Former Apple CFO Fred D. Anderson reached a deal with the U.S. Securities and Exchange Commission over the backdating of stock options, including an agreement to pay $3.5 million to settle civil charges. As many of the newspapers stories report, backdating options is not necessarily illegal, but must be properly disclosed and accounted for.
At Economic Principals last week, David Warsh noted that the Wall Street Journal received the Pulitzer Prize for public service for its “creative and comprehensive probe” into backdated stock options. Warsh reports the back story of the options backdating affair, including how “the story itself began with an alarm raised by a finance professor.”
In addition to revealing the role that statistical analysis by a couple of academics played in bringing the story to the attention of the Wall Street Journal and federal regulators, Warsh also puts the right spin on the ethics of the practice:
The basic problem with backdating is fabrication…. It has to do, not with fleecing shareholders, but with misleading them. Deceptive practice is the issue, not some purely economic crime.