Option backdating settlement
But they found him guilty of lying about the backdating to KB accountants and in a 2006 quarterly report. There was no evidence that he planned it, but he certainly covered it up,” said juror Ron Dick, a 72-year-old retired aerospace worker who lives in Harbor City. During the trial, prosecutors sought to portray Karatz as a greedy, scheming executive who deceived shareholders and federal regulators while inflating the value of his stock options from 1999 to 2005. “This is a victory for the Justice Department, not so much in the backdating issue, in which they weren’t successful, but more in emphasizing the need for corporate truthfulness,” said Peter Henning, who teaches securities law at Wayne State University Law School in Detroit. This case may be more about executive hubris than anything else.”The Karatz trial came only a few months after federal prosecutors suffered a significant setback in the options backdating prosecution of Broadcom Corp. Even without the backdated options, Karatz was one of the nation’s highest paid executives, making more than 0 million in compensation during his last three years at the company.Karatz, 64, is one of the most prominent corporate executives to be charged criminally in the government’s long-running crackdown on options backdating. The scheme enabled him to make more than million in “secret pay,” Assistant U. Revenue soared under his watch, reaching a record billion in 2006.Bruce Karatz, who helped turn Westwood-based KB Home into one of the nation’s most successful home builders during two decades as its chief executive, was convicted Wednesday on four felony charges related to the manipulation of executive stock options. Stock options allow employees to buy a certain amount of stock at a set price, typically the date on which they are granted.A federal jury in Los Angeles convicted Karatz of two counts of mail fraud, making false statements in a regulatory filing and lying to the company’s accountants. The jury rejected the government’s claim that Karatz intentionally defrauded shareholders by backdating stock option grants from 1999 to 2005 to make them more valuable. Wright II said Karatz could remain free on -million bond, secured by his Bel-Air home, until sentencing. Companies can boost the value of these options by backdating them to dates when the stock price was lower than the actual grant date. A federal judge in Santa Ana dismissed charges against both men and against two other company executives, saying prosecutors and unfairly influenced witnesses, making it impossible for the defendants to receive a fair trial.In other words, 35% of the litigation observations were parallel.
The case is monumental for shareholders seeking to recover losses sustained as a result of improper accounting for backdated stock options and is the largest recovery in a securities class action in the Eighth Circuit.The team delved into the company’s documents and internal correspondence, uncovering United Health’s pervasive options backdating scheme.Robbins Geller attorneys also collectively took more than 50 depositions and engaged in significant motion practice in the months leading up to the close of discovery.Other key corporate governance changes included (i) enhanced standards for director independence; (ii) a mandatory holding period for options issued to executives; (iii) a shareholder approval requirement for any stock options re-pricing; and (iv) a identified United Health as a company with “wildly improbable option-grant patterns.” By April 2006, the SEC had begun an informal inquiry prompting United Health to initiate an independent investigation into its own historical stock options granting practices.
After being selected as lead plaintiff, Cal PERS filed a consolidated complaint in December 2006. Rosenbaum denied defendants’ motions to dismiss the consolidated complaint in their entirety, and compared defendants’ scheme to the movie During the discovery process, Robbins Geller attorneys carefully scoured more than 22 million pages of documents obtained from defendants, as well as hundreds of thousands of additional documents from more than 15 third parties.Mc Guire and former General Counsel and Corporate Secretary David J. Mc Guire paid million and returned stock options representing more than 3 million shares to shareholders, while Lubben paid an additional 0,000 to shareholders.