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Juniper Networks settles SEC backdating charges; SEC sues company's former general counsel

Juniper Networks settles SEC backdating charges; SEC sues company's former general counsel

Networking equipment maker Juniper Networks Inc. has become the fifth company in recent months to settle federal allegations of improper backdating of stock options, after being accused by regulators of concealing hundreds of millions of dollars in options expenses from investors.
Juniper was not fined Tuesday under the settlement of civil fraud charges with the Securities and Exchange Commission, which filed a civil lawsuit against the company in federal court in San Jose, California. The company, based in Sunnyvale, California, neither admitted nor denied the SEC's allegations but did agree to refrain from future violations of the securities laws.
The SEC also sued Lisa Berry, who was a general counsel of KLA-Tencor Corp. and later of Juniper, accusing her of repeatedly backdating option grants from 1997 to 2003 and creating phony documents to enable the process. Agency officials said Berry, as the top attorney at both companies, was in a unique position to ensure that they accurately disclosed their expenses from stock options and, instead, helped them defraud investors.
Berry, through her attorney, disputed the SEC's allegations.
"This case is unfounded and the SEC's allegations don't make it otherwise," the attorney, Melinda Haag, said in a statement. "Lisa had no responsibility for accounting at either company, had no idea that either company violated options accounting, and did not personally benefit from misdated options grants at either company."
The SEC is seeking unspecified civil fines and restitution against Berry, 49, of Los Gatos, California, and an order barring her from serving as an officer or director of any public company.
KLA-Tencor, a computer chip supplier based in San Jose, in July settled the SEC's allegations of improper options backdating. It was not fined but agreed to an injunction against securities-law violations.
The SEC has been investigating more than 100 public companies, many of them in Silicon Valley, over suspect timing of stock option awards to executives. In May, the SEC signed settlements with two other technology companies, Brocade Communications Systems Inc. and Mercury Interactive LLC, which were fined several million dollars under the accords. Integrated Silicon Solution Inc. settled with the SEC earlier this month.
The SEC alleged that from mid-1999 through mid-2003, Juniper hid hundreds of millions of dollars in expenses, and overstated its income, by backdating the stock option grants and failing to properly disclose them.
Backdating options make the rewards even more lucrative by retroactively setting the exercise price to a low point in the stock's value. Usually, a stock option's exercise price coincides with the market value at the time of a grant to give the recipient an incentive to drive the price higher.
If companies backdate options without properly disclosing and accounting for the move, it can cause profits to be overstated and taxes to be underpaid.
The SEC cited Juniper's cooperation in the agency's investigation, which likely was a factor in the company not being fined.
Scott Kriens, Juniper's chairman and chief executive, said in a statement: "We are pleased to conclude this matter with the SEC and to continue our intense focus on execution and the growth of Juniper Networks."
In contrast, Brocade Communications' former chief executive, Gregory Reyes, was convicted earlier this month on 10 felony counts of securities fraud in connection with options backdating. Reyes is appealing the conviction. Brocade's former vice president of human resources Stephanie Jensen also was charged by federal prosecutors with securities fraud, for allegedly doctoring corporate records to hide compensation costs associated with certain stock option awards.
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On the Net:
http://www.sec.gov
http://www.juniper.net
http://www.kla-tencor.com


Updated : 2021-03-01 21:33 GMT+08:00