The U.S. attorney for the Northern District of California, Kevin Ryan, on Thursday launched a stock-option grants task force to add to ongoing investigations of the alleged backdating of grants by companies to increase executives’ financial gain, The Wall Street Journal reports.
Ryan said at a news conference Thursday that backdating “needs to be investigated aggressively,” and that any party found guilty of the practice could face a variety of fraud charges, as well as tax regulation violations, according to the Journal.
The U.S. Securities and Exchange Commission (SEC) and a handful of federal prosecutors from states across the nation are looking into possible backdating of stock-option grants at more than 50 companies—many of them technology firms—because some executives were given grants at cheap prices just before large increases in their companies’ stock values, the Journal reports.
Ryan’s San Francisco office handles the Silicon Valley area, and according to SEC filings, he has already issued subpoenas to more than 12 companies in relation to options backdating, including KLA-Tencor, a semiconductor-equipment producer, and Internet firm CNET Network, the Journal reports.
The new task force will be made up of 12 or so U.S. prosecutors and federal officials, according to the Journal.
“It is integral to the public trust in our financial markets that books and records are maintained honestly, and that the true financial condition of public companies is disclosed accurately,” Ryan said in a statement, the Journal reports.
The SEC is probing possible civil violations in relation to the alleged backdating of options, and federal prosecutors from Massachusetts and New York, among other states, have launched criminal investigations into the matter, according to the Journal.
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