SEC & Hain Celestial Group Settle Backdating Charges - 3 Sep 2009

SEC & Hain Celestial Group Settle Backdating Charges

The SEC settles another backdating case, this one involving The Hain Celestial Group,
Inc. ("Hain"), a Melville, New York natural foods company.  The SEC's
complaint, filed in federal court in Brooklyn, New York, alleges that
from at least 1998 to 2002, Hain fraudulently backdated stock options
granted to Company officers, directors, and employees.  After media
inquiries and analyst reports regarding its stock option practices in
mid-2006, Hain's current CFO conducted a limited internal review of
selected grants. At the time, Hain did not retain outside counsel to
review its historical option practices and did not conduct a forensic
review of e-mails or accounting records. Subsequently, Hain's current
CFO and the company made statements during September and November 2006
that the company had carefully reviewed its historical stock option
grants and found nothing improper.

After being contacted by the SEC staff in mid-2007, Hain formed a
group of independent directors and retained outside counsel and other
experts to conduct a detailed review of its stock options practices. In
January 2008, Hain restated its historical financial statements as a
result of this review. Hain re-measured 48 grants and recorded $20.5
million of compensation expense. Twenty-one of the 48 re-measured
grants, representing approximately 3.7 million options and $13.2
million of compensation expense, were issued between 1998 and 2002.

Without admitting or denying the SEC's allegations, Hain consented
to a permanent injunction against violations of Section 17(a) of the
Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A),
13(b)(2)(B), and 14(a) of the Securities Exchange Act of 1934, and
Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, and 14a-9 thereunder. The
settlement is subject to court approval. The Commission took into
account the cooperation that Hain provided the Commission staff during
its investigation.

September 3, 2009 in SEC Action | Permalink

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