Backdating


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Backdating

In the context of mutual funds, a feature allowing fundholders to use an earlier date on a letter of intent to invest in a mutual fund in exchange for a reduced sales charge, e.g. Giving retroactive value to purchases from the earlier date. In the context of corporate governance, the illegal practice of setting the date of options awarded as part of executive compensation to a period when the stock price was very low (rather than setting the date of the options on the date the award was made).

Backdating

The act of dating a document before the date it was actually signed. For example, if one signs a contract on February 1, one may backdate it to January 31. Backdating is usually illegal; for example, one may use backdating to evade taxes. However, it can be permissible under certain circumstances. For instance, one may backdate an insurance claim if there was an unavoidable delay between the date the insured event occurred and the day the claim was made.

backdating

The practice of allowing a mutual fund shareholder to use previous purchases of the fund's shares so as to qualify for reduced commission charges on subsequent purchases. Backdating is used when a fund offers declining proportional sales charges on larger purchases.
References in periodicals archive ?
However, we further show that the negative relation between unvested options and the occurrence of backdating is largely driven by managers with less persistent incentives from unvested options.
Alexander Googled "Namibia & Backdating Stock Options," didn't come up with anything too worrisome, and high-tailed it out of town.
Fried argues that companies can avoid the temptations of backdating by announcing all stock option grants at a set period in advance of the grant.
While the loopholes that permitted companies to backdate stock options in the past have largely been closed by recent legislation, governmental agencies and the plaintiff's bar have dedicated significant resources in the past year to address past option backdating practices.
I believe that the chancery court wanted to make two things absolutely clear: that the Delaware courts will make these decisions under Delaware law, and that backdating, lying to shareholders, is utterly and clearly a breach of the directors' duty," said Clint Krislov of Chicago, who represented the plaintiffs in Ryan.
It is important that the companies and individual directors and officers provide prompt notice to the D&O insurer of any options backdating claim.
The report found that to date, the options backdating scandal has resulted in an unadjusted initial decline in market value of $5.
One lesson is to understand that insurance, legal defense and business strategy are all intertwined when it comes to dealing with a backdating issue.
The corporate crooks who loot their firms by backdating haul in hefty amounts of plunder.
30, citing an unwillingness to sit for further questions over the company's backdating practices in the past.
Dean Foods is one of at least 152 companies that have launched internal investigations or are under scrutiny by federal regulators for possibly backdating stock option grants.