Backdating digital river
This trend alone could provoke an industrywide adjustment in DO premiums. Stock options offer the holder the opportunity to buy a stock at a fixed price and then sell it at a gain if the stock rises.
That fixed price is usually the trading price of the stock on the day the option is granted.
“Some industries are more prone to claims than others.” Settlements of securities class-action suits often trigger DO insurance claims.
In November, a shareholder lawsuit against Digital River accused some of the company’s top officers and directors of backdating millions of dollars worth of stock options.Premiums on directors’ and officers’ liability insurance, also known as DO insurance, soared in 20 after the Enron and World Com scandals.But they’ve since come down as litigation related to those problems worked its way through the courts and the number of lawsuits that trigger DO insurance claims declined.Nicole Garrison-Sprenger can be reached at 651-228-5580 or [email protected] (October 30, 2006, AM EST) -- Sarbanes-Oxley reforms have not stopped companies from illegally backdating options, mostly because the U. Securities and Exchange Commission has failed to enforce them, according to a report a report recently released by a financial advisory firm. disclosed hundreds of late Form 4 disclosures of stock options grants, in which a company's stock price materially increased from the reported grant date to the disclosure date.