Backdating Scandal Ends With a Whimper - Bernard L. Madoff
Before Lehman Brothers imploded, before Bernard L. Madoff’s arrest and before the global economy’s near-collapse, there was the backdating of stock options. On Wednesday, a federal judge in Los Angeles sentenced Bruce E. Karatz, the former chief executive of KB Home, to five years of probation. His case is likely to be the last criminal trial relating to backdating, a scandal that ensnared dozens of executives over allegations that the dates of stock-option awards had been manipulated to enrich recipients. When the first cases emerged in 2006, they looked like low-hanging fruit for federal prosecutors. The Securities and Exchange Commission and the Justice Department investigated more than 100 companies. Internal investigations by companies led to scores of financial restatements and dozens of executive dismissals. But on the criminal front, the government had mixed results, winning several trials but also losing a number of prominent cases. In all, 12 executives across the count...