Comverse Settles With the SEC

     CENTRAL ISLIP, N.Y. (CN) – Telecommunications company Comverse Technology overstated its income by $300 million in a decade-long binge of backdated stock options and improper accounting practices, the SEC claims in Federal Court. In a second complaint, the commission sued Comverse subsidiary Ulticom on similar charges.




     Comverse distributed options from at least 26 backdated grants to employees and directors from 1991 to 2001, and to employees for subsidiaries Ulticom and Verint Systems, according to the complaints.
     “Six out of seven company-wide grants made by Comverse during the relevant period were granted at or near the lowest stock price quarter or year,” the SEC says.
     Comverse also made grants to fictitious employees, creating a slush fund of “in-the-money” stock options, according to the complaints.
     Ulticom allegedly ran similar accounting and backdating scams. From 2000 to 2004, eight stock option grants were backdated without taking the proper accounting charges, the complaint states.
     Both companies are accused of filing phony SEC reports with false disclosures about its operating margins and sales backlog to cover up the frauds.
     The SEC previously charged former Comverse CEO Jacob “Kobi” Alexander, former CFO David Kreinberg and its former General Counsel William F. Sorin. Kreinberg and Sorin settled the complaints.
     Alexander, an Israeli citizen, was arrested in Namibia in 2006 after being declared a fugitive by the FBI.
     Former Ulticom CFO Lisa Roberts agreed to pay a $25,000 civil penalty.Both companies consented to the permanent injunctions prohibiting future violations of the antifraud, books and records and proxy provisions.

%d bloggers like this: