Are there any insurance issues with investigations into timing of stock option grants?
Pell: Definitely. Companies need to carefully analyze their D&O insurance policies as to the extent of coverage and as to claim reporting requirements. Individual officers and directors covered by those policies need to know what exclusions may apply, and whether the insurer can rescind their insurance if the company’s financial statements, which the insurer considered in deciding whether to underwrite the insurance, will have to be restated. Q: Where will the current investigations lead? Raskin: It’s likely that the investigations will continue, at least for some time to come. It’s also likely that backdating is in fact a practice that has dwindled by now. That’s because Sarbanes-Oxley, in 2002, required that option grants be reported within two days, which made concealing information more difficult. Before that, although the SEC had required that option grants be carefully reported, starting way back in 1992, the reporting could be delayed quite awhile, which meant that records could
