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Stock Options Task Force Set to Patrol Bay Area
Staff Reporter -- Electronic News, 7/17/2006
A "stock options backdating task force" has been assembled by the U.S. Attorney to investigate the stock option backdating allegations of companies and individuals in Silicon Valley.
According to a statement released last week by the U.S. Attorney's office in Northern California, the task force is investigating several companies in the Bay Area to determine the "extent of the intent to mislead or defraud shareholders in the dating and awarding of stock option grants." The task force will include members of the U.S. Attorney's Office and the FBI in the Northern District of California.
Click here for more news on the unfolding stock option investigation."We will investigate whether individuals and companies may have deliberately backdated stock options with the intent to defraud," U.S. Attorney Kevin Ryan said in the statement. "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. Falsification or backdating of financial documents may call the integrity of companies' financial statements into question, can constitute fraud on the company, shareholders, and the market, and may give rise to tax violations.
"We will evaluate the facts of each case, and we will bring criminal charges when appropriate," Ryan asserted.
The task force is currently composed of four members of the U.S. Attorney's Office and four supervisory special agents of the FBI, along with several special agents assigned throughout the Bay Area.
"The FBI, working in conjunction with the U.S. Attorney's Office and other concerned entities, will diligently investigate any allegation in which a publicly traded company has illegally backdated stock options," Arthur Balizan, the FBI's special agent in charge of the task force, said in the statement. "Although not all of the allegations will rise to the level of criminal prosecution, the FBI has a duty to the investing public to examine whether companies, both in the past and present, are violating securities laws. Illegally backdating options give the company insiders an unfair advantage over the investing public and contributes to shareholders' lack of trust in those executives who are running these companies."
As one of only two U.S. Attorney's Offices in the country with a stand-alone Securities Fraud Section, Ryan further noted that FBI investigators and U.S. Attorney's Office prosecutors have a "practiced expertise" in the investigation of complex white collar cases.
