Trident Hammered by Options Probe

The company says its audit committee is looking at the matter.
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Trident Microsystems (TRID) fell 21% after the company said its audit committee was probing the company's handling of stock option grants.

The probe comes on the heels of Trident's mention in an article Monday in

The Wall Street Journal

on possible stock option abuses at several companies. Monday's article focuses in part on possible options backdating at

KLA Tencor

(KLAC) - Get Report

. KLA shares fell 6% Monday.

Regulators are probing option granting practices across the nation. Companies ranging from

Vitesse

(VTSS)

and

Juniper

(JNPR) - Get Report

to

Caremark

(CMX)

and

UnitedHealth

(UNH) - Get Report

have gotten requests for information from the

Securities and Exchange Commission

and the Justice Department in recent weeks, company statements indicate.

The regulatory probes appear to focus on the notion that companies have given executives stock options that were backdated to maximize their value.

On Monday, Trident said of Monday's

Journal

article, "To our knowledge, the article relies on a survey of SEC filings going back 5-10 years when the company was still a struggling graphics chip enterprise with a market value substantially less than what it is today. The article then uses statistical assumptions and draws a set of inferences around the timing of certain stock option grants to officers during that period.

"The Company noted that its executive officers did not exercise the specific stock options being discussed in the article for an average of approximately seven years after the date on which they were granted and during certain portions of the intervening period, these options were 'under water' (i.e. of little value -- the underlying stock was trading below the option exercise price). Other than the implications of the statistical analysis, the article does not offer any evidence of wrong doing."

Trident said it also received and responded to an SEC inquiry regarding its stock option grants to executive officers for a period from 2000 to 2004.

On Monday, Trident fell $4.94 to $22.39.