Securities: Cyberonics Insiders Made Nearly $50 Million Trading Stocks

Cyberonics' chief executive and financial officer resigned after an internal investigation showed that unnamed insiders had falsely reported the dates of company stock options for several years. David Wise, the general counsel of Cyberonics, said that the company had under-reported its executive compensation expense by about $10 million over the past 8 years. This information comes at a time when federal authorities already are investigating at least 130 companies to decide whether insiders backdated options-award dates in order to profit from market gains.

Special Report: Insiders Made Nearly $50M Trading a Money-Losing Company's Stock

Cyberonics told the public that it was being investigated by the Securities and Exchange Commission in June. The company also faces several lawsuits brought about by shareholders and it involved in a proxy fight with an investor who is demanding that changes be made to the board. Former Cyberonics CEO Robert "Skip" Cummins maintains that no illegal activities occurred. "We have nothing to hide," Cummins said. Cummins had been working to gain Medicare reimbursement for its medical devices that treat severe depression; this could open a $1 billion sales market for the company.