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Mon, Jul 24, 2006 - Page 10 News List

Options scandal looks set to spread


But their study concluded that only a small minority of those who practiced backdating will ever be prosecuted because of the difficulty of determining an illegal practice.

Some companies, for example, may try to cover up the practice by choosing only the second-lowest stock price for the backdate option strike date.

Others may have had several simultaneous backdated stock option plans running at the same time and may in the end have chosen one over another.

In the emerging scandal the Wall Street Journal recently suggested that some of the backdaters profited from the market plunge that followed the Sept. 11, 2001 terror attacks.

Merrill Lynch, which lost three employees in the attack on the World Trade Center, reportedly granted its president on Sept. 24 options to buy more than 750,000 shares, at a price 15 percent below the pre-attacks level.

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