Taming the (Options Backdating) Monster
In re Monster Worldwide, Inc. Securities Litigation
In 2008, Labaton Sucharow won a major victory in an options backdating action against internet behemoth Monster Worldwide, securing what was, at the time, one of the largest settlements in the series of backdating scandals that swept through public companies and damaged countless investors.One of the largest options backdating settlements in history, against one of the leaders of the largest options backdating scandals beginning in the late 1990s.
The Monster story broke wide open in June 2006, when the Wall Street Journal reported that Monster executives had received bargain-priced options awards immediately before sharp ascents in the stock price. According to the article, the chance of this occurring without backdating was about "one in 9 million." Just months after the story appeared, Monster restated results for nine years for a cumulative charge of approximately $339.5 million related to the options expenses.
As lead counsel to the major public pension fund acting as class representative, Labaton Sucharow persuaded a New York federal court that Monster's long-running backdating scheme damaged scores of innocent investors and violated the law. Perhaps even more significant than securing the $47.5 million settlement, the Firm successfully argued that Monster's founder and former CEO should personally contribute to the settlement. Such an extraordinary event – individuals very rarely dig into their own pockets to fund settlements – set up a strong deterrent for potential wrongdoers. Indeed, this case stands as another compelling example of the role large institutional investors can play by exercising their right under the law to improve the standards of corporate governance, recover losses and restore integrity to corporate practices across the nation.