Comverse technology backdating scandal
Some others argue that it may be a crime but it is a victimless crime owing to the fact that nobody was tangibly affected adversely.However these just seem to be blind arguments as these executives were aiming to decieve shareholders and board members regarding the stock options that were actually provided at a lesser price without disclosing it thus increasing the company’s expense towards compensation .According to his lawyers “Backdating options is not illegal.Alexander relied on lawyers and accountants to draft Comverse’s disclosures and to prepare its financial statements,” Alexander’s lawyers noted that “The charges relate to the disclosure and accounting treatment of the options,”.If backdating is done with proper documents and intimation of other stock holders the very purpose of backdating is defeated.Backdating is generally done to grant employees and favoured inviduals within the organisation an extra compensation without providing any necessary accounting or details in financial statements.
Ethics of backdating options While backdating of stock options is considered as illegal by many there are still others who claim that it is perfectly legal.
However this scandal has had a long term effect on the company and it is still recovering from the blow that it suffered during the investigations and subsequent convictions of its executives.
The Comverse Background story The Comverse Backdating scheme by three of the company’s top executives started coming apart in March of 2005 when a reporter called the CEO Jacob “Kobi” Alexander asking how it was that all options grants were made at a time when there was a sharp dip in stock prices of Comverse Technology Inc.
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.