U.S. Targets Comverse for Alleged Securities Fraud
RENEE MONTAGNE, host:
Time now for business news.
The scandal over the backdating of corporate stock options is widening. U.S. officials yesterday charged three former executives at a Long Island software company with securities fraud.
Among other things, the executives at Comverse Technology are accused of using a secret slush fund to award options to favored employees. NPR's Jim Zarroli reports.
JIM ZARROLI reporting:
U.S. officials say Comverse's founder and former chief executive Kobi Alexander made millions of dollars by backdating stock options, and they say the company's Chief Financial Officer David Kreinberg and ex-General Counsel William Sorin, helped him hide what was going on from the company's board.
Chip Burris is acting assistant director of the FBI.
Mr. CHIP BURRIS (Acting Assistant Director, Federal Bureau of Investigations): Comverse is a billion dollar publicly traded company, and its shareholders were plundered by this modern day pirates, and they must be held accountable. And they will be held accountable in the court of law.
ZARROLI: Federal officials say that between 1991 and 2001, Alexander would regularly award stock options to himself and employees, both at Comverse and a company it controlled called Ulticom. On at least 26 occasions, they say, he changed the dates that the options were granted to coincide with a time when the stock was trading at an especially low price. That meant that recipients would make a bigger profit if they later sold the shares.
Authorities say Alexander also awarded options to fictitious employees, and the options were then put into a slush fund. It's alleged he used these options to award favored employees.
U.S. officials have said they're investigating some 80 companies for backdating, although it's not clear how many of those involved deliberate fraud. Among those named so far are such corporate giants as Apple Computers and United Health Group.
Jim Zarroli, NPR News, New York.