Juniper faces delisting after finance probe
Published: 11 Aug 2006 13:35 BST
Juniper Networks faces being delisted from the Nasdaq share index after revealing the extent of irregularities around stock options at the company.
On Thursday, Juniper revealed the conclusions of an internal review conducted by its audit committee into issues raised concerning stock options issued prior to 2006.
According to the company, the investigation is "ongoing", but it said in a statement that based on information already uncovered it needs "to restate historical financial statements to record additional non-cash charges for stock-based compensation expense related to past option grants".
But the company also admitted that it still could not "determine the amount of such charges, the resulting tax and accounting impact, or which specific periods require restatement".
As a result, Juniper said that all "financial statements and all earnings press releases and similar communications issued before January 1, 2003" should therefore "not be relied upon".
Further to this, the company said that as a result of this "delinquency", it expects to "receive a notice of delisting from Nasdaq in accordance with Nasdaq's standard process".
Juniper is just the latest in a line of companies forced to announce that they had broken the rules of the Security and Exchange Commission. Mostly, the transgressions have centred on the issue of stock options to senior executives.
Stock options have long been a standard way for rewarding executives, and one shareholders generally approve of. Stock options are linked to a company's stock price, thus the value of the options are linked to the performance of the company. But in the past options have been open to abuse by executives acting on "inside information". It was for that reason the rules have been considerably tightened.
By backdating stock options, a company could let an executive benefit from a lower share price and thus make their options more valuable.
Among the companies facing probes over the issue are the storage networking supplier Brocade, whose ex-chief executive is facing charges.
Apple has also been the subject of an investigation, as have Rambus and Comverse.
And on Friday, Nvidia saw its shares fall by 8 percent after it announced good results but admitted that it too may have granted some share options on the wrong dates.
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