(The news featured below is a selection from the news covered in Federal Securities Law Reporter, which is distributed to subscribers of Federal Securities Law Reporter.)

Commission Seeks Injunctive Relief in Options Case

The SEC filed a civil injunctive action against the former chief executive officer and chairman of Engineered Support Systems, Inc., and the CEO's son, a former member of Engineered Support's compensation committee. As alleged, the two individuals participated in a fraudulent scheme in which they granted undisclosed in-the-money stock options to themselves and to other Engineered Support officers, employees and directors.

According to the complaint, Engineered Support employees and directors received approximately $20 million in unauthorized and undisclosed compensation as a result of the backdating, $16 million of which was received by top executives and directors. The Commission claimed that the CEO personally profited from the backdating scheme by more than $8.9 million.

Linda Thomsen, director of the Commission's Division of Enforcement, said that "our actions today demonstrate that the Commission will aggressively pursue individuals who are alleged to have engaged in fraudulent stock option granting practices to secretly enhance their own compensation." Merri Jo Gillette, director of the Commission's Chicago regional office, added that "truthful disclosure of executive compensation is an important issue for shareholders, and concealing compensation and misleading shareholders in order to obtain approval for stock option plans will not be tolerated."