Caremark Subpoenaed Over Stock-Option Grants - TheStreet

Caremark Subpoenaed Over Stock-Option Grants

The company's relocation program also gets the SEC's attention.
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Caremark Rx (CMX) joined an increasingly longer list of companies getting scrutiny over their stock-option practices, announcing Wednesday that it received a grand jury subpoena from a New York federal attorney requesting records pertaining to stock-option grants.

The pharmacy-benefit manager said late Thursday that it also received a letter of informal inquiry from the

Securities and Exchange Commission

requesting documents related to the granting of stock options and the company's relocation program. The company said that the letter from the SEC "states that this informal inquiry should not be construed as an indication by the SEC or its staff that any violation of law has occurred, or as an adverse reflection upon any person, entity or security."

Caremark plans to cooperate with each request for information.

It wasn't immediately clear that either probe was related to recent attention from regulators on so-called option grant backdating, in which company executives acquire grants that are deliberately and improperly dated to when shares traded at or near their lows, thereby offering an artificially low strike price and, as a result, a larger potential profit.

In recent after-hours trading, Caremark shares were off $1.16, or 2.4%, to $47.73 on Instinet.