Sec stock option backdating cases

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Stock-option backdating is back in the news, with Quest Software, a midcap provider of point-of-sale systems, settling civil charges by the Securities and Exchange Commission.The SEC also settled a fraud case against Med Quist Inc., a small-cap medical-transcription company.

The SEC began charging corporations and executives in enforcement actions relating to backdating in significant numbers in 2006, and criminal charges have resulted in a few cases.“Nobody in any public company in America, unless they don’t own a television, can now think that the backdating practices that we are focused on are legitimate,” said Cox.Prosecutions against executives accused of fraud in connection with backdating stock options have been plagued by prosecutorial misconduct.In August, the Ninth Circuit reversed the conviction of Gregory Reyes, former CEO of Brocade Communication Systems, due to prosecutorial misconduct.Last week, Judge Carney of the Central District of California dismissed charges against former Broadcom executives with prejudice, entering a judgment of acquittal for one.

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