Saturday, November 17, 2007
The flood of options backdating investigations seems to be receding, with the SEC closing cases without filing civil charges. An article in The Recorder (on Law.com here) reports that the investigation of VeriSign has concluded without any further action. The company's 8-K (here) states, "The staff of the Securities and Exchange Commission (“SEC”) has formally notified the Company that the SEC’s investigation concerning the Company’s historical stock option granting practices has been terminated and that no enforcement action was recommended to the SEC." The company took a $160 million accounting charge related to the options, and its CEO and CFO both resigned. The notification to VeriSign comes on top of other recent case closings involving backdating at high-tech firms Electronic Arts, Linear Technology, Nvidia, PMC-Sierra. and Zoran Corp.
The Commission appears to be clearing out its investigative docket, likely closing the weaker cases while it prepares the stronger ones for some type of enforcement action. Don't be surprised to see some new filings in the new year as the SEC moves beyond options backdating and faces new areas of concern arising from the subprime meltdown, especially disclosure issues related to the multi-billion write-downs of CDOs by leading financial companies.
Over on the criminal side, there haven't been any significant new cases since the conviction of former Brocade CEO Gregory Reyes in August 2007, and it may be that the criminal pipeline is also shrinking. Options backdating looks like it may be on its way to becoming yesterday's news. (ph)