Backdating is back – in an SEC settlement

The news came with a faint smell of a history lesson, though not an altogether obvious one. Jacob "Kobi" Alexander, a co-founder of Comverse Technology, has agreed to pay $53.6 million to settle a complaint by the US Securities and Exchange Commission about a scam that awarded him stock options backdated to make them a better value for him, and a worse one for shareholders. Alexander will be barred for life from serving as an officer or director of a public company. This case has been kicking around for a while, since the days of the backdating scandal in 2005 and 2006, when many cases came to light of boards awarding executives options that were already in the money, in violation of securities law. This, however, is a case with a twist. The SEC originally charged Alexander and two other former employees of Comverse with running a slush fund of options that they awarded themselves, which had originally been awarded to fictitious employees. "The SEC’s complaint alleged that Alexander made material misrepresentations to Comverse investors regarding Comverse's stock option grants and concealed from investors that Comverse had not recorded compensation expenses for the grants."

Source document: The SEC news release gives further details.
http://www.sec.gov/news/press/2010/2010-232.htm