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Thursday, April 25, 2024 | Back issues
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SEC Says Quest Execs Backdated Stock Options

SANTA ANA, Calif. (CN) - The Securities and Exchange Commission accused Quest Software and three current or former executives of backdating stock options, in a lawsuit filed in Federal Court.

The alleged securities fraud resulted in a $113.6 million restatement of Quest's operating income for fiscal years 1999 through 2005, the SEC claims.

The SEC says Quest, executive chairman Vincent C. Smith, former CFO John J. Laskey and former controller and chief accounting officer Kevin E. Brooks granted undisclosed, "in-the-money stock options" to employees and executives by backdating millions of options.

Quest allegedly failed to accurately describe its stock-option practices in public filings and failed to properly account for the backdated options in its financial statements. The results were false and misleading disclosures to Quest's shareholders over a six-year period, the SEC claims.

Smith, Laskey and Brooks allegedly took steps to evade Quest's internal auditors, who became suspicious of the backdating.

The SEC charges the defendants with fraud, falsification of records and proxy violations.

Quest has agreed to settle the charges, and the executives have agreed to pay a combined settlement of more than $300,000, the SEC announced Thursday.

Attorney Sam Puathasnanon is representing the government.

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