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Last year was a good year for most investors in the stock market.
However, among those that didn’t fare as well as they otherwise
would have, were investors who purchased stock in companies
who were associated with the backdated options scandal.
Specifically, investors who purchased stocks in those companies
before the backdating bad news was disclosed, purchased their
stock “at an artificially inflated price.” It is not surprising that
some of those investors are now bringing shareholder litigation
against the affected companies. One would suspect that, in the
future, additional litigation will be brought because, even though
the stock prices have recovered in many cases, these and other
investors paid too much for their stock.
Sunrise Senior Living (NYSE: SRZ)
Investors Want an Independent Investigation.
Some shareholders at the Virginia-based retirement home company
are upset regarding the Company’s investigation of the possible
backdating of stock options. One group that is taking action to
improve corporate governance in this area is the SEIU Master Trust,
a pension fund for the Service Employees International Union.
In December, 2006, the SEIU reportedly sent a letter to the
Board questioning the composition of the special review committee
investigating the matter. Not surprisingly, the SEIU Master Trust
wanted to ensure the investigation is “independent.” It is hard to
imagine that any other shareholders would disagree.
Sunrise Senior Living is under investigation for both the timing of
its options grants and insider selling prior to its May 2006 announcement
that it would restate its earnings. Since that announcement, its stock
has declined over 20%. It is very understandable why many
shareholders are upset, particularly those who purchased prior to
the May announcement when some insiders were selling their shares.
Monster Worldwide (MNST) and Backdated Options
The situation regarding backdated stock options at Monster.com, the
online job-listing service, is, unfortunately, typical of many companies
who backdated their options dates to enrich highly compensated
corporate insiders.
The most important item to bear in mind is that this practice wasn’t a
one or two year “mistake.” Instead, at Monster, this improper
practice happened for eight straight years – from 1997 to 2003.
What was the General Counsel doing? The General Counsel clearly
wasn’t doing enough and he was fired in November 2006, one month
after the CEO quit his job.
At Monster, the backdating of options definitely hurt shareholders.
Last month, Monster indicated that it recognized $339.6 million in
charges after an internal investigation uncovered improper stock-option
awards to employees between 1997 and 2003. Of course, those
shareholders who perhaps were most negatively affected were the
ones who purchased Monster.com in the months before the backdated
options scandal was disclosed. They purchased their stock at an
artificially-inflated price.
However, as you are probably aware, well over 100 companies are
under investigation for their stock option granting practices. In
particular, you want may want to consider your options and contact
us at info@securitiessleuth.com or 877.511.4717 if you are an
affected investor in the following companies.
Affiliated Computer Services Inc. (ACS)
On May 10, 2006, the Dallas technology outsourcer acknowledged,
after a preliminary internal probe, that it had issued executive stock
options that carried "effective dates" preceding the written approval
of the grants. ACS said it plans a charge of as much as $32 million
to rectify its accounting related to the grants. It is being examined
by the Securities and Exchange Commission.
Altera Corporation (ALTR)
On June 21, Altera said its special committee has reached a preliminary
conclusion that the actual measurement dates for certain option
grants issued between 1996 and 2000 differed from the recorded grant
dates, and that it expects to restate its financial statements for the
fiscal years ended 1996 through 2005.
Sycamore Networks, Inc. (SCMR)
On May 23, 2006, the Company disclosed it was informed that the SEC
has started a formal investigation related to certain stock options granted
by the company during calendar years 1999 through 2001 that were
erroneously accounted for under GAAP. The Company said it had
previously instituted and completed an independent investigation into
this matter and subsequently restated financial results for fiscal years
2000 through 2004 and for the first two quarters of fiscal 2005.
McAfee, Inc. (MFE)
On May 30, 2006, McAfee ended the employment of General Counsel
Kent Roberts after an internal review of the company's employee
stock options revealed an improper grant involving Roberts in 2000.
On June 9, McAfee disclosed it received a document subpoena
pursuant to a formal SEC investigation. On July 27, McAfee said findings
from a review of its practices and accounting for stock-option grants will
force it to restate prior results for at least one, and possibly several,
past periods.
Power Integrations (POWI)
The Company recently announced that it will not make its deadline for
filing its delayed quarterly and annual reports and, as a result will
likely be delisted.
Now with respect to securities cases that have recently settled. If you
are an affected investor – you purchased any of these stocks during
the relevant class period - you may wish to contact the claims
administrator to obtain additional information. Remember, if you don’t
submit your claim form, you won’t receive your share of any settlement.
Ask Jeeves (ASKJ)
Class Period: November 18, 1999 to May 16, 2000
Claims Deadline: February 5, 2007
Claims Administrator: Rust Consulting
Information regarding other recent settled cases, including the cases
listed below can be found at www.securitiessleuth.com.
Advanced Marketing Services
King Pharmaceuticals, Inc.
MasTec, Inc.
McLeodUSA, Inc.
Again you should contact the claims administrator (rather than us).
However, if you are an affected investor in any of the companies
under investigation, you many wish to contact us so that you can
consider your options.
Likewise, if you happen to be aware of corporate restatements or
other financial fraud -- especially if you're a victim -- you're encouraged
to contribute to the Sleuth by giving your own tip-offs at
www.securitiessleuth.com or by e-mailing info@securitiessleuth.com.
You can also call Mark McNair at 877-511-4717. If you have a friend or
colleague you think would benefit from The Sleuth, please pass along
this issue and ask them to sign up at
www.cartville.com/app/join.asp?MerchantID=47994.
Warmest regards,
Mark McNair
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