ACS Loses CEO and CFO. Wuh-O.
You know how much we're fascinated by the whole Afflilated Computer Services Inc. stock-option manipulating scandal; it's been all over Unfair Park in recent months. Well, if you read the Wall Street Journal this morning, you know it just got a little better:
"The options-backdating scandal claimed more high-level officials, as the top two executives at a large technology-outsourcing company resigned after an internal investigation concluded they were closely involved in manipulation of stock options at their company. Mark King, chief executive of Affiliated Computer Services Inc., and Warren Edwards, the company's finance chief, stepped down from their posts yesterday but will remain employees until June, the company said."
Already this morning, King and Edwards' bios were removed from ACS' Web site; how quickly they forget. So, lesse, that means more than 60 top officers have been booted from the company due to the backdating of stock options, which got them rich quick. And the paper figures it ain't over yet. Good guess, what with all those stockholder lawsuits still out there. Yes, chances are, it will get uglier. And uglier still.
In releasing the results of its internal probe, ACS said its investigators determined that Messrs. King and Edwards, along with Jeffrey Rich, a former ACS CEO who resigned in September 2005 before the options issues surfaced, intentionally backdated options in a "significant number of cases," increasing their own potential for profit, and prepared memos with phony dates to document the misdated grants.
Messrs. King and Edwards also misled the company's own directors and lawyers, the internal probe concluded, telling them earlier this year that there wasn't any backdating. ACS said that led the company to make an "inaccurate" securities filing in May that denied any serious backdating issues.
The company said it will face a charge of around $51 million to fix the faulty accounting caused by the misdating. The company said it hasn't yet determined how the adjustment will affect past and current financial statements or whether restatements would be required.
In a statement, Mr. King's lawyer, Karen Seymour, said her client voluntarily resigned as CEO and "cooperated fully" with the investigation. She added: "He acted at all times in good faith and did not engage in any intentional misconduct."
Gary P. Naftalis, a lawyer for Mr. Edwards, said his client cooperated "fully and forthrightly" with the probe and helped find and guide the investigators to relevant documents. Mr. Naftalis noted that Mr. Edwards didn't become chief financial officer until 2001, years after the problems apparently started. "He engaged in no intentional misconduct," Mr. Naftalis said, "and acted in good faith at all times in connection with the company's longstanding and historic options granting practices."
Aitan Goelman, a lawyer for Mr. Rich, said he couldn't comment, because he hadn't seen the probe's findings.
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