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NEWS21 June 2007

SEC launches Forrester option grants probe

US stock market regulator to investigate backdating of option grants at IT market research agency

The Securities and Exchange Commission has launched an investigation into stock option backdating at Forrester Research.

The US IT market research firm launched its own internal investigation last year, which found that some grants, made mainly between 1998 and 2004, had exercise prices lower than the fair value of the stock at the time.

In December, its CFO Warren Hadley resigned after irregularities were uncovered surrounding an option grant made to him in 1999.

By backdating grants to times when prices were lower, companies can allow employees to realise inflated gains, while recording lower compensation. It has become a major issue in the US business world, and Forrester is now one of more than 100 firms under investigation by the SEC.

Forrester has already said it will have to restate historical results, and it has not yet filed its financials for the full year 2006 or the first quarter of 2007.

The Nasdaq stock market has given the firm until 12 September to submit results or face being delisted, and can reconsider the terms of Forrester’s continued listing at any time.

The firm said in an SEC filing that it is “continuing to cooperate” with the commission, which had earlier issued an informal request for the production of various documents and information.

CEO George Colony has taken over the role of CFO while the firm seeks a permanent replacement.

Author: Robert Bain

Related links:

Forrester revenue up 17% in Q1

Forrester to restate results

Forrester stock option probe finds dating irregularities

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