Comms chips

Marvell Joins Options Fun

They just keep on coming: Add Marvell Technology Group Ltd. (Nasdaq: MRVL) to the list of companies flagged for suspicious stock-options activity.

In a document filed with the Securities and Exchange Commission (SEC) this morning, Marvell noted it's received "a letter of informal inquiry" from the SEC "relating to stock option grants and practices." Marvell also got a grand jury subpoena from the U.S. Attorney's office for the Northern District of California, "requesting substantially similar documents," the filing says.

The SEC filing says Marvell plans to comply with both requests.

Marvell stock was down $3.37 (7.5%) to $41.47 late this afternoon.

Marvell is the latest in a string of companies flagged for questionable stock-options grants. Observers have noted patterns where executives' option grants coincide with a stock's low points, thus ensuring a bigger return when the option is exercised.

Telecom-related companies under investigation by the SEC and/or federal prosecutors include
  • Applied Micro Circuits Corp. (Nasdaq: AMCC),
  • Broadcom Corp. (Nasdaq: BRCM),
  • Foundry Networks Inc. (Nasdaq: FDRY),
  • Juniper Networks Inc. (NYSE: JNPR),
  • Redback Networks Inc. ,
  • SafeNet Inc. (Nasdaq: SFNT), and
  • Vitesse Semiconductor Corp. (Nasdaq: VTSS).

    (See AMCC Gets Subpoenaed, SEC Informaling Broadcom , Foundry, VeriSign in Stock Option Probes, Feds Call on Juniper, Redback in Options Probe, Options Scare Hits SafeNet, Juniper, and Vitesse Gets Subpoenaed.)

    The potential effects go beyond esoteric accounting. Vitesse fired three executives, including its former CEO, following an internal investigation into options practices. And the buzz is that the investigation around Juniper could likewise cause trouble for top execs. (See Vitesse Execs Get the Axe and Backdating Could Bite Juniper Execs.)

    It's possible some of these companies might have to restate earnings as well. That's what happened to software firm Mercury Interactive Corp. , which filed a new earnings statement Monday with changes to fiscal years 2002 through 2004.

    — Craig Matsumoto, Senior Editor, Light Reading

  • Pete Baldwin 12/5/2012 | 3:49:47 AM
    re: Marvell Joins Options Fun Any guesses?
    DZED 12/5/2012 | 3:49:44 AM
    re: Marvell Joins Options Fun Why all the excitement over tweaking options?

    Bookham gives away no-strings free cash and shares.
    longshort 12/5/2012 | 3:49:44 AM
    re: Marvell Joins Options Fun Has CSCO been asked to provide option info?
    optiplayer 12/5/2012 | 3:49:43 AM
    re: Marvell Joins Options Fun Its not "tweaking options", its stealing. If not properly accounted for it may also be accounting fraud and lead to potentially signifcant re-statements.

    Companies can reward their employees with cash, stock and options all they want as long as they accurately disclose the rewards to their shareholders and account for them in their financial statements neither of which was done at the companies that back-dated options.
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