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August 29, 2007 1:59 am
The Securities and Exchange Commission filed civil fraud charges on Tuesday against a lawyer accused of improper options backdating at two different Silicon Valley companies.
The charges provided further evidence that the SEC intends to take a hard line against corporate counsel who are alleged to have engaged in improper backdating of options grants.
The SEC accused Lisa Berry, general counsel for KLA-Tencor, a semiconductor equipment company, and Juniper Networks, a networking equipment company, of “repeatedly backdating options and falsifying related paperwork” at the two companies.
The SEC alleged that Ms Berry “devised the improper backdating scheme while serving as general counsel of [KLA-Tencor], then implemented similar practices after assuming the position of general counsel for [Juniper],” which she joined after leaving KLA in 1999.
Ms Berry’s lawyer said the SEC’s case was “unfounded”.
“Lisa had no responsibility for accounting at either company, had no idea that either company had violated options accounting, and did not personally benefit from misdated options grants at either company,” said Melinda Haag, an attorney with Orrick, Herrington & Sutcliffe in San Francisco.
Among other penalties, the SEC said it was seeking to ban Ms Berry from serving as an officer of director of a public company.
The civil charges against Ms Berry came weeks after Gregory Reyes, former chief executive of Brocade, a chipmaker, was convicted on criminal fraud charges stemming from backdating at his company.
Ms Berry’s case marks the second time in two weeks that the SEC has moved forward with a civil backdating case without waiting to see if the justice department will file parallel criminal charges.
Earlier this month, the SEC charged Michael Byrd, Brocade’s former chief financial officer, with fraud for his alleged role in backdating at the company. Mr Byrd’s attorney said that the jury in Mr Reyes’s criminal case had already accepted that Mr Byrd had no knowledge of illicit activities at the company.
More than 200 companies have come under investigation for alleged options backdating, in which the grant dates of a stock options are manipulated to inflate their value. Only a handful of cases have resulted in civil or criminal charges.
The SEC separately reached a settlement over backdating with Juniper on Tuesday. The company will not face a fine, and neither admitted to nor denied wrongdoing in the matter.
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