Human Capital & Careers

FBI Probing 52 Companies over Backdating

In the past two months, the G-men have greatly expanded their investigation of stock options practices.
Stephen TaubSeptember 26, 2006

The FBI has stepped up its war on backdated stock options.

The federal law enforcement agency is investigating 52 companies that may have illegally backdated options and may open more cases, according to Bloomberg. Chip Burrus, an assistant director of the Federal Bureau of Investigation, told the wire service that the number of criminal cases has increased 16 percent in less than two months. “We’re going to knock that pretty good,” he told Bloomberg in an interview. “We’re going to go after those.”

Altogether, the FBI is investigating 486 corporate fraud cases this fiscal year, up from 423 in 2005, according to Bloomberg. The wire service added that the FBI has opened 1,160 securities fraud probes, compared with 1,139 last year. In fact, it notes that 20 of the corporate-fraud cases are said to involve more than $1 billion.

The wire service points out that the FBI works closely with the Securities and Exchange Commission, U.S. attorneys’ offices, the Justice Department’s fraud section, and other agencies.

“I’m not interested in civil fines,” Burrus told the wire service. “If I’m coming in and I’m looking, there are allegations of criminal misconduct. There’s obviously a different pucker factor that comes when you start talking to an FBI agent.”

And this includes the illegal manipulation of stock options, which he told Bloomberg is one of the biggest growth areas. So far, criminal charges in the options scandal were brought against former executives of Brocade Communications Systems and Comverse Technology. More than 100 companies are under investigation by the SEC for how they dated their stock options.