Exec pleads guilty in options backdating case

25 October 2006

The former chief financial officer of voicemail software company Comverse has pleaded guilty to conspiracy and securities fraud in connection with options backdating, it has been announced.

David Kreinberg, who left the company in May this year, has become the first executive to admit his guilt in an investigation by US prosecutors into suspect options-granting practices at dozens of companies.

The Securities and Exchange Commission (SEC) is investigating whether shareholders have been misled by managers who have manipulated the grant dates of stock options in order to inflate their value.

Mr Kreinberg has already agreed to pay $2.4 million to shareholders affected by the alleged fraud, although this did not involve admitting any wrongdoing, the SEC has confirmed.

More cases of this kind are expected to follow, with other executives at Comverse the likely targets of prosecutors, along with those in other companies found to be misdating stock options.

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