Attention Gatekeepers: SEC Charges former General Counsel of Monster for Backdating Options

Today the SEC announced its charges against Myron F. Olesnyckyj, former general counsel of online search firm Monster Worldwide. In part for his non-feasance (or liability resulting from a failure to act), the former chief counsel of a public company, at 45, is going to pay a dear price. The investigations are continuing.

The government’s press release said this involved a “multi-year scheme to secretly backdate stock options granted to thousands of Monster officers, directors and employees, including himself. Olesnyckyj, along with others, falsified documents to make it appear as if the company had actually granted options on certain dates. In reality, the grant dates had been selected after the fact by looking backward for a date on which the stock price was low.”

The SEC charges make fairly clear that the general counsel should have acted to stop the illicit practice and allowing the conduct to take place was unacceptable. “Olesnyckyj knew that backdating was wrong but nonetheless went along with the scheme. Any lawyer who works at a public company should do everything possible to thwart fraud — not participate in it.”

Moreover, in the complaint filed in the U.S. District Court for the Southern District of New York, the SEC alleges that “Olesnyckyj took efforts to conceal the fraudulent scheme. For example, Olesnyckyj was responsible for maintaining the documentation that reflected the Compensation Committee approvals of option grants in Monster’s minute books. OlesnyckyJ sometimes, however, discarded or failed to create the lists of grantees that were purportedly attached to the Compensation Committee approvals. By failing to maintain or create these lists, it was much more difficult, and in some instances impossible, to determine which grants were approved on which dates, or if a grant was approved at all.”

Here is the SEC press release and complaint, and the press release of the U.S. Attorney for the Southern District of New York.

For more, see an earlier post on this subject titled Inculpatory Emails Implicate GC: Former Monster GC the Focus of Options-Timing Investigation.

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