WASHINGTON - Big pension funds in the United States, Europe and Australia are suing dozens of companies over the timing of stock options grants to their top executives, an attorney for a firm that is filing the suits said Tuesday.
The pension funds, which hold shares in the companies and include several union-employee funds in the United States, are using a prominent law firm specializing in class-action suits against public companies to bring their cases.
In expanding investigations, at least 40 companies are under scrutiny by the Securities and Exchange Commission or federal prosecutors for possible manipulation of the timing of options grants so that executives could reap a profit.
Justice Department officials made it clear Tuesday that company executives can face possible prison time for improper backdating of option grants, said Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee.
"Outside the corporate suite, Americans don't get to pick and choose their dream stock price. The market dictates the price," Grassley said during a hearing on other issues. "If the tax laws are inadequate, I want to beef them up. ... I expect the Justice Department to fully enforce the law" in this area.
Darren Robbins, a partner in the San Diego-based firm Lerach Coughlin Stoia Geller Rudman & Robbins LLP, said pension funds "are completely beside themselves and outraged over the self-dealing that has gone on."
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