Read The Recorder‘s roundup of the stock-option backdating scandal. There won’t be a test later … but there might be a subpoena.
She declined to name any of the companies, but said she expects many suits similar to the McAfee action to be filed over the next few months, by the rank-and-file and executives alike.
The new complaint is just the latest backdating-related problem for the Santa Clara-based company. On Friday, The Recorder reported that former McAfee General Counsel Kent Roberts was likely to be indicted by federal prosecutors within the month. The company fired Roberts in May.
The employees’ suit further accuses the company of reneging on promises to give former workers a 90-day extension on their window for exercising options. In August, then-Chief Executive George Samenuk sent an e-mail to all employees making this promise, and when he retired in October, interim CEO Dale Fuller decided to revoke it, the suit alleges.
Citing unnamed sources, the complaint accuses Fuller of telling senior management that he didn’t understand why McAfee would “take money out of our pockets and our children’s pockets and give it to employees who have left the company.”
The Securities and Exchange Commission doesn’t require companies to impose a blackout in this situation, as it does in some pension-fund disputes, Baker said.
But companies may choose to do so to prevent insider trading allegations, according to Morrison & Foerster corporate practice partner Robert Townsend. If an employee or executive is allowed to make a stock trade during this time � when the company is uncertain about what may end up being material or immaterial information � the company opens itself up to potential liability, Townsend said.
“If insiders are trading with material, nonpublic information, it could force the company to issue a press release and disclose information it might not wish to disclose and create liability for the individual,” he said. “They don’t want people trading until they’ve told the public how the quarter turned out.”
Though Townsend wasn’t sure why a company wouldn’t let former employees exercise their options, he speculated the company may want to make sure none of them make stock decisions based on information they got while still employed.
