Press Release: SEC Charges Former General Counsel of KLA-Tencor And Juniper Networks For Fraudulent Stock Option Backdating
Lisa C. Berry, former General Counsel of KLA-Tencor and Juniper Networks, fraudulently backdated stock options from 1997 to 2003 using hindsight and forged minutes, causing $900M in unreported expenses at Juniper and up to 47% net income inflation at KLA, leading to SEC charges seeking injunctions, disgorgement, penalties, and a director bar.
The SEC charged Lisa C. Berry with orchestrating a fraudulent stock option backdating scheme at KLA-Tencor and Juniper Networks between 1997 and 2003, using hindsight to select favorable grant dates and fabricating board meeting minutes to conceal in-the-money options. The misconduct resulted in KLA overstating net income by up to 47% in fiscal years 1998–1999 and Juniper overstating 2003 net income by nearly 22%, with Juniper ultimately recording $900 million in previously unreported compensation expenses. Both companies settled with the SEC—KLA previously and Juniper in 2007—agreeing to permanent injunctions without admitting guilt, while Berry faces charges for securities fraud, falsifying books and records, and violating internal controls, with the SEC seeking disgorgement, interest, civil penalties, and a bar from serving as a public company officer or director.
Lisa C. Berry, former General Counsel of KLA-Tencor and Juniper Networks, systematically backdated stock option grants from 1997 to 2003, using hindsight to select dates with historically low stock prices to maximize executive gains while concealing the true cost of compensation. At KLA-Tencor, her actions caused net income to be overstated by as much as 47% in fiscal years 1998–1999; after moving to Juniper shortly before its 1999 IPO, she replicated the scheme, creating fictitious minutes of stock option committee meetings and using signature stamps to forge approvals. The fraud led Juniper to misstate its 2003 net income by nearly 22% and ultimately resulted in the company restating its financials and recording nearly $900 million in previously unreported compensation expenses. Both KLA and Juniper settled with the SEC—KLA prior to 2007 and Juniper in August 2007—agreeing to permanent injunctions against securities law violations without admitting guilt, with Juniper credited for cooperation during the investigation. The SEC’s complaint against Berry, filed in federal court in San Jose, alleges violations of antifraud, books and records, internal controls, reporting, and proxy provisions, and seeks disgorgement, interest, civil penalties, and a bar from serving as an officer or director of any public company. The SEC emphasized that Berry, as legal counsel, had a heightened duty to ensure accurate disclosures and instead facilitated a widespread fraud that misled investors and undermined financial integrity. The case underscored the Commission’s position that attorneys are held to the same standards as corporate executives under federal securities laws.
Extracted insights
- $900.00M $900 million $100M–$1B
- company an order barring her from acting as an officer or director of a public company
- person linda chatman thomsen
- person lisa c. berry
- person marc fagel
- person stock option grants
- person their financial statements
- Sec Charges Former General Counsel of KLA-Tencor And Juniper Networks
- Sec Charges Lisa C. Berry
- Lisa C. Berry Backdating Stock Option Grants
- Lisa C. Berry Conceal Hundreds of Millions of Dollars in Stock Option Compensation Expenses
- Commission Announce Settled Enforcement Action Against Juniper
- Juniper Consent Permanent Injunction Against Violations of the Antifraud and Other Provisions of the Federal Securities Laws
- KLA Settle Charges Brought by the Commission
- Linda Chatman Thomsen Say The Commission's Action Confirms That Attorneys Are No Less Bound by the Securities Laws Than Other Public Company Executives
- Marc Fagel Add By Its Use of Hindsight to Pick Favorable Grant Dates, Juniper Avoided Reporting Hundreds of Millions of Dollars of Expenses to Its Shareholders
- The Commission's Complaint Allege Berry Routinely Used Hindsight to Identify Dates with Historically Low Stock Prices
- Berry Move To Juniper Shortly Before Its 1999 Ipo
- Berry Establish A Similar Backdating Process at Juniper
- The Commission's Complaint Allege The Backdated Grants Resulted in Materially Misleading Disclosures
- Kla Overstate Its Net Income in Fiscal Years 1998 Through 1999 by as Much as 47 Percent
- Juniper Overstate Its 2003 Net Income by Nearly 22 Percent
- Both Kla and Juniper Restate Their Financial Statements
- Juniper Record Nearly $900 Million in Previously Unreported Compensation Expenses
- The Commission Seek A Permanent Injunction Against Violations of the Antifraud, Books and Records, Internal Controls, Reporting, and Proxy Provisions of the Federal Securities Laws
- The Commission Seek Disgorgement and Interest
- The Commission Seek A Civil Penalty
- The Commission Seek An Order Barring Her from Acting as an Officer or Director of a Public Company
- The Commission's Settlement Provide That Juniper Will Be Enjoined from Violating the Antifraud, Books and Records, Internal Controls, Reporting, and Proxy Provisions of the Federal Securities Laws
- The Commission Take Into Account The Cooperation That Juniper Provided Commission Staff During Its Investigation
SEC Charges Former General Counsel of KLA-Tencor And Juniper Networks For Fraudulent Stock Option Backdating Juniper Settles Fraud Charges Brought by Commission FOR IMMEDIATE RELEASE 2007-170 Washington, D.C., August 28, 2007 - The Securities and Exchange Commission today filed fraud charges against a Bay Area attorney for her role in illegally backdating stock option grants. The Commission charged Lisa C. Berry with routinely backdating option grants from 1997 to 2003, first as General Counsel of KLA-Tencor Corporation and then as General Counsel of Juniper Networks, Inc. The Commission alleges that Berry's misconduct caused the two companies to conceal hundreds of millions of dollars in stock option compensation expenses relating to undisclosed in-the-money options provided to company executives and employees. The Commission also announced today that it has filed a settled enforcement action against Juniper, an information technology company based in Sunnyvale, Calif. Without admitting or denying the allegations, Juniper has consented to a permanent injunction against violations of the antifraud and other provisions of the federal securities laws. KLA, a San Jose-based semiconductor equipment company, previously settled charges brought by the Commission. "The Commission's action today confirms that attorneys are no less bound by the securities laws than other public company executives," said Linda Chatman Thomsen, the SEC's Director of Enforcement. "At both KLA and Juniper, Ms. Berry was in a unique position to insure that the companies accurately disclosed their stock option expenses; instead, she facilitated their fraud on investors." Marc Fagel, Associate Regional Director of the Commission's San Francisco Regional Office, added, "By its use of hindsight to pick favorable grant dates, Juniper avoided reporting hundreds of millions of dollars of expenses to its shareholders. Juniper's internal controls failed to detect the problem, resulting in its repeated reporting of false financial information to the public." The Commission's complaint against Berry, filed in federal district court in San Jose, Calif., alleges that she routinely used hindsight to identify dates with historically low stock prices, facilitating the backdating of option grants by KLA's stock option committee. According to the Commission, Berry then moved to Juniper shortly before its 1999 IPO, touting her experience in stock administration. The complaint alleges that Berry established a similar backdating process at Juniper, creating minutes of fictitious stock option committee meetings to document false grant dates - at times affixing the names of other committee members with a signature stamp. According to the Commission's complaint, the backdated grants resulted in materially misleading disclosures, with KLA overstating its net income in fiscal years 1998 through 1999 by as much as 47 percent and Juniper overstating its 2003 net income by nearly 22 percent. In 2007, both KLA and Juniper restated their financial statements, with Juniper recording nearly $900 million in previously unreported compensation expenses. In its action against Berry, the Commission seeks a permanent injunction against violations of the antifraud, books and records, internal controls, reporting, and proxy provisions of the federal securities laws, disgorgement and interest, a civil penalty, and an order barring her from acting as an officer or director of a public company. The Commission's settlement with Juniper, also filed in federal district court in San Jose, provides that Juniper will be enjoined from violating the antifraud, books and records, internal controls, reporting, and proxy provisions of the federal securities laws. In considering Juniper's settlement offer, the Commission took into account the cooperation that Juniper provided Commission staff during its investigation. # # # For more information, contact: Marc J. Fagel Associate Regional Director (415) 705-2449 Cary S. Robnett Assistant Regional Director (415) 705-2335 SEC's San Francisco Regional Office Additional materials: Litigation Release No. 20257 http://www.sec.gov/news/press/2007/2007-170.htm Home | Previous Page Modified: 08/28/2007
SEC Charges Former General Counsel of KLA-Tencor And Juniper Networks For Fraudulent Stock Option Backdating Juniper Settles Fraud Charges Brought by Commission FOR IMMEDIATE RELEASE 2007-170 Washington, D.C., August 28, 2007 - The Securities and Exchange Commission today filed fraud charges against a Bay Area attorney for her role in illegally backdating stock option grants. The Commission charged Lisa C. Berry with routinely backdating option grants from 1997 to 2003, first as General Counsel of KLA-Tencor Corporation and then as General Counsel of Juniper Networks, Inc. The Commission alleges that Berry's misconduct caused the two companies to conceal hundreds of millions of dollars in stock option compensation expenses relating to undisclosed in-the-money options provided to company executives and employees. The Commission also announced today that it has filed a settled enforcement action against Juniper, an information technology company based in Sunnyvale, Calif. Without admitting or denying the allegations, Juniper has consented to a permanent injunction against violations of the antifraud and other provisions of the federal securities laws. KLA, a San Jose-based semiconductor equipment company, previously settled charges brought by the Commission. "The Commission's action today confirms that attorneys are no less bound by the securities laws than other public company executives," said Linda Chatman Thomsen, the SEC's Director of Enforcement. "At both KLA and Juniper, Ms. Berry was in a unique position to insure that the companies accurately disclosed their stock option expenses; instead, she facilitated their fraud on investors." Marc Fagel, Associate Regional Director of the Commission's San Francisco Regional Office, added, "By its use of hindsight to pick favorable grant dates, Juniper avoided reporting hundreds of millions of dollars of expenses to its shareholders. Juniper's internal controls failed to detect the problem, resulting in its repeated reporting of false financial information to the public." The Commission's complaint against Berry, filed in federal district court in San Jose, Calif., alleges that she routinely used hindsight to identify dates with historically low stock prices, facilitating the backdating of option grants by KLA's stock option committee. According to the Commission, Berry then moved to Juniper shortly before its 1999 IPO, touting her experience in stock administration. The complaint alleges that Berry established a similar backdating process at Juniper, creating minutes of fictitious stock option committee meetings to document false grant dates - at times affixing the names of other committee members with a signature stamp. According to the Commission's complaint, the backdated grants resulted in materially misleading disclosures, with KLA overstating its net income in fiscal years 1998 through 1999 by as much as 47 percent and Juniper overstating its 2003 net income by nearly 22 percent. In 2007, both KLA and Juniper restated their financial statements, with Juniper recording nearly $900 million in previously unreported compensation expenses. In its action against Berry, the Commission seeks a permanent injunction against violations of the antifraud, books and records, internal controls, reporting, and proxy provisions of the federal securities laws, disgorgement and interest, a civil penalty, and an order barring her from acting as an officer or director of a public company. The Commission's settlement with Juniper, also filed in federal district court in San Jose, provides that Juniper will be enjoined from violating the antifraud, books and records, internal controls, reporting, and proxy provisions of the federal securities laws. In considering Juniper's settlement offer, the Commission took into account the cooperation that Juniper provided Commission staff during its investigation. # # # For more information, contact: Marc J. Fagel Associate Regional Director (415) 705-2449 Cary S. Robnett Assistant Regional Director (415) 705-2335 SEC's San Francisco Regional Office Additional materials: Litigation Release No. 20257 http://www.sec.gov/news/press/2007/2007-170.htm Home | Previous Page Modified: 08/28/2007