Updating Backdating

One lawyer. Two companies. Add backdated stock option grants. Mix in federal securities regulators, and whip up a bunch of fraud charges.

Those include fraud charges against lawyer Lisa C. Berry, 49, of Los Gatos, California, whom the Securities and Exchange Commission has accused of illegally backdating stock option grants for two separate Silicon Valley companies.

The result was hundreds of millions of dollars in unreported compensation at two high tech companies where she worked as general counsel, the S.E.C. contends.

The most recent was Juniper Networks, Inc., an information technology firm based in Sunnyvale, Calif., and yesterday Juniper settled with the federal government—without admitting or denying any allegations—agreeing to a permanent injunction against violations of the antifraud and other provisions of federal securities laws.

The company, which underreported its income by 22 percent in 2003, earlier this year restated its financials, recording nearly $900 million in previously unreported compensation expenses.

That stemmed, according to a civil complaint filed in federal district court in San Jose, from Berry's actions between mid-1999 and mid-2003, when she oversaw the company's stock option granting process. Options for employees were routinely backdated to times when Juniper's closing stock price was lower.

She also created fictitious stock option committee meetings to document the false dates, the complaint adds, and sometimes used a signature stamp to add the names of other committee members.

According to the suit against Berry, she also routinely backdated options grants from 1997 to 1999 when she served as General Counsel for KLA-Tencor, a San Jose-based semiconductor equipment maker.

In July, KLA settled charges brought by the S.E.C., which alleged that the company concealed more than $200 million in stock option compensation to its employees and executives.

by Elizabeth Olson

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