SEC Ends Thomas Group Options Probe

The firm's internal investigation and later restatment resulted in a $2.2 million charge.
Sarah JohnsonJune 8, 2007

The Securities and Exchange Commission has ended its investigation into the way Thomas Group grants stock options and has taken no enforcement action, the professional services firm said on Friday.

Earlier this year, the Thomas Group disclosed that it had conducted its own probe into the timing of its stock-option grants and restated some of its financials. Outside lawyers and forensic accountants had determined that for 10 years, the Irving, Texas-based company allowed the company’s chief executives or presidents to authorize option plans with only minimal oversight from the board or its compensation committee.

Because of that process flaw, the company decided to adjust the accounting measurement dates for certain option grants. Its investigation team identified evidence that could be considered manipulative but did not consider the grants intentionally backdated or intentionally manipulated.

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As a result of the findings, the company restated financials for three quarters of the fiscal year ending December 31, 2006. The cumulative, pretax, stock-based compensation expense from the revised measurement dates was about $2.2 million between 1993 and 2006.

The SEC has investigated more than 140 companies for possibly fraudulent reporting of stock-option grants, according to John White, director of the SEC’s Division of Corporate Finance.