Former SafeNet CFO Pleads Guilty to Options Backdating

October 10, 2007 ( - The former chief financial officer of SafeNet Inc., Carole Argo, on Friday pled guilty to securities fraud for backdating stock options.

According to the Houston Chronicle, at Friday’s hearing, Argo said the company’s CEO asked her to backdate options as of October 1, 2001, a low point for the company’s stock. She said she also backdated options for herself and another employee at the time.

As a result, SafeNet did not properly record compensation expenses for option grants and made an inaccurate filing with the Securities and Exchange Commission (SEC), Argo said, according to the newspaper.

At sentencing, scheduled for January 21, Argo faces a maximum of 20 years in prison on the charge; however, the stipulated sentencing guideline range in her plea agreement was 97 months to 121 months in prison.

Prosecutors alleged that between 2000 and 2006, Argo and others engaged in a scheme to systematically backdate option grants at the company and failed to report compensation expenses in connection with those option grants. They are also charged with engaging in a scheme to deceive the company’s board of directors, shareholders and auditors, as well as the investing public.

Last year, Argo and SafeNet’s former chairman and CEO, Anthony A. Caputo, resigned as a result of an internal investigation into the company’s stock-options grant practices. No criminal charges have been filed against Caputo.