Options Pricing Investigations

MAKE A CLAIM Do you believe that other U.S. corporations have manipulated the prices of options granted to their senior executives or directors? CONTACT US

Forbes.com recently published a report written by Harvey Pitt, former Chairman of the SEC (2001 to 2003), who stated that options price backdating is The Next Big Scandal.

Options pricing backdating occurs when options grants to senior officers or directors of public companies are made at prices lower than the trading price of the stock on the date such options are granted. To accomplish this illegal and improper act, officers and directors select a prior date, when the stock was trading at a lower price, and pretend as if that were the actual date of the grant. For example:

XYZ Corp. grants options on June 22, when its stock price is $25, but records the date of issue as May 22, when the stock price was only $15. The effect of this simple slight-of-hand is a very lucrative "gift" of corporate assets to a "lucky" recipient.

To protect investors from this illegal and improper conduct, Kahn Gauthier Swick, LLC has created the nation's first privately funded independent Options Pricing Investigations Division, focused on the investigation into the illegal backdating of options grants by U.S. corporations. A growing number of companies are now being investigated by KGS Options Pricing Investigations Division for improperly manipulating the prices of options granted to officers and directors.

REPORT ILLEGAL OPTIONS PRICE BACKDATING

If you believe that other U.S. corporations have manipulated the prices of options granted to their senior executives or directors, please contact KGS Options Pricing Investigations Division.

The backdating of the exercise price of options is illegal and improper and violates each company's internal procedures as well as state and federal law. Such practices also constitute accounting fraud in violation of the Securities Act of 1934, Internal Revenue Service and tax fraud and breach of fiduciary duties to shareholders. The manipulation of options exercise prices results in lower payments to companies and it also results in those companies under-reporting compensation expenses in violation of GAAP.

More fundamentally, according to former SEC Chairman Harvey Pitt, "the financial statements of a company that has engaged in backdating may require restatement." The options subject to such false pricing may not be deductible, and the expenses, as well as the various periods to which they may have been allocated, may also be incorrect factors necessitating a restatement.

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Kahn Gauthier Swick, LLC has its principal office at 650 Poydras St. Suite 2150, New Orleans, Louisiana 70130. Lewis Kahn is the attorney responsible for this site. Mr. Kahn may be reached at 504-455-1400.

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