You go away for a week, and you know something is different when you see a former GC doing a perp-like walk on the CNBC monitor in the airport.
A good summary of the GC angle on the options backdating mess is from Bloomberg News, via the Philadelphia Inquirer; here’s a highlight:
The exodus is unprecedented among the ranks of corporate attorneys, who ensure the legality of commercial transactions, said Susan Hackett, vice president of the Association of Corporate Counsel. The departures reflect added responsibility that in-house lawyers now bear for company actions, she said.
“I have never seen as much turnover in high-profile positions,” said Hackett, who has been at the Washington-based group representing 8,000 corporations for more than a decade. “This has been a watershed.”
One interesting point is the description of one of the duties of corporate attorneys (and by implication particularly GCs) to “ensure the legality of commercial transactions.” As we are seeing in the options backdating cases, the level of involvement of the GC and the legal department can vary. Rather than looking at just at legality, some of those involved could have started with propriety.
A former officer of ACC gets it right:
“Ten or 15 years ago, general counsels were mainly just asked whether a corporate action was legal or not,” said Al Gonzalez, 52, a past vice president of the Association of Corporate Counsel and currently general counsel at Tyson Foods Inc., based in Springdale, Ark., which is not involved in the scandal. “Today, the first questions they are asked is, ‘Is it ethical? Does it conform to the company’s code of conduct and core values? Is it the right thing to do?’ “
A sign that things may have gone way past “legality” is contained in today’s Wall Streeet Journal ($$$) which recounts alleged options practices at Mercury Interactive. The story quotes documents produced in a court proceeding as referring to “magic backdating ink,” presumably the sort that can lead to a change in an option grant date.
I don’t remember hearing about “magic backdating ink” in law school. But it doesn’t sound like something that would require much research. Perhaps a case study for this upcoming show on Fox?