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A relevant litigation release: http://www.sec.gov/litigation/litreleases/2009/lr20964.htm http://www.sec.gov/litigation/litreleases/2009/lr20964.htm And a des

A relevant litigation release: http://www.sec.gov/litigation/litreleases/2009/lr20964.htm http://www.sec.gov/litigation/litreleases/2009/lr20964.htm And a description of the practice in question: http://en.wikipedia.org/wiki/Options_backdating http://en.wikipedia.org/wiki/Options_backdating

robotcookies 13y ago
From reading the first release, it sounds like the penalties imposed was for more than just the stock options thing described by Horowitz. It also describes fraudulent disclosures about backlog of sales and structuring fraudulent loans. So it's not necessarily the case that Horowitz would have had to serve jail time if he had gone along with his cfo's proposal (although he would likely have had to pay back his gains and possibly fines). When I first read the blog, it certainly sounded like the SEC being overly harsh over a mistake made by a good CFO. But reading the release makes me think there was more to it than that. It's possible this is the reason why that excerpt wasn't published in his book.
- rmrfrmrf 13y ago
  Well, it also goes to show that public perception and reputation of a person can be largely at odds with reality. I like Horowitz's story, too, because it shows that even though people can do illegal things, it's very easy to do so with the best of intentions. Given the widespread nature of options backdating at the time, Michelle may have even been under the impression that her proposal was one of the "tricks of the trade," so to speak.
LanceH 13y ago
What is described here doesn't sound strictly illegal. It is my understanding that most of the options violations (of various forms) stem from not carrying the options as the liabilities they are. It was usually pricing them at zero cost until exercised as many companies did, or backdating them and drastically changing their value.

robotcookies 13y ago

From reading the first release, it sounds like the penalties imposed was for more than just the stock options thing described by Horowitz. It also describes fraudulent disclosures about backlog of sales and structuring fraudulent loans. So it's not necessarily the case that Horowitz would have had to serve jail time if he had gone along with his cfo's proposal (although he would likely have had to pay back his gains and possibly fines). When I first read the blog, it certainly sounded like the SEC being overly harsh over a mistake made by a good CFO. But reading the release makes me think there was more to it than that. It's possible this is the reason why that excerpt wasn't published in his book.

rmrfrmrf 13y ago
Well, it also goes to show that public perception and reputation of a person can be largely at odds with reality. I like Horowitz's story, too, because it shows that even though people can do illegal things, it's very easy to do so with the best of intentions. Given the widespread nature of options backdating at the time, Michelle may have even been under the impression that her proposal was one of the "tricks of the trade," so to speak.

LanceH 13y ago

What is described here doesn't sound strictly illegal. It is my understanding that most of the options violations (of various forms) stem from not carrying the options as the liabilities they are. It was usually pricing them at zero cost until exercised as many companies did, or backdating them and drastically changing their value.