The Pulitzers have been collected, and now the courts have been examining what, if anything, the backdating scandal amounted to.
The WSJ reports that more than 160 derivative cases have been filed. "[M]ore than a dozen" have been dismissed.
In those that have settled, the amounts paid out, both to the company and to the plaintiffs' lawyers, are relatively small. "In many cases, plaintiffs' lawyers are really just aiming to secure corporate therapeutics and, beyond that, just make a living," says Kevin LaCroix, a lawyer who focuses on issues of directors' and officers' liability and has had a limited role in some backdating cases.
Only about 30 class action suits have been filed on behalf of investors "because word of options backdating typically didn't lead to significant drops in share prices." At least two were dismissed at least partly because of failure to allege materiality, including the one at Apple.
Meanwhile, "the Securities and Exchange Commission has ended several investigations without filing formal charges." A continuing investigation deals with the backdating at Apple which, again, a court has said did not hurt the investors the SEC is supposed to be protecting.
So far the big casualty has been Greg Reyes, who was convicted of, essentially, being in the wrong place at the wrong time -- in other words, a victim of the corporate crime lottery.
As I've said from the beginning (e.g., here) the media manufactured the backdating story. The pernicious result is the massive inflation of run-of-the-mill state fiduciary claims, with huge direct and indirect costs for firms caught up in the maelstrom. Now, in the cold light of the courtroom, the backdating balloon seems to be bursting.
Comments