Engineered support systems backdating
The SEC failed to overturn a directed verdict entered in favor of Engineered Support Systems, Inc. Those centered on claims that the company engaged in the unlawful and undisclosed backdating of its options in violation of its disclosed plan which provided in part: “Options granted are at an option price equal to the market value of the date the option is granted . The evidence demonstrated that the price at which the options were issued corresponded to the stock price on the certificate date.
Both defendants were alleged to have caused the annual reports as well as other filings of the company to be falsified as a result of the scheme. The Circuit Court affirmed the dismissal of the SEC’s claims. The Company applies Accounting principles Board opinion No. The Commission failed however to establish its claim that backdating the options clearly violated the disclosed ESSI plan.
Stuart Gasner centers his practice in the areas of white collar criminal and securities defense, intellectual property litigation and complex corporate disputes.25 “perceived that the undisclosed grant of ‘in-the money’ stock options – which had no impact on ESSI’s financial performance – would be a material misstatement or omission . .” Indeed, the Commission presented virtually no evidence on the question of materiality.Likewise, the Commission failed to present any evidence to support its negligence based claims under Securities Act Sections 17(a)(2) & (2).That is all the plan actually requires if literally read. perceived an apparent contradiction between the option dating and pricing practices of the company and its disclosed plan from his work on the compensation committee, the SEC did not establish that he recklessly failed to see an obvious danger that investors would be misled.There is nothing in the plan which specifically prohibited backdating the options. It is undisputed that no one at the company, including its outside auditors who monitored compliance with APB No.