How to Cash in on the Options Backdating Scandal?

1. More companies are going to be late in filing their SEC returns and will get delisted as a process. They will trade on pink sheets (Over the Counter) (look for the symbol followed by pk). OTC markets are notoriously not liquid. If there was a way to provide great liquidity over an alternate market there is money to be made - since most of the companies have products, good revenues, great customers etc.

2. Small independent audit firms: Most companies with backdating need an independent auditor to supplement their existing auditors. The smaller audit firms could make good short term money.

3. Legal firms: Same as auditors, except they are the first ones to get a call when the SEC comes calling.

4. Records and Content Management: Compliance issues make up most of the backdating scandal from a reporting standpoint. There is money in email discovery management, financial reporting and business intelligence tools.

5. Offshore staff augmentation: Some auditors and experts charge upto $400/hour for their services. Ripe opportunity to help them augment grunt work to offshore firms. If you are a offshore firm, buy or partner with a firm based in America.

6. Buy the stock: If you truly believe the company, its prospects, future potential and market, then buy it on the dip. But only after you have done all other due diligence.

7. Invest in Executive Search and Placement Firms: They are going to be looking forward to a lot of business replacing a bunch of executives who will either be fired or replaced because of options backdating.

Article Source: http://EzineArticles.com/?expert=Mukund_Mohan

backdating options | greg reyes

What the Media Does Not Cover About the SOBD Scandal? Employee Stress

There are a relatively few people that either profited or benefited enormously from the Options Backdating scandals. Lets assume that the top 10 executives in each of the high tech companies got the most number of stock options (> 70% of the grants). The rest of the employees also benefited but not as much.

Most of the companies currently under inquiry or investigation from the SEC are high tech, most have good products, a valuable franchise, over 1000 employees and many thousand customers that depend on them.

Most of these companies have to restate multiple years earnings due to tax and earnings implications. This cost comes from current year and next years bottom line. Add to the fact that customers get nervous when a company which was doing well now cannot state earnings for 3-4 quarters, and put off significant purchases, there is a significant risk these companies face after they have been asked to probe into their option grants.

Many of these companies have fired their top 2-3 executives - typically the CEO, CFO and Legal Counsel.

The point is: There are 1000 other employees and thousands of customers who suffer as a consequence.

Question: At what cost are we getting justice? Many of these companies will have to trim earnings, revenues and cut costs (possibly lay off people).

Is it not possible to just make sure the top executives resign and the rest of the company moves on - pay a one-time fine, pay taxes (estimated amounts) and move on with their lives?

“It is the greatest good to the greatest number of people which is the measure of right and wrong.” - Jeremy Betham

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gregory reyes | options backdating

Federal Judge Rejects Plea Deal Because of No Prison Time

On September 29, 2008, Federal Judge Cormac Carney rejected a proposed plea deal that would have given probation to Broadcom Corp. co-founder Henry Samueli. Samueli previously plead guilty to one felony count of making a false statement to the SEC. The Court's decision permits Samueli to withdraw that guilty plea.

Samueli is also listed as an unindicted co-conspirator in the federal indictment of Broadcom co-founder Henry T. Nicholas III, the company's former CEO, and William Ruehle, its former chief financial officer.

In his ruling, Carney noted that Nicholas and Ruehle, if convicted, could theoretically be sentenced to more than 300 years each in prison. Carney pointed out that people convicted in run of the mill fraud cases serve on average 17 months in prison. Carney also relied on the U.S. Probation Office's report that concluded probation was insufficient and recommended Samueli spend a year in prison.

Carney's ruling suggests that he agrees with the Probation report's conclusion that Samueli deserves to go to prison for lying to regulators about his role in an alleged $2.2-billion stock-option scam.

Carney rejected the plea deal for several reasons. The Judge believed that a significant prison sentence was warranted if the allegations are true. Judge Carney also criticized an unusual provision in the proposed plea. The provision called for Samueli to pay $12 million to the government even though the maximum fine permitted for the charge to which Samueli agreed to plead guilty is $250,000.

Judge Carney was not willing to accept a plea agreement that gives the impression that justice is for sale. He was concerned the payment provision would erode the public's trust in the fundamental fairness of the justice system.

Although it may be rare for a federal judge to reject a prosecution deal with a defendant, rejections have occurred more often recently.

Judge Carney, for example, sentenced money manager James P. Lewis Jr. to 30 years in prison. Mr. Lewis, who is 62 years old, has 22 years remaining on that sentence. Clearly Mr. Samueli, who is 53, would prefer to avoid a similar draconian result.

But there are few options available to white collar defendants when judges begin rejecting plea deals worked out with prosecutors. Who knows what the result would have been if Samueli had agreed to pay the $12 million as restitution, rather than as a fine?

Samueli is a defendant in an SEC lawsuit that says Broadcom's $2.2-billion understatement of compensation expense because of backdated options was the largest among a host of such cases the SEC looked into.

Judge Carney's ruling indicates that Samueli will spend some time in prison. This is no different than the fate of most federal white collar defendants.

Geoff Mousseau can be found on the web at [http://www.PrisonCampInc.com]

Article Source: http://EzineArticles.com/?expert=Geoff_Mousseau

options backdating | stock option backdating