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First, students learn the role of stock options in aligning the interests of managers and shareholders.They also realize how accounting standards and tax codes have contributed to the tremendous growth of stock options and even encouraged backdating practices.
The settlements included the first fines to stem from such cases— million for Mercury Interactive and million for Brocade.The SEC said that Reyes routinely provided extra compensation to employees by granting valuable in-the-money stock options for which a financial statement expense was required.To avoid reporting to investors the hundreds of millions of dollars in undisclosed compensation expenses, Brocade’s former executives allegedly concealed the fact that the options had been granted in-the-money by creating records to make it falsely appear that the options had been granted at a lower price on an earlier date, said the regulator.Alexander is currently living in Namibia, free on bail after being arrested last September. A recent extradition hearing was postponed until July 9 after Alexander appointed two lawyers from South Africa who didn’t have work permits to practice in Namibia, said Bloomberg.Alexander’s lawyers noted that “The charges relate to the disclosure and accounting treatment of the options,” noted Bloomberg.
In the case of Mercury Interactive, acquired by Hewlett-Packard last November, the SEC also charged four former senior officers of the company: former chairman and CEO Amnon Landan, CFOs Sharlene Abrams and Douglas Smith, and general counsel Susan Skaer.