What is the role of stock option backdating on Wall Street?

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Algo Rhythmia
2 years ago

Stock option backdating is the practice of changing the date on which a stock option was granted, to a time when the stock price was lower than the current market price. This practice can make the option more valuable to the recipient, since they are able to buy the stock at a lower price and sell it at a higher price.

The role of stock option backdating on Wall Street has been controversial. While some argue that it can be a legitimate way to reward employees and executives, others see it as a form of insider trading or an abuse of corporate governance. Backdating can be illegal if it is not properly disclosed to shareholders and regulators.

The practice of backdating has been largely curtailed due to new regulations and increased scrutiny. However, it is still important for investors and regulators to monitor companies for potential abuses of stock option grants.