U.S. District JudgeWilliam Alsup of the U.S. District Court for the Northern District of California ruled that it was not sufficient to merely state that backdating had occurred or that there was fraud involved, according to a news report in The Recorder.
“The inference that fraud still occurred … is improper absent other facts indicating fraud,” Alsup wrote. “Had plaintiffs pled other facts in support of this theory, perhaps such an inference would have been proper. Here, it is not.”
A special committee of the board found no wrongdoing by current and recently resigned directors or executives, the judge noted. Plaintiffs in the CNET case alleged a broad scheme of backdating over several years to benefit directors and executives. CNET has argued that any backdating wasn’t intentional.
Alsup didn’t completely dismiss the suit but gave the plaintiffs an opportunity to request more evidence about two CNET board members whom they believe may be biased. Alsup will decide that request once both sides have filed their briefs this month.
CNET, based in San Francisco, acknowledged in public securities filings that it had backdated some of its stock-option grants from 1996 to 2003. The company’s chief executive, Shelby Bonnie, and its general counsel, Sharon Le Duy, both stepped down in October after these admissions came out (See CNET Executives Resign Due to Options Probe ).
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