U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20004 / February 15, 2007
Accounting and Auditing Release No. 2558 / February 15, 2007
SEC v. Myron F. Olesnyckyj, United States District Court for the Southern District of New York, Civil Action No. 07 CV 1176 (HB) (S.D.N.Y. February 15, 2007)
SEC Charges Former General Counsel of Monster Worldwide, Inc. for Role in Options Backdating Scheme
The Securities and Exchange Commission ("Commission") today announced the filing of a civil action in federal district court in New York, New York against Myron F. Olesnyckyj, the former general counsel of Monster Worldwide, Inc. The Commission charged Olesnyckyj with securities fraud for participating in a multi-year scheme to secretly backdate stock options granted to thousands of Monster officers, directors and employees.
The complaint alleges that, from 1997 through 2003, Olesnyckyj backdated stock options grants to coincide with the dates of low closing prices for the Company's common stock, resulting in grants of in-the-money options to numerous individuals. When making grants of options, certain officers and employees at Monster would select a low closing stock price at which they wanted to grant stock options. Olesnyckyj, or others acting at his direction, then prepared backdated documentation for Monster's Compensation Committee containing the grant date that reflected the low closing price for Monster's common stock. Olesnyckyj then caused Monster to misrepresent in its periodic filings and proxy statements that all stock options were granted at the fair market value of the stock on the date of the award, when that was simply not the case. In fact, by backdating the options, Monster granted undisclosed compensation to its employees, failed to recognize compensation expenses, and overstated its net income by $340 million from 1997 through 2005. Olesnyckyj, 45 and a resident of New Providence, New Jersey, personally profited by receiving backdated options.
The complaint further alleges that Olesnyckyj misled Monster's outside auditors in an attempt to hide the backdating scheme by providing documentation to them that misrepresented the grant date of the stock option awards.
The complaint charges Olesnyckyj with violations of the antifraud provisions of the federal securities laws and with violating or aiding and abetting the violation of reporting requirements. The Commission is seeking permanent injunctive relief, disgorgement of ill-gotten gains, civil monetary penalties, and an officer and director bar.
The Commission acknowledges the assistance of the United States Attorney's Office for the Southern District of New York and the United States Postal Inspection Service, which conducted their own separate, parallel investigation resulting in distinct criminal charges.
The Commission's investigation in this matter is continuing.