Accounting Observer > Public Blog - Backdating Body Count: More Execs Fall

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Backdating Body Count: More Execs Fall

Location: Blogs AAO Weblog (Public)
Posted by: Jack Ciesielski	11/27/2006 7:41 AM
At several companies with ongoing reviews of option grant irregularities, a few more executives fell from grace after the Thanksgiving holiday. Quest Software CFO Brinkley Morse not only resigned; he refused to answer questions from the investigating special committee. At Affiliated Computer Services, President/CEO Mark King and CFO Warren Edwards departed. Affiliated's investigation is complete, according to the 8-K; these resignations appear to be the fallout. There was no mention of restated amounts in prior financial statements. Oddly, both men still stick around in consulting roles until mid-2007 - and get to keep their options that would normally vest through the end of August, 2007, though their other unvested options are cancelled. * * * * * * * * * * An exceptionally good column over the weekend in the Wall Street Journal came from Herb Greenberg. Herb asks a good question: is an IPO slowdown a bad thing, as Sarbanes-Oxley foes claim? That's presuming that they're correct that Sarbanes-Oxley really is to blame for a slowdown, something that's hard to buy off on when you consider that any slowdown in the IPO market long preceded the SarbOx implementation. But Herb's answers are excellent anyway. A couple nuggets that might make you click on the whole article: "But has anybody stopped, for just a moment, to ask whether fewer IPOs might actually be a good thing? Seriously, maybe some of these companies shouldn't go public in the first place, especially if they fear or don't want to pay for laws that are attempting to crack down on skullduggery..." And: "Compared with the boom of the 1990s, the IPO market isn't so hot. But think about it: Based on everything we've been hearing lately, there's more money earmarked for untested private companies than there are places to put it. That's right: The very entities that may be looking to the public markets for an exit tomorrow -- Sarbanes-Oxley or no Sarbanes-Oxley -- are gobbling up risky-ish deals that otherwise might go public today. That, in turn, makes laws like Sarbanes-Oxley not just a good thing for investors, but a convenient scapegoat, as well." That pretty much says it all.

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