Wilson Sonsini Goodrich & Rosati has spent the past year trying to back away from the metastasizing stock option backdating mess, but an internal e-mail now in regulators’ hands is making it difficult.
In a 2004 message, Wilson Sonsini lawyer Roger Stern asks his partner to dig up a document from the time when a client was “using the time machine to pick low strike prices.”
That client, semiconductor maker KLA-Tencor, has since restated its earnings by $370 million to account for backdating its options during the tech boom, when Wilson Sonsini chief Larry Sonsini was the company’s corporate secretary.
The firm was forced to cough up the internal exchange by a subpoena from the Securities and Exchange Commission, said people who’ve seen the e-mail.
That subpoena was sent to the firm in January as part of the government’s probe of KLA’s options. And it kicks off what promises to be an unpleasant process for Silicon Valley’s top firm.
Across a swath of companies at which Sonsini had a leadership role, options were misdated on his watch by executives or lawyers close to him, by company officials consulting with Sonsini’s firm, and — in the high-profile Pixar case — by Sonsini himself. Prominent among those companies are Brocade, Juniper Networks, Apple and Pixar, as well as KLA.
Complicating matters is the fact that, according to SEC records, Sonsini and his firm may have profited immensely from stock awards by companies that admit to rampant options improprieties.