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ARTICLE · 12 OCTOBER 2006

Stock Options: ´Backdating and Springloading´ - Are Your Records in Order?

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Just when you might have thought that the dust had settled on the series of scandals that have rocked corporate America, the latest chapter in this continuing saga - involving stock options - is just being written. Currently, the practices of ‘backdating’ and ‘springloading’ are the focus of investigation by US securities regulatory authorities and US federal prosecutors, as well as being the subject of several class-action lawsuits by shareholders.

CanadaCorporate/Commercial Law
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By Eric C. Belli-Bivar and Liana L. Turrin

Just when you might have thought that the dust had settled on the series of scandals that have rocked corporate America, the latest chapter in this continuing saga - involving stock options - is just being written. Currently, the practices of ‘backdating’ and ‘springloading’ are the focus of investigation by US securities regulatory authorities and US federal prosecutors, as well as being the subject of several class-action lawsuits by shareholders.

The recent announcement by the Chief Criminal Investigator of the FBI, Mr. Chip Burrus, that it is probing the conduct of executives and officials at 52 companies, and that more cases are underway, underscores just how seriously the practices of backdating and springloading are being dealt with south of the border. Mr. Burrus notes that where his agency becomes involved "there are allegations of criminal misconduct".

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