Employment search provider Monster Worldwide agreed to pay the SEC $2.5 million in penalties to settle stock option backdating charges.

“Monster misled investors by failing to report hundreds of millions of dollars of expenses,” said James Clarkson, acting regional director of the SEC's New York Regional Office, in a statement. “Backdating stock options made the company look like it had more money than it really did.”

The SEC’s complaint alleged that Monster filed false and materially misleading statements concerning the true grant date and exercise price of stock options in its annual, quarterly and current reports, proxy statements and registration statements. Many of the documents also falsely represented that stock options were being granted at fair market value at the company, which operates the Monster.com Web site.

Further, Monster failed to record and disclose the compensation expense associated with the "in-the-money" portion of stock option grants. As a result, Monster materially overstated its quarterly and annual earnings in its financial statements and was required to restate its historical financial results for 1997-2005 in a cumulative pre-tax amount of approximately $339.5 million to record additional non-cash charges for option-related compensation expenses.

Without admitting or denying the SEC's allegations, Monster agreed to pay a $2.5 million penalty and consent to the entry of an order permanently enjoining it from violating the antifraud, reporting, record-keeping and internal controls provisions of the federal securities laws.

The commission took into account the cooperation that Monster provided SEC staff during the course of the investigation. Monster currently operates under new management.

“This is an important step in closing an unfortunate chapter in the company’s history and putting the issue firmly behind us,” said Monster Chairman and CEO Sal Iannuzzi. “Our current executive team has spent the last two years refocusing Monster on its customers and shareholders, retooling the day-to-day management, and overhauling governance in an effort to adhere to the highest standards.”

The SEC previously charged four of Monster’s former executives, including CEO Andrew McKelvey, president and COO James Treacy, general counsel Myron Olesnyckyj, and controller Anthony Bonica, for their alleged roles in the backdating scheme at Monster.

A federal jury convicted Treacy of securities fraud and conspiracy charges in the case last week. He faces up to 25 years in prison. 

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