Former CFO of HP Company Settles Stock Option Backdating Charges with $2.29M Payment

Holding:

Sharlene Abrams, a former chief financial officer of Mercury Interactive, LLC, (“Mercury”) has settled civil fraud charges arising from an alleged scheme to backdate stock option grants and from other alleged misconduct. Without admitting or denying the allegations in the Securities and Exchange Commission's (“SEC”) complaint, Abrams consented to the entry of a final judgment permanently enjoining her from violating and/or aiding and abetting violations of the antifraud, financial reporting, record-keeping, internal controls, false statements to auditors, securities ownership reporting and proxy provisions of the federal securities laws, and barring her from serving as an officer or director of a public company. Abrams will pay $2,287,914 in disgorgement, of which $1,498,822 represents the "in-the-money" benefit from her exercise of backdated option grants, and a $425,000 civil penalty. Under the terms of the settlement, Abrams' disgorgement of her "in-the-money" benefit, totaling $1,498,822, would be deemed satisfied by her previous voluntary payment of that amount to Mercury.

Detailed Summary:

By way of background, Mercury (formerly known as Mercury Interactive Corporation) was acquired by Hewlett-Packard Company (“HP”) by an agreement consummated on November 8, 2006, and is now a non-trading subsidiary of HP. Prior to the consummation of the merger, Mercury was a corporation headquartered in Mountain View, California, and organized under the laws of Delaware. The company made software used to test and optimize information technology systems and software applications. One of the product solutions it sold was marketed as a means to implement best practices frameworks for Sarbanes-Oxley compliance. At the time of the conduct described in the SEC’s…

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