On Morning Edition today Jim Zarroli has a corporate fraud story that's worth hearing. Three former executives of Brocade Communications were charged in a scheme in which they allegedly handed out company stock options that had been backdated to when the share prices were low. That guaranteed recipients the biggest possible payday. These are the first charges in a burgeoning backdating scandal that involves dozens of U.S. corporations and top executives.
Prosecutors allege the backdating practiced at Brocade was especially crooked. They claim the backdating was hidden from shareholders and auditors and that board minutes at meetings were altered to maintain the deception. Whether backdating without this sort of alleged cover-up is illegal or merely sleazy is something that will be sorted out in court. SEC chairman Christopher Cox calls the practice "poisonous to efficient marketplaces."
Whether it's legal or not, the fact that companies essentially rigged the game to allow executives to cash in rich options is difficult to swallow.
Backdating reminds me of those conversations about time machines you used to have as a kid. You remember. Someone would say, "What would you do if you could go back in time?" And almost everyone said they would get rich. They'd bet on a team that wound up winning the Super Bowl or they'd buy a stock that later went through the roof or they'd pick the winning Powerball numbers.
Well, it looks quite a few executives got very rich with something like a real-life time machine.