The chairman of the U.S. Securities and Exchange Commission (SEC) said that civil charges will be filed soon against companies that backdated stock options. According to MarketWatch, SEC Chairman Christopher Cox would not elaborate on which companies will be targeted and when.
The SEC investigation revealed that some companies backdated options to a point in time when prices were lower so that company executives could take advantage of jumps in share values.
Mr. Cox stated "For some period of time now, itis been abundantly clear that these are not merely episodic instances," noting that the practice was wide-spread in the 1990s.
Although the SEC isnit saying yet which companies will be prosecuted, itis possible that Apple Computer will be on the list. The company announced in June that it had hired independent council to investigate irregularities it discovered in stock option grants that were issued between 1997 and 2001.
In early July, Apple was hit with two lawsuits from investors over the way it handled the stock options.
The civil charges that the SEC files may be followed by criminal charges later on. The U.S. Attorney for Northern California has launched its own task force to investigate companies that may have been involved in stock option fraud.
U.S. Attorney Kevin Ryan said "Falsification or backdating of financial documents may call the integrity of companiesi financial statements into question, can constitute fraud on the company, shareholders, and the market, and may give rise to tax violations."
Apple has not indicated if it is being targeted with a criminal investigation.