Comverse Technology Scandal
Comverse Technology scandal involves the recent trend in executives abusing options. In this particular scandal Comverse has already fired three of its executives for options fraud which includes, wire fraud, mail fraud, and securities fraud. They are also expected to fire more people involved as the investigation continues.
The people fired were former CEO Kobi Alexander, CFO David Kreinberg, and general counsel William Sorin. They had not been working directly for comverse since May because they had admitted to backdating stock options and lying about the finances to stock holders. They had however continued to work as consultants for the company. It is expected that Comverse Technology scandal will take legal action against the three men for their Comverse Technology scandal.
The Securities and Exchange Commission (SEC) has already filed a lawsuit against Kobi, Kreinberg, and Sorin for giving false information on their financial reports from the dates of 1991-2005.
It was also expected that the men created some fake employees. This allowed them to offer perks and money to those employees while keeping all the money themselves. They also offered options to these "employees" without the boards' approval. This guaranteed that they could lock in a lower stock price for these made up employees and generate even more money. This Comverse Technology scandal is very much illegal and the men tried to cover this up when it was noticed.
This kind of performance in executives is not a rare thing. It has been happening in a lot of companies and is a big scandal being investigated by a lot of lawyers. It is suspected that there will be a lot of executives losing their jobs over these illegal options. It's also expected that there will be a lot more companies and executives that have stuff going on under the table.
One example of what the three executives from Comverse Technology scandal did was to take and lock in buying at the lowest stock rate over a period of a couple of months. This allowed them to get the best deals for their stock while hurting the average investor out of their hard earned money.
The biggest problem with backdating Comverse Technology scandal stock options is that you are not telling your investors what is going on. Every investor in a company deserves an equal share in what that company going has on. The reason for this is, of course, that it's the average investors who get hurt the most when a company has a scandal or issue with their executives.
So, while the investigation of the Comverse Technology scandal continues there is still the unanswered question in the back of everyone's mind, "Are the companies I invest in doing this too?" This may lead to a general fall in stock prices as the average investor becomes more aware of just how insecure his investment can become if executives get greedy. However, most people will go on trusting the companies they invest in without lifting a finger to find out what is happening behind the scenes. It's this lack of knowledge that is really hurting the average investor.
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