Case library · Wall Street
The Backdated Stock Options
United States v. Reyes (2011)
Charge: Securities fraud, falsifying company books and records, lying to auditorsCourt: U.S. Court of Appeals, Ninth CircuitState: CaliforniaDocket: Wall Street
The facts
A man was chief executive of a technology company. He could approve stock-option grants for ordinary staff. He admits grants were backdated: recorded as given on an earlier date, when the share price was lower. Backdating was not illegal by itself, but its cost had to be shown properly in the company's books, and it was not. He says he did not know about the misreporting and relied on others. The law requires proof he acted knowingly. Is he guilty?
You have the facts the court had. Guilty or not guilty? Call it in the game with your friends, then see what the court actually decided. Wrong call, you drink.
Citation: United States v. Reyes, 660 F.3d 454 (9th Cir. 2011)
Read more at caselaw.findlaw.com. The source reveals the outcome.