Backdating Battle Focuses on Fraud

We don't know where all those investigations are going to go because we haven't gotten to all the investigations. So, there are gradations, as you point out. To prove a fraud case, you need to prove fraudulent intent.

Is it possible that we're going to see actions taken against lawyers and auditors who may have given favorable opinions?

Let me go to an analogy of financial fraud generally. We have a long history of bringing financial fraud cases. And the defendants in financial fraud cases -- generalized financial fraud cases, without regard to options -- include companies, auditors, lawyers, executives. So, it really depends. Whether or not people find themselves as a defendant depends on what they did and not who they are.

Whither the Options

What happens to the backdated options held by rank-and-file employees? Assuming they were handed out fraudulently, they benefited from the fraud. Isn't that like being in possession of stolen property?

Stolen property is a very interested analogy.

Say someone robs a bank, and they pay their landlady with the proceeds of that theft, and then the landlady goes and uses that money to buy groceries. If she's not on notice, if she doesn't know anything, there's no reason to go after the landlady. If a bank robber, on the other hand, gives dye-packed money to his brother and tells him to go buy a car and then re-sells it to sort of launder the money, at some point, the brother who receives that stolen property becomes complicit in this and may have some accountability.

It depends on ... the state of mind of the people involved, whether or not they even have civil liability or criminal liability.

We have the possibility of trying to get money back. This may be more complicated in an options case because it's not necessarily realized gains yet.

But, taking your analogy with the dyed money, in many cases, you likely can see where the options went because the employees haven't exercised them yet.

Well, they may have the options, but we may not know yet, many of them may get cancelled. So, I think it's not yet known.

Where are you guys now in terms of staffing and the ability to conduct investigations or take enforcement actions?