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William F. Sorin will pay more than $3 million; about $1 million of that amount represents the ''in-the-money'' benefit from his exercise of backdated option grants.
Stephen Taub, CFO.com | US
January 10, 2007
The Securities and Exchange Commission has settled civil fraud charges against William F. Sorin, former general counsel of Comverse Technology, stemming from his role in the company's stock options backdating scandal.
Under the deal with the commission, Sorin will pay more than $3 million in civil penalties, disgorgement, and prejudgment interest; about $1 million of that amount represents the "in-the-money" benefit from his exercise of backdated option grants.
Sorin, who neither admitted nor denied the SEC allegations, also consented to a judgment enjoining him from further violations of federal securities laws; to be permanently barred from serving as an officer or director of a public company; and to be suspended from appearing or practicing before the commission as an attorney.
The settlement is subject to court approval, noted the SEC.
Last August, the SEC filed charges against Sorin and two other former Comverse executives, ex-CEO Jacob "Kobi" Alexander and former CFO David Kreinberg. Federal prosecutors also filed criminal charges against the three individuals; last November, Sorin pleaded guilty to a single criminal count of conspiracy to commit securities fraud, mail fraud, and wire fraud.
The SEC alleged that for many years, Alexander, Kreinberg, and Sorin granted undisclosed in-the-money options to themselves and to others by backdating stock option grants to coincide with historically low closing prices of Comverse common stock. Specifically, the SEC elaborated, "Sorin created company records that falsely indicated that Comverse's compensation committee had approved a grant of stock options on a date when, in reality, no such corporate action took place."
The complaint also alleged that Sorin created false records that facilitated a similar backdating scheme at Ulticom, another public company that is a majority-owned subsidiary of Comverse.
"Today's settlement signals that the Commission will vigorously pursue those responsible for backdating schemes wherever the investigation may lead, even, as appropriate, into the offices of corporate counsel," said Linda Chatman Thomsen, director of the SEC's Division of Enforcement, in a statement.