Ron Breaux in Law360: Ex-Mercury GC Can't Escape $258M SEC Backdating Case

02/19/2013

The U.S. Securities and Exchange Commission (SEC) won a major ruling Wednesday that could expand its five-year window for filing enforcement actions, as a California federal judge kept alive a long-running suit against Mercury Interactive LLC’s former general counsel over an alleged $258 million stock options backdating scheme.

U.S. District Judge William Alsup denied Susan Skaer’s motion for summary judgment in the SEC’s suit alleging she and other executives helped Mercury hide more than $258 million of compensation expenses by manipulating stock option grants.

Skaer claimed in her Jan. 3 motion that the SEC ran over the five-year statute of limitations. The last alleged options-backdating occurred in April 2002, but the SEC did not bring its suit until May 2007, Skaer said.

But Judge Alsup said the agency could seek equitable tolling, a method of stopping the clock on the statute of limitations, in part because the fraud had been concealed until 2004. That finding could set up a precedential Ninth Circuit decision on the issue, attorneys not involved in the case told Law360.

“You’re going to have a potential conflict in the circuits on this issue,” Haynes and Boone, LLP Partner Ronald Breaux said. “The defendant or the SEC may even want to try to get this clarified by the Supreme Court.”

Excerpted from Law360, February 19, 2013. To view full article, click here (subscription required).

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