Securities: Some Companies Admit Using Backdating to Profit from 9/11

Affiliated Computer Services Inc., Corinthian Colleges Inc., KLA-Tencor Corp., Progress Software Corp., and Take-Two Interactive Software Inc. have admitted to falsifying dates on options grants given to executives and other employees to make it appear that the grants were given at low points in the companies' stock prices after September 11. Other companies that have admitted backdating also gave options during the time following 9/11, but have not said whether these options were backdated to take advantage of the effect the terrorist attacks had on the stock market.

Report: Some companies have admitted options backdating in 9/11 twist

An analysis by the Wall Street Journal showed that among 1,800 companies, the frequency of options awarding more than doubled in late September 2001, during the stock market's low point. Backdating is beneficial to stock options because options will be more profitable if the date at which they were given is set back to a low point in the stock's value. If disclosed and approved by the company's board or share holders, backdating can be legal. Securities and Exchange Commission Chairman Christopher Cox says that the widespread backdating scandal is “a pandemic of crooked accounting.”