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Nejat Seyhun of the University of Michigan for the newspaper showed that that options granting practices between 20 often failed to comply with the Sarbanes-Oxley requirement that grants of awards to executives be reported within two days of board approval (T"he Dating Game: Do Managers Designate Option Grant Dates to Increase Their Compensation? Prior research at Erik Lie at the University of Iowa found a pattern of probable options backdating in a number of companies prior to 2002.

Recording the exercise as having occurred on an earlier date when the stock price was lower would minimize the executive's income tax liability, but constitutes tax fraud.

Furthermore, Marmaro criticizes the DOJ and the SEC for scapegoating the innocent because of "some perceived need to show quick action in response to the stock option issues being discussed in the media." In the midst of ongoing investigations, Linda Thomsen, chief of enforcement at the SEC, stated at Thursday's conference that it is not a question of whether Reyes profited from backdated options himself. Ryan said at the joint news conference, "It is integral to the public trust in our financial markets that books and records are maintained honestly and that the true financial condition of public companies is disclosed accurately." In wake of this groundbreaking case, lawyers, executives, and accountants are trying to differentiate between criminal conduct and innocent accounting errors.

It is about taking responsibility for concealed information that may have adversely affected stock prices. Larry Ribstein, professor at the University of Illinois College of Law, commented on the government's tightening control on American corporations.

He continued, "Additionally, the amounts of under-reported stock option compensation expenses alleged in this case did not have any impact on the company's financials or on the value of the stock." Marmaro defends Brocade and Reyes, saying that neither breached federal securities laws with the deliberate intent to misstate the company's financials and mislead shareholders.

Responding to allegations of criminal conduct, Marmaro asserts that "there were some paper problems in the company's HR department" that resulted in backdating—nothing more.

Currently, in an attempt to restore public confidence in corporations, the SEC is investigating 80 other companies—both technology and S&P 500—for similar cases of backdated options. If the government indicts both the executive and HR manager, will it also persecute CFOs and anybody else remotely involved in company scandals?

If the government punishes executives for backdating options, will it also lash out at other compensation practices?

There is not even an allegation of self-enrichment or self-dealing.

These accounting errors led to overstated earnings of more than

There is not even an allegation of self-enrichment or self-dealing.

These accounting errors led to overstated earnings of more than $1 billion.

To add to public suspicion, Brocade's downfall coincided with the year when Reyes made a staggering $556 million, most of which came from selling his options.

In a joint news conference in San Francisco, the agencies alleged that the two former employees "routinely backdated stock option grants to give employees favorably priced options without recording necessary compensation expenses." The topic of intense debate is whether the pair purposefully backdated options to periods when Brocade's stock price was at a record low and whether the information was properly recorded and disclosed.

This case, in essence, is an extension of other major scandals that recently rocked the corporate world, in which executives rake in tons of cash at the expense of unsuspecting shareholders.

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There is not even an allegation of self-enrichment or self-dealing.These accounting errors led to overstated earnings of more than $1 billion.To add to public suspicion, Brocade's downfall coincided with the year when Reyes made a staggering $556 million, most of which came from selling his options.In a joint news conference in San Francisco, the agencies alleged that the two former employees "routinely backdated stock option grants to give employees favorably priced options without recording necessary compensation expenses." The topic of intense debate is whether the pair purposefully backdated options to periods when Brocade's stock price was at a record low and whether the information was properly recorded and disclosed.This case, in essence, is an extension of other major scandals that recently rocked the corporate world, in which executives rake in tons of cash at the expense of unsuspecting shareholders.

billion.

To add to public suspicion, Brocade's downfall coincided with the year when Reyes made a staggering 6 million, most of which came from selling his options.

In a joint news conference in San Francisco, the agencies alleged that the two former employees "routinely backdated stock option grants to give employees favorably priced options without recording necessary compensation expenses." The topic of intense debate is whether the pair purposefully backdated options to periods when Brocade's stock price was at a record low and whether the information was properly recorded and disclosed.

This case, in essence, is an extension of other major scandals that recently rocked the corporate world, in which executives rake in tons of cash at the expense of unsuspecting shareholders.

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