SEC Sues Maxim Integrated Products and Former Senior Officers in Stock Option Backdating Scheme

U.S. Securities and Exchange Commission, Dec 04, 2007

Washington, D.C. - The Securities and Exchange Commission filed civil charges against Maxim Integrated Products, Inc., a Silicon Valley semiconductor company, and the company's former CEO and CFO, alleging that they reported false financial information to investors by improperly backdating stock option grants to Maxim employees and directors.

Linda Chatman Thomsen, the SEC's Director of Enforcement, stated, "Maxim's seeming ability to pick favorable grant dates for its employees was too good to be true — in ten consecutive quarters, Maxim granted options on the date with the lowest stock price of the quarter. In reality, Maxim selected these supposed grant dates with the benefit of hindsight, allowing it to hide millions of dollars in expenses from shareholders."

Marc J. Fagel, Co-Acting Regional Director of the SEC's San Francisco Regional Office, added, "Of particular concern here was the CFO's abandoning his role as corporate gatekeeper and instead facilitating Maxim's misrepresentations about its stock option program and financial condition."

The Commission alleges that former CFO Carl W. Jasper, of San Jose, Calif., helped the company fraudulently conceal tens of millions of dollars in compensation expenses through the use of backdated, "in-the-money" option grants. In a separate action, former President, CEO, and Chairman of the Board John F. Gifford, of Menlo Park, Calif., agreed to pay more than $800,000 in disgorgement, interest, and penalties to settle charges relating to his role in the options backdating. Maxim similarly has agreed to settle the Commission's charges against it.

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