Sec stock option backdating cases Free local hookups no reg

The Securities and Exchange Commission reached its first two settlements with companies in stock-option backdating cases Thursday as Brocade Communications Systems and Mercury Interactive agreed to pay fines totaling million.

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The charges were filed as the SEC reached a million settlement with Mercury, now owned by Hewlett-Packard, and a million settlement with Brocade.

Last week the Do J brought criminal charges against two Brocade Communications Systems executives, while the SEC filed a civil suit against the same two and the CFO.

As expected, the charges focused on backdating stock options by doctoring employment documents, neglecting to record the stock-option expense on the company’s books, and misleading investors.

For example, the IRS disallows certain corporate tax deductions for in-the-money options, but it allows them for performance-based pay.

Furthermore, since 1995, when FASB issued FAS 123, Accounting for Stock-Based Compensation, companies have been required to record in-the-money grants as a compensation expense.

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