Comverse backdating scandal
Comverse backdating scandal
As part of Wednesday's charges, federal authorities seized more than $45 million in two investment accounts held in Alexander's name. According to complaint, the three defendants set an option price of $35 per share in 1999, well below the actual market price on the day the options were actually granted.
However, based on the first case brought by the Department of Justice and the SEC against two Brocade Communications Systems executives, it seemed virtually impossible to backdate options and achieve the ultimate goal of putting grants “in the money” without first deliberately falsifying documents and then covering up the sham—one definition of accounting fraud.In addition, the investor suit accused Alexander and Kreinberg of funneling some of the backdated options into a hidden “slush fund” from which they then granted options to several Comverse employees.Menorah Group is charging that the slush fund dates back to 1996, and was used up until November of 2006 when the scheme was uncovered.It is expected that Comverse Technology scandal will take legal action against the three men for their Comverse Technology scandal.The Securities and Exchange Commission (SEC) has already filed a lawsuit against Kobi, Kreinberg, and Sorin for giving false information on their financial reports from the dates of 1991-2005.Comverse Technology scandal involves the recent trend in executives abusing options.
In this particular scandal Comverse has already fired three of its executives for options fraud which includes, wire fraud, mail fraud, and securities fraud.
Alexander is currently living in Namibia, free on bail after being arrested last September. A recent extradition hearing was postponed until July 9 after Alexander appointed two lawyers from South Africa who didn’t have work permits to practice in Namibia, said Bloomberg.
Alexander’s lawyers noted that “The charges relate to the disclosure and accounting treatment of the options,” noted Bloomberg.
It is unclear whether Deloitte, as Comverse’s auditor, will be held liable for any damages related to the suit.
However, the idea of suing or calling into question the work of a third party — such as an independent auditor — that is not directly connected to the alleged fraud may be gaining steam.
Last month, the SEC filed civil stock fraud charges against Gregory Reyes, the former CEO of Brocade Communications Systems and Stephanie Jensen, Brocade's former vice president of human resources, for granting backdated stock options to employees. We will continue to pursue misconduct in any boardroom where we find it." Comverse , a New York-based multimedia software and systems firm, said in a statement the company has cooperated fully with the Do J and the SEC, noting that the men charged are no with the company.