Stock option backdating 2016
That is embezzlement or larceny and fraudulent behavior and improper governance that took assets away from the corporation.Thus, it could be viewed as the bailiwick of a derivative lawsuit, which addresses wrongs to the corporation.The stock option backdating litigation is unusual if not unique as each litigation could conceivably have been brought as a stand-alone derivative lawsuit or as a parallel litigation (with both a derivative lawsuit and a private securities class action).Which genre of litigation was better at deterring executive fraud? The parallel litigation, which includes private securities class actions, is positively associated with the forced departure of stock option backdating fraudster executives.
He had long been fighting extradition to the United States, where he was indicted on 35 charges that included securities fraud, money laundering and obstruction. In connection with a 2009 settlement of a lawsuit by Comverse investors, Alexander agreed to pay million to the software developer and waive more than million of claims against it. Comverse was bought out in 2013 by a former unit, Verint Systems (vrnt).
The reason the stock option backdating litigation was comprised of both derivative lawsuits and private securities class actions is that the stock option backdating litigation could be viewed as appropriate for either genre of litigation.
On the one hand, the stock option backdating litigation involved executives absconding with more compensation than they were telling the shareholders they were receiving.
On the other hand, the financial reporting to the shareholders was fraudulent, since compensation expense was understated, resulting in overall expenses being understated, and net income and earnings per share being overstated.
Thus the stock option backdating litigation could be viewed as appropriate for a private securities class action, except that often the materiality of the resulting overstatement of net income and earnings per share was debatable.