Comverse technology backdating scandal
In addition, the Financial Crimes Enforcement Network (Fin CEN) and Dunn & Bradstreet have been able to provide significant background information on subject individuals or subject companies in an investigation.
During FY 2006, the FBI investigated 490 Corporate Fraud cases resulting in 171 indictments and 124 convictions of corporate criminals.
The FBI focuses its financial crimes investigations on such criminal activities as corporate fraud, health care fraud, mortgage fraud, identity theft, insurance fraud, mass marketing fraud, and money laundering.
These are the identified priority crime problem areas of the Financial Crimes Section (FCS) of the FBI.
Through the manipulation of financial data, the share price of a corporation remains artificially inflated based on fictitious performance indicators provided to the investing public. While the number of cases involving the falsification of financial information remains relatively stable, the FBI has recently observed a spike in the number of Corporate Fraud cases that involve the backdating of executive stock options.
In addition to significant financial losses to investors, Corporate Fraud has the potential to cause immeasurable damage to the U. Stock options are corporate incentives that allow the holder to purchase stock at a fixed “strike” price sometime in the future, regardless of the prevailing market price.
Where appropriate, suggestions are made in order to protect the public from being victimized by fraudulent activity.Generally, the strike price is the cost of the stock on the date the options were granted.The benefit to the options holder is the difference between the strike price and the later sales price.The FBI has placed greater emphasis on investigating allegations of these frauds by working closely with the SEC, National Association of Securities Dealers (NASD) Regulation, Internal Revenue Service (IRS), Department of Labor, Federal Energy Regulatory Commission, Commodity Futures Trading Commission (CFTC) and U. The FBI has also worked with numerous organizations in the private industry to increase public awareness about combating Corporate Fraud, to include: Public Company Accounting Oversight Board, American Institute of Certified Public Accountants and the North American Securities Administrator’s Association, Inc.These organizations have been able to provide referrals for expert witnesses and other technical assistance regarding accounting and securities issues.
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As the lead agency investigating Corporate Fraud, the FBI has focused its efforts on cases which involve accounting schemes, self-dealing by corporate executives and obstruction of justice.