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    ally are investigated or asked by the SEC (currenty June 03 is 42) by June 2006 = 100

    2. # of companies that will co

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    I had a discussion with Erik Lie about the experiences with Stock Options Backdating (SOBD) and the economic impact of his work. According to Erik, at least 15% of the stock options grants between 1996 to August, 2002,were backdated. Some were within 30 days of the grant date, others more egregious. The number of companies though he said that were going to come clean would be far less than 15%. Here is what we came up with.

    First the assumptions:

    1. # of companies that actually are investigated or asked by the SEC (currenty June 03 is 42) by June 2006 = 100

    2. # of companies that will com

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    work. According to Erik, at least 15% of the stock options grants between 1996 to August, 2002,were backdated. Some were within 30 days of the grant date, others more egregious. The number of companies though he said that were going to come clean would be far less than 15%. Here is what we came up with.

    First the assumptions:

    1. # of companies that actually are investigated or asked by the SEC (currenty June 03 is 42) by June 2006 = 100

    2. # of companies that will co

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    ithin 30 days of the grant date, others more egregious. The number of companies though he said that were going to come clean would be far less than 15%. Here is what we came up with.

    First the assumptions:

    1. # of companies that actually are investigated or asked by the SEC (currenty June 03 is 42) by June 2006 = 100

    2. # of companies that will co

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    an would be far less than 15%. Here is what we came up with.

    First the assumptions:

    1. # of companies that actually are investigated or asked by the SEC (currenty June 03 is 42) by June 2006 = 100

    2. # of companies that will co

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    ally are investigated or asked by the SEC (currenty June 03 is 42) by June 2006 = 100

    2. # of companies that will complete the 3 step process of preliminary investigation, comprehensive audit and finally restatement of results (approximately at 30-50%) = 40

    3. Approximate amount of time spent performing the initial investigation = 4-6 weeks.

    4. Approximate time spent doing comprehensive audit = 20-32 weeks

    5. Costs in back taxes, delisting, restatement, defending lawsuits & fines = 30% of cumulative value of option grants

    6. Size of company assumed on average: $500M in revenue

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