Backdating news: putting it in emails; and here come the awards

The WSJ does its usual heavy breathing on the latest backdating scandal – a complaint in a dismissed derivative suit at Mercury Interactive details (which news organizations have been clamboring to see until it was unexpectedly disclosed last Friday) details emails that seem to clearly reveal backdating conduct.

Interesting that the employees were putting all this criminal conduct in emails. Could they have expected that this conduct would land them in jail?

Meanwhile, three WSJ reporters have won the Polk Award for excellence in journalism. It's not the Pulitzer (yet), but as I said a few days ago about the backdating scandal:

What I think we're going to find when the smoke finally clears is a bunch of routine accounting misstatements, some ruined executive careers and, of course, a Pulitzer Prize.

Comments

[AS]

While I largely disagree on the criminalization of backdating, I disagree with your insinuation (or perhaps, direct point) that the fact that the backdating was discussed in e-mails somehow negates the executives' intent (or in any way mitigates the impropriety of their actions).
As set forth in said released complaint, at paragraph 5(c), former CFO Abrams replied to an e-mail inquiry regarding the dating of a grant: "Ken you know the story. I will not put this in an e-mail."

Furthermore, GC Skaer (ultimately failed when she) attempted to white-out fax headers on faxed UWC papers to remove evidence of backdating, employment letters were falsified to comport with backdated grants, and board minutes were engineered after-the-fact -- all to cover up the backdating practice. These cover up actions would imply the exact opposite of your insinuation (that these actions appear more to be innocent-intended actions). The executives, at least in the Mercury case, knew that what they were doing was at the very least misleading (they all knew why the 1989 stock options plan was amended, partly so that the options granted could not be in the money), and I feel no sorrow for the executives being tied up in civil lawsuits/SEC inquiry.

Now whether they should be put behind bars is another question...

[Larry E. Ribstein]

Whether they should be put behind bars is not "another question" -- it's the only question I was addressing. The conduct here may have been wrong in some sense, but the fact that it was embodied in emails I believe supports my point that the participants did not understand the severity of their wrongdoing.