Foundry, VeriSign in Stock Option Probes
Switch/router vendor Foundry Networks Inc. (Nasdaq: FDRY) and security specialist VeriSign Inc. (Nasdaq: VRSN) are the latest companies to be sucked into the growing stock option scandal over so-called "backdating." (See Foundry Gets Subpoena and VeriSign Gets Subpoena.)
Broadcom Corp. (Nasdaq: BRCM), Juniper Networks Inc. (NYSE: JNPR), SafeNet Inc. (Nasdaq: SFNT), and Vitesse Semiconductor Corp. (Nasdaq: VTSS) are already involved in formal and informal investigations into the seemingly widespread practice. (See Backdating Blues, Options Scare Hits SafeNet, Juniper, Vitesse Gets Subpoenaed, and SEC Informaling Broadcom .)
“Backdating” involves the retroactive alteration of stock option grant dates to coincide with low share prices, so maximizing the value of the stock awards when, and if, the share price achieves a higher price.
Now Foundry and VeriSign say they're also being probed.
Foundry stated late Tuesday it has received "a grand jury subpoena issued by the U.S. District Court for the Northern District of California requesting documents related to the Company's granting of stock options from 1995 through the present. It has also been asked by the Securities and Exchange Commission (SEC) to provide documents "related to the same subject matter."
VeriSign has also received a grand jury subpoena from the U.S. Attorney for the Northern District of California "requesting documents relating to VeriSign's stock option grants and practices," as well as an "informal inquiry" from the SEC about the same issue. VeriSign says it had already launched its own internal review of its historical stock option grants before it received either request.
Both companies say they're cooperating with the authorities.
Foundry, which announced its subpoena hours after the markets closed, saw its share price drop 25 cents, about 2.5 percent, to $9.60 in after-hours trading Tuesday evening. VeriSign, which announced its news before the markets closed, saw its share price fall by $1.31, nearly 6 percent, to $21.47 on Tuesday.
— Ray Le Maistre, International News Editor, Light Reading