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U.S. Securities and Exchange Commission


Litigation Release No. 19878 / October 24, 2006

Accounting and Auditing
Release No. 2497 / October 24, 2006

Securities and Exchange Commission v. Jacob ("Kobi") Alexander, David Kreinberg, and William F. Sorin, United States District Court for the Eastern District of New York, Civil Action No. CV-063844 (GJ) (E.D.N.Y. August 9, 2006)

David Kreinberg, Former CFO of Comverse Technology, Inc., Agrees to Settle SEC Charges in Options Backdating Case; Relief Includes Officer-And-Director Bar and Nearly $2.4 Million in Disgorgement and Interest

The Securities and Exchange Commission today settled civil charges against David Kreinberg, the former Chief Financial Officer of Comverse Technology, Inc., and a defendant in the Commission's August 2006 enforcement action against three former Comverse executives arising from an alleged scheme to backdate stock option grants. The Commission also alleged that, from 1999 through at least April 2002, Kreinberg and Comverse's former Chairman and Chief Executive Officer created a slush fund of backdated options that the former Chairman and Chief Executive Officer, with Kreinberg's knowledge, used to recruit and retain key personnel.

Without admitting or denying the allegations of the Commission's complaint, Kreinberg has consented to the entry of a final judgment permanently enjoining him from violating and/or aiding and abetting violations of the antifraud, reporting, record-keeping, internal controls, false statements to auditors, Sarbanes-Oxley certification, and securities ownership-reporting provisions of the federal securities laws. Specifically, the proposed final judgment would permanently enjoin Kreinberg from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b), 13(b)(5), 14(a), and 16(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13a-14, 13b2-1, 13b2-2, 14a-9, and 16a-3 thereunder, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder.

Kreinberg has consented to the entry of an order permanently prohibiting him from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act. Pursuant to the order, Kreinberg is required to pay $1,769,255.80 in disgorgement, of which $989,434.00 represents the "in-the-money" benefit from exercises of backdated option grants. In addition, Kreinberg will pay $625,661.88 in prejudgment interest thereon, for a total of $2,394,917.68. Kreinberg also has agreed to cooperate in the Commission's ongoing litigation. The settlement is subject to the approval of the United States District Court for the Eastern District of New York.

As part of the settlement, and following the entry of the proposed final judgment, Kreinberg, without admitting or denying the Commission's findings, has consented to the entry of an administrative order, pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant.

In a separate matter also filed in the United States District Court for the Eastern District of New York, Kreinberg today pled guilty to one criminal count of conspiracy to commit securities fraud, mail fraud, and wire fraud, and one criminal count of securities fraud. The plea was the result of an agreement between Kreinberg and the United States Attorney's Office for the Eastern District of New York.

The Commission's investigation in this matter is continuing.

For further information, see Litigation Release No. 19796 (August 9, 2006).



Modified: 10/24/2006