Former Comverse CEO Settles SEC Charges for $53.6 Million

Jacob Alexander, co-founder of Comverse Technology Inc., (CMVT) agreed to pay $53.6 million to settle charges of backdating stock options and misleading investors.

The settlement consists of a $6 million penalty and the paying of $47.6 million that the SEC considers his "ill-gotten gains", the agency said in a statement. Alexander is barred from serving as officer or director of a public company.

"This successfully concludes one of our earliest stock option backdating cases and one of the most egregious attempts to cover up and avoid responsibility for options backdating fraud," said Antonia Chion, associate director of the SEC's division of enforcement. "Executives who mislead investors about their personal compensation and the company's compensation expenses will be held accountable for their misconduct."

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The SEC alleged that Alexander and two other former Comverse executives granted themselves undisclosed in-the-money options by backdating stock option grants to coincide with low prices of Comverse stock.

The SEC also said that Alexander assigned stock options to fictional employees and then used them as a slush fund to recruit and retain personnel.

Alexander made material misrepresentations to Comverse investors about the company's stock option grants and concealed from investors that Comverse had not recorded compensation expenses for the grants.

Alexander does not admit or deny any of the charges.