Preventing backdating of

In addition to the enforcement efforts, others at the Commission have taken two other major steps to address this issue.First, there are the recently adopted rules relating to executive compensation disclosure which specifically address options.With respect to both, there are pending parallel criminal actions as well.As most of you know, the Comverse criminal case has had a certain amount of drama surrounding former CEO Kobi Alexander, who was first a fugitive from justice, and later was located after he took up residence in Namibia, where he is presently fighting extradition to the United States. Thank you so much for spending time today on this important topic.I thought I'd talk a little about where we are from an Enforcement perspective.These rules, in combination with the prescient provisions of Sarbanes-Oxley requiring timely reporting of stock option grants, will go a very long way toward preventing the kinds of problems we are seeing today from occurring to the same degree in the future.

So, from the shareholder, accounting and tax perspectives, at the money options had certain distinct advantages.

For example, at the money options received more favorable accounting treatment — they did not need to be expensed.

They also generally received more favorable tax treatment.

In the past few years, we brought two other cases involving option issues in the context of allegations relating to broader financial frauds — one in 2003 involving Peregrine and one in 2004 involving Symbol Technologies.

We do not expect to bring 100 enforcement cases regarding stock options — we are focusing on the worst conduct. To be a little less enforcement-centric, I would also like to talk about where the Commission as a whole is on stock option matters.

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