Wednesday, July 25, 2007

2007-07-25 Former SafeNet CFO/President Indicted for Backdating - More Than Option Prices

Civil charges relating to options backdating were filed by the SEC against SafeNet and KLA/Tencor. Perhaps more interesting is the indictment of Carol Argo, former SafeNet CFO/President. A read of the indictment, which was made public yesterday, sets forth allegations that Argo backdated options prices, BoD minutes, and her signature on documents in connection with stock option grants.

Excerpted From the Argo indictment filed in the United States District Court for the Southern District of New York:

"a. ARGO and her co-conspirators picked dates on which SafeNet’s stock price was at or near its low over a certain period, usually within the prior quarter, and made it appear as if options were granted at fair market value on those dates, when in fact they were granted at a later date.

b. ARGO and her co-conspirators prepared and caused others to prepare unanimous written consents for the Compensation Committee’s approval with backdated dates to make it appear as if the Compensation Committee had approved option grants on those dates.

c. ARGO and her co-conspirators ignored or modified existing option grants after the Compensation Committee had already executed unanimous written consents or otherwise approved option grants to take advantage of falling stock prices.

d. ARGO and her co-conspirators caused and directed false and misleading entries to be made in SafeNet’s financial books and records, thereby falsely overstating SafeNet’s publicly reported income during the period 2000 through 2006."

The question always begged (and now answered in part) --- what else is being backdated?

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