There were rumblings near the end of 2008 that the SEC’s interest in options backdating was winding down, but the last few days have seen a new surge in such cases. On May 14, the SEC filed a settled backdating enforcement action against Gary A. Ray, the former VP of human resources at L.A.-based homebuilder KB Home, Inc. Today, the SEC brought another backdating case against Monster Worldwide, Inc., for an alleged “multi-year scheme to secretly backdate stock options granted to thousands of Monster officers, directors and employees.” The SEC announced that Monster agreed to pay a $2.5 million penalty to settle the SEC’s charges that the company defrauded investors by granting backdated, undisclosed “in-the-money” stock options while failing to record required non-cash charges for option-related compensation expenses.
The SEC’s alleges that as a result of this scheme, Monster materially overstated its quarterly and annual earnings in its financial statements and was required to restate its historical financial results for 1997-2005 in a cumulative pre-tax amount of approximately $339.5 million to record additional non-cash charges for option related compensation expenses.
