Some of Maxim Integrated Products Inc. employees may think they have jumped from one stock-options scandal to another.
Maxim in October bought Vitesse Semiconductor Corp.'s Colorado Springs-based Storage Products businesses and retained 55 of the operation's 60 employees. Another 50 people work for another local Maxim division. Vitesse has not reported earnings for two years as a result of a stock-option backdating scandal and investigation that led to the departure of its chief executives and several other top managers.
The Securities and Exchange Commission Tuesday sued Sunnyvale, Calif.-based Maxim; John Gifford, its former chief executive, and Carl Jasper, its former chief financial officer, for allegedly falsifying financial information by improperly backdating stock option grants to employees and directors. The company's profits were inflated by more than 10 percent between 2003 and 2005 as a result of the scheme, the agency said.
The SEC agreed to settlements in which the company agreed to cease and desist from future violations and Gifford paid at $150,000 fine and returned $652,681 in bonuses tied to the company's performance. Neither the company nor Gifford admitted or denied the allegations as part of the settlement. Jasper has not settled with the agency and his attorney, Steven Bauer, told the Associated Press that Jasper didn't receive any backdated options and didn't have any authority to issue them.
Stock options give holders the right to buy shares in the future at a preset price. In Maxim's case, the SEC alleged the company routinely granted options at below-market prices, but avoided reporting the cost by backdating paperwork to make it appear that the options had been granted at an earlier date when the stock price was lower.
To view the suit against Maxim and Gifford, go to http://www.sec.gov/litigation/complaints/2007/comp20381-maxim.pdf. To view the suit against Jasper, go to http://www.sec.gov/litigation/complaints/2007/comp20381-jasper.pdf.