While Broadcom’s founders wait — and wait — for their backdating trials to begin, another stock-options case got underway today in New York, that of former president and COO of Monster Worldwide, Jim Treacy.
Treacy was accused along with Monster’s founder, Andrew McKelvey, of pocketing many millions of dollars in an alleged scheme centering on intentionally mispriced stock options grants. As a result, says the U.S. Attorneys Office, Monster’s public filings with the SEC between 1997 and 2005 “fraudulently understated the company’s compensation expenses by a total of more than $300 million.”
McKelvey died late last year of pancreatic cancer.
In January of last year, McKelvey admitted to prosecutors that he, along with others, priced stock-option grants for themselves based on historical dates when Monster’s stock price had closed at, or near, a low point, “resulting in grants of in-the-money stock options” between 1997 through 2003.
The Assistant U.S. Attorney prosecuting the case, Joshua Goldberg, said Treacy could have stopped the shenanigans but opted not to do that. Instead, says the government, of the more than one million options Treacy received, he exercised approximately 745,000 of them for a gain of more than $23 million, roughly half of which was derived from the in-the-money portion of backdated option grants.
Monster’s former general counsel, who pled guilty a couple of years ago in connection with the alleged scheme, agreed to cooperate with prosecutors and is expected to a be a witness against Treacy at the trial.
The Wall Street Journal has more here, and here is a copy of the indictment against Treacy.