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Juniper Settles, SEC Charges

Craig Matsumoto
8/28/2007

Juniper Networks Inc. (NYSE: JNPR) announced today it's settled its options backdating case with the Securities and Exchange Commission (SEC) , admitting no guilt and paying no fines in the process.

But the SEC did come down on former Juniper general counsel Lisa Berry for her part in backdating options at Juniper and, earlier, at KLA-Tencor Corp. The SEC filed civil-fraud charges against her in federal court in San Jose, Calif., according to The Wall Street Journal.

As for Juniper, its punishment amounted to a stern talking-to. "Juniper Networks has agreed to settle the charges by consenting to a permanent injunction against any future violations of the antifraud, reporting, books-and-records and internal control provisions of the federal securities laws," the company's press release states. (See Juniper Settles With SEC.)

In other words, Juniper promised not to break any laws in the future, a spokeswoman confirms.

Berry is the only Juniper executive to be charged by the SEC.

In 2006, as the case was unfolding, CEOs of other firms such as Comverse Inc. (Nasdaq: CNSI) and Vitesse Semiconductor Corp. (Nasdaq: VTSS) were being forced out due to stock options backdating. Speculation at the time was that Juniper's case could go to the top as well, to CEO Scott Kriens. (See Comverse CEO, CFO Resign, Cops Catch 'Most Wanted' Ex-CEO, Vitesse Execs Get the Axe, and Backdating Could Bite Juniper Execs.)

Juniper's internal investigation of options practices did turn up instances of backdating. Kriens himself received only two such options grants, both of which were canceled, unexercised, in 2001. Kriens hasn't exercised any options since 1998. (See Juniper Completes Probe.)

In March, Juniper restated past years' earnings to account for the proper value of backdated options. (See Juniper Catches Up, Writes Down.)

— Craig Matsumoto, West Coast Editor, Light Reading

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lightreceding
lightreceding
12/5/2012 | 3:03:25 PM
re: Juniper Settles, SEC Charges
and my favorate part is that no execs have to give any money back.

Kriens got off because he benefited from some creative cancelling and reissuing of stock options.

From another article:

"The company said there was no evidence of wrongdoing by the board of directors or current management."

This is because all the people who got rich already left. Juniper had about a 100% turn over in top management in the last two years.

In the mean time, steal a loaf of bread and get 16 months in prison, as shown on a recent television documentry.


Pete Baldwin
Pete Baldwin
12/5/2012 | 3:03:25 PM
re: Juniper Settles, SEC Charges
Got some clarification from the SEC on this, because the settlement sounded odd. Literally, Juniper agreed not to break the law in the future ... but, uh, you're not supposed to be breaking any laws in the first place, right?

Here's the deal: By agreeing to this court order in the settlement, Juniper faces extra penalties any time they do violate certain SEC regulations. So, it's like they're on double-non-secret probation.

An SEC spokesman told me they do this when they believe a company *IS* guilty, but don't think it's worth the time to try to extract a fine out of them. The press release says Juniper's cooperation in the investigation was a consideration in deciding the settlement.

In Berry's instance, the SEC is seeking the same kind of order, plus an injunction preventing her from acting as an officer of a public company again.
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