The SEC filed a settled enforcement action today against Blue Coat Systems, Inc. and its former CFO, Robert P. Verheecke, alleging that they backdated stock option grants to executives and employees and reported false financial information to shareholders. The case is also notable for being the final options backdating case that the SEC’s San Francisco Regional Office expects to file: CalLaw’s Legal Pad reports that the Regional Director of the SEC’s San Francisco office, Marc Fagel, confirmed that the Blue Coat Systems case was the last coming out of his office.
The SEC alleges that from approximately 2000 through 2005, Blue Coat concealed nearly $50 million in compensation expenses associated with valuable “in-the-money” options by backdating paperwork to make it appear as if the options had been granted on earlier dates. Blue Coat and Verheecke have agreed to settle the SEC’s charges without admitting or denying the allegations. Verheecke will pay more than $185,000 in disgorgement, penalties, and prejudgment interest.
