Read The Recorder‘s roundup of the stock-option backdating scandal. There won’t be a test later … but there might be a subpoena.
“This one is unusual in that it focuses on exercises,” said Hoenig. “Most of the attention in stock option backdating in the past several years has had to do with the grants.”
Both a spokesman for the U.S. attorney’s office and Abrams’ lawyer, Farella Braun & Martel partner Douglas Young, declined to comment Friday afternoon.
Just as interesting as what prosecutors put in the Abrams complaint is what they left out. When the Securities and Exchange Commission filed suit against Mercury and its executives last year, it alleged that the company’s former general counsel, Susan Skaer, participated in another exercise-date scheme.
Skaer sent Mercury’s controller a note on March 10, 1998, saying that former CEO Amnon Landan may exercise 100,000 shares “effective as of a prior date,” according to the SEC complaint. Skaer then filed an amended Form 4 for Landan two weeks later, reporting a 65,000-option exercise the prior January. Landan, however, had exercised the options on March 25, realizing a tax advantage by concealing more than $698,000 in gains, the SEC alleged.
Though Abrams was also involved in that transaction, the criminal complaint against her only refers to conduct in 2001 and 2002, presumably because the charges carry a six-year statute of limitations.
Skaer’s lawyer, Orrick, Herrington & Sutcliffe’s Melinda Haag, could not be reached for comment late Friday afternoon.
According to the Abrams complaint, the former CFO reported she exercised 45,501 options on May 3, 2001 � when the stock price was $67.41 � when she actually exercised the grant on April 4, when it was $31.88. She reported the same inaccurate date for Landan’s 284,000 options, the complaint alleges, and for 364,586 options belonging to Kenneth Klein, Mercury’s former chief operating officer.
