Tuesday, January 29, 2008

Comverse probe confirms backdating scheme

Crain's New York Business

By Pamela Appea

The independent probe confirmed allegations of stock-option backdating and earnings manipulation at the company, according to a filing with the U.S. Securities and Exchange



Comverse Technology Inc. said that a board committee completed its independent probe of the company, confirming allegations of stock-option backdating and earnings manipulation. The Manhattan-based maker of voicemail software filed a notice of the probe’s completion, along with a final report on its findings, with the U.S. Securities and Exchange Commission Tuesday.

“The completion of the investigations and the subsequent report is a major accomplishment and a significant first step in putting the issues addressed by the investigations behind us,” Comverse Chairman Mark Terrell said in a statement.

Comverse said it will follow a series of recommendations made by the independent committee to enhance corporate governance, internal controls, training and compliance.

The company plans to start with a search for a new chief financial officer. Comverse named former AT*T Wireless executive Andre Dahan to the position of CEO in April, after former CEO Jacob “Kobi” Alexander left the company in May of 2006.

Mr. Alexander, along with former Comverse CFO David Kreinberg and senior general counsel William Sorin were accused in August 2006 of pocketing hundreds of millions of dollars by secretly manipulating stock options between 1991 and 2005, and making falsified statements to conceal the fraud from shareholders.

Messrs. Kreinberg and Sorin both pleaded guilty in October 2006, but Mr. Alexander, currently fighting extradition from Namibia to face the criminal charges, hasn’t given up the ghost.

Last week he filed a lawsuit against his former company, saying Comverse owes him more than $72 million in severance and other compensation.

Mr. Alexander says he is innocent of the charges and blames poor advice from his financial and legal advisors. His extradition hearing is not expected before March.

Comverse’s stock was delisted in February after the company failed to file its financial reports on time.