By not disclosing these changes, her practice went against Juniper’s stated policy of granting stock options at fair market value, the SEC notes.
She also allegedly created minutes of compensation committee meetings that had not occurred in order to justify misdated option grants.
The number of companies associated with the controversy spread as more revealed they were conducting internal investigations or that they had received inquiries from the Department of Justice and SEC about their stock option granting practices.
But no one has been able to pinpoint exactly where the idea of backdating stock options originated. A report released last year from corporate governance firm The Corporate Library said it wasn’t.
The concept could have been shared by employees switching jobs during the time period when most backdating occurred — the late 1990s and first few years of this decade.
During new job negotiations, a person may have said, “‘I had an interesting options package that was oddly dated and now that I’m moving to another company, and I want my options at last week’s price,'” theorizes Fagel.
In Berry’s case, she served on Juniper’s three-member stock option committee along with the company’s CEO and CFO and reviewed the company’s annual reports.
The report named director Kenneth Levy as serving on both of the companies’ boards, implying that he may have spread the idea.
Fagel notes that in most cases of financial fraud, such as improper practices related to revenue recognition, the SEC doesn’t find that internal attorneys are behind the wrongdoing.
But backdating is a different story, as company attorneys are often involved in decisions about employees’ compensation.
“We’re not going to seek out that information, but when we do an investigation we’re very aware of who serves on the boards of other companies,” Fagel says.
While headlines about backdating have concentrated on the top executives at the implicated companies, a handful of former internal attorneys have also been mentioned, such as Berry, Nancy Heinen, who settled charges with the SEC that she participated in fraudulent backdating of options while she was general counsel at Apple, and William Sorin, the former Comverse general counsel who in May became the first executive involved in the options-dating scandal to be sentenced to prison this past May.