SEC Files Suit Against Monster's Olesnyckyj

February 20, 2007 ( - The Securities and Exchange Commission (SEC) has filed a civil suit against deposed Monster Worldwide General Counsel Myron Olesnyckyj for his role in participating in and concealing a backdating stock options scheme.

The SEC charged Olesnyckyj with violating antifraud provisions of the federal securities laws and with aiding and abetting the violation of reporting requirements.

According to an SEC press release , Olesnyckyj, from 1997 through 2003, “backdated stock options grants to coincide with the dates of low closing prices for the Company’s common stock, resulting in grants of in-the-money options to numerous individuals.”

He then allegedly concealed this practice from Monster’s Compensation Committee, which caused it to overstate its net income by $340 million because it failed to recognize compensation expenses. In December 2006, the company announced that it would restate its earnings by $219.9 million to account for the backdated stock options (See Monster Inc. Earnings Dive $217.9M From Options Backdating).

The SEC charges that Olesnyckyj also gave outside auditors documentation that misrepresented grant dates to hide the scheme.

The SEC filed the suit in the U.S. District Court for the Southern District of New York soon after Olesnyckyj pleaded guilty to federal charges of securities fraud and conspiracy to commit securities fraud. He has agreed to pay back the $381,000 he gained, but faces a potential sentence of 25 years in prison and $5.2 million in fines for participating in the backdating scheme (See Monster Exec Pleads Guilty to Backdating Charges ).

The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains, civil monetary penalties, and an officer and director bar.

Th e civil action is SEC v. Myron F. Olesnyckyj, United States District Court for the Southern District of New York, Civil Action No. 07 CV 1176 (HB) (S.D.N.Y. February 15, 2007).

Olesnyckyj was ousted in November 2006 as the stock options scandal unraveled (See  Corporate Carnage Continues in Stock Options Scandal with Monster Firing ).