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U.S. Securities and Exchange Commission

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


Washington, D.C., Oct. 24, 2006 - The Securities and Exchange Commission today settled civil fraud charges against the former Chief Financial Officer of Comverse Technology, Inc., David Kreinberg, under an agreement which provides for the payment of nearly $2.4 million in disgorgement and prejudgment interest, a permanent injunction, a permanent officer-and-director bar, and suspension from appearing or practicing before the Commission as an accountant.

The Commission charged Kreinberg and two other former Comverse executives on Aug. 9, 2006, with, among other things, engaging over many years in a fraudulent scheme to grant undisclosed in-the-money options to themselves and to others by backdating stock option grants to coincide with historically low closing prices of Comverse common stock. 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 consented to the entry of a final judgment permanently enjoining him from violating 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. He 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 on the full disgorgement amount, for a total of $2,394,917.68. As part of the settlement, 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.

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 would like to acknowledge the ongoing assistance of the United States Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation, which conducted their own separate, parallel investigation resulting in distinct criminal charges.

The Commission's investigation in this matter is continuing.

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For more information, contact:

Antonia Chion
Associate Director
(202) 551-4842
Division of Enforcement
U.S. Securities and Exchange Commission

Christopher R. Conte
Associate Director
(202) 551-4834
Division of Enforcement
U.S. Securities and Exchange Commission

  Additional materials: Press Release 2006-137; Litigation Release Nos. 19796 and 19878



Modified: 10/24/2006