Stock options backdating trial starts in SF

Jury selection began in federal court in San Francisco Tuesday in the case of a former Silicon Valley general counsel accused of changing the date of a stock purchase option to increase his profit.

Kent Roberts, 51, of Dallas, was formerly general counsel of Santa Clara-based McAfee Inc., a computer security company. He was fired in May 2006.

Prosecutors have alleged in court papers that he increased his potential profit by $197,600 by having the date of a stock option purchase grant changed from Feb. 14 to April 14, 2000, in company computers.

The change in date gave Roberts the ability to buy 20,000 shares of the company at a lower price of $19.75 per share instead of the original price of $29.62 per share, according to prosecutors.

Roberts faces two counts of mail fraud and one count of falsifying company books in connection with the alleged date change.

The practice of granting options to buy company stock is used as a compensation and recruitment tool for corporate employees. Backdating, or changing the date of an option, is not illegal in itself, but it is illegal to lie about it or fail to disclose it in regulatory filings.   

The trial in the court of U.S. District Judge Marilyn Patel is expected to last two to three weeks.

Roberts is the third corporate executive to go to trial in federal court in San Francisco in a stock options backdating case.

In separate trials in 2007, two former executives of San Jose-based Brocade Communications Systems Inc. were convicted of charges related to the falsification of dates of stock purchase options for other employees.

Bay Area NewsCrimeCrime & CourtsLocal

If you find our journalism valuable and relevant, please consider joining our Examiner membership program.
Find out more at www.sfexaminer.com/join/

Just Posted

After the pandemic hit, Twin Peaks Boulevard was closed to vehicle traffic, a situation lauded by open space advocates. (Kevin N. Hume/S.F. Examiner)
New proposal to partially reopen Twin Peaks to vehicles pleases no one

Neighbors say closure brought crime into residential streets, while advocates seek more open space

Protesters rally at the site of a proposed affordable housing project at 2550 Irving St. in the Sunset District on Saturday, Jan. 23, 2021. (Ming Vong/S.F. Examiner)
Sunset District affordable housing discussion flooded with ‘scare tactics and hysteria’

Project would provide 100 units, some of which would be designated for formerly homeless families

Members of the Sheriff’s Department command staff wore masks at a swearing-in ceremony for Assistant Sheriff Tanzanika Carter. One attendee later tested positive. 
Courtesy SFSD
Sheriff sees increase in COVID-19 cases as 3 captains test positive

Command staff among 10 infected members in past week

Rainy weather is expected in the coming week. (Kevin N. Hume/S.F. Examiner)
Rainstorms, potential atmospheric river expected to drench Bay Area in coming week

By Eli Walsh Bay City News Foundation Multiple rainstorms, cold temperatures some… Continue reading

U.S. Poet Laureate Amanda Gorman’s powerful reading was among the highlights of Inauguration Day. (Kent Nishimura/Los Angeles Times/TNS)
Inauguration shines light in this never-ending shade

Here’s to renewal and resolve in 2021 and beyond

Most Read