The stock plans of many public companies prohibit the granting of below-market options; other companies disclose in their SEC reports that stock options are granted at market and prepare their financial statements on that basis.The term “backdating” refers to a number of option granting practices in which the reported grant date is different from the date on which the option is actually awarded, resulting in an option that is already “in-the-money” at the time of the grant.while completing my Masters of Science in Accounting & Taxation at the University of Hartford.Given the recent resurgence of news relating to options backdating, I thought I’d reprint the paper for those who might be interested.
He is the first person to have been convicted for fraudulent backdating of corporate stock options.Reyes began working full-time position at Convergent while taking evening classes in order to complete his degree.After obtaining his degree, Reyes became an OEM sales representative for Convergent, then left to become Vice President of Sales and Support at Banyan Systems, a networking and data communications software firm.This is one of the most common issues which comes up in the context of group reorganisations or intercompany agreements. Giving a document a date which is earlier than the date when it was actually signed, would almost certainly constitute fraud.Although it may have been intended to put in place a new arrangement by a particular date – often a year end – that date may now have passed. Obviously the ideal position is to put in place the legal documents in advance. Well, it depends on what was transferred, and whether it can be said that the relevant transaction has already happened.