Broadcom Co-Founders Charged in Stock Options Probe

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Federal officials have charged Broadcom co-founders with falsifying the company's reported income by illegally backdating stock options. Can someone explain to me why backdating stock options is illegal for some people and not for others?

The four men are accused of violating federal securities laws by misrepresenting the dates on which stock options were granted to its executives and employees. The Irvine-based communications chip maker agreed last month to pay $12 million to settle similar charges without admitting or denying the allegations.
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Probably for the same reason Phoenix Suns players get suspended for leaving the bench during a fight and Boston Celtics players do not get suspended for leaving the bench during a fight. Remember that Steve Jobs was once indicted for back-dating stock options but came, like Andy Dufresne, came out clean on the other side.
 
I believe it has something to do with the timing and selling of the stock. If the company performs in an extreme one way or another and you back date you options to make/lose more money when timed with an....oh hell I just can't make up any more bullshit on this.
 
As with all white-collar crime. The DEATH PENALTY is an actual deterant, as opposed to most violent crime where the perp could give two shits.

So OFF with thier fucking heads, and the practice will immediately stop. :eek::rolleyes::p
 
Steve said:
Can someone explain to me why backdating stock options is illegal for some people and not for others?
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Because some cases are worse than others. For some companies, it was a simple administrative mistake.
A (real life) example of this is the case where options were granted on day n, but the officially recorded day was day n+1. Really stupid and an incredible hassle for the (many) employees who have to clean up the tax mess, and illegal according to tax law, but not a criminal fact and easy to settle by paying the difference to the IRS.

A second fact is that it matters if the stock holders were seriously harmed in the process. In the case of Apple, Jobs had the good fortune that the stock price went up like crazy after the backdating. It's hard to find victims in this case: the existing stock holders don't care (assuming that the amount of options granted was not heavily correlated with the stock price, which is usually the case, and can't be proven anyway), the new stock holders don't care either, and the IRS will actually receive more money when lower priced options are exercised. Note that all this is only true when options aren't listed as an accounting expense, which was the case during the backdating days.

It's different when the stock price does stay mostly flat: in that case, the stock will be diluted more than it would have been if there wasn't backdating.

And finally, it also depends on the amount of proof, the locality and the spine of the presecutors. Broadcom is in Newport Beach, where there are far less backdating cases than in Silicon Valley, so there's more time per company to prosecute. Broadcom is also not exactly the most popular company, contrary to Apple of course. What exactly has a prosecutor to gain by suing Apple and forcing Steve to step down? The wrath of thousands of local stockholders who've made good money on his back?

Sometimes life isn't fair...
 
I don't know if anyone besides a tax lawyer could explain it. Just like why my bonuses from the last 3 years, given to me as stock, had to be taxed 3 times.
 
dgingeri said:
I don't know if anyone besides a tax lawyer could explain it. Just like why my bonuses from the last 3 years, given to me as stock, had to be taxed 3 times.
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Just 3 times? I got a bonus that was part cash and stock and that was taxed 6x.
 
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