Fugitive tech CEO settles backdating case with SEC for $53m
Now can I come home from Namibia?
A former tech firm CEO has finally settled a stock backdating case with the Feds, almost five years after skipping the US and heading to the South West African bolthole of Namibia.
Jacob "Kobi" Alexander, co-founder and former chairman and CEO of Comverse, will pay the SEC $47.6m in disgorgement and prejudgment interest and a $6m penalty.
Alexander will also be "permanently enjoined from violating the antifraud and related provisions of the federal securities laws and will be permanently barred from serving as an officer or director of a public company".
It is thought the settlement is a prelude to a likely deal with prosecutors that would allow Alexander to end almost five years of self-imposed exile in Namibia.
All of this has been agreed without Alexander "admitting or denying the allegations", though the agreement prohibits him being an officer or director of a public company.
Alexander fell foul of the SEC back in 2006 when the agency launched a massive crackdown on stock options backdating - this was the practice common among Silicon Valley companies and others of backdating stock options for new hires to make them as lucrative as possible. While not neccessarily illegal at the time, the practice was seen as harmful to shareholders, particularly when they were not kept up to speed on the details of the grants.
In Alexander's case, the SEC charged that Alexander, and two others, backdated options to benefit themselves, as well as others.
It also alleged that he "created a slush fund of backdated options by causing options to be granted to fictitious employees, and later used these options, some of which were made immediately exercisable, to recruit and retain key personnel".
Alexander and two others resigned from voicemail provider Comverse in May 2006 amidst the SEC investigation. The exec, who had dual US-Israeli citizenship, then decided not to wait around for the Feds to ponder their investigation and instead decided to skip to Namibia, via Sri Lanka.
He was finally tracked down when the Feds intercepted a Skype call he had made. ®
At the first read, I read "former CEO of Converse" and wondered where's the IT angle with a tennis shoe company. Then I saw it was actually "Comverse", which sounds like a good knock-off tennis shoe company ... oh well...