Human Capital & Careers

Siebel Says SEC Examining Options

The business software maker is the latest company to be probed by the commission concerning the timing of stock option grants.
Stephen TaubMarch 15, 2005

Business software maker Siebel Systems, already fighting the Securities and Exchange Commission regarding Regulation Fair Disclosure, is the latest company to be probed by the commission concerning the timing of stock option grants.

Siebel announced in a regulatory filing that the SEC has issued an order of investigation, stressing that the commission confirmed that “the issuance of the order does not indicate that it has concluded that the company has violated any securities laws.” Siebel was also one of a number of companies mentioned in a March 2004 Wall Street Journal article on the early stages of the probe. The Journal reported that the SEC was looking into the practice of granting options to executives shortly before announcing positive news, which would give the value of the options a quick boost.

According to proxy research firm Glass Lewis, 16,500 option grants were made to executives in 2003 and 2004. One week after the grants, the underlying share price of 289 grants had climbed 25 percent; one month later, 1,422 grants had experienced such a rise in their underlying price.

TheDeal.com recently reported that Amalgamated Bank has filed lawsuits charging that executives at Cisco Systems and Tyson Foods illegally granted themselves stock options before they announced good news. “The options grants were clearly orchestrated by insiders to coincide with, or in anticipation of, the happening of a material corporate event that was known to insiders making or accepting the grants, but not to the shareholding public,” the complaint reportedly said.