Monster Boss Faces 25 Years
Monster Boss Faces 25 Years
The ex-boss of recruitment firm Monster Worldwide faces up to 25 years in jail after being found guilty of fraud in a stock option backdating scheme.
James Treacy's actions caused the recruitment giant to under-report the share bonuses given to senior staff by $339m (222m) between 1997 and 2005.
Backdating stock options can allow staff to make a more profit by changing the dates when options were granted. It only becomes illegal if not properly reported in a company's accounts.
As a result of Treacy's actions, Monster's earning for the years in question were falsely inflated. A jury in New York found Treacy, 51, guilty of conspiracy to commit securities fraud, filing false reports to US financial watchdog the Securities and Exchange Commission, making false statements to auditors, and falsifying books and records.
He is now due to be sentenced on 25 August.
"This verdict brings us closer to the end of an unfortunate chapter in the company's history and closer to putting the issue firmly behind us," Monster Worldwide said in a statement.
Monster Worldwide Inc. (MWW) has agreed to pay $2.5 million to settle allegations by the U.S. Securities and Exchange Commission that the company engaged in a multiyear scheme to secretly backdate stock options paid to executives and employees, the regulator said Monday.
In a statement, the SEC said Monster Worldwide reached the settlement without admitting or denying wrongdoing and the regulator took the company's cooperation into account.
The fine to be paid pursuant to the settlement is within the amount previously accrued by Monster Worldwide, the company said in a statement.
In a settled complaint filed in U.S. District Court in Manhattan, the SEC alleged a group of former executives and employees at Monster Worldwide, including its founder and former Chief Executive Andrew J. McKelvey, engaged in a scheme between 1997 and April 2003 to improperly backdate the "vast majority of stock options" granted to its employees.
"Monster's public filings did not accurately describe the company's stock option practices. Additionally, most of Monster's option grants were in-the-money on the day they were granted and therefore had an immediate compensatory component that Monster failed to expense properly and otherwise failed to disclose to shareholders," the lawsuit said.
In 2006, Monster Worldwide restated its results for 1997 through 2005 by a cumulative pretax amount of $339.5 million, to record additional noncash charges for options-related compensation expense.
"This is an important step in closing an unfortunate chapter in the company's history and putting the issue firmly behind us," said Sal Iannuzzi, Monster's chairman and chief executive, in a statement. "Our current executive team has spent the last two years refocusing Monster on its customers and shareholders, retooling the day-to-day management, and overhauling governance in an effort to adhere to the highest standards."
Monster Worldwide is the parent company of online job-search Web site Monster.com.
"Monster misled investors by failing to report hundreds of millions of dollars of expenses. Backdating stock options made the company look like it had more money than it really did," said James Clarkson, acting regional director of the SEC's New York Regional Office, in a statement.
Last week, a jury convicted James J. Treacy, Monster Worldwide's former president and chief operating officer, of conspiracy and securities fraud in a scheme to improperly backdate millions of dollars in stock-options awards. A civil case brought by the SEC is still pending against Treacy, who resigned from the company in 2002, but served on its board through 2003.
McKelvey resigned in October 2006, citing, in part, the demands of coping with a probe of the stock-option practices.
In January 2008, McKelvey entered into a deferred prosecution agreement with federal prosecutors in which he admitted, along with others, to routinely selecting "prices for stock-options grants based on historical dates when Monster's stock price had closed at, or near, a low point, resulting in grants of in-the-money stock options" between 1997 through 2003.
McKelvey died in late November of pancreatic cancer.
Myron F. Olesnyckyj, Monster's former general counsel, pleaded guilty in 2007 to criminal charges in connection with the alleged backdating and agreed to cooperate with prosecutors.