Squeezing Money from Corpses in Irvine
That companies which use magical accounting practices to rewrite history to fatten the bank accounts of their executives would try to squeeze money from corpses isn't really too surprising, but it is still disgusting. And it's happening in Irvine.
The Wall Street Journal reports that dozens of companies used the collapse of prices in the stock market following the 9/11 attack as an opportunity to shovel more money into the troughs of their executives via the backdating of stock options. (The story is unfortunately available online only to subscribers, but Mark Lacter at LA Biz Observed has a summary of it.) Backdating stock options is the practice by which a company allows its executives to buy its stock at a price the stock was in the past, and then enjoy the rise in value the stock has already experienced by the time the exec actually buys the stock. So, instead of the traditional buy-low-sell-high approach, the privileged exec gets to pretend to have bought low and then actually ride the high. It's rewriting history, it's magic. And certain rather depraved companies looked at the smoking ruins of 9/11 and saw the most magical opportunity of all. After all, in the immediate aftermath of the attack, stocks tanked in a way Wall Street hadn't seen since Hitler rolled into Paris ("the worst full week for the blue-chip average since Germany invaded France in May 1940", notes the Journal). Short of nuclear war, this was a buy-low opportunity unlikely to be equaled-- so companies with sufficiently low moral standards decided to use the ruins of the Twin Towers as a guidepost by which to backdate stock options, and let execs enjoy the benefits of pretending to have bought low that can only come when thousands of innocent people have been slaughtered. Among those companies, according to the Journal, is Irvine's Broadcom Corporation.
Broadcom, you may recall, is already in trouble over backdating stock options. Earlier this year, Broadcom had to restate its earnings from 1998 through the first quarter of 2006, because its backdating practices cost the company $2.24 billion. There's also an ongoing federal investigation of Broadcom's backdating magic, carrying the potential of criminal indictments. You'd think that with all that hanging over their heads, the folks who pretend to buy low would want to be able to get a good night's sleep-- not one haunted by the smell of burning jet fuel and the screams of the dying-- but I suppose that if you're the sort of who sees 9/11 as a money-making opportunity, you're unlikely to have enough of a conscience to keep you up at nights.
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