury subpoena from a U.S. Attorney's Office . . . yet. Look for one to arrive fairly soon. (ph)
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