Affiliated Computer Services, Inc. Charged for Backdating and False Disclosures
The Securities and Exchange Commission has charged Computer Services, Inc. (ACS) that the latter has backdated grants of stock option to ACS employees and officers during the period from 1995 to 2006. They further alleged that ACS had also falsely denied that their officers were involved in intentional backdating.
Affiliated Computer Services, Inc. is a former Fortune 500 company engaged in the affair of providing information technology services and business processes. This company was acquired by Xerox Corporation in February, 2010.
The complaint filed by the SEC in the federal district court in Washington, D.C charges that ACS was engaged in a deceptive and fraudulent scheme from 1995 to 2006. It provided undisclosed compensation to its employees and executives. Former CEO and CFO of the ACS backdated the stock options grants of ACS and manipulated it to match with the date segment of low closing prices. They also filed routine reports with the SEC which does not show actual expenses for backdated options.
SEC further alleges that ACS had understated the company’s compensation expenses in their financial statement by resorting to undisclosed backdating. In addition, ACS failed to maintain accurate records of stock option grants and they were short of internal controls required for such grants.
The complaint lodged by SEC also reveals that during the period ACS was conducting internal investigation into the backdating episode through their former CEO and CFO, it denied that an intentional backdating had taken place. The former CEO read a statement to this effect on April 27, 2006 too. ACS stated identical false information on May 10, 2006 in the statutory forms.
ASC has neither admitted nor denied the allegation filed by the SEC but has consented to a permanent injunction against the alleged violations.