Backdating companies

However, it can be permissible under certain circumstances.For instance, one may backdate an insurance claim if there was an unavoidable delay between the date the insured event occurred and the day the claim was made.

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I count no fewer than 38 top executives at 19 high-tech companies that have bit the dust over this stuff.

We're talking top executives at big-name companies like Apple, Altera, Broadcom, Brocade, Cirrus Logic, Comverse, KLA-Tencor, Maxim, Mc Afee, Rambus, Sanmina-SCI, Take Two, Trident, Verisign, and Vitesse. That's serious fallout considering that options backdating is legit as long as the company reports it and accounts for it accurately.

New rules under the Sarbanes-Oxley Act have reduced the practice to 10% of the companies granting options.

Only 7.7% of companies filing within the new two-day reporting window for options grants show a pattern of backdating, compared to 19.9% of companies that did not meet the requirements.

The pattern was somewhat more common in technology companies, smaller companies, companies granting options to more executives and directors, and companies with higher stock price volatility.

Volatility is especially significant: 29% of companies with high volatility appear to have manipulated grant dates, compared to 13% of those with low volatility.

In the context of mutual funds, a feature allowing fundholders to use an earlier date on a letter of intent to invest in a mutual fund in exchange for a reduced sales charge, e.g.

Giving retroactive value to purchases from the earlier date.

After all, stock option backdating is all the rage these days.

You'd think they'd be up to their eyeballs in rope.

But Apple makes clear that Jobs was directly involved in some instances of backdating.

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