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This disclosure must come no later than the end of the following trading day, effectively preventing any back-dating of option grants.Companies also have to have their own share dealing codes.Backdating option grants to, for example, just before an announcement that had a positive share price effect would be equivalent to granting the option in a prohibited period.Directors are rightly highly sensitive about share dealing because they can be censured by the stock exchange; prosecuted for abusing the market by the Financial Services Authority; or even summarily dismissed by the company itself.If the price has fallen, you simply don't buy the share.Backdating is the practice of rewriting the agreement so that the option appears to have been granted at an earlier time when the share was even cheaper.Reyes is the first executive to go on trial, though others have settled cases with US financial regulator the Securities and Exchange Commission and paid not only fines, but millions of dollars of 'ill gotten gains' in some cases. The simple answer is that the practice has not taken hold because of the quality of UK regulation.It is simply not an option for publicly listed companies to pretend that an option was granted days or even weeks ago.

These HMRC agreed valuations usually remain valid for 30 days only.Protections don't just apply to big listed firms, though.Even for privately held companies the scope to backdate an option grant is very limited indeed.A stock option granted, for example, on the day you join the company allows you the right to buy that share at that day's price, but not until a fixed period – say a year – has elapsed.If the price has risen in that time you can buy the share at the option price, sell it and pocket the profit.

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