The Securities and Exchange Commission has charged Myron F. Olesnyckyj, former general counsel of careers and recruitment company Monster Worldwide, with securities fraud for his role in backdating stock options granted to thousands of Monster officers, directors, and employees, including himself.
“Olesnyckyj knew that backdating was wrong but nonetheless went along with the scheme,” said Mark Schonfeld, director of the SEC’s Northeast Regional Office, in a statement. “Any lawyer who works at a public company should do everything possible to thwart fraud — not participate in it.”
The complaint alleges that, from 1997 through 2003, Olesnyckyj secretly backdated stock options grants to coincide with the dates of low closing prices for the company’s stock, resulting in grants of in-the-money options to numerous individuals.
The SEC asserted that Olesnyckyj, or others acting at his direction, prepared backdated documentation for the compensation committee using the improper grant date, then caused Monster to misrepresent in regulatory filings that all stock options were granted at fair market value on the date of the award. The complaint also accused Olesnyckyj of misleading Monster’s outside auditors by providing similarly misleading documentation.
By backdating and improperly accounting for options, alleged the SEC, Monster granted undisclosed compensation to its employees, failed to recognize compensation expenses, and overstated its net income by $340 million from 1997 through 2005.
Meanwhile, appearing Thursday before U.S. District Court Judge Laura Swain in Manhattan, Olesnyckyj agreed to plead guilty to securities fraud and conspiracy to commit securities fraud, reported the Associated Press. He faces as much as 25 years in prison and a fine of more than $5.2 million, the AP added, and has agreed to cooperate with prosecutors.
An attorney for Olesnyckyj was not immediately available for comment.
Bloomberg pointed out that at 14 companies that are investigating their stock-option practices, in the past eight months, the general counsel or chief in-house attorney has resigned or was fired. A total of more than 75 executives at such companies have resigned or been fired, the wire service also noted.
In January, the SEC settled civil fraud charges against former Comverse Technology general counsel William Sorin, stemming from his role in the company’s stock-options backdating scandal. Sorin, the first corporate attorney to be fined by the SEC related to the options scandal, agreed to pay more than $3 million in disgorgement, prejudgment interest, and civil penalties.
