Comverse technology backdating scandal
Backdating itself was rife in the Silicon Valley and went unnoticed until a student doing statistical studies figured out that backdating with illegal accounting was occurring in many of the technology firms earning many an illegal profit stealthily.When he got in touch with the Wall Street Journal they followed up the story and the backdating scandal storm started brewing and one of its first casualties was Comverse Technology Inc. B.(2006)) Comverse Technology Inc is the world’s leading provider of software and systems enabling network-based multimedia enhanced communication and billing services.Scandals from stock frauds to backdating scandals rule in stock markets and the lure of the lucre really tells in the stock market.One of the types of scandals to hit the stock markets and which did not receive much attention until lately is that of backdating stock options.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 .
As long as the intent is not to decieve or commit fraud and earn a fast buck backdating is perfectly legal.Options backdating is simply granting an employee stock options that is dated prior to the date that the company actually granted the option.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.Thus the parties affected were clearly the company its employees ,shareholders and board members whose money was clearly being swindled.Hence backdating is unethical and clearly illegal atleast in the Comverse backdating scandal.