Washington, D.C., Jan. 23, 2008 – LAWFUEL – Legal Newswire – The Securities and Exchange Commission today announced a settled enforcement action against Andrew J. McKelvey, the former Chief Executive Officer of Monster Worldwide, Inc., for his participation in a multi-year scheme to secretly backdate stock options granted to Monster officers, directors and employees.
Under the settlement, McKelvey will pay $275,989.72 in disgorgement and prejudgment interest, will be barred from serving as an officer or director of a public company, and will be enjoined from violations of the anti-fraud, reporting and other provisions of the federal securities laws. McKelvey agreed to the settlement without admitting or denying the allegations in the complaint.
The Commission’s complaint alleges that, beginning in 1997, McKelvey and others backdated stock option grants to coincide with the dates of low closing prices for the Company’s common stock, resulting in grants of in-the-money options to numerous individuals. McKelvey understood that backdating options to coincide with low closing prices for Monster stock without recognizing a compensation expense was contrary to accounting rules and contrary to representations in Monster’s SEC filings.
McKelvey caused Monster to misrepresent in its periodic filings and proxy statements filed with the Commission that all stock options were granted at the fair market value of the stock on the date of the award. This was not the case. McKelvey also caused Monster to file materially misstated financial statements with the Commission in its Forms 10-K and 10-Q that did not recognize compensation expense for the company’s stock option grants, as required by generally accepted accounting principles. As a result, Monster overstated its aggregate pretax operating income by approximately $339.5 million, for fiscal years 1997 through 2005. Although McKelvey did not receive backdated options, he benefited from the scheme by granting backdated options to four individuals he personally employed, including three pilots and a mechanic.
The settlement does not include a civil penalty due to overriding personal circumstances related to McKelvey.
The Commission acknowledges the assistance of the United States Attorney’s Office for the Southern District of New York and the United States Postal Inspection Service, which conducted their own parallel investigation.
The Commission’s investigation in this matter is continuing.List your legal jobs on the LawFuel Network