What’s Wrong With Stock Option Backdating?

Law360, New York (April 29, 2010, 12:55 PM EDT) -- The short answer is that there is nothing wrong with backdating stock options — if appropriate procedures are followed and the transactions are properly accounted for and disclosed. Backdating is a practice of locking in financial gains by retroactively pricing stock option grants on days when a company’s stock price is low, thereby increasing the value of the options. This practice is legal when properly recorded as a non-cash corporate expense.

Then why have more than 170 companies been investigated since 2007 by the U.S. Securities...
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