Microsoft stock option backdating
Soltes was a keynote speaker at the 28th Annual ACFE Global Fraud Conference, June 18-23.
Soltes writes in his book that Richards, the global head of sales at CA, would often sweat out the last days of each quarter because customers would wait until the last possible minute to try to get the best deals.
But he’s unfazed, which shows his remarkable capacity to compartmentalize,” Soltes says.
The results of the prison correspondence and visits plus Soltes’ research on white-collar criminology resulted in his 2016 book, “Why They Do it: Inside the Mind of the White-Collar Criminal” (Public Affairs).
Richards’ actions inflated quarterly earnings and temporarily propped up the firm’s stock price.
Eight CA executives, including Richards, were convicted.
“From my perspective,” Richards says in Soltes’ book, “the preprinting of dates was nothing more than a subtle reinforcement to the customer that something needed to happen before a particular time.” However, Soltes says, in preprinting the dates, Richards and his sales people effectively eased the end-of-quarter rush by artificially extending the quarter to include several additional days.
“It was easy to rationalize why Richards deserved to be punished for breaking an accounting rule, but whether a sales contract was dated Friday or Monday didn’t create a strong feeling of anger or indignation among many students.
“No matter what was presented to him in terms of the harm he did, he always had a way to minimize it,” Soltes says.
“The smaller — or less-wealthy investors — who were wiped out because of him, he saw as people that were just simply foolish to put all their eggs in one basket and give him all the money.
“This is nothing more than a timing issue,” Richards was quoted in Soltes’ book. 30, 2000, CA prematurely recognized more than .3 billion in revenue from at least 363 software contracts that CA, its customer or both parties hadn’t yet executed, in violation of Generally Accepted Accounting Principles.
“I didn’t feel that I was doing anything wrong.” However, the Securities and Exchange Commission did. In 2006, Richards was sentenced to seven years in jail. Some of the students in Soltes’ classes who studied the Stephen Richards’ case, many who are already business people, harshly criticized Richards for the ease in which he’d succumbed to institutional and market pressures.