"Another obstacle for the government in prosecuting backdating is at some companies the practice was discussed openly, making it harder to argue that executives knew they were engaged in wrongful conduct.
Defense lawyers will doubtless pass blame around. Those representing CEOs are likely to argue that their clients -- being business leaders, not accountants -- relied on others to figure out how options should be issued and accounted for. Those representing subordinates are likely to argue that the boss made them do it.
Helping boost momentum toward the filing of charges is the statute of limitations. It's five years for securities fraud and wire fraud. But there's some flexibility, based on the notion that misdated options might affect earnings in later years."
I have a problem with the prosecutors here for several reasons. The primary motivations for prosecution is central to the prosecutors not the "victims" (what victims?), the public (who cares really?), or the courts.
The PROSECUTORS have looked long and hard to find SOMETHING wrong. You know what it took? It took a change in how stock options back-dating was viewed by accountants and the law. It took an arbitrary change in how procecutors selectively enforce this issue. It took an issue "easy enough to catch criminals" that they openy admitted their actions. They THOUGHT THEY WERE LEGAL.
They had past practice to see and point to. They had accountants passing on the practice which should be the ONLY issue here. They had corporate leadership not only in their company but peer and near-peer companies doing similar actions.
Why is it when a practice changes and becomes criminalized, the prosecutors choose to do "get-cha" and make an example of folks, rather than simply sending out a few letters and say from now on stop doing this?
It would be a lot more effective, would not suck dozens of otherwise good folks into the criminal justice system, and would have a far more rapid, widespread and effective result.
The answer?
This is about jobs for procecutors, ego events and political points for prosecutors. This is NOT being done for the public or the stockholders.
When a person is issued stock options it is compensation for value provided to the firm, and by reference to the public. Exercising those options is an event which is only noted when they are successful and profitable. What about all the folks whos options have become worthless?
Stockholders are not protected when a prosecutor soils the company's name or news cycle with allegations of wrongdoing, so the very folks PROSECUTORS caim to be protecting, are injured by the act of the prosecutor and not injured at all by the alleged wrong act, even if actually wrong!
Prosecutors gone wild! This is not the only area in society this is a problem, but it is perhaps one of the most obvious because the government official overtly harms the victim to "aid" them in the process of collecting professional points for themselves.
The options dating acts INCREASED income taxes to the treasury. Do they get a refund with interest and penalties commensurate with what IRS charges??
Rocketman
