Sunday, November 11, 2007

SEC Brings 14 Percent More Cases Amid Options Probe (Update1)

The U.S. Securities and Exchange
Commission brought 14 percentage more enforcement lawsuits in fiscal
2007, the first addition in four years, amid a federal investigation of
companies that backdated stock-option grants.

The regulator filed 656 lawsuits alleging securities law
violations in the twelvemonth ending Sept. 30, up from 574 a year
earlier, second Enforcement Head Linda Thomsen said at a law
conference in New House Of York today. Improper fiscal disclosures,
including deceptive statements on options grants, made up 33
percent of cases, compared with 24 percentage in 2006, she said.

More than 220 companies have got disclosed internal or federal
investigations into whether they backdated employee stock
options to lock in net income for recipients. The Washington-based
regulator filed 24 related to lawsuits in the most recent year, after
bringing two in 2006, Thomsen said.

''There are still more than to come,'' she said. ''My hope is
we will acquire a batch more done'' complete the adjacent 12 months.

The SEC's backdating investigations so far have got targeted companies
including Brocade Communications Systems Inc. and former
officials from Apple Inc.

The figure of lawsuits related to fiscal revelations may
be rising because of the Sarbanes-Oxley Act, Thomsen said. The
law, passed by United States Congress in 2002 to battle corporate fraud in
the aftermath of Enron Corp.'s collapse, made it easier for
regulators to throw executive directors answerable for statements
companies do to investors.

Accounting Sweep

The Numbers were boosted by a sweep, announced in
September, of 69 accounting houses and people who allegedly
audited populace companies without being registered with the
Public Company Accounting Oversight Board, as needed by
Sarbanes-Oxley. The second issued 39 orders. Most defendants
settled, agreeing to refund clients a concerted $201,337 in fees.

A rush in leery trading ahead of corporate buyouts
led the federal agency to register 47 insider-trading lawsuits during the
year, one more than than in 2006, Thomsen said. The lawsuits included
the SEC's biggest since the 1980s, involving a ring of former
employees at UBS AG, Lewis Henry Morgan Francis Edgar Stanley and Bear Stearns Cos.

Continuing Focus

Insider trading may stay a focusing this year, while the
agency scrutinizes executives' so-called 10b5-1 trading
programs. The regulator authorized the programs in 2000 to let
managers sell company shares without being accused of insider
trading. The programs necessitate participants to put up trades before
gaining confidential information that may impact stock prices.

If the second happens widespread maltreatments and companies don't
take stairway to forestall them in the future, the programs should be
discontinued, Thomsen said.

Complaints against fiscal advisors made up 12 percent
of the caseload, slipping from 15 percentage in 2006 as a
crackdown on mutual-fund abuses injure down, Thomsen said. Cases
targeting broker-dealers climbed to 14 percentage from 13 percent
a twelvemonth earlier.

Cases targeting companies for failing to register financial
reports drop to 8 percentage of the caseload, roughly half the
year-earlier share, second spokesman Toilet Squatter said.

To reach the newsman on this story:
David Scheer in American Capital at .

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