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Investors Respond to Backdating 2.0 with Resounding "Who Cares?"


World greets news with half-hearted shrug rather than shock and awe.

Watch out, corporate beancounters. Backdating is back.

Or at least the Wall Street Journal thinks it is. The paper, which exposed the pervasive, illegal practice of rewarding executives with stock options dated to maximize their returns back in 2006, is reviving the scandal. According to a story in today's paper, researchers at University of Houston's C.T. Bauer College of Business looked for patterns of similar abuse at more than 4,000 companies and discovered that -- surprise! -- more companies did it than ever got caught for it the first time around.

But the world isn't greeting the latest scandal with the shock and awe it did a few years ago, when it became known that even Apple's (AAPL) Steve Jobs received backdated options. And that's a good thing.

Essentially a victimless crime, backdating is a minor offense compares the ugliness the credit crisis has wrought. John Carney at the Business Insider takes it even further: "The press devoted so much attention to backdating that it overlooked many of the early signs of the housing bubble popping, the coming destruction of Wall Street and the whinging of the economy before it nosedived."

Indeed, investors responded to the news with barely a shrug. The article only mentions 4 companies discovered by the new research -- Dress Barn (DBRN), Omnicom Group (OMC), JB Hunt Transport Services (JBHT), and United Rentals (URI). Shares of all four companies are in solidly positive territory today.

Perhaps it reflects a new shareholder outlook: If you guys are smart enough to reward your best people and not get caught, you must be doing something right.

The fallout from backdating 1.0 is still happening. The Journal reports that, so far, the SEC has filed civil charges against 24 companies and 66 individuals, and at least 15 people have been convicted of criminal conduct.

To say the SEC has more important matters to attend to today is an understatement. Everyone, from the business press to the financial regulators and federal prosecutors, have bigger fish to fry.

Will turning a blind eye to the latest revelations lead to more backdating? Perhaps, but it's unlikely it will become the common practice it once was. Millions of people fudge their tax returns every year, too. But that doesn't mean anyone expects the IRS to devote the resources necessary to catch them all.
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