Fines for backdating
In this litigious society, shareholders will almost certainly file a class-action lawsuit against the company for filing false earnings reports.
In the worst cases of options backdating abuse, the stock exchange on which the offending company's stock trades and/or regulatory bodies such as the Securities and Exchange Commission (SEC) or National Association of Securities Dealers can levy substantial fines against the company for perpetrating fraud.
As a result, the company has been forced to recognize a stock-based expense increase of 3 million between 19. It has also been the subject of a civil and a criminal complaint.
The total cost to shareholders, in this case, has been staggering.
Speaking on Citi FM’s news analysis program The Big Issue, he explained that, although he is not against the NCA sanctions on the defaulting radio stations, the regulator has broken certain constitutional provisions with the way the sanctions were imposed on 131 radio stations.For example, in early November 2006, United Health reported that it would have to restate earnings for the last 11 years, and that the total amount of restatement (related to improperly booked options expenses) could approach, or even exceed, 0 million. While reports of past indiscretions are likely to continue to surface, the good news is that companies will be less likely to mislead investors in the future. Prior to 2002, when the legislation was adopted, an executive didn't have to disclose their stock option grants until the end of the fiscal year in which the transaction or grant took place.