Dozens of Companies Backdated Stocks After 9/11 and Broke the Law

March 5, 2007
Dozens of Companies Backdated Stocks After 9/11 and Broke the Law

Dozens of companies are being investigated for backdating stock options to the days that followed the Sept. 11, 2001, terrorist attacks, and profiting on the back of the equity-market slump that resulted, The Wall Street Journal reported Wednesday.

The latest development is only part of a wider backdating scandal that implicates more than 140 companies and has caused more than 70 firings or resignations of corporate officials, the Journal reported.

The options paid to top executives or other employees were arranged weeks after the attacks and took advantage of the relatively low value of company´s stock, the paper said. Normally options reflect the closing price of the share on the day it is granted, if the stock rises after the day of issue then the individual can exercise the option (buy the stock) and benefit from the premium generated.