Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

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

By

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

PrintPRINT
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.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE