Options backdating wikipedia

The problem with this practice, according to the SEC, was that stock option backdating, while difficult to prove, could be considered a criminal act 6.One of the larger backdating scandals occurred at Brocade Communications, a data storage company.

Options backdating is the practice of altering the date a stock option was granted, to a usually earlier (but sometimes later) date at which the underlying stock price was lower.

This is a way of repricing options to make them valuable or more valuable when the option "strike price" (the fixed price at which the owner of the option can purchase stock) is fixed to the stock price at the date the option was granted.

Cases of backdating employee stock options have drawn public and media attention.

In the context of mutual funds, a feature allowing fundholders to use an earlier date on a letter of intent to invest in a mutual fund in exchange for a reduced sales charge, e.g.

Giving retroactive value to purchases from the earlier date.

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