Stock Trading and Other Things

Is it illegal to backdate stock options at the highest price & distribute them to employees?

Is all backdating illegal? Is this particular situation illegal if the CEO is backdating stock options to the highest price and distributing them to executives and company employees? Would the CEO be able to write off more $ in taxes if the stock price is higher?

Public Comments

1. of course it is. But I think you mean backdating stock options to the lowest price.

At the very least it's illegal tax evasion. It's also a breach of the fiduciary duty of the directors/CEO towards other shareholders.

Options are highly volatile, if the share price is low, options are not worht much, if hte price goes up, the value of the options increases rapidly.