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 ?
(41.) As of July 27, 2006, it has been reported that eighty-four derivative actions and ten class actions have been filed by private litigants in connection with backdating of options.
Due to the correlation between downward earnings management and option backdating, the need for managers to diversify the increased-risk associated with stock-based compensation (Ofek and Yermack, 2000; Cheng and Warfield, 2005) can clearly explain the effects of CEOs' outstanding options on both earnings management and the occurrence of backdating.
First, unlike prior studies, we investigate the role of compensation committees in option backdating. Compensation committees are responsible for the approval of option grants.
An Iowa finance professor's study brought to light the fraudulent practice of backdating options.
This took place at the same time Apple was backdating options for Steve Jobs, putting an extra $20 million in his pocket.
The thing I liked about the Journal's treatment of the Alexander case was how the reporter managed to be respectful toward the Namibian legal system while at the same time hinting to readers that not every society has the same attitude toward backdating stock options as this one does.
Consider that in January 2008, current and former top officers of UnitedHealth Group agreed to pay a record $887 million to settle stock-option backdating charges brought by government agencies and by shareholders bringing private actions.
In 2006, Charles Forelle and James Bandler ("The Perfect Payday," Wall Street Journal, March 18, 2006) reported that all six of the option packages granted to Affiliated Computer Services Inc.'s CEO Jeffrey Rich from 1995 to 2002 were dated at the bottom of a steep drop in stock price, with the odds of such an occurrence "around one in a billion." The SEC decided to look into the issue of backdating option prices, and by mid-2007 more than 140 companies were under investigation.
While backdating practices assume various forms, the typical scenario alleged is one in which the company has granted an option with an exercise price below the market value of the company's stock on that day.
Summary: The Securities and Exchange Commission announced Thursday it suspended five accountants and two audit firms for performing deficient audits of public companies, falsifying and backdating ...
The new backdating power gives the LAA a discretion to backdate an: