Negative Public Perception
While it is true that many forms of backdating are not fraudulent or criminal in nature, there is a largely prevalent public opinion that all forms of backdating are the equivalent of fraud. This is not always the case, according to a ruling by federal judge William Alsup of the U.S. District Court for the Northern District of California. According to Alsup’s reasoning and subsequent ruling, it is improper to infer fraudulent activity based solely on the occurrence of options backdating – further facts must be present and proven before the act can be considered to be fraudulent.
Another public perception is that options backdating stems from executive corruption. While this conclusion is logical in cases of options backdating in which executives knowingly participated in the criminal actions, options backdating can be a result of normal accounting or corporate policies that are not criminal in nature, and is a legal practice as long as the backdated contract is appropriately reported for tax purposes.
Read more about this topic: Options Backdating
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