The company only says that the SEC is looking into past options practices. Most likely, it will center on whether there was any backdating of options for the benefit of its executives. The Santa Monica-based company said in a filing that it has launched its own inquiry into options practices. Some analysts and shareholders have suspected that there may have been a little funny business with the way Activision handled its options, so the disclosure isn't that much of a surprise. It is among the scores of companies that the government is looking into - mainly to determine if executives were allowed to buy options at a strike price well under what the stock had been trading for. Actually, backdating may not be illegal. The main question is whether investors were disclosed of the activity.
Activision joins a growing list of Southern California companies either under scrutiny by the SEC or in the midst of their own investigations into backdating, including Quest Software, Vitesse Semiconductor, Semtech, and Broadcom. There are now more than 80 companies caught up in the stock options scandal. Camarillo-based Vitesse fired the executives said to be involved, including CEO Louis Tomasetta, Chief Financial Officer Yatin Mody and Executive Vice President Eugene Hovanec. Because of the inquiry, Vitesse is not able to release financial statements. The stock was de-listed from the Nasdaq exchange on June 26. It now trades on the pink sheets and the company said there is no timetable to try to get back on the major exchange.