Comverse technology backdating scandal
The general counsel, who was also in on the scheme, drafted and signed off on the reports.( Options run out at Comverse, Richard Duprey (2006)) While they arrested 2 of the executives CFO David Kreinberg and former General Counsel William Sorin the kingpin of the racket CEO Jacob “Kobi” Alexander fled the police and was later tracked down to Sri Lanka leading to high drama.
This generally means that the value of the stock option is set to less than the fair market value thus deceiving shareholders and potential shareholders and dealing out an unfair advantage and profit to certain favored individuals While backdating may not necessarily be illegal it is virtually impossible to backdate options and achieve its ultimate aim of making money without falsifying records and documents hence misleading shareholders and other interested parties, which comes under the clear heading of accounting fraud.The Securities and Exchange Commission is currently investigating more than 80 public companies and the Internal revenue service is auditing 40 businesses for improper reporting of backdated options.( Securities Litigation & Regulation, Mateja, W. This scandal hit the headlines in 2005 and involved some of the top executives of the company and even today continues to bring forth many more shocking details of the fraud.Whether backdating options by some of its top executives is ethical still remains debatable and there are many gray areas that still need to be dealt with.Its effect on Comverse Business While many wrote off Comverse after its involvement in major lawsuits it still continues to try to gain its lost ground.Comverse Inc tottered under the effect of its various scandals, with it being one of the top affected in backdating history, after having 3 of its top executives, including its CFO and CEO charged with various backdating offenses the future of Comverse seemed to be under a cloud .